Empyrean Energy : 31% Uplift in Best Case Gross Prospective (Un-risked) Resources in Block 29/11 Offshore China

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Empyrean Energy PLC - EME 31% Uplift in Prospective Resources in Block 29/11 Released 07:00 06-Jun-2018

RNS Number : 4549Q

Empyrean Energy PLC 06 June 2018

This announcement contains inside informa�on

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

6 June 2018

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

31% Upli� in Best Case Gross Prospec�ve (Un-risked) Resources in Block

29/11 Offshore China

• · Total best case Prospec�ve Resources increased 31% to 774 MMbbl from 591 MMbbl

• · Jade Prospect best case Prospec�ve Resources increased 84% to 190 MMbbl from 103

  MMbbl

• · Topaz Prospect best case Prospec�ve Resources increased 19% to 435 MMbbl from 365

  MMbbl

• · Pearl Prospect best case Prospec�ve Resources increased 21% to 149 MMbbl from 123

MMbbl

Empyrean Energy (EME: AIM), the oil and gas development company with interests in China, Indonesia and the United States, is pleased to announce that comprehensive processing and interpreta�on of the 608km2 of new 3D seismic data that it successfully acquired on its offshore China Block 29/11, for which it holds 100% explora�on rights, during 2017 and announced on 23 August 2017 has now been completed. The analysis has firmed up key prospects which wereini�ally iden�fied by the vintage regional 2D seismic survey and were mapped on the par�ally available (seismic Survey Boat Raw) 3D in September 2017.

Based on the results of the comprehensive processing and interpreta�on of the final 3D data, the prospec�ve (un-risked) resources of the three major high graded prospects have been revised (Table 1). The revised es�mates are higher than previously reported es�mates because of detailed mapping and improved assessment of reservoir parameters. Gross (100%) 'Best' case Prospec�ve Resources combined are es�mated at 774 million barrels of oil ("MMbbl") on an un-risked basis.

Empyrean CEO Tom Kelly commented, "It is pleasing to report con�nued strong progress with our China asset and we are delighted with the significant increase to the prospec�ve resources. Our in-depth work has confirmed the Jade and Topaz prospects as both being highly material opportuni�es with best es�mate Prospec�ve (un-risked) Resources of 625 MMbbl, along with a third exci�ng opportunity at the Pearl prospect. Driven by quality 3D data and known analogues these prospects will be targe�ng reservoir intervals proven by AMACO and CNOOC discoveries immediately north and west of Block 29/11. Put simply, the poten�al size of the prize in China just got materially bigger.

"Together with high impact ac�vity taking place elsewhere across our por�olio, specifically first cash flow from the commencement of commercial gas produc�on at the Dempsey 1-15 well in the Sacramento Basin, onshore California in which we have a 30% interest, this is an exci�ng �me for Empyrean. With this in mind, we look forward to upda�ng our shareholders in due course on further progress."

Table 1:

Following the successful acquisi�on of a large 3D survey with no Health, Safety and Environmental (HSE) issues in August 2017, Empyrean has focused on processing the seismic data op�mally. Empyrean has had regular interac�on with the China Offshore Oil Services Limited (COSL) processing team at all stages of the project. Time (PSTM) and Depth (PSDM) processing of the 3D seismic data was completed in January 2018. The final processed data is of high-quality that has clearly imaged the poten�al reservoirs, faults and deeper basin.

Interpreta�on of the processed data commenced immediately following the comple�on of processing using both internal technical capability provided by experienced Geoscien�st Gaz Bisht and an addi�onal expert consultant Geophysicist that Empyrean contracted specifically for the task. These works have recently been completed.

Arising from the 3D seismic interpreta�on, the Jade and Topaz prospects have developed into be�er defined and very substan�al opportuni�es. The Pearl Prospect, which was a substan�al lead based on the vintage regional 2D seismic has evolved into a substan�al prospect following the 3D. The results indicate that all three prospects are large and are in favourable geological se�ngs.

Given, one of the major challenges with resource es�ma�on rests heavily with an es�ma�on of Gross Rock Volume (GRV), a cri�cal step to reducing the uncertainty of es�ma�ng GRV is to be�er understand and quan�fy velocity field and depth conversion. As a result, two approaches were taken for depth 'conversion of �me' interpreta�on of the seismic marker for the poten�al reservoir top. The resul�ng two GRVs from two structure maps were then combined to generate an industry standard probabilis�c result using Monte Carlo simula�on with 1,000 trials (using Crystal Ball so�ware). This probabilis�c method has produced Gross Prospec�ve (un-risked) Resources as shown below (Table II).

Table 2:

In addi�on, Empyrean has made significant progress on an "Oil Migra�on study" to iden�fy and map effec�ve migra�on of hydrocarbons to the prospects from the proven "Baiyun Sag" hydrocarbon kitchen. China Na�onal Offshore Oil Corpora�on ("CNOOC") (Shenzhen branch) has been highly suppor�ve and coopera�ve during this study. CNOOC technical team shared data and analysis with Empyrean freely and contributed enormously in developing a basin-wide understanding of hydrocarbon source rock, maturity and migra�on pathways.

Empyrean will make a further update with regards to the Oil Migra�on study as soon as it is completed in the near future.

Cau�onary Statement: The es�mated quan��es of oil that may poten�ally be recovered by the applica�on of a future development project relates to undiscovered accumula�ons. These es�mates have both an associated risk of discovery and a risk of development. Further explora�on, appraisal and evalua�on is required to determine the existence of a significant quan�ty of poten�ally movable hydrocarbons.

**ENDS**

St Brides Partners Ltd Lo�e Wadham Frank Buhagiar

Tel: +44 (0) 20 7236 1177

Tel: +44 (0) 20 7236 1177

The informa�on contained in this announcement was completed and reviewed by the Company's Execu�ve Director (Technical) , Mr Gajendra (Gaz) Bisht, who has over 28 years' experience as a petroleum geoscien�st.

Notes to Editors

About Empyrean Energy Plc (LON: EME)

Empyrean is a London AIM listed oil and gas explorer with three poten�ally high impact new projects. Empyrean has a 1800km2 offshore oil permit located in the Pearl River Mouth Basin, China where it has completed 3D seismic in Q3, 2017 to further mature two large oil prospects, Jade and Topaz. Processing and interpreta�on is underway and preliminary internal interpreta�on of the raw seismic data has confirmed the structural validity of the Jade and Topaz prospects and also iden�fied a third significant target named Pearl, which is located north of Topaz. The permit is directly South East of the billion barrel+ Liuhua Oil Field operated by CNOOC and two recent discoveries to the permits West and South further enhance the merit of Jade and Topaz. Empyrean is operator and holds 100% of the explora�on rights through to commercial discovery where CNOOC have a back-in right to 51%.

Empyrean also has a 10% interest in West Natuna Explora�on Limited that holds 100% of the Duyung PSC in offshore Indonesia and is targe�ng the Mako Shallow Gas Discovery that has an independently verified 2C and 3C gas resource of between 430-650 Bcf recoverable gas. Successful tes�ng opera�ons were recently completed at the Mako South-1 Well with 10.9 million cubic feet of gas flow and be�er than expected reservoir quality and mul� Darcy permeability. The operator is currently analysing data with a view to providing a development plan.

Empyrean also has a joint venture with ASX listed Sacgasco Limited on a suite of projects in the Sacramento Basin, onshore California, USA. The package includes two mature, mul�-Tcf gas prospects, 'Dempsey' and 'Alvares', and an Area of Mutual Interest (the "Dempsey Trend AMI") that includes at least three already iden�fied, large Dempsey-style follow up prospects. Dempsey is a large structure mapped with 3D seismic and interpreted by Sacgasco to have the poten�al to hold a prospec�ve resource of over 1 Tcf of gas in up to seven stacked target reservoirs. The joint venture has completed drilling of a 2,970 metre (9,747 fee) combined appraisal and explora�on well; Dempsey 1-15, to evaluate this prospect. Wireline logs confirmed numerous zones for produc�on tes�ng.

Aside from compelling technical merit, the Dempsey-1 well loca�on sits next to exis�ng gas metering and surface infrastructure that is owned by the joint venture. This will allow for any gas discovery to be tested and connected into the local pipeline at rela�vely low cost and in an accelerated �meframe. This early poten�al for short-term cash flow in the event of a commercial discovery would be significant for the joint venture and for the state of California where gas demand is high and approximately 90% of consump�on is imported from otherstates. Gas produced in the Sacramento Basin currently prices at a 10-15% premium to Henry Hub Gas Prices. The joint venture is currently tes�ng the Dempsey Prospect.

Alvares is a large structure mapped with 2D seismic and interpreted by Sacgasco to hold prospec�ve resources of over 2 Tcf es�mated poten�al recoverable gas. A well drilled by American Hunter Explora�on Limited in 1982 for deeper oil intersected 5,000� of gas shows. No valid flow test was conducted due to equipment limita�ons and the deeper oil target failing. However minor gas flows to surface were recorded even with these limita�ons. The possibility of using the exis�ng well bore to sidetrack and get a valid flow test, thus reducing costs will be examined.

The Dempsey Trend AMI is an Area of Mutual Interest extending to approximately 250,000 acres and containing the Dempsey prospect (described above) as well as at least three other, Dempsey-style prospects which have been iden�fied on exis�ng seismic.

www.empyreanenergy.com

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t in Prospective Resources in Block 29/11 - RNS