TIDMEME
RNS Number : 2515K
Empyrean Energy PLC
04 May 2022
This announcement contains inside information
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
Empyrean Energy plc
Block 29/11, China - Proposed drilling of Topaz Prospect
following Jade well results
4 May 2022
Empyrean Energy plc ("Empyrean" or the "Company"), the oil and
gas development company with interests in China, Indonesia and the
United States, provides the following update on Block 29/11
offshore China.
Empyrean is the operator of Block 29/11 in China and has a 100%
working interest during the exploration phase. In the event of a
commercial discovery, its partner CNOOC, may assume a 51%
participating interest in the development and production phase.
Based upon the preliminary assessments of the Jade well results
and the ongoing agreement with its partner, China National Offshore
Oil Company (" CNOOC "), to further cooperate with regards to
follow up post well analysis, it is Empyrean's current intention to
proceed with the second phase of exploration at Block 29/11 and to
participate in the drilling of the Topaz prospect.
Jade Well results - Preliminary interpretation
Final logs have been run with demobilisation of the China
Oilfield Services Limited ("COSL") owned NH9 rig to take place over
the next few days.
The final log data confirmed several elements of the pre-drill
prognosis:
-- 292 metres of excellent quality reservoir was intersected;
-- more than 2330 metres of regional marine clay seal formation; and
-- validity of the trap confirmed by intersecting the reservoir
top within the anticipated depth
Pre-drill, Jade was chosen over Topaz to drill first because it
was a 4-way dip trap with less structural risk, had a slightly
higher geological chance of success and was situated closer to the
proven Bayiun Sag East source rock in the basin. Effective
hydrocarbon charge was recognised as a key geological risk of the
Jade prospect. As a result, comprehensive "gas cloud" analysis of
Empyrean's 3D seismic data as well as that of CNOOC oil discoveries
and dry wells was conducted to help assess the potential for
hydrocarbon charge to the Jade prospect. The drilling of Jade has
proven that there was no oil migration into the Jade trap, yet oil
migration has effectively charged the four CNOOC light oil
discoveries to the immediate west and south-west of Empyrean's
permit. Empyrean has immediately teamed with CNOOC to analyse and
assess the reasons for this and the implications that all of the
data, including the positives and negatives, now have for the
prospectivity at the Topaz prospect, in particular oil migration
pathways.
The Jade (LH 17-2-1) well recorded elevated gas (C1) from 1550
metres to 1800 metres MD which was interpreted pre-drill to be a
"gas cloud" zone. Post-drill analysis of 3D seismic data in light
of the results of the Jade well indicates the presence of gas
clouds over the Jade trap was potentially a result of gas migrating
from the Bayiun Sag East kitchen vertically via a large basinal
fault followed by lateral migration through coarser clays in the
1550 metres to 1800 metres MD zone. Preliminary post-Jade
assessment of the gas clouds over the nearby CNOOC discoveries
indicates that there is no linkage to the basinal faults for those
CNOOC discovery gas clouds. The Topaz prospect has a similar
structural setup to the CNOOC discoveries with no apparent linkage
to basinal faults.
Implications for the Topaz Prospect
The 2017 seismic data analysis matured two prospects - Jade and
Topaz - along the western block boundary. Pre-Jade drilling,
comprehensive analysis confirmed Topaz as a large and genuine
exploration target in Block 29/11, with Gaffney Cline independently
assessing a target in place oil estimate of 506 mmbbls (Mean case)
of oil and an upside of 891 mmbbls (P10 case) with a 30% Geological
Chance of Success ("GCoS").
The Jade well data has validated Post Stack Acoustic Impedance
conclusions for reservoir and seal facies at the Topaz prospect. At
the same time, the penetration of reservoir top within the
pre-drill depth prognosis confirms the reliability of the depth
conversion approach Empyrean used and confirms the trap definition
of the Topaz prospect. As a result, the Jade well results have
helped provide confidence in Reservoir, Trap and Seal of the Topaz
prospect.
Similar to Jade, effective hydrocarbon charge has been
recognised as a key remaining geological risk for the Topaz
prospect.
Jade had relied on relatively long-distance direct oil migration
from Baiyun Sag East source rock that is located over 26 km to the
south. The Topaz prospect relies on more local oil charging
mechanisms. Firstly, it has the potential to be charged by the
newly identified - Baiyun Sag North - located less than 6 km to the
southeast of Topaz. The Baiyun Sag North kitchen was identified by
Empyrean's own 3D seismic data, is entirely covered by this 3D and
provides the mapping of direct migration pathways to the Topaz
prospect. Secondly, cooperation between CNOOC and Empyrean on the
respective data sets shows there is a potential migration pathway
from the CNOOC LH16-2 discovery well spilling on to the Topaz
prospect.
Drilling of the Topaz prospect
Under the PSC, Empyrean must elect to enter the second phase of
exploration period by 12 June 2022. The second phase of exploration
involves the commitment to drill the Topaz prospect before 12 June
2024.
Following the Jade well results, Empyrean has held several
technical meetings, including with the CNOOC technical team in
China, to review the well results and its implications for Block
29/11 prospectivity and, in particular, the pros and cons of the
well results for the much larger Topaz prospect. In this regard,
CNOOC has already been very cooperative in sharing its regional
data and assisting by passing on a greater technical understanding
of the basin.
Based upon these preliminary assessments of the Jade well
results and the ongoing agreement with CNOOC to further cooperate
with regards to follow up post well analysis, it is Empyrean's
current intention to proceed with the second phase of exploration
at Block 29/11 and to participate in the drilling of the Topaz
prospect, subject to availability of financing.
Forward Plan
It is Empyrean's intention to maximise the value of its interest
in the Mako Gas Discovery on the Duyung permit in Indonesia and
position itself for participation in the drilling of the high
impact Topaz prospect. Demand for oil and gas in the South East
Asian region is strong and growing. Demand and prices for pipeline
quality gas that the Mako Gas Discovery offers is strong into the
Singapore energy hub.
China is the largest importer of oil in the world. Exploration
throughout the region has gathered momentum and CNOOC is drilling a
large number of domestic exploration wells. Empyrean is currently
considering its alternatives to funding the Topaz prospect drill
and is preparing a work program that it believes can see the Topaz
well drilled within the next drilling weather window in the Pearl
River Mouth Basin in 1H 2023. Topaz is a slightly shallower target
depth. Given the very large target size at Topaz, Empyrean will
also investigate potential risk share alternatives and farm out
possibilities.
The information contained in this announcement has been reviewed
by Empyrean's Executive Technical director, Gaz Bisht, who has over
31 years' experience as a hydrocarbon geologist and
geoscientist.
Empyrean CEO, Tom Kelly, stated:
"Whilst we are extremely disappointed with the results of the
Jade well, we have made significant investment of resources and
time in systematically maturing the prospectivity of this large
block. Empyrean's early assessment is that the much larger Topaz
prospect remains a world class conventional light oil target that,
based on existing understanding of available data, will be
drilled.
Over the past 6 years, Empyrean has built a deep and strong
relationship with CNOOC and has found an experienced team in CNOOC
EnerTech that, together, has proven to be able to execute a safe
drilling campaign in an offshore environment. The COSL team has
been extremely professional and effective in managing various
aspects of the drilling operations including a Covid-safe campaign.
I would like to thank our partner and consultant teams for their
support and we now look forward to their ongoing assistance with
the proposed drilling of the Topaz prospect."
For further information please contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 6146 5325
Cenkos Securities plc (Nominated Advisor and Broker)
Neil McDonald Tel: +44 (0) 20 7297 8900
Pete Lynch
Pearl Kellie
First Equity (Join Broker)
Jason Robertson Tel: +44 (0) 20 7330 1883
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