Sugarloaf-1 Spuds on Texas Gulf Coast

AIM-quoted Empyrean Energy PLC said that the Sugarloaf-1 exploration well, located in the onshore Gulf Coast Basin in Texas, USA, commenced drilling at 0200 hours on 17th August 2006. At 0600 hours Friday, Sugarloaf-1 was at a measured depth of 186 feet and drilling ahead in 22 inch diameter hole.

The proposed total depth of Sugarloaf-1 is 21,000 feet (6,400 meters) or such other depth as agreed by the joint venture partners.

The well has a number of geologically independent targets and is being drilled in an area where there are numerous fields producing from a variety of geological horizons.

The primary target is a large four-way dip closed growth fault structure developed in the early Cretaceous aged Hosston Formation. The top of the Hosston is interpreted from seismic to be at approximately 17,000 feet (5,200 meters) and there is the potential for several different sandstones to be developed over a gross 4,000 feet (1,200 meters) thickness. Mean reserves potential for the Hosston target is 800 BCF of gas, with upside potential of several TCF.

The shallower secondary targets are in Cretaceous aged carbonate formations at depths ranging from 12,000 to 14,000 feet (3,600 - 4,300 meters). These formations are productive in adjacent areas. Reserves potential of the shallow targets is estimated at around 100 BCF equivalent.

The first secondary target of the well (12,000 - 14,000 feet) is anticipated to be reached approximately 4 weeks after spud. Given that the well is designed to be drilled to 21,000 feet, these shallower formations will be evaluated by logs and cased off, regardless of whether or not hydrocarbons are present. If potentially commercial hydrocarbons are interpreted from the logs, these will be production tested with a smaller rig as soon as practicable after the deep drilling rig is released. Definitive results from the shallow targets will therefore only be obtained after a testing program once the well is completed.

The primary Hosston target is expected to be reached in early to mid October and total depth of 21,000 feet (6,400 meters) in early November. If hydrocarbons are intersected in the Hosston Formation, they will be cased off and production tested using a smaller completion rig.

Due to the Australian Stock Exchange ("ASX") listed partners' intentions to issue routine ASX releases providing a Sugarloaf-1 update every Wednesday during drilling, Empyrean Energy Plc will provide a mirror updating announcement for consistency unless there are material matters which require an earlier release.

Executive Director, Tom Kelly, commented:

"The Sugarloaf Hosston Prospect is another exciting well for Empyrean with multiple reservoir targets including the deeper multi-TCF gas target. The well is close to existing hydrocarbon infrastructure and with strong energy prices in the USA - any discovery will be rapidly brought into production. Empyrean will continue to seek excellent risk versus reward opportunities aimed at delivering early cash flow and building shareholder value upon exploration success."

Participants in the Sugarloaf-1 well are:

--Adelphi Energy Texas, Inc., 20.0%
--Texas Crude Energy Inc (Operator) et al, 41.5%
--Aurora Oil and Gas Ltd, 20.0%
--Eureka Energy Ltd, 12.5%
--Empyrean Energy plc, 6.0%