Empyrean Acquires Stake in Sugarloaf Hosston

Empyrean Energy and Texas Crude Energy have agreed to a farm-in deal that will give Empyrean 6 percent working interest in the Sugarloaf Hosston Prospect in South Texas.

Operated by Texas Crude, Sugarloaf Hosston Prospect (Cretaceous) is a 20,000-acre 4-way closure. Empyrian said that, based on independent estimates, the prospect could contain up to 2.3 tcf of gas.

Texas Crude expects to drill an initial well to a total depth of 21,000 feet beginning in the third quarter of this year. The large anticlinal structure reportedly is well defined by some 24 lines of re-processed 2D seismic data. The target Hosston Sands are in the lower Cretaceous and are predicted to occur at 17,000 feet. Drilling is estimated to take 110 days to this depth.

Under the agreement, Empyrean to pay 7.5 percent of the costs of the initial well (including lease costs and operating expenses) until payout. After that point, Empyrean's working interest reverts to 6.0 percent (4.26 percent NRI). The initial well is expected to cost a total of $6 million. Lease and completion costs are expected to add a further $4 million. Empyrean's share of this expenditure is estimated at $750,000.

"The participation in the Sugarloaf Hosston Prospect allows Empyrean exposure to a potentially massive gas resource," said Tom Kelly, Empyrean's executive director. "The profile of this prospect is in line with our strategy to develop high value energy projects in politically stable countries with high levels of infrastructure and healthy domestic energy markets."

In addition to Sugarloaf Hosston, Empyrean is performing horizontal completion of its Eagle Oil Pool Development Project in California and is conducting tests at the Glantal Gas Project in Germany.