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Updated Reserve Report
Empyrean, the profitable US onshore oil, gas and condensate exploration, development and production company with assets in Texas and California, has announced that an independent appraisal and updated report prepared by DeGolyer & MacNaughton, effective to 30 June 2015, has highlighted a further significant increase in the Company’s Reserves and Resources at its flagship Sugarloaf AMI asset. The Project is located in the liquids rich core of the Eagle Ford Shale in Texas, USA.
Highlights:
· Significant increases reported in all reserve categories in boe and NPV10 values, demonstrating the scalability of the Project:
o 13.84% increase in Proven Reserves (1P) to 6.58 MMboe ( 5.78 MMboe to Dec 2014)
o 9.77% increase in Probable Reserves to 7.53 MMboe (6.86 MMboe to Dec 2014)
o 11.63% increase in Proven plus Probable Reserves (2P) to 14.11 MMboe (12.64 MMboe to Dec 2014 )
o 10.90% increase in Proven plus Probable plus Possible Reserves (3P) to 23.19 MMboe (20.91 MMboe to Dec 2014)
o 2P Reserves plus 2C Resources up 0.65% to 15.59 MMboe (15.49 MMboe to Dec 2014)
o NPV (10) of 1P Reserves valued at approximately US$45.7m (US$43.8m to Dec 2014)
o NPV (10) of 2P Reserves valued at approximately US$135.9m (US$121.7m to Dec 2014)
o NPV (10) of 3P Reserves valued at approximately US$294.7m (US$263.5m to Dec 2014)
· Significant potential to increase future reserves:
· Upper Eagle Ford Shale is not included in report numbers – Marathon’s early partial delineation of this zone was announced post period end
· Further delineation of both the Upper Eagle Ford and Austin Chalk zones is anticipated
The Project, in which Empyrean has a 3% working interest, is operated by Marathon Oil Company, a subsidiary of US major Marathon Oil Corporation (NYSE:MRO). The figures below represent the Barrels of Oil Equivalent Reserves and Resources attributable to Empyrean’s net revenue interest after royalties in the Project.
Empyrean CEO Tom Kelly said, “The value of the Sugarloaf AMI continues to improve even in the current oil price environment. These figures for the Lower Eagle Ford and Austin Chalk prove the robust nature of the asset and the increasing potential for exploitation. An increase of more than 10% across all reserve categories highlights the on-going development by Marathon and underpins its confidence in the asset. Furthermore, there has been an improvement in the NPV at a 10% discount rate of 1P & 2P reserves, to US$45.7m and US$135.9m respectively, both representing a substantial premium to our current market capitalisation.
“Furthermore, the Upper Eagle Ford formation, which is a relatively new zone identified by Marathon for appraisal and development, is not included in these figures. As announced previously, we believe this represents an exciting development opportunity similar to the Austin Chalk 12 months ago, and therefore we anticipate that as this is further appraised and developed, our Reserves and Resources could rise further. This serves to reinforce the scalability of production at our flagship asset and its status as an attractive investment proposition. We remain optimistic about the development of the Sugarloaf AMI and believe that the long-term value of the project will be recognised in our valuation.”
