Empyrean Could Opt Out of Further Drilling; Shares Drop-Update

By Alex MacDonald

LONDON--Shares in Empyrean Energy PLC (EME.LN) fell Wednesday after the company said it has the ability to opt out of new wells drilled at its flagship shale oil-and-gas project in Texas should it need to manage its cashflow in a lower oil price environment.

The U.K.-listed company said that drilling costs at the Sugarloaf AMI project have fallen by 21% since 2014 and are forecast to continue falling as a result of lower oil and gas prices. The company noted it has the option to opt out of any new wells drilled by the operator Marathon Oil Corp (MRO) if necessary. The company said it may do this in order to manage cashflow should oil prices remain low or should it fail to raise adequate funds to cover its share of any additional drilling costs.

At 0807 GMT, Empyrean's shares were down 8% at 5.75 pence a share, resulting in a market value of GBP13 million or $20 million.

The U.K.-listed company said its share of oil and gas production from the flagship Sugarloaf AMI project dipped 0.5% on the quarter to 108,849 barrels of oil equivalent in the second quarter. This was due to disruptions and delays caused by major flooding in Texas.

The company also said there were 231 gross producing wells at Sugarloaf AMI at the end of June, 26 more than at the end of the first quarter. Marathon also had another 58 wells in various stages of completion as of the end of that quarter.

Sugarloaf AMI, which is 3% owned by Empyrean, raised its proven reserves by 63% to 5.78 million barrels of oil equivalent and increased its proven and probable reserves by 94% to 12.64 million barrels of oil equivalent, according to an independent report published on July 8.

The company said that it is still profitable despite the lower oil and gas price environment.

Write to Alex MacDonald at [e-mail]

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(END) Dow Jones Newswires

September 02, 2015 04:59 ET (08:59 GMT)

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