EMPYREAN ENERGY PLC

Business and Financial Review • Feb 19, 2013

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RNS Number : 1789Y

Empyrean Energy PLC

19 February 2013

19 February 2013

Empyrean Energy PLC

("Empyrean" or the "Company"; Ticker: (EME))

Sugarloaf Project: Onshore Texas, USA

Production and Operational Update

Empyrean Energy Plc, the AIM listed condensate and gas exploration and production company focused on the Eagle Ford Shale, Texas, USA, is pleased to provide the following update on production and operations at its Sugarloaf Project:

Highlights

·     Production on a barrel of oil equivalent basis ("BOE") net to Empyrean increased by approximately 29%  in the three months to December compared to the three months to September 2012

·     Production on a barrel of oil equivalent basis ("BOE") net to Empyrean increased by approximately 34% from the three months to October compared to the three months to January 2013

Production

The following is a summary of wellhead production data received from the operator from wells at the Sugarloaf Project from July 2012 through to January 2013. All figures that are stated as "Net to EME" are calculated at the working interest percentage in each well and multiplied by the net revenue interest ("NRI") to give an amount due to Empyrean net of royalties but before any taxes.

Month	Gas (Net to EME) (mcf)	Condensate (Net to EME)(bbls)	BOE Total (Net to EME)	BOE/day average (Net to EME)
July 2012	13,163	5,046	7,240	234
August 2012	24,905	7,129	11,280	364
September 2012	30,355	7,814	12,873	429
October 2012	18,011	7,658	10,660	344
November 2012	20,738	10,127	13,583	453
December 2012	30,069	11,248	16,260	525
January 2013	35,386	10,972	16,870	544

Notes:

1.   The wells have had the Average Daily Equivalent Oil Rate recalculated on a simple 6:1 basis.

2.   Please note that reporting for production at the wellhead does not include Natural Gas Liquids (NGL's) as these are extracted and measured later. The numbers are approximate and are rounded and are subject to change as sales are completed and allocated to each well. The Company has been notified by the operator that there have been some issues with the allocation of gas production numbers for some wells since September 2012, when wells on single separators have been switched over to facilities that have both a high pressure and low pressure separator. The operator has assured the Company that these issues are being corrected and will not affect the ultimate allocation of volumes of hydrocarbons for product sold. The issue above will likely result in an increase in the allocation of gas produced and therefore a possible understating of the gas produced for those months since the issue arose in September. Therefore the data provided above and below should be used as a guide only to monitor the trend. The information should not be relied upon to accurately monitor or extrapolate revenue.

A revised version of this announcement in which the information from the table above has been portrayed graphically is available on the Company's website and clearly shows a positive trend.

Sugarloaf Production update

The following is a summary of 30 and 60 day production data recently received for the following wells at the Sugarloaf Project:

	Working Interest	Total Gas Production (mmcf)	Total Condensate Production (bbls)	Average Daily Equivalent Oil Rate (boe/d)*
Mobil D 1H - 30 day	2.45%	36.3	35,397	1382
Tipton Jonas 2H - 30 day	1.485%	30.0	15,659	689
Tipton Jonas 3H - 30 day	1.485%	11.1	15,959	594
Tipton Jonas 4H - 30 day	1.485%	12.3	17,828	663
Brysch Adams 2H- 60 day	3.0%	36.8	40,074	770
Brysch Adams 3H- 60 day	3.0%	44.0	46,496	897
Gross McLean 1H - 60 day	2.03%	159.6	39,582	1103
Gross McLean 2H - 60 day	2.03%	181.6	43,950	1237
Mobil A 1H - 60 day	3.0%	55.2	55,211	1074
Mobil A 2H - 60 day	3.0%	35.5	48,458	906
Jordan 3H - 60 day	3.0%	60.7	19,773	498

Notes:

1.   The wells have had the Average Daily Equivalent Oil Rate recalculated on a simple 6:1 basis.

The Company is currently reviewing the timing and nature of production updates given the large number of wells now in production and will update shareholders in due course as to how it will provide production updates moving forward. The factors influencing this review include the fact that only condensate and gas are measured at the wellhead and Natural Gas Liquids (NGL's) are extracted and measured later. Due to this, the allocation of production sold on an individual well basis versus initial production reported can be different. There is also shrinkage in the gas volumes as the NGL's are stripped out.

Operations

As at the end of January 2013 Empyrean had 69 wells that were producing at the Sugarloaf Project on acreage operated by Marathon Oil Company ("Marathon"). In addition, there was two wells drilling ahead and a further two wells awaiting or in the process of having completion/stimulation operations carried out. The six wells that were reported as being off production at the end of December are now back on production. These wells were temporarily off production due to either facility or surface equipment repair or pressure monitoring/well load up operations.

The operator at the Sugarloaf Project, Marathon, recently made public their fourth quarter and full year results to the end of December 2012. Empyrean is encouraged by their results and commitment to further development and improvements across their Eagle Ford Shale acreages.

Some of the highlights from Marathon's report relating to the Eagle Ford Shale are quoted below:

"...spend approximately one third of our US$5.2 billion capital, investment and exploration budget for 2013 in the Eagle Ford, the cornerstone of our growth strategy."

"Increased average net production more than four fold in the Eagle Ford Shale from approximately 15,000 barrels of oil equivalent per day (boed) in December 2011 to more than 65,000 boed in December 2012."

"Expanded midstream infrastructure in the Eagle Ford to support production growth."

"Continue downspacing pilot in Eagle Ford to identify optimal spacing of wells."

"Continue to build infrastructure to support production growth across Eagle Ford operating area."

Commenting today, Empyrean CEO, Tom Kelly said "Empyrean is very encouraged from the trends emerging from the production data. It is great to see that Marathon have stated that the Eagle Ford Shale is the cornerstone for their growth strategy. We look forward to the further development of the project and to the results of stated initiatives to improve production and possibly add to reserves. There is a clear commitment to the Eagle Ford Shale by some of the biggest oil and gas companies in the world. Empyrean is fortunate to have a slice of the action and has been able to hang in there with much larger companies as the value of our asset has demonstrably grown."

The information contained in this announcement was completed and reviewed by the Technical Director of Empyrean Energy Plc, Mr Frank Brophy BSc (Hons) who has over 40 years experience as a petroleum geologist.

For further information

Empyrean Energy plc 

Tom Kelly

+618 9480 0111

Shore Capital

Anita Ghanekar

Edward Mansfield

+44 (0) 207 408 4090

Jonathan Charles

Lionsgate Communications

E: jcharles@lionsgatecomms.comM: +44 (0)7791 892509 

www.lionsgatecomms.com 

Notes to Editors:

Empyrean Energy Plc is an AIM listed (Ticker : EME) condensate and gas exploration and production company focused on the Eagle Ford Shale, Texas, USA. Other assets include a 10% working interest in the Riverbend Project, Texas, just north of the prolific Brookeland Field (Austin Chalk) as well as a 48.5% interest in the Eagle Oil Pool Development Project located in the San Joaquin Basin, southern California.

Empyrean's portfolio includes an interest in over 70 producing wells with scaleable growth potential from further development and exploration updside.

This information is provided by RNS

The company news service from the London Stock Exchange

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