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EME Empyrean Energy Plc

0.26
0.035 (15.56%)
14 Jun 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Empyrean Energy Plc LSE:EME London Ordinary Share GB00B09G2351 ORD 0.2P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.035 15.56% 0.26 0.22 0.30 5,076,524 16:35:07
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Oil And Gas Field Expl Svcs 0 -20.8M -0.0211 -0.10 2.17M

Empyrean Energy PLC Interim Results (1640X)

18/12/2023 11:34am

UK Regulatory


Empyrean Energy (LSE:EME)
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TIDMEME

RNS Number : 1640X

Empyrean Energy PLC

18 December 2023

Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil & Gas

18 December 2023

Empyrean Energy PLC ("Empyrean" or the "Company")

Interim Results

Empyrean Energy (EME: AIM), the oil and gas development company with interests in China, Indonesia and the United States, is pleased to provide its Interim Report for the six months ended 30 September 2023.

Highlights

Reporting period

Block 29/11, Pearl River Mouth Basin, China (EME 100%)

-- Joint regional oil migration study with CNOOC team conducted to map oil migration from the proven source rock south-west of Block 29/11 that charges the four CNOOC oil discoveries (immediately west of Block 29/11 and Topaz) and extends this into Block 29/11 to map these potential migration pathways to Topaz. Comprehensive study also included potential migration pathways from a new source/kitchen identified by Empyrean 3D data.

-- Simultaneous 3D seismic inversion project being conducted in two phases to firstly assess whether light oil pay in the target reservoir can be discriminated from a water bearing reservoir by seismic inversion and secondly to invert the entire 3D seismic data to generate several datasets for the elastic properties. These datasets will be analysed for high grading the Topaz prospect.

-- Drill Preparation of the Topaz prospect is ongoing such that should funding become available, operations can commence within the favourable weather window.

Duyung PSC Project, Indonesia (EME 8.5%)

-- Key Terms agreed for Long-Term Gas Sales Agreement between Conrad subsidiary, WNEL, operator of the Duyung PSC, and Sembcorp Gas Pte Ltd. The parties are in the process of finalising a definitive gas sales agreement

-- Conrad engaged a global investment bank to lead a farm-down process for the divestment of a portion of its interest in the Duyung Production Sharing Contract. Bids are expected to be received by the end of CY 2023.

-- Mako is one of the largest gas discoveries in the West Natuna Sea and the largest undeveloped resource in the area.

Corporate

   --     Placement to raise US$1.88 million (GBP1.52 million) completed in May 2023. 

-- Convertible Loan Note Debt restructured to reduce face value of the note and secure extended moratorium on interest.

For further information please visit www.empyreanenergy.com or contact the following:

 
 Empyrean Energy plc 
 Tom Kelly                    Tel: +61 8 6146 5325 
 
 
 Cavendish Capital Markets Limited (Nominated Advisor and 
  Broker) 
 Neil McDonald                Tel: +44 (0) 20 7397 
                               8900 
 Pearl Kellie 
 
 
 First Equity Limited (Joint Broker) 
 Jason Robertson              Tel: +44 (0) 20 7330 
                               1883 
 
 

Chairman's Statement

In China, planning and further de-risking work is currently being finalised with the aim to ultimately drill the Topaz prospect in 2024. These activities, largely focused on oil migration into Topaz, are expected to be completed in the immediate future.

In Indonesia, Empyrean was very pleased to see agreement reached between the operator of Mako and a major gas utility in September and also that the agreement was endorsed by the Government of Indonesia's petroleum upstream regulator. The focus of the parties is now on converting this significant milestone into a binding gas sales agreement.

The existing terms reached will be welcomed by those parties currently participating in the sell down process to fund the development of the Mako gas field and Empyrean expects an update shortly on this process. The macro environment for gas in South-East Asia, and Singapore in particular, is expected to continue trending favourably with the region transitioning from coal to gas as the preferred energy source.

On the corporate front, the Company successfully raised funds in May and was pleased to renegotiate the Convertible Note at the same time. The Company continues to assess other financing and strategic alternatives to provide it with additional working capital as and when required, including through the sale or partial sale of existing assets, through joint ventures of existing assets, as well as further equity funding.

I would like to thank the Board, management and staff for their perseverance during the year and we all now eagerly await good news from Indonesia before our attention turns to the targeted drilling of the Topaz Prospect in China.

Patrick Cross

Non-Executive Chairman

18 December 2023

Operational Review

China Block 29/11 Project (100% WI)

Background

Block 29/11 is located in the prolific Pearl River Mouth Basin, offshore China approximately 200km Southeast of Hong Kong. The acquisition of this block heralded a new phase for Empyrean when it became an operator with 100% of the exploration rights of the permit during the exploration phase of the project. In the event of a commercial discovery, CNOOC will have a back in right to 51% of the permit.

Jade Prospect Drill Program

In April 2022, the Company commenced the drilling of the LH 17-2-1 well to test the first of the three prospects noted above, the Jade Prospect in Block 29/11, offshore China.

On 10 April 2022 LH 17-2-1 spudded and on 27 April 2022 reached final total depth of 2,849 metres in Zhuhai Sandstone formation. The interpretation from LWD and mud logging data indicated no oil pay in the target reservoir which was confirmed by wireline logs. The Company successfully operated an offshore exploration and drilling program without any operational or environmental issues.

Post Jade Well Analysis and Implications for Topaz Prospect

Following the Jade drilling program, comprehensive post well analysis by Empyrean and CNOOC confirmed the Jade well intersected carbonate reservoir as prognosed with better parameters than pre-drill estimates with total thickness of 292m and porosity in the range of 25 to 27%. In addition, the Jade well penetrated thick and effective regional seal facies and the reservoir top was encountered within the depth conversion range. These parameters have now been more confidently mapped across Empyrean's 3D data set.

The Jade well failed due to lack of access to effective migration pathways. Given oil migration to the Topaz Prospect is now identified as the key risk, the Company's pre drill exploration efforts are focusing on mitigating this risk. Reservoir, seal and trap validity of the Topaz prospect have been enhanced by the Jade well data.

Entering of Second Phase of Exploration

Being able to combine excellent quality 3D seismic data with the confirmed well data and post well analysis has resulted in the improved validity of the Topaz prospect as a robust and large drilling target (approximately 891 million barrels in place (P10) per below table). Based on post drill technical evaluation, and CNOOC-assisted migration pathways assessment, Empyrean decided to enter the second phase of exploration and drill the larger Topaz prospect, which is targeted to occur in 2024.

Block 29/11 Oil in place (MMbbl) audited by GCA

 
 Prospect    P90   P50   P10   Mean   GCoS 
   Topaz     211   434   891   506    30% 
            ----  ----  ----  -----  ----- 
   Pearl     38    121   302   153    15% 
            ----  ----  ----  -----  ----- 
 

Current Activities

Empyrean is conducting two further key technical projects that capitalise on the excellent quality 3D seismic acquired by the Company over the permit, shared regional 3D seismic that CNOOC has and additional physical well data of both Empyrean and CNOOC.

These projects are designed to help address and mitigate the remaining primary geological risk at Topaz - oil migration into the Topaz trap.

Firstly, joint with CNOOC, Empyrean is completing a regional oil migration study. CNOOC bring excellence in basin modelling expertise along with crucial regional data that augments the data Empyrean has on Block 29/11. The regional data includes temperature, pressure, timing of oil maturation, and successful oil migration pathway mapping. The project will map oil migration from the proven source rock south west of Block 29/11 that charges the four CNOOC oil discoveries (immediately west of Block 29/11 and Topaz) and extend this into Block 29/11 and map these migration pathways to Topaz.

In addition, similar work will be conducted from a new source/kitchen located entirely within Block 29/11 and oil migration pathways will be mapped to Topaz. This project is expected to be completed in the immediate future.

Secondly, Empyrean is conducting a 3D simultaneous seismic inversion project focussing on Topaz. This project is utilising the oil properties, reservoir temperature, reservoir pressure and water salinity data from CNOOC oil discovery wells combined with reservoir porosity and mineralogical data from Empyrean well logs and core to maximise the effectiveness of the inversion project outcomes.

This project is being conducted in two phases. The aim of Phase I is to assess whether an oil bearing reservoir case can be distinguished from water bearing reservoir in the elastic property domain of seismic inversion. Phase 2 involves inverting the entire 3D seismic data and will generate several datasets for the elastic properties. These datasets will be analysed for high grading the Topaz prospect.

The 3D seismic inversion project is expected to be completed in the immediate future.

Cautionary Statement: The volumes presented in this announcement are STOIIP estimates only. A recovery factor needs to be applied to the undiscovered STOIIP estimates based on the application of a future development project. The subsequent estimates, post the application of a recovery factor, will have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially movable hydrocarbons.

Duyung PSC, Indonesia (8.5% WI)

Background

In April 2017, Empyrean acquired a 10% shareholding in WNEL from Conrad Petroleum (now Conrad Asia Energy Ltd), which held a 100% Participating Interest in the Duyung Production Sharing Contract (" Duyung PSC") in offshore Indonesia and is the operator of the Duyung PSC. The Duyung PSC covers an offshore permit of approximately 1,100km2 in the prolific West Natuna Basin. The main asset in the permit is the Mako shallow gas field that was discovered in 2017, and comprehensively appraised in 2019.

In early 2019, both the operator, Conrad, and Empyrean divested part of their interest in the Duyung PSC to AIM-listed Coro Energy Plc. Following the transaction, Empyrean's interest reduced from 10% to 8.5% interest in May 2020, having received cash and shares from Coro.

During October and November 2019, a highly successful appraisal drilling campaign was conducted in the Duyung PSC. The appraisal wells confirmed the field-wide presence of excellent quality gas in the intra-Muda reservoir sands of the Mako Gas Field.

Revised Plan of Development

In September 2022, Empyrean announced that the partners in the Duyung PSC have approved the revised PoD and have secured alignment with SKK Migas on the plan. The PoD was then submitted to the Indonesian Ministry of Energy and Mineral Resources for approval, which was duly received in November 2022, marking a major milestone on the pathway to developing this significant pipeline quality methane gas resource. This allowed the operator Conrad to focus on its stated objective of working with the Government of Indonesia to complete GSA negotiations at the earliest opportunity.

The revised Mako PoD is based on field Contingent Resources of 297 billion cubic feet (net attributable to 100% of the Duyung PSC Joint Venture) and a daily production of 120 MMscf/d, consistent with the GCA competent persons report dated 26 August 2022, details of which were also announced by the Company on 9 September 2022. The Mako Gas Project resource is currently the largest undeveloped gas field in South Natuna Sea.

Current Activities

In September 2023 Empyrean announced that Conrads wholly owned subsidiary, West Natuna Exploration Ltd ("WNEL") has signed non-binding key terms with Sembcorp Gas Pte Ltd, a Singapore based major gas buyer, that have been endorsed by SKK Migas - the petroleum upstream regulator in Indonesia ("SKK Migas"), for a first long-term gas sales agreement for the Mako gas field. The Terms Agreement for the supply of gas from the Natuna Sea underpins the commercial development of the Mako gas field providing secure and reliable gas that is less carbon intensive than LNG. The key terms relate to approved gas production from Mako commencing in 2025 until the end of the Duyung PSC in 2037 for a total sales gas volume (100%) of c 293 Bcf with potential to increase to c 392 Bcf (100%). Gas sales will be priced against Brent oil.

The joint venture is now focused on finalising a gas sales agreement.

Conrad continues to advance the sell down process with a global investment bank in order to fund the development of Mako. Bids are expected to be received by the end of calendar year 2023.

The Mako Gas Field is located close to the West Natuna pipeline system and gas from the field can be marketed to buyers in both Indonesia and in Singapore.

Multi Project Farm-in in Sacramento Basin, California (25%-30% WI)

There were no significant activities conducted during the year however the Company will continue to work with its joint venture partners in reviewing and assessing any further technical and commercial opportunities as they relate to the project.

The information contained in this report was completed and reviewed by the Company's Executive Director (Technical), Mr Gajendra (Gaz) Bisht, who has over 34 years' experience as a petroleum geoscientist.

Definitions

2C: Contingent resources are quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable. The range of uncertainty is expressed as 1C (low), 2C (best) and 3C (high).

Bcf: Billions of cubic feet

MMbbl : Million Barrels of Oil

*Cautionary Statement: The estimated quantities of oil that may potentially be recovered by the application of a future development project relates to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially movable hydrocarbons.

Gajendra (Gaz) Bisht M.Sc. (Tech) in Applied Geology

Executive Director (Technical)

18 December 2023

Statement of Comprehensive Income

For the Period Ended 30 September 2023

 
                                                                              Year 
                                                                             Ended 
                                                  6 Months to 30          31 March 
                                               September (unaudited)     (audited) 
                                                                       ----------- 
                                                   2023          2022         2023 
                                     Notes      US$'000       US$'000      US$'000 
 
 Revenue                                              -             -            - 
                                            -----------  ------------  ----------- 
 
 Administrative expenditure 
 Administrative expenses                          (233)         (201)        (382) 
 Compliance fees                                   (76)         (121)        (263) 
 Directors' remuneration                          (197)         (186)        (362) 
 Foreign exchange differences                        52           388          197 
 Impairment - exploration and 
  evaluation assets                    3            (2)      (22,097)     (17,030) 
 Total administrative expenditure                 (456)      (22,217)     (17,840) 
 
 Operating loss                                   (456)      (22,217)     (17,840) 
 
 Finance income/(expense)                            20       (1,888)      (2,955) 
 
 Loss from continuing operations 
  before taxation                                 (436)      (24,105)     (20,795) 
 Tax expense in current period                      (1)           (1)          (1) 
                                            -----------  ------------  ----------- 
 
 Loss from continuing operations 
  after taxation                                  (437)      (24,106)     (20,796) 
                                            -----------  ------------  ----------- 
 
 Total comprehensive loss 
  for the year                                    (437)      (24,106)     (20,796) 
                                            ===========  ============  =========== 
 
 Loss per share from continuing 
  operations (expressed in cents) 
 
   *    Basic                          2        (0.06)c       (3.22)c      (2.71)c 
 
   *    Diluted                        2        (0.06)c       (3.22)c      (2.71)c 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Statement of Financial Position

As at 30 September 2023

 
                                                                              Year 
                                                                             Ended 
                                                  6 Months to 30          31 March 
                                               September (unaudited)     (audited) 
                                                                       ----------- 
                                                    2023         2022         2023 
                                     Notes       US$'000      US$'000      US$'000 
 Assets 
 Non-Current Assets 
 Exploration and evaluation 
  assets                               3          11,181        4,417       10,635 
 Total non-current assets                         11,181        4,417       10,635 
 
 Current Assets 
 Trade and other receivables                          24           50           38 
 Cash and cash equivalents                           636          800           83 
                                            ------------  -----------  ----------- 
 Total current assets                                660          850          121 
 
 Liabilities 
 Current Liabilities 
 Trade and other payables                          2,203        2,160        4,224 
 Provisions                                          159          140          159 
 Convertible loan notes                4           5,621        3,258        4,076 
 Derivative financial liabilities                      -          722            - 
 Total current liabilities                         7,983        6,280        8,459 
 
 Net Current Liabilities                         (7,323)      (5,430)      (8,338) 
                                            ------------  -----------  ----------- 
 Net Assets/(Liabilities)                          3,858      (1,013)        2,297 
                                            ============  ===========  =========== 
 
 Shareholders' Equity 
 Share capital                         5           2,664        2,170        2,170 
 Share premium reserve                            46,744       45,319       45,319 
 Warrant and share based payment 
  reserve                                             79          598           73 
 Retained losses                                (45,629)     (49,100)     (45,265) 
                                            ------------  -----------  ----------- 
 Total Equity                                      3,858      (1,013)        2,297 
                                            ============  ===========  =========== 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Statement of Cash Flows

For the Period Ended 30 September 2023

 
                                                                           Year Ended 
                                                     6 Months to 30          31 March 
                                                  September (unaudited)     (audited) 
                                               -------------------------  ----------- 
                                                       2023         2022         2023 
                                       Notes        US$'000      US$'000      US$'000 
 Operating Activities 
 Payments for operating activities                    (433)        (591)      (1,126) 
 Net cash outflow from operating 
  activities                                          (433)        (591)      (1,126) 
 
 Investing Activities 
 P ayments for exploration and 
  evaluation                                          (860)      (1,045)      (1,227) 
 Net cash outflow from investing 
  activities                                          (860)      (1,045)      (1,227) 
 
 Financing Activities 
 Issue of ordinary share capital                      1,905        2,268        2,268 
 Proceeds from exercise of warrants                       -          233          233 
 Payment of finance costs                              (29)          (8)          (8) 
 Payment of equity issue costs                         (30)         (76)         (76) 
                                               ------------  -----------  ----------- 
 Net cash inflow from financing 
  activities                                          1,846        2,417        2,417 
 
 Net increase/(decrease) in cash 
  and cash equivalents                                  553          781           64 
 Cash and cash equivalents at 
  the start of the year                                  83           19           19 
 Forex loss on cash held                                  -            -            - 
                                               ------------  -----------  ----------- 
 
 Cash and cash equivalents at 
  the end of the period                                 636          800           83 
                                               ============  ===========  =========== 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Statement of Changes in Equity

For the Period Ended 30 September 2023

 
                               Share      Share     Warrant    Retained    Total 
                               Capital    Premium    and SBP     Loss      Equity 
                                          Reserve    Reserve 
                              US$'000    US$'000    US$'000    US$'000    US$'000 
 
 Balance at 1 April 
  2022                           1,809     41,285        576   (24,994)     18,676 
                             =========  =========  =========  =========  ========= 
 
 Loss after tax for 
  the period                         -          -          -   (24,106)   (24,106) 
 Total comprehensive 
  loss for the period                -          -          -   (24,106)   (24,106) 
                             ---------  ---------  ---------  --------- 
 Contributions by and 
  distributions to owners 
 Shares and warrants 
  issued                           307      1,961          -          -      2,268 
 Equity issue costs                 49      1,921          -          -      1,970 
 Share-based payment 
  expense                            5        228          -          -        233 
 Share-based payment 
  expense                            -          -         22          -         22 
                             ---------  ---------  ---------  ---------  --------- 
 Total contributions 
  by and distributions 
  to owners                        361      4,034         22          -      4,417 
                             ---------  ---------  ---------  ---------  --------- 
 
 Balance at 30 September 
  2022                           2,170     45,319        598   (49,100)    (1,013) 
                             =========  =========  =========  =========  ========= 
 
 Balance at 1 April 
  2022                           1,809     41,285        576   (24,994)     18,676 
                             =========  =========  =========  =========  ========= 
 
 Loss after tax for 
  the year                           -          -          -   (20,796)   (20,796) 
 Total comprehensive 
  loss for the year                  -          -          -   (20,796)   (20,796) 
                             ---------  ---------  ---------  --------- 
 Contributions by and 
  distributions to owners 
 Shares and warrants 
  issued                           307      1,961          -          -      2,268 
 Partial conversion 
  of convertible note               49      1,921          -          -      1,970 
 Exercise/expiry of 
  warrants                           5        228      (525)        525        233 
 Equity issue costs                  -       (76)          -          -       (76) 
 Issue of placement                  -          -          -          -          - 
  warrants 
 Share-based payment 
  expense                            -          -         22          -         22 
 Total contributions 
  by and distributions 
  to owners                        361      4,034      (503)        525      4,417 
 
 Balance at 1 April 
  2023                           2,170     45,319         73   (45,265)      2,297 
                             =========  =========  =========  =========  ========= 
 
 Loss after tax for 
  the period                         -          -          -      (437)      (437) 
                             ---------  ---------  ---------  ---------  --------- 
 Total comprehensive 
  loss for the period                -          -          -      (437)      (437) 
                             ---------  ---------  ---------  ---------  --------- 
 Contributions by and 
  distributions to owners 
 Shares and warrants 
  issued                           483      1,450          -          -      1,934 
 Exercise/expiry of 
  warrants                           -          -       (73)         73          - 
 Equity issue costs                  -       (58)          -          -       (58) 
 Share-based payment 
  expense                           11         33         79          -        123 
 Total contributions 
  by and distributions 
  to owners                        494      1,425          6         73      1,998 
                             ---------  ---------  ---------  --------- 
 
 Balance at 30 September 
  2023                           2,664     46,744         79   (45,629)      3,858 
                             =========  =========  =========  =========  ========= 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Notes to the Financial Statements

For the Period Ended 30 September 2023

Basis of preparation

The Company's condensed interim financial statements for the six months ended 30 September 2023 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom and Companies Act 2006. The principal accounting policies are summarised below. The financial report is presented in the functional currency, US dollars and all values are shown in thousands of US dollars (US$'000). The financial statements have been prepared on a historical cost basis and fair value for certain assets and liabilities. The same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the Company's latest audited financial statements for the year ended 31 March 2023.

The financial information for the period ended 30 September 2023 does not constitute the full statutory accounts for that period. They have not been reviewed by the Company's auditor. The Annual Report and financial statements for the year ended 31 March 2023 have been filed with the Registrar of Companies. The independent auditor's report on the Annual Report and financial statements was unqualified and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006, but did draw attention to a material uncertainty relating to going concern.

Nature of business

The Company is a public limited company incorporated and domiciled in England and Wales. The address of the registered office is 2(nd) Floor, 38-43 Lincoln's Inn Fields, London, WC2A 3PE. The Company is in the business of financing the exploration, development and production of energy resource projects in regions with energy hungry markets close to existing infrastructure. The Company has typically focused on non-operating working interest positions in projects that have drill ready targets that substantially short cut the life-cycle of hydrocarbon projects by entering the project after exploration concept, initial exploration and drill target identification work has largely been completed.

Going concern

The Company's principal activity during the period has been the development of its exploration projects. The Company had a cash balance of US$0.64 million at 30 September 2023 (31 March 2023: US$0.83 million) and made a loss after income tax of US$0.44 million (31 March 2023 loss of US$20.80 million).

The Directors have prepared cash flow forecasts for the Company covering the period to 31 December 2024 and these demonstrate that the Company will require further funding within the next 12 months. In June 2022, the Company entered into an agreement with CNOOC to drill an exploration well on the Topaz prospect in China, by 12 June 2024, which includes a payment of US$250,000 to CNOOC. It is estimated that the cost of drilling this well would be approximately US$12 million. The Directors note that if the well commitment is not met in the timeframe advised then either a renegotiation of the commitment timing will be required or the licence could be relinquished.

In May 2023 US$1.9 million was raised through an equity placement for the completion of joint regional oil migration and 3D seismic inversion studies at Topaz, ongoing prospect, licensing fees and permit costs, post Jade well consultancy, analysis and residual exploration costs, front-end engineering design ("FEED"), studies and surveys at Mako - including gas processing and export gas tie in at the Kakap KF Platform and for general working capital requirements.

The Company has also renegotiated the terms of the Convertible Note as detailed in the AIM announcement dated 30 May 2023. The Convertible Note is secured by a senior first ranking charge over the Company, including its 8.5% interest in the Duyung PSC and Mako Gas Field.

However, in order to meet the well commitment at Topaz and also to meet the repayment terms of the Convertible Note, the Company is required to raise further funding either through equity or the sale of assets and as at the date of this report the necessary funds are not in place. The Directors are however optimistic that the full funding commitments for the Topaz well and the repayment of the Convertible Note will be met, having a successful track record of equity (and debt) and in particular with the prospect of monetising its interest in Mako through the current sell down process.

It is the belief of the Board that there are likely value catalysts throughout the next 12 months leading up to the intend drilling of the Topaz Prospect in 2024 - including maximising the value of its interest at the Mako Gas field through the current sell down process and the completion of the GSA and also through the conclusion of important de-risking activities currently being conducted prior to the drilling of the Topaz Prospect.

The Directors have therefore concluded that it is appropriate to prepare the Company's financial statements on a going concern basis, however, in the absence of additional funding being in place at the date of this report, these conditions indicate the existence of a material uncertainty which may cast significant doubt over the Company's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

   Note 1.    Segmental Analysis 
 
 The Directors consider the Company to have three geographical segments, 
  being China (Block 29/11 project), Indonesia (Duyung PSC project) 
  and North America (Sacramento Basin project), which are all currently 
  in the exploration and evaluation phase. Corporate costs relate 
  to the administration and financing costs of the Company and are 
  not directly attributable to the individual projects. The Company's 
  registered office is located in the United Kingdom. 
   Details                               China   Indonesia       USA   Corporate     Total 
                                        US$'000     US$'000   US$'000     US$'000   US$'000 
    30 September 2023 
    Revenue from continued operations         -           -         -           -         - 
    Segment result 
    Unallocated corporate expenses            -           -         -       (454)     (454) 
                                       --------  ----------  --------  ----------  -------- 
    Operating loss                            -           -         -       (454)     (454) 
    Finance income/(expense)                  -           -         -          20        20 
    Impairment of oil and gas 
     properties                               -           -       (2)           -       (2) 
    Loss before taxation                      -           -       (2)       (434)     (436) 
    Tax expense in current period             -           -         -         (1)       (1) 
                                       --------  ----------  --------  ----------  -------- 
    Loss after taxation                                   -       (2)       (435)     (437) 
                                       --------  ----------  --------  ----------  -------- 
    Total comprehensive loss for 
     the financial period                                 -       (2)       (435)     (437) 
                                       ========  ==========  ========  ==========  ======== 
 
    Segment assets                        6,104       5,077         -           -    11,181 
    Unallocated corporate assets              -           -         -         660       660 
                                       --------  ----------  --------  ----------  -------- 
    Total assets                          6,104       5,077         -         660    11,841 
                                       ========  ==========  ========  ==========  ======== 
 
    Segment liabilities                       -           -         -           -         - 
    Unallocated corporate liabilities         -           -         -       7,983     7,983 
                                       --------  ----------  --------  ----------  -------- 
    Total liabilities                         -           -         -       7,983     7,983 
   ----------------------------------  --------  ----------  --------  ----------  -------- 
 
    Details                              China   Indonesia       USA   Corporate      Total 
                                       US$'000     US$'000   US$'000     US$'000    US$'000 
    30 September 2022 
    Revenue from continued                   -           -         -           -          - 
    operations 
    Segment result 
    Unallocated corporate expenses           -           -         -       (120)      (120) 
                                     ---------  ----------  --------  ----------  --------- 
    Operating loss                           -           -         -       (120)      (120) 
    Finance expense                          -           -         -     (1,888)    (1,888) 
    Impairment of oil and gas 
     properties                       (22,069)           -      (28)           -   (22,097) 
    Loss before taxation              (22,069)           -      (28)     (1,888)   (24,105) 
    Tax expense in current period            -           -         -         (1)        (1) 
                                     ---------  ----------  --------  ----------  --------- 
    Loss after taxation               (22,069)           -      (28)     (2,009)   (24,106) 
                                     ---------  ----------  --------  ----------  --------- 
    Total comprehensive loss for 
     the financial period             (22,069)           -      (28)     (2,009)   (24,106) 
                                     =========  ==========  ========  ==========  ========= 
 
    Segment assets                           -       4,417         -           -      4,417 
    Unallocated corporate assets             -           -         -         850        850 
                                     ---------  ----------  --------  ----------  --------- 
    Total assets                             -       4,417         -         850      5,267 
                                     =========  ==========  ========  ==========  ========= 
 
    Segment liabilities                      -           -         -           -          - 
    Unallocated corporate 
     liabilities                             -           -         -       6,280      6,280 
                                     ---------  ----------  --------  ----------  --------- 
    Total liabilities                        -           -         -       6,280      6,280 
   --------------------------------  ---------  ----------  --------  ----------  --------- 
 
 
 Details                                    China   Indonesia         USA     Corporate      Total 
                                          US$'000     US$'000     US$'000       US$'000    US$'000 
 31 March 2023 
 Unallocated corporate expenses                 -                -          -     (810)      (810) 
                                        ---------  ---------------  ---------  --------  --------- 
 Operating loss                                 -                -          -     (810)      (810) 
 Finance expense                                -                -          -   (2,955)    (2,955) 
 Impairment of oil and gas properties    (16,998)                -       (32)         -   (17,795) 
 Cyber fraud loss                               -                -          -         -    (1,981) 
 Loss before taxation                    (16,998)                -       (32)   (3,765)   (20,795) 
 Tax expense in current year                    -                -          -       (1)        (1) 
                                        ---------  ---------------  ---------  --------  --------- 
 Loss after taxation                     (16,998)                -       (32)   (3,766)   (20,796) 
                                        ---------  ---------------  ---------  --------  --------- 
 Total comprehensive loss for 
  the financial year                     (16,998)                -       (32)   (3,766)   (20,796) 
                                        =========  ===============  =========  ========  ========= 
 
 Segment assets                             5,958            4,677          -         -     10,635 
 Unallocated corporate assets                   -                -          -       121        121 
                                        ---------  ---------------  ---------  --------  --------- 
 Total assets                               5,958            4,677          -       121     10,756 
                                        =========  ===============  =========  ========  ========= 
 
 Segment liabilities                            -                -          -         -          - 
 Unallocated corporate liabilities              -                -          -     8,459      8,459 
                                        ---------  ---------------  ---------  --------  --------- 
 Total liabilities                              -                -          -     8,459      8,459 
--------------------------------------  ---------  ---------------  ---------  --------  --------- 
 
 
   Note 2.    Loss Per Share 

The basic loss per share is derived by dividing the loss after taxation for the period attributable to ordinary shareholders by the weighted average number of shares on issue being 904,491,535 (2022: 747,642,305).

 
                                                                                         Year Ended 
                                                6 Months to 30 September                   31 March 
                                                       (unaudited)                        (audited) 
                                          ===================================  ==================== 
                                                     2023                2022                  2023 
 Loss per share from continuing 
  operations 
 Loss after taxation from continuing         US$(437,000)     US$(24,106,000)       US$(20,796,000) 
  operations 
 Loss per share - basic                           (0.06)c             (3.22)c               (2,71)c 
 
 Loss after taxation from continuing 
  operations adjusted for dilutive           US$(437,000)     US$(24,106,000)       US$(20,796,000) 
  effects 
 Loss per share - diluted                         (0.06)c             (3.22)c               (2,71)c 
 
 
 

For the current and prior financial periods the exercise of the options is anti-dilutive and as such the diluted loss per share is the same as the basic loss per share. Details of the potentially issuable shares that could dilute earnings per share in future periods are set out in Note 5.

   Note 3.    Oil and Gas Properties: Exploration and Evaluation 
 
                                                         Year Ended 
                             6 Months to 30 September      31 March 
                                    (unaudited)           (audited) 
                           ===========================  =========== 
                                   2023           2022         2023 
                                US$'000        US$'000      US$'000 
 
 Balance brought forward         10,635         24,907       24,907 
 Additions(a)                       548          1,607        2,758 
 Impairment(b)(c)(d)                (2)       (22,097)     (17,030) 
                           ------------  -------------  ----------- 
 Net book value                  11,181          4,417       10,635 
                           ============  =============  =========== 
 
 

(a) The Company was awarded its permit in China in December 2016. Block 29/11 is located in the Pearl River Mouth Basin, offshore China. Empyrean is operator with 100% of the exploration right of the Permit during the exploration phase of the project. In May 2017, the Company acquired a working interest in the Sacramento Basin, California. Empyrean entered into a joint project with ASX-listed Sacgasco Limited, to test a group of projects in the Sacramento Basin, California, including two mature, multi-TcF gas prospects in Dempsey (EME 30%) and Alvares (EME 25%) and also further identified follow up prospects along the Dempsey trend (EME 30%). Please refer to the Operational Review for further information on exploration and evaluation performed during the period.

(b) Empyrean and its China Block 29/11 partner CNOOC, along with its technical service providers CNOOC Enertech and COSL, completed significant pre-drilling operational, technical and permitting work throughout the 2022 financial year to enable to safe drilling, although ultimately unsuccessful drilling of the Jade prospect in April 2022. As a result of the unsuccessful well at Jade, Empyrean provided for impairment against Jade prospect costs and the dry hole costs associated with the Jade drilling program, together being US$17.0 million as at 31 March 2023. Post-well analysis at Jade however has confirmed reservoir quality is better than pre-drill estimates with regional seal confirmed and the depth conversion approach validated. As a part of post-well evaluation, CNOOC geochemical and basin modelling experts together with Empyrean have interpreted the critical elements of effective regional oil migration pathways-leading to positive implications for the Topaz prospect, and ultimately the decision to proceed with the second phase of exploration at Block 29/11, being the drilling of the Topaz Prospect before June 2024.

(c) While the Company will continue to work with its joint venture partners in reviewing and assessing any further technical and commercial opportunities as they relate to the Sacramento Basin project, particularly in light of strong gas prices for gas sales in the region, it has not budgeted for further substantive exploration expenditure. The Company has continued to fully impair the carrying value of the asset at 30 September 2023.

 
 
 

(d) In light of current market conditions, little or no work has been completed on the Riverbend or Eagle Oil projects in the period and no substantial project work is forecast for either project in 2022/23 whilst the Company focuses on other projects. Whilst the Company maintains legal title it has continued to fully impair the carrying value of the asset at 30 September 2023.

 
 Project                       Operator            Working         2023        2022 
                                                   Interest    Carrying    Carrying 
                                                                  Value       Value 
                                                                US$'000     US$'000 
 Exploration and evaluation 
 China Block 29/11             Empyrean Energy      100%*         6,104           - 
 Sacramento Basin              Sacgasco            25-30%             -           - 
 Duyung PSC                    Conrad               8.5%          5,077       4,417 
 Riverbend                     Huff Energy           10%              -           - 
 Eagle Oil Pool Development    Strata-X            58.084%            -           - 
                                                             ----------  ---------- 
                                                                 11,181       4,417 
                                                             ==========  ========== 
 
 
 *In the event of a commercial discovery, and subject to the Company 
  entering PSC, CNOOC Limited will have a back in right to 51% of 
  the permit. As at the date of these financial statements no commercial 
  discovery has been made. 
 
   Note 4.        Convertible Loan Notes 
 
                                                                   Year Ended 
                                       6 Months to 30 September      31 March 
                                              (unaudited)           (audited) 
                                     ===========================  =========== 
                                              2023          2022         2023 
                                           US$'000       US$'000      US$'000 
 (a) Convertible Loan Note - 
  Original 
 Opening balance                                 -         4,125        4,125 
 Conversions                                     -       (1,970)      (1,970) 
 Costs of finance                                -           121          121 
 Foreign exchange gain                           -         (133)        (133) 
 Extinguishment on substantial 
  modification                                   -       (2,143)      (2,143) 
 Convertible Loan Note - Original                -             -            - 
                                     =============  ============  =========== 
 
 (b) Convertible Loan Note - 
  Modification 1 
 Opening balance                             4,076             -            - 
 Recognition of modified liability 
  1                                              -         2,637        2,637 
 Loss on substantial modification                -         1,369        1,369 
 Costs of finance                                -         (268)          185 
 Foreign exchange loss/(gain)                   12         (480)        (115) 
 Extinguishment on substantial             (4,088)             -            - 
  modification 
 Total Convertible Loan Note 
  - Modification 1                               -         3,258        4,076 
                                     =============  ============  =========== 
 
 (c) Convertible Loan Note - 
  Modification 2 
 Opening balance                                 -             -            - 
 Recognition of modified liability           6,544             -            - 
  2 
 Gain on substantial modification            (845)             -            - 
 Costs of finance                             (29)             -            - 
 Foreign exchange gain                        (49)             -            - 
 Total Convertible Loan Note                 5,621             -            - 
  - Modification 2 
-----------------------------------  -------------  ------------ 
 

(a) In December 2021, the Company announced that it had entered into a Convertible Loan Note Agreement with a Melbourne-based investment fund (the "Lender"), pursuant to which the Company issued a convertible loan note to the Lender and received gross proceeds of GBP4.0 million (the "Convertible Note").

(b) As announced in May 2022, the Company and the Lender then amended the key repayment terms of the Convertible Note, which at that time included the right by the Lender to redeem the Convertible Note within 5 business days of the announcement of the results of the Jade well at Block 29/11. The face value of the loan notes was reset to GBP3.3m with interest to commence and accrue at GBP330,000 per calendar month from 1 December 2022.

(c) In May 2023, it was announced that the Company and the Lender have, in conjunction with and conditional upon the completion of the Subscription, now reached agreement on amended key terms to the Convertible Note to allow the sales process for Mako to complete. The key terms of the amendment are as follows:

1. The parties have agreed a moratorium of accrual interest on the Convertible Note until 31 December 2023 - interest will accrue thereafter at a rate of 20% p.a.;

   2.    The conversion price on the Convertible Note has been reduced from 8p to 2.5p per Share; 

3. The face value of the Convertible Note has been reduced from GBP5.28m (accrued to the end of May 2023) to GBP4.6 million (to be repaid from Empyrean's share of the proceeds from Mako sell down process); and

4. Empyrean will pay the Lender 15% of the proceeds from its share in the Mako sell down process.

   Note 5.    Share Capital 
 
                                                                                     Year Ended 
                                                        6 Months to 30 September       31 March 
                                                               (unaudited)            (audited) 
                                                      ===========================  ============ 
                                                               2023          2022          2023 
                                                            US$'000       US$'000       US$'000 
 
 985,470,767 (2022: 788,431,892 ) ordinary 
  shares of 0.2p each                                         2,664         2,170         2,170 
                                                      -------------  ------------  ------------ 
 
                                                               2023          2022          2023 
                                                                No.           No.           No. 
 Fully Paid Ordinary Shares of 0.2p 
  each - Number of Shares 
 At the beginning of the reporting 
  period                                                788,431,892   646,070,780   646,070,780 
 Shares issued during the period: 
 
        *    Placements                                 189,753,783   121,750,001   121,750,001 
                                                          4,397,592             -             - 
        *    Salary sacrifice shares 
                                                          2,887,500             -             - 
        *    Advisor shares 
 
        *    Partial conversion of Convertible Note               -    18,750,000    18,750,000 
 
        *    Exercise of warrants                                 -     1,861,111     1,861,111 
                                                      -------------  ------------  ------------ 
 Total at the end of the reporting 
  period                                                985,470,767   788,431,892   788,431,892 
----------------------------------------------------  -------------  ------------  ------------ 
 
 
 
                                                          2023      2022      2023 
                                                       US$'000   US$'000   US$'000 
 Fully Paid Ordinary Shares of 0.2p 
  each - Value of Shares 
 At the beginning of the reporting 
  period                                                 2,170     1,809     1,809 
 Shares issued during the period: 
 
        *    Placements                                    476       307       307 
                                                            11         -         - 
        *    Salary sacrifice shares 
                                                             7         -         - 
        *    Advisor shares 
 
        *    Partial conversion of Convertible Note          -        49        49 
 
        *    Exercise of warrants                            -         5         5 
                                                      --------  --------  -------- 
 Total at the end of the reporting 
  period                                                 2,664     2,170     2,170 
----------------------------------------------------  --------  --------  -------- 
 

The Companies Act 2006 (as amended) abolishes the requirement for a company to have an authorised share capital. Therefore, the Company has taken advantage of these provisions and has an unlimited authorised share capital.

Each of the ordinary shares carries equal rights and entitles the holder to voting and dividend rights and rights to participate in the profits of the Company and in the event of a return of capital equal rights to participate in any sum being returned to the holders of the ordinary shares. There is no restriction, imposed by the Company, on the ability of the holder of any ordinary share to transfer the ownership, or any of the benefits of ownership, to any other party.

 
 
   Share options and warrants 
 The number and weighted average exercise prices of share 
  options and warrants are as follows: 
 
 
                                       6 Months to 30              6 Months to 30 September 
                                  September 2023 (unaudited)           2022 (unaudited) 
                                =============================  ================================ 
                                 Weighted                         Weighted 
                                  Average          Number          Average           Number 
                                  Exercise       of Options       Exercise         Of Options 
                                   Price        and Warrants        Price         and Warrants 
                                   2023            2023             2022             2022 
 
 Outstanding at the beginning 
  of the period                    GBP0.137         6,558,333        GBP0.116        65,890,916 
 Issued during the period          GBP0.017        12,833,333               -                 - 
 Cancelled during the period       GBP0.137       (6,558,333)        GBP0.113      (53,413,139) 
 Exercised during the period              -                 -        GBP0.096       (1,861,111) 
                                -----------  ----------------  --------------  ---------------- 
 Outstanding at the end of 
  the period                       GBP0.017        12,833,333        GBP0.131        10,616,666 
                                ===========  ================  ==============  ================ 
 
 
 
 
 Valuation and assumptions of options and warrants at 30 September 
  2023 
                                                Incentive         Incentive      Advisor 
                                                 Warrants          Warrants     Warrants 
  Number of options remaining                   5,000,000         5,000,000    2,833,333 
  Grant date                                     29/05/23          29/05/23     29/05/23 
  Expiry date                                    30/05/26          30/05/26     30/05/24 
  Share price                                    GBP0.010          GBP0.010     GBP0.010 
  Exercise price                                 GBP0.015          GBP0.020     GBP0.015 
  Volatility                                         100%              100%         100% 
  Option life                                        3.00              3.00         1.00 
  Expected dividends                                    -                 -            - 
  Risk-free interest rate (based on national 
   government bonds)                                4.45%             4.45%        4.45% 
  -------------------------------------------  ----------  ----------------  ----------- 
 
 
 
  The options and warrants outstanding at 30 September 2023 have 
  an exercise price in the range of GBP0.015 to GBP0.02 (2022: GBP0.075 
  to GBP0.18) and a weighted average remaining contractual life 
  of 2.22 years (2022: 0.57 years). None of the outstanding options 
  and warrants at 30 September are exercisable at period end. 
 
   Note 6.    Events After the Reporting Date 

Significant events post reporting date were as follows:

No matters or circumstances have arisen since the end of the financial period which significantly affected or could significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

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