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Empire Energy Group Ltd (ASX:EEG) Completes $46.8 Million Capital Raise
EMPIRE COMPLETES $46.8 MILLION CAPITAL RAISE CORNERSTONED BY BRYAN SHEFFIELD AND LIBERTY ENERGY
Sydney, April 17, 2024 AEST (ABN Newswire) - Empire Energy Group Ltd (googlechartASX:EEG) (googlechartEEGUF:OTCMKTS) is pleased to announce that it has received binding firm commitments to raise $39 million (before costs) via a strongly supported two-tranche placement of new fully paid ordinary shares ("Shares") to institutional and sophisticated investors at $0.16 per Share ("Placement").
- Commitments received from existing and new institutional and sophisticated investors for a strongly supported two-tranche placement to raise $39 million
- Bryan Sheffield and Liberty Energy Inc (googlechartNYSE:LBRT) ("Liberty Energy") have demonstrated their support for Empire with each investing US$5 million (~A$7.7 million) in the placement
- Daly Waters, a subsidiary of Formentera Partners (a US based private equity firm founded by Bryan Sheffield) and Liberty Energy have each independently acquired a 2.25% royalty interest in EP187 for US$2.5 million (~A$3.9 million) raising an additional US$5 million (~A$7.7 million).
- Empire is now funded to drill a 3km fracture stimulated horizontal pilot development well in EP187 and to further progress engineering and preparation for installation of Carpentaria Pilot Project surface facilities
- Empire anticipates commencement of commercial production and gas sales in 2025
- Empire Directors have demonstrated their continuing support for Empire by committing to invest an additional $325,000 (subject to shareholder approval)
Comments from Managing Director Alex Underwood:
"The Empire team is delighted to have received the support of key US strategic investors in the Beetaloo Basin, alongside investments from new and existing institutional and sophisticated investors under the placement.
Bryan Sheffield and his team have an outstanding track record of value creation in the US shale sector, and they have made significant investments across the Beetaloo Basin. The strategic alignment being created through Bryan's further investments announced today will be of material value to Empire's shareholders.
Liberty Energy is one of the largest providers of hydraulic fracture stimulation services in the US shale market and they will soon be sending a large frac spread to Australia to service the nascent Beetaloo Basin. Liberty also offers industry leading subsurface engineering services to help their customers 'spiral up' from data to value. Working with Liberty will facilitate improved well productivity and cost efficiency as we move from the exploration phase into the production phase.
We are grateful to Bryan and his team, the Liberty team and existing and new shareholders who have participated in this raise for their support.
The Beetaloo Basin is rapidly approaching a key inflection point which I believe will create substantial value for shareholders. We are now well funded to drill, stimulate and flow test our first pilot development well and to progress our field development plans as we aim to commence gas sales in 2025 into the undersupplied Northern Territory market."
Two-Tranche Placement
Blue Ocean Equities Pty Limited and Morgans Corporate Limited acted as the Joint Lead Managers for the Placement.
Sheffield Holdings LP and Liberty Energy have provided cornerstone support, with each investing US$5 million in the Placement.
Empire Directors have also demonstrated their continuing support for Empire by committing to invest an additional $325,000 (subject to shareholder approval).
Placement Details
Empire will issue a total of 243,750,000 Shares at an issue price of $0.16 per Share to raise $39 million (before costs) under the Placement. The issue price represents a discount of:
- 13.5% to Empire's closing share price on Friday 12 April 2024; and
- 9.3% to the 15-day VWAP prior to the trading halt.
The Shares will be issued in two tranches. The first tranche of 193,321,700 Shares will be issued under the Company's existing placement capacity under Listing Rules 7.1 and 7.1A ("Tranche 1"). It is anticipated that settlement of Tranche 1 will occur on Wednesday 24 April 2024 with the Shares being allotted on Friday 26 April 2024.
The second tranche will be subject to shareholder approval at the Company's Annual General Meeting, which is scheduled to occur on or around Tuesday 28 May 2024 and, if approved, will result in the issuance of 50,428,301 Shares ("Tranche 2"). The settlement of Tranche 2 is anticipated to occur on or around Monday 3 June 2024 and allotment is anticipated to occur on or about Wednesday 5 June 2024.
Sale of EP187 Royalty Interests to Daly Waters and Liberty
Empire has also sold 2.25% overriding royalty interests ("ORRI") over the 110,000 acre Carpentaria Project within EP187 on a net-back basis (same formula as NT Government royalty) for US$2.5 million in cash to each of Daly Waters Royalty, LP and Liberty Energy Australia Pty Limited. Funds raised under the royalty transaction will be applied to the development of the Carpentaria Pilot Project in EP187 and for working capital.
All of Empire's other Northern Territory exploration permits remain free of royalties other than to the Northern Territory Government and traditional owners.
About Empire Energy Group Ltd
Empire Energy (ASX:EEG) (OTCMKTS:EEGUF) is a Sydney based Australian oil and gas company holding 100%-owned and operated assets with unconventional targets in the Northern Territory Beetaloo Sub-basin and central trough of the McArthur Basin.
Empire is an active Beetaloo Sub-basin operator, focused on maturing its assets to production. Following the successful appraisal drilling and flow testing of the Carpentaria-2H and 3H wells in Empire's EP187, Empire is targeting first gas flow in H1 2025 at its Carpentaria Pilot Project. The Pilot has a targeted sales gas rate of up to 25 TJ per day utilising the existing McArthur River Pipeline.
Empire Energy Group Ltd
E: info@empiregp.net
T: +61-2-9251-1846
F: +61-2-9251-0244
WWW: www.empireenergygroup.net
https://www.abnnewswire.net/press/en/124853/Empire-Energy-Group-Ltd-(ASX-EEG)-Completes-$468-Million-Capital-Raise.html
Trading halt for CR: here's the details compliments from Holdtight on the Hotcopper board. 4/16/2024@ 9:46 Australia
$30.8m at 16c.
EEG is Australian oil and gas company holding 100% owned andoperated assets with shale gas targets in located onshore Northern TerritoryBeetaloo Sub-basin and central trough of the McArthur Basinc.
This deal comes on the back of yesterday’s news that EEG hascompleted the sale of its US assets for US$9.1m. Followingcompletion of the sale, upfront cash proceeds of US$5.9 million were receivedby EEG and the existing US Macquarie Bank loan of ~US$4.6 million was repaid infull.
Cornerstone support hasbeen obtained from US investors including binding commitments of:
· US$5M from Bryan Sheffield,who was previously Chairman, CEO and Founder of Parsley Energy Inc., a majorindependent shale player in the Permian Basin, Texas.
· US$5M from Liberty Energywho specialises in hydraulic fracturing services and will bring their knowledgeand expertise to Empire’s Carpentaria project.
o Each of Sheffield and Liberty Energy have signed royalty deeds(each royalty deed entailing a 2.25% overriding royalty interest over EP187 forconsideration of US$2.5 million each). Royalty is calculated in accordance withthe NT Government net-back with deductions limited to 30% of gross revenue.
Verbal commitments from major Australian and US institutions havealso been received pre-launch, so I suspect the book is fully covered. Clearlythere is plenty of interest in the Australian shale assets
https://www.smh.com.au/business/companies/empire-leading-the-charge-in-beetaloo-gas-revolution-20240404-p5fhhn.html#amp_tf=From%20%251%24s&aoh=17122346629166&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.smh.com.au%2Fbusiness%2Fcompanies%2Fempire-leading-the-charge-in-beetaloo-gas-revolution-20240404-p5fhhn.html
Empire leading the charge in Beetaloo gas revolution
By Matt Birney
April 4, 2024 — 3.46pm
There’s a quiet revolution taking place in the Australian gas industry and it’s called the “Beetaloo Basin.”
The quaintly named Beetaloo Basin is a vast tract of land in the Northern Territory that is thought to contain almost biblical-scale accumulations of gas that, in time, could almost single-handedly solve the growing gas crisis in the eastern states.
The Beetaloo geological sub-basin lies 500km south-east of Darwin, covers about 28,000 square kilometres in total and stretches across about 350km from west to east.
Some say the Beetaloo is likely harbouring 500 trillion cubic feet (TCF) of gas. To put that in context, WA’s revered North West Shelf offshore oil and gas field, one of the largest investments ever made in Australian hydrocarbons, has only delivered about 18 TCF of gas over time and now has about 6 TCF of gas left.
Whilst the Beetaloo has not yet produced any gas commercially, the race is on to do so and several notable players now hold ground out there where they are looking to prove up flow rates and get into commercial production.
The leader of that pack is probably ASX-listed Empire Energy, the largest landholder in the basin by far, with an extraordinary 3 million net effective acres of ground under its control.
Perhaps even more extraordinary is the $130m market-capped Empire Energy’s prospective resource estimate of 47TCF of gas on its own ground. Whilst the company still has some work to do to get that resource up to reserve status, any part of that number that converts into reserve would still put the North West Shelf’s 6TCF in the shade.
The Beetaloo has been likened geologically to the unconventional Marcellus shale in eastern America. Prior to 2008 the Marcellus shale was considered to have inconsequential natural gas potential but is now believed to hold the largest volume of recoverable natural gas in the United States.
In 2012, the Marcellus Shale became the leading producer of both shale gas and overall natural gas in the United States. Two years later it was pumping out 14.0 billion cubic feet of gas per day (BCFD) and by 2019 it was responsible for producing 21 BCFD.
A fun fact is that Empire’s landholdings in the Beetaloo are roughly similar in size to core areas within the Marcellus shale. Notably, not even the leading producer of gas in the Marcellus shale, the US$16b EQT Corporation, comes close to the scale of Empire’s holdings with its 1m net acres.
Importantly, Empire’s four stacked shale reservoirs amount to a net thickness of more than 300m in the Carpentaria project, five times thicker than the prolific Marcellus shale suite at about 60m.
All of which begs the question, will the Beetaloo flow commercial gas because if it does, it will have a global impact on gas markets.
Empire says it does. The company has now drilled and stimulated two horizontal wells in the Beetaloo, its Carpentaria 2H and 3H wells. Normalised gas flows came in at 3.5 terajoules per day (TJ/d) per 1000m during testing – a number that Empire describes as “excellent.”
Management says after recent basin-wide appraisal drilling by its own field team in addition to industry heavyweights Origin, Tamboran, Empire and Santos, the project is assessed as being commercially viable.
The next big hurdle that all wanna-be gas producers face is infrastructure – i.e. how will they get their gas to market?
Empire’s Carpentaria project is fortunate when it comes to infrastructure. Its holdings basically smother the gas spur line that runs out to the McArthur River Mine to Empire’s east and Empire has already appointed energy infrastructure firm APA Group to commence pre-engineering studies to hook into the pipeline.
This connection would establish a link from the Beetaloo Basin through to APA’s Amadeus Gas Pipeline that pumps gas into Darwin, Alice Springs and regional centres in the Northern Territory.
The grand plan being developed by Empire and APA is to eventually work out how to connect the Beetaloo to the gas-hungry East Coast markets.
Before that happens however, Empire needs to build a pilot plant to commercially operate its 2H and 3H wells at Carpentaria. In December last year the company acquired a pilot plant from AGL who had no further use for its Rosalind gas plant after winding up its Camden Gas project.
Empire paid $2.5m to AGL for the plant that it says would likely have cost $100m, giving it a massive advantage when it comes to commercialisation. That plant has a maximum capacity of 42 TJ/d, albeit the initial plan is to produce 25 TJ/d from the 2H and 3H wells.
It will still have to spend money getting it to site and hooking it into the McArthur River pipeline and the company says a financial investment decision on that scope of work is now imminent.
Management says the 2H and 3H wells cost about $25m each to build however that number will likely be halved when it starts drilling wells at scale. Each well will produce about $80m worth of gas over its life and the company expects to pay the capex down for a well in just two years.
The opportunity for Empire to scale up its Beetaloo gas production is immense if gas flows end up coming out as expected from the early wells. Empire essentially has a three staged plan; initially produce up to 25TJ a day in phase 1 with first revenues of $110m a year expected by 2025 at plateau.
Phase two will see the company pump out 200TJ/d to supply the east coast of Australia that many say is currently experiencing a gas shortage crisis. The goal from phase 3 is to churn out 1BCF of gas a day and supply the LNG export markets. The company reckons it can land LNG in Tokyo Bay for just US$6.50 MMBtu.
And the rub? Well, Empire’s preliminary financial modelling shows a project net present value for phase 2 coming in at A$2.5b and phase three is showing an NPV of wait for it……A$14.5b.
And with the Marcellus shale’s biggest producer in the USA, EQT Corporation, currently valued at around $16b, maybe that phase three NPV is not so mind-boggling, albeit Empire has a lot of drilling and investing to do first and it will need to have its fair share of lady luck on its side when the gas starts to flow.
One thing seems certain however, if gas does successfully flow at commercial rates out of the Beetaloo, with its foot on 3m acres, Empire will have plenty to sell.
A rich resource bounty, but we need to get it right: Alex Underwood
22:20 Wed 14 Jun 2023
Elisha Newell
Empire Energy Group Ltd
ASX:EEG
OTC:EEGUF
Empire Energy Group Ltd - A rich resource bounty, but we need to get it right: Alex Underwood
Managing director Alex Underwood. Source: Empire Energy.
There’s a gigantic gas opportunity shaping up in Australia’s north and Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) MD Alex Underwood is in the thick of it.
The managing director has been at the helm for five years, transforming the company’s Australian portfolio into the largest acreage position in the NT’s Beetaloo Sub-basin.
Fast forward to today, mere weeks after the Northern Territory Government greenlit fracking in the Beetaloo, and Empire stands on the threshold of a sizeable development opportunity.
In this article:
Back then …
… And now
Gas remains in the mix
Community at the heart
New chapter for the Beetaloo
However, there’s a fine tightrope to walk. While the Beetaloo’s resource bounty represents significant upside, Empire needs to work with the region’s pastoralists and traditional owners to develop a vital asset that creates domestic energy security.
Underwood spoke to Proactive about his personal commitment to responsible production and sheds light on the role gas will play in the green energy revolution.
Back then …
It’s one thing to take a high-performing stock and build on its success. But for Underwood, his leadership journey has meant taking Empire through a 180 transformation.
When Alex joined the company in 2018 it was in a pretty challenging position: its core asset was subject to a moratorium on fracking, which meant no activity could be carried out in the field.
Beyond the situation in the basin, Empire’s finances were also a pain point.
“We had US$38 million of debt and that was secured against US oil and gas production that was only generating about US$4 million a year,” Alex remembers.
“In the office, it was just me and Kylie, our financial controller, who were trying to keep everything going.”
Although things looked bleak, Alex says he was drawn to the challenge.
“I’ve certainly always been a risk taker — often to my mother's great dismay when I was a teenager,” Alex laughs.
Things soon turned around. Shortly after Alex became MD, the moratorium was lifted, paving the way for exploration in the basin.
He also steered the company through an exhaustive recapitalisation process, meaning it could get some money back into the Beetaloo.
Five years on and Empire is leveraged to develop its extensive holding into a low-carbon operation — one that can provide critical energy security amid the east coast’s energy crisis.
Empire’s holding in the Beetaloo Sub-basin.
… And now
In early May, the Northern Territory Government made an announcement that will open the doors to a full-scale onshore gas industry: it’s allowing fracking to go ahead in the Beetaloo Basin.
This is a major development and not just for companies in the region. Last year, the Australian Competition and Consumer Commission (ACCC) reported that an energy crisis on the country’s east coast — triggering widespread supply issues and price hikes — was likely to last through winter 2023.
The ACCC forecast a 70% increase in gas demand for electricity generation, while high international gas prices also hit consumers’ pockets.
This phenomenon underscores the need for reliable domestic gas supply and the Beetaloo’s sizeable gas bounty is well placed to meet demand.
With this in mind, Underwood says the company plans to build on four years of exploration to deliver much-needed supply.
“Beyond the domestic opportunity we hope to increase liquefied natural gas (LNG) exports, already the NT’s largest source of foreign income and a significant contributor to Federal Government revenues,” he stated in early May.
Gas remains in the mix
While the green energy revolution remains front of mind, it’s important to remember the role oil and gas companies will play in global decarbonisation efforts.
“In this increasingly carbon-constrained world, gas is going to be a critical transition fuel,” Underwood notes.
“Ultimately there's going to be a competitive advantage for those sources of gas that have very low CO2.”
That’s where Empire’s focus lies: on building a sustainable, low-carbon operation that supports modern energy requirements.
Earlier this year, the Federal Government introduced safeguard legislation, essentially giving effect to its commitments to reduce Australia's emissions by 43% by 2030 and then ultimately getting to net-zero by 2050.
The mechanism lays down the law on gas supply, paying specific attention to prospective operations in the sub-basin to facilitate cleaner, greener production.
“First of all, gas from the Beetaloo will need to be scope one net-zero from the commencement of production but there's another requirement that new fields that feed gas into existing LNG plants will also need to be net-zero,” Underwood explains.
“We've been working on this in the background for quite some time.”
From Alex’s perspective, gas will always play a role in our modern energy mix.
“The reality is that 82% of all energy usage globally is still hydrocarbon based,” he explains.
“It's very clear to me — and I think a lot of other people in the broader energy industry — that there simply will not be net-zero without an orderly transition from the old system to the new system,” he continues.
That’s ultimately because renewables face one key problem: intermittency. And while battery technology is evolving rapidly, their intensive mineral and infrastructure requirements mean they’re a long way off powering the grid.
Community at the heart
Beyond the traditional carbon credit system, Alex is considering ways the business could reduce its carbon footprint while supporting Northern Territory communities.
“As part of our efforts to be a good corporate citizen and help generate more economic activity, one option we’re looking at is taking the capital that we would otherwise invest [in carbon credits] and helping Northern Territory-based businesses to develop their own carbon farming opportunity.”
One option on the table is human-induced regeneration, which involves planting trees to act as carbon sinks.
“We've had conversations with some of the pastoralists on whose properties we operate to look at that,” Alex says.
Another initiative is savanna burning, which involves deliberate burning in the early dry season to reduce the emissions released in large wildfires.
“For thousands of years, traditional owners have been managing these areas by deliberately setting smaller fires to manage the risk of big fire outbreaks,” he explains.
“It actually results in less carbon release in aggregate because you're more carefully managing the land.”
Considering the resource spoils Australia is known for, Underwood is a big advocate for prospecting our natural wealth with care.
“I believe the key to building a social licence for our industry is to demonstrate the environmental credentials of our products,” he concludes.
Regardless of a workforce’s size, Alex says a responsible operation can have a ripple effect on the local community. Although it may only create a certain number of on-site jobs, the money and people it brings to local businesses can have an exponential effect.
One of the best examples of this kind of impact? For Alex, it’s a motel that’s close to his heart.
The Heartbreak Hotel, Cape Crawford. Source: Heartbreak Hotel.
“There's a roadhouse about 80 Ks down the road from us called the Heartbreak Hotel — a great name for a remote roadhouse,” he laughs.
“They do a great steak by the way, if anyone's in that part of the world. But our activities can result in that business alone — just one business — having a great time, because people are staying there, eating, having a beer after work.
“It's these sorts of opportunities — out in these remote areas where there's little other economic opportunity — where we can actually really make a difference to people's lives.”
Next chapter for Empire
One area where Underwood believes Australia’s energy industry needs to step up is in the way it communicates its role in society.
“There's a bit of a perception about oil and gas, where it's just all of these people in glass towers,” he explains.
“I've seen the way they do it in America — you've got states like Texas and Oklahoma and Kansas where the oil and gas industry is just part of people's daily lives.
“I remember visiting Kansas once and going out to look at one of our fields … you see the nodding donkey wells dotted all over the place and the landowners benefit from it.”
Down under, Underwood says energy companies should talk more about their decarbonisation and ESG initiatives — especially considering Australia’s natural resource endowment.
And with all eyes on the Beetaloo right now, operating with a social licence — and valuing the safety and sustainability of your team — is Alex’s number-one priority.
“This can be a dangerous industry if you don't do things the right way, and I'm very proud of our safety track record.
“I'm ultimately the person responsible for lots of people's safety, and that really requires you to act with integrity.”
With all this in mind, one big question remains: What does Alex see in store for the Beetaloo asset?
“As a company, we are in this for the long haul. We’re not just looking to drill a few wells, de-risk projects and then sell off to a bigger player,” he clarifies.
“We take great inspiration from some of the great Australian success stories … but I think what’s most important is bringing people on the journey.
“We've got all the pieces of the puzzle on the board as it were, and really what we're focused on is bringing them together for what could be a nation building project.
Here's the link to the annual general meeting audio and slides presentation: https://www.finnewsnetwork.com.au/archives/finance_news_network415332.html. here's the YouTube link
Empire Energy Group delivers “nationally significant” LNG resource at EP187 in Beetaloo Basin
20:29 Sun 28 May 2023
Ephrem Joseph
Empire Energy Group Ltd
ASX:EEG
OTC:EEGUF
Empire Energy Group Ltd - Empire Energy Group Ltd delivers “nationally significant” LNG-scale resource at EP187
Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) has made a breakthrough with an independent LNG resource at EP187 permit in the highly prospective Beetaloo Basin, representing a “nationally significant” resource of low CO2 gas.
The company said the results were nothing short of impressive, revealing a substantial increase in the contingent resources of EP187, including:
270% increase in 2C contingent resources to 1,739 Petajoules (PJ) representing an average estimated ultimate recovery (EUR) per well of 7.9 PJ;
217% increase in 1C contingent resources to 304 PJ representing an average EUR per well of 6.2 PJ; and
129% increase in 3C contingent resources to 3,507 PJ representing an average EUR per well of 9.3 PJ.
The assessment, carried out by Netherland, Sewell & Associates, Inc. (NSAI), an esteemed petroleum property analysis firm, follows the successful completion of Empire's 2022 Beetaloo work program.
What makes Empire's EP187 even more promising is the high calorific value of its gas, a factor that NSAI has taken into account while assessing the sales volumes.
Shares have been as much as 8.15% higher in the first hour of ASX trading to A$0.20.
Gas shortfall on horizon
Empire managing director Alex Underwood said: "The Empire team is delighted to share these outstanding results with shareholders.
“The volumes delineated in EP187 represent a nationally significant resource of low CO2 gas.
“Warnings abound from multiple sources that Australia faces material gas shortfalls in years ahead, a view that I share given the enduring role of gas.
“The Beetaloo and more particularly Empire’s resource has the potential to service domestic demand gaps and international sales via LNG.
“At an assumed gas contract price of $10/GJ, each development well in EP187 could produce between $62 million and $95 million of revenue over its life, compared to a development cost of ~$20 million in the pilot phase and or ~$15 million in larger development scenarios.
Results summary
The C-2H and C-3H operational results demonstrate that Empire can cost-effectively deliver 3-kilometre hydraulically stimulated horizontal wells utilising Australia’s existing rig and frack spread fleet.
3-kilometre horizontal wells represent Empire’s intended well design for future development of the Carpentaria Project in EP187.
Contingent resources have been estimated using a combination of deterministic and probabilistic methods based on step-out locations from current well control using this well design with a 500m lateral drainage offset.
EP187 contingent resources
Forward plan
Prospective resources are those areas proximal to the contingent resources areas where uncertainty in mapping is still evident due to a lack of well control.
Future additional step-out drilling may allow Empire to convert some of this prospective resources base to contingent resources.
However, Empire’s current focus for EP187 is on commercialising its significant discovered resource base.
Underwood adds: “NSAI has identified over 200 2C drilling locations, representing LNG scale development potential.
"Following the recent green light from the NT Government to move into production, the Empire team is progressing towards development drilling and cash flow.
“Our current capital resources allow us to proceed to a final investment decision on the pilot project this year without raising any further capital in the near term.
“This will allow the team to focus on further value accretive work including field development planning, indigenous consultation, regulatory approvals and gas sales negotiations
Empire Energy Group continues strong gas flow at Carpentaria-2H as testing ends
10:53 Wed 24 May 2023
Proactive
Empire Energy Group Ltd
ASX:EEG
OTC:EEGUF
Empire Energy Group Ltd -
Gas flare at the Carpentaria-2H well.
Consistently strong gas flow rates at the Carpentaria-2H (C-2H) well within the Beetaloo Sub-Basin in Australia's Northern Territory (C-2H) has renewed the confidence of Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) in the commercial viability of its EP187 asset.
C-2H has produced a total of 323 terajoules (TJ) or 281 million standard cubic feet (mmscf) over 127 days, with the gas composition remaining consistent with high calorific value and extremely low carbon dioxide (CO2).
This equates to a normalised rate of 2.75 TJ or 2.4 mmscf per day per 1,000 metres for the entire test period.
Following an updated gas composition analysis, the post-soak 2023 IP30 is now confirmed at 3.5 TJ or 3.0 mmscf per day per 1,000 metres.
Growing confidence
"We are pleased to share the continued strong gas flow rates achieved at C-2H as they provide further confidence that an economic development in EP187 may be achievable,” Empire Energy managing director Alex Underwood said.
“The cumulative production of 323 TJ over 127 days from C-2H would equate to over 1,000 TJ cumulative production for an equivalent 3-kilometre horizontal development well over the same period.
“This is despite the unoptimised nature of the C-2H well that has tested multiple completion methodologies.
Wells shut
C-2H has been 'shut in' for now and will be available as a future gas producer.
On the other hand, Carpentaria-3H (C-3H) will reopen for flow testing once its soaking period ends.
Soaking is the practice of shutting in a shale gas well for a period following fracture stimulation to improve its long-term productivity through redistribution and interaction of the residual water with the rock.
Meanwhile, the front-end engineering and design for the Carpentaria Pilot Project’s final investment decision is ongoing.
Map showing depth to base of Velkerri B shale across the Greater Carpentaria project area.
Attractive gas price
“If we assumed a gas price of $10/GJ, which is less than half the spot price at Wallumbilla on May 22, 2023, an equivalent 3-kilometre development well could generate over $10 million in gross revenue before royalties over an equivalent first 127 days of commercial production without any further well optimisation,” Underwood said.
“Such a level of gross revenue so early in the life of development wells may support field level economics.
“Following recent regulatory implementation by the NT Government giving the Beetaloo a ‘green light’ to move into commercial production, and an extremely tight domestic gas market, line of sight towards commercialisation is getting clearer by the day," he added.
Upstream article 5/11/23...
In operation: the Silver City Drilling Rig 40 at the Carpentaria-2H well on EP 187 in Australia’s Northern Territory.Photo: EMPIRE ENERGY
Empire Energy eyes pilot production in newly-reopened Australian shale play
Final investment decision targeted in 2023 for Carpentaria gas production
11 May 2023 23:05 GMT UPDATED 11 May 2023 23:05 GMT
By Amanda Battersby in Singapore
Australia-listed junior Empire Energy is racing to step up a gear towards production at its Northern Territory assets now the territory’s government has finalised the Beetaloo regulatory framework.
Empire is progressing front-end engineering and design work, field development planning, Indigenous and regulatory approvals, gas sales and pipeline transportation negotiations for its proposed Carpentaria pilot project on EP 187, with the aim of taking the final investment decision later this year.
Northern Territory gas exploitation: ‘Best outcome’ or ‘rotten decision’? You decide
Read more
Independent reservoir engineering forecast production analysis indicates that three-kilometre horizontal wells in the Carpentaria area of EP 187 could ultimately deliver about 6 billion cubic feet of gas per well on a 50% recovery basis and about 8 Bcf on a 10% recovery basis, the operator said.
“This represents a potential upstream development cost of A$2 to A$3 per gigajoule in future development scenarios assuming A$15 million to A$20 million per well capital expenditure,” Empire said.
The company has engaged consultants Netherland, Sewell & Associates to prepare an updated resource assessment for its EP 187 asset, which is due before the end of June.
The regulatory framework put in place by the NT government is now among the most extensive and robust in the world and will allow the safe and sustainable development of the Beetaloo’s abundant natural gas resources, Empire said.
The company added that this gives management the confidence to accelerate its investment decision and planning processes as it moves towards pilot production.
“Building on the encouraging results of our exploration activity over the last four years, we look forward to submitting applications for all required approvals to enable us to move into gas production and the delivery of much-needed new gas supply to the Australian domestic market, and subsequently to increase liquefied natural gas exports, already the NT’s largest source of foreign income and a significant contributor to federal government revenues,” Empire managing director Alex Underwood said.
Last week, the NT government announced the finalisation of all 135 recommendations of the 2018 scientific inquiry into hydraulic fracturing in the territory chaired by Justice Rachel Pepper, effectively establishing a platform for approval of gas production in the Beetaloo sub-basin.
“After an extensive process of review and reform, industry participants and their investors now have certainty on how the NT government will regulate this vital industry,” Underwood added.
Meanwhile, in the western Beetaloo, Empire has secured a groundwater extraction licence to supply water for its planned 2D seismic survey, drilling and hydraulic stimulation activities in the gas discovery area within its wholly owned EP 167 and EP 168.
The company plans to soon resubmit its environment management plan for this work and, once its EMP and Land Access & Compensation Agreements are completed and approved, Empire will be able to acquire up to 376 line kilometres of 2D seismic and construct up to six well pads with horizontal stimulated wells.
Australian Budget Supports Gas and Hydrogen Development
Wednesday, May 10, 2023
© Lukasz Z / Adobe Stock
Australia’s federal government has released its 2023 Budget, with the offshore industry saying it listened to industry concerns.
Australian Petroleum Production & Exploration Association (APPEA) Chief Executive Samantha McCulloch said the new Future Gas Strategy showed the government recognised the urgent need for a strategy to secure new gas supply to avoid shortfalls in coming years.
“New gas supply is essential to keep the lights on, put downward pressure on prices and deliver substantial economic benefits in the transformation of our energy system for net zero,” McCulloch said. “The national strategy announced tonight is a response to independent reports and authorities warning of gas supply shortfalls and allows for a coordinated policy response.”
The Budget allocates A$2 billion to accelerate the development of low-carbon hydrogen in Australia and to catalyse clean energy industries. Australia already has the largest pipeline of renewable hydrogen projects in the world.
McCulloch said: “Low-carbon hydrogen has a critical role to play in reaching net zero, in particular in hard-to-abate industries and manufacturing. The oil and gas sector is pivotal in scaling up and rolling out low-carbon hydrogen in Australia and globally, with natural gas combined with carbon capture representing the most developed and lowest cost pathway to low-carbon hydrogen available today.”
The Budget also recognised the importance of CCUS, with a review of regulations to enable CCUS investment – as highlighted by APPEA in its 2023-24 Federal Budget Submission. However, the McCulloch says the Budget fell short of committing to a national CCUS roadmap in partnership with industry to provide the clear policy direction needed to promote Australia as a regional carbon storage leader. “Global momentum for CCUS is growing, and Australia must not miss the emissions reduction and economic opportunity of an emerging CCUS industry that creates new jobs and investment.”
APPEA also welcomed the review of environmental management regulations for offshore energy to provide clarity for major supply projects.
Green light game-changer for Empire at Beetaloo
Michael Philipps
SPONSORED
Thu, 4 May 2023 2:49PM
Empire Energy expects to provide a resource upgrade for its Carpentaria project in the Beetaloo sub-basin this month.
Empire Energy expects to provide a resource upgrade for its Carpentaria project in the Beetaloo sub-basin this month. Credit: File
Empire Energy Group has been given the green light from the Northern Territory Government to seek production approvals for its gas projects in the Beetaloo sub-basin – a game-changing moment for the area’s development of the vast resource.
The move comes after the government finalised all 135 recommendations from a 2018 inquiry into hydraulic fracturing. The company says the government’s new framework sets the scene for gas production approval in the region, including for its EP187 Carpentaria pilot project.
According to the NT Government, all applications made for gas production in the Beetaloo sub-basin — subject to the industry’s successful exploration and appraisal results — will go through a rigorous approval and monitoring process.
Empire says the regulatory framework the government has put in place is among the most extensive and robust in Australia and will allow the safe and sustainable development of the Beetaloo’s abundant natural gas resources.
Hydraulic fracturing (fracking) is a technique for recovering gas from a prospective shale rock. Companies can maximise gas production rates by optimising the placement of a well’s fractures along the target zone by piercing the reservoir with a chemical mixture known as “fracking fluid”.
Empire's official announcement NT government gives greenlight for Beetaloo production : https://www2.asx.com.au/markets/company/eeg
Northern Territory clears way for fracking to begin in Beetaloo Basin
Environmental groups and scientists say move will have an unacceptable impact on the climate and have called for ban.
Lisa Cox
Tue 2 May 2023 23.50 EDT
The Northern Territory government says it is satisfied the recommendations of an independent inquiry into fracking have been met, clearing the way for gas production and the expansion of wells across the Beetaloo basin. Guessing the eco-terrorist will due by the end of the day.
Words of wisdom: Woodside Energy chief executive Meg O'Neill. Photo: APPEA
Woodside chief blasts extremists that threaten investment in Australia’s gas industry
Meg O’Neill also urges investment and regulatory certainty amid twin goals of energy security and decarbonisation
23 April 2023 7:14 GMT UPDATED 23 April 2023 7:14 GMT
By Amanda Battersby in Singapore
Woodside Energy chief executive Meg O’Neill has slammed extremists who are doing the damnedest to scupper under development and new gas projects in Australia, the region’s largest liquefied natural gas exporter.
Addressing the National Press Club in Canberra, O’Neill said that development of Australia’s gas industry has only been possible with the support of international investors and customers looking to secure their own energy supplies. But now they are questioning whether Australia still wants their investment.
“A vocal minority wants to shut down the industry and the jobs and livelihoods that go with it. They have deep pockets and are using both protest action and the courts to create uncertainty and destabilise regulatory processes to frustrate existing and new projects,” she said.
“We respect every Australian’s right to express their opinion – and we share the commitment to decarbonisation - but extremism is not the answer. We need confidence in stable regulatory outcomes, or we risk choking our energy industry, impacting both domestic and international supply,” added O’Neill.
“This concerns our regional partners, who depend on current Australian gas projects to help them meet their decarbonisation commitments and to keep the lights on in Asian megacities.”
O’Neill said that the challenge, as she sees it, is for Australia to use its vast natural gas resources for three interrelated goals: To provide affordable and reliable energy for Australians, to maintain strategic partnerships and regional energy security, and to progress global decarbonisation.
“We want to develop new projects in Australia, across both hydrocarbons and new energy opportunities, but that will only be possible if policy settings provide the certainty to underpin long-term investment.”
Securing future investment
During 2022, the world experienced what the International Energy Agency has termed “the first truly global energy crisis” and Australia, for all its vast natural resources, was not immune.
“Those who can least afford it have felt it most acutely, sometimes having to choose between food and heating through winter. This should not be happening in Australia. Australians should be able to expect reliable energy. That needs to come from having the right investment climate - rather than arbitrary market intervention - and the right honest conversations between all participants in the energy system,” said O’Neill.
But, she said, a longer-term view is needed to ensure new supply will be there to meet anticipated demand.
“Woodside and other companies are actively considering what we might be able to do to help - from infrastructure to enable LNG imports, to buildout of gas storage - but we also know these can only be progressed in concert with government.
“[This] requires a clear investment framework and regulatory certainty to attract the capital from international markets that is needed for large-scale projects.”
Woodside's 2022 A$2 billion-plus tax bill
Read more
The same partners who invested in Australia’s gas projects can provide the capital to develop lower-carbon hydrogen and renewable projects, but only if they consider it a secure investment, added O’Neill.
“For Australia to remain an attractive destination for global capital, fiscal and regulatory certainty is paramount.
“We urge the government, in any changes to the tax framework, to consider the long-term and preserve Australia’s ability to attract the next generation of investment, jobs and energy supply,” said O’Neill.
“In terms of regulatory certainty, agreement on clear processes and response times for project approvals is essential to unlocking reliable supply. Otherwise, energy investment will find another home, taking jobs and opportunities with it.”
Gas in tandem with renewables
Globally, we are going to need to use all the tools to address climate change while advancing developing economies, Woodside’s chief executive said.
“That’s going to require rapid scale-up of renewables and investment in ongoing gas supply as existing gas fields deplete.”
Even in its Net Zero Emissions scenario, the Paris-headquartered IEA has estimated an average of US$365 billion of upstream oil and gas investment is needed every year to 2030, and US$171 billion every year thereafter to 2050.
“When used to generate electricity, natural gas emits around half the life cycle emissions of coal. Gas is a flexible source of energy and provides a stable baseload,” she added.
Australia’s federal government is targeting increasing the share of renewables in the electricity grid to 82% by 2030, leaving an 18% gap that could be filled by natural gas. However, today gas-fired power only accounts for 7% of the national energy market.
O’Neill admitted that Australia’s gas industry needs to do more to reduce emissions but that it is moving in the right direction.
“We employ engineers – creative, practical problem-solvers, who are prioritising this challenge – and commercial analysts, who are figuring out ways to finance it,” she said.
“We have geologists, who used to explore for new oil and gas reservoirs, who are now looking at how we can safely inject and store carbon dioxide in depleted reservoirs.”
However, in the absence of certainty at a national level, Australian states have implemented complex and conflicting regulations for emissions reduction, moving away from the concept of tackling the lowest-cost abatement options first, and adding to the cost of doing business… not just for energy producers, but for all industrial segments, O’Neill commented.
Getting it right in future
“You might guess from my name that I’m of Irish heritage. I grew up in Boulder, Colorado, (in the US) but my Nanna grew up in a village in County Mayo, in Western Ireland, with no electricity - relying on a peat fire for heating, cooking and light,” O’Neill shared.
“As a society, we have come a long way since then, in just two generations. And we should not be regressing. We should instead be extending access to electricity to hundreds of millions of people in the developing world who still live without it. To do that, we need new supplies of affordable and reliable energy.”
However, against that backdrop, there is the need to decarbonise which will require the rapid scale-up of renewables alongside investment in ongoing gas supply as existing gas fields deplete.
Woodside is aiming to spend US$5 billion by 2030 to progress new energy opportunities and lower-carbon services.
Admitting the Australian company – which was founded in 1954 – historically has not always “got it right” in its relations with First Nations peoples, O’Neill said the company is on a journey in its relations with First Nations peoples and “working to get it right” by listening to and learning from these peoples.
“For Woodside, a big part of this is working with the Traditional Owners of Murujuga, in northern Western Australia, where our largest Australian operations are based,” she said
News from Australia: APPEA
Gas will play critical role in kick-starting low emissions hydrogen: APPEA chief executive
IEA reckons more than 25% of hydrogen in 2050 will come from natural gas utilising CCUS
13 April 2023 22:00 GMT UPDATED 13 April 2023 22:00 GMT
By Amanda Battersby in Singapore
Australia’s oil and gas industry believes the federal government’s focus on hydrogen is an important step on the path to net zero and one that paves the way for new economic opportunities for the nation.
The Australian Petroleum Production & Exploration Association (APPEA) on Thursday welcomed the release of the 2022 State of Hydrogen report amid a review of the national hydrogen strategy.
APPEA chief executive Samantha McCulloch said the gas sector would play a critical role in kick-starting low-emissions hydrogen.
“Natural gas combined with carbon capture, utilisation and storage (CCUS) is currently by far the most affordable pathway low-carbon hydrogen production — meaning significantly more emissions reductions per dollar today,” she said.
“This paves the way for all low-carbon hydrogen pathways, enabling faster scale-up to support economy-wide decarbonisation.”
Inpex and Jogmec team up on offshore CCS Down Under
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Under the International Energy Agency’s Net Zero by 2050 scenario, more than a quarter of hydrogen in 2050 will come from natural gas utilising CCUS.
McCulloch said: “We share the nation’s commitment to lowering emissions to get to net zero across the economy by 2050 and hydrogen will be a key tool to get there.
“The gas sector has the expertise, infrastructure and commercial relationships necessary to make the hydrogen economy a reality and are already investors in low-carbon hydrogen development.
“As the government reviews its national hydrogen strategy, it’s critical we keep all options on the table to make sure we are rolling out hydrogen at the pace and scale required,” she added.
“Leveraging the most affordable low-carbon hydrogen pathways not only makes net zero more achievable but also minimises the impact on the costs of doing business for Australian manufacturers and industry as they align with our climate targets.”
APPEA has called for the identification and advancement of priority hubs for low-carbon hydrogen and CCUS in its 2023-2024 federal budget submission.
Managing director Underwood picked up 200,000 shares 3/31.
Empire Energy says it has boosted production ambitions by lifting its average 30-day gas flow rate by more than 17 per cent in initial tests held at the Northern Territory’s Beetaloo Basin.
The company says its new rate of 2.81 million standard cubic feet (mmscf) per day at its first horizontal well, Carpentaria-2H, represents a normalised flow rate of more than 3mmscf a day per 1000m of horizontal section.
Empire, which boasts the biggest holding in the giant Beetaloo Basin gas province in Australia’s Top End, believes the results validate its soaking strategy. It is now incorporating that strategy into its future development plans.
Independent analysis says the company’s development wells could generate 6.2 billion standard cubic feet (BCF) of gas per well on a conservative P50 basis and 8.1 BCF gas on a P10 basis.
The P50 basis signals at least a 50 per cent probability that the quantities recovered will equal or exceed the best estimate, while P10 means there should be a minimum 10 per cent chance that the amount recovered will equal or exceed the estimate.
The company has now crunched the numbers and believes its development wells at 2-H and 3-H in the pilot phase can be drilled and fracture-stimulated to be ready for production for $20 million per well. The figure could drop to $15 million per well for bigger developments once economies of scale kick in. The numbers show an indicative cost of about $2-$3 per mmscf in any future development scenarios.
Fracture stimulation is where the wellbore is filled with high-pressure fluids to create fractures in the rocks. The fluid composition is mostly made up of 99 per cent water combined with a matrix of the kind of chemical additives found around the house and a small amount of sand and clay. The sand and clay find their way into the rock fractures, propping them open and allowing the gas and oil to seep out over time.
With the flow testing now continuing in the background, management’s main focus is the work required for a final investment decision (FID) on a pilot project planned for later this year.
Interestingly, the company believes the recent political wrangling about the future of the Beetaloo Basin and how it fits into the Federal Government’s so-called “safeguard mechanism” in implementing a cut in emissions, has helped provide “clarity” for its project.
Empire Energy managing director Alex Underwood yesterday told the ABC: "As the NT government finalises the implementation of Pepper inquiry, settling the regulatory framework for the Beetaloo is essential to building investor confidence."
Leading into its FID, Empire has a healthy cash balance of $15.7 million and despite an upcoming bill of $3.5 million for last year’s drilling and stimulation, it is also expecting a final payment of about $7.6 million as part of the Beetaloo Cooperative Drilling Program. The company’s $15 million credit facility also remains untouched.
Ultimately, the financial numbers have added to management’s confidence in the cash-making potential of the project.
Empire Energy managing director Alex Underwood said: “The upgraded IP30 rate that Empire has achieved at C-2H, the company’s first horizontal appraisal well within an experimental and therefore unoptimized stimulation design, demonstrates that EP187 has the potential for commercial outcomes in development scenarios.”
China's liquefied natural gas demand is forecast to recover this year as the country emerges from COVID-19 controls. According to analysts Rystad Energy, Wood Mackenzie and ICIS, the Middle Kingdom is expected to rebound to between 70 million and 72 million tonnes this year, jumping up to between 9 per cent and 14 per cent higher than in 2022.
As Empire ticks more boxes on the practical and political side of its project on the road to production, news of even greater demand for gas should only increase the confidence of its bullish board.
Latest flow rates and operations: ABN Newswire) Empire Energy Group Ltd (ASX:EEG) (OTCMKTS:EEGUF) report that the Carpentaria-3H ('C-3H') has been flow tested for 27 days and is currently shut in for soaking (the practice of shutting in a well for a period following fracture stimulation to maximise long-term productivity). Gas production rate has ranged between 2.3 million standard cubic feet per day ('mmcf / day') and 5.7 mmcf / day with an average of 2.6 mmcf / day. Flow rates are yet to be optimized by the shut-in and soaking. Empire believes that higher flow rates will be achieved when the well is reopened.
Carpentaria-2H ('C-2H') has been brought back online to test the benefit of soaking with excellent results. A sustained average gas flow rate of 3.24 mmcf / day over eight days ('IP8') has been achieved over the 927-metre stimulated horizontal section, approximately 21% higher than the initial IP8 with a lower rate of decline.
This is a normalised flow rate of 3.5 mmcf / day per 1,000 metres at C-2H, demonstrating that soaking has had a material beneficial impact on flow rates, consistent with productivity improvements seen in other wells in the Beetaloo Sub-basin and in US shale gas basins.
Empire intends to continue flow testing C-2H to develop an early production type curve that will be incorporated into Empire's ongoing Front-End Engineering and Design ('FEED') process. Management is working towards pilot project Final Investment Decision ('FID') this year (subject to financing, gas sales agreement, regulatory approvals and Board approval).
Petrophysical interpretation of Carpentaria-4V ('C-4V') data has confirmed that net pay in the Middle Velkerri B is 20% greater and ~150 metres deeper than at the C-2H / C-3H location. C-4V formation evaluation results are being incorporated into the updated independent resource assessment that is expected to be complete in the coming weeks.
Current cash balance is $18.2 million with recent drilling and stimulation projects coming in well under budget. The $15 million credit facility is available but undrawn. Final Beetaloo Cooperative Drilling Program progress payment of ~$7.6m is expected to be received soon.
An investor webinar including Q&A will be conducted today at 11am AEDT during which Managing Director Alex Underwood will provide an overview of these results and investors can ask questions. Dial in details can be found below.
Comments from Managing Director Alex Underwood:
'The Empire team is highly encouraged by the stabilised flow rates we have achieved at C-2H. At this stage, the rates appear to exceed thresholds that others in the Beetaloo have proposed as being commercial. Empire has high earnings leverage due to the reduced capital costs we enjoy at shallower depths than other parts of the Beetaloo and high net revenue interest (working interest adjusted for royalties) in our Beetaloo properties.
This result has significantly de-risked EP187 and propels us towards a final investment decision on our pilot project later this year. We are rapidly optimising how to drill, stimulate and complete the Middle Velkerri B shale, and expect further improvements as we drill future pilot wells that, along with C-2H and C-3H, will generate production revenue (subject to FEED, sales and transportation agreements, financing, regulatory approvals and FID).
Netherland, Sewell & Associates are due to upgrade our EP187 Contingent Resources including our recent C-4V results. We anticipate a material increase.
C-3H has remaining fluid that the Empire team wants to remove to see the full C-3H well result. We expect soaking to reduce water saturation and to increase gas pressure that will help to remove the remaining fluid, in addition to providing the other matrix gas benefits seen in C-2H.
The global gas market remains in serious structural deficit. New sources of responsibly sourced, low CO2 gas are urgently required to avoid more seasonal price spikes. The IEA recently forecast that LNG demand from the world's largest importer, China, is expected to increase by up to 35% this year as its economy reopens, but new sources of supply are not coming onstream quickly enough. The NT gas market is undersupplied due to production issues at legacy fields, so our short-term opportunity is to support the NT Government to ameliorate forecast gas shortfalls by bringing our pilot project online quickly.
These flow testing results reinforce our commercialisation strategy.'
CARPENTARIA-2H UPDATE
C-2H was reopened on Friday 24th February after ~5 months of shut in to soak. Soaking is the practice of shutting in a shale gas well for a period following fracture stimulation to seek to improve long-term productivity through redistribution and / or interaction of the residual water with the rock. Productivity improvements have been achieved at other Beetaloo wells and in analogous US shale basins following the execution of such a strategy.
After reopening C-2H, production quickly built to over 3 mmcf / day and is now flowing at 3.25 mmcf / day. This represents a 33% increase compared to the corresponding flow rate after the first 8 days of pre-shut-in initial flow, a material improvement.
The well has been reopened with a restricted choke, with a current wellhead pressure of over 336 psi, which is double the wellhead pressure after the previous corresponding IP8 period.
While lowering this flowing wellhead pressure would produce higher short term gas flow rates, Empire is maintaining a high back pressure and carefully managing the flowback to ensure full fracture connectivity is maintained. The gas is being produced up the 4 1/2' casing without any artificial lift. No well intervention or optimisation was undertaken prior to restart, as the gas rate is sufficient to lift wellbore fluids in 4 1/2' casing.
Third party flowback analysis carried out by Subsurface Dynamics Inc, an independent advanced reservoir engineering and geoscience firm based in North America, indicates that the material improvement in C-2H flow rate has resulted from reduced fractured area water saturation following water imbibition into the surrounding reservoir, removing water blockages to gas flow.
This confirms that Empire's soaking strategy has been effective and is improving gas flow rates which is likely to improve total gas recovery over the life of the well. It also confirms that the increased C-2H flow rate can be used to infer greater well productivity in development well planning.
C-2H well testing is continuing to confirm the longer-term benefits of soaking and to develop an upgraded IP30 type curve.
CARPENTARIA-3H UPDATE
C-3H has flowed at rates of up to 5.7 mmcf / day with an average production rate over the first 27 days of over 2.6 mmcf / day. The initial flow period showed an even shallower level of rate decline than seen on the initial C-2H flowback, indicating that the well is still cleaning up.
C-3H flowed up 4 1/2' casing without the need for production tubing or artificial lift.
C-3H is now shut-in to test whether soaking, now demonstrated as highly effective at C-2H on the same well pad, will improve productivity.
The soaking of C-3H is expected to provide the fractured area matrix improvements seen in C-2H and in addition remove water by imbibition which will reduce the flowing bottom hole pressure and likely improve gas flow rates.
Higher water production during the initial flowback (due to pumping twice as much water to place twice as many fracture stimulation stages) created an estimated 20% higher bottom hole flowing pressure at the heel of the well compared to C-2H due to the density of the fluid lifted, which has impacted gas flow rates. In addition, the long undulating horizontal section in C-3H resulted in fluid and pressure surges during production ('slugging'). This slugging is likely to have created additional back pressure along the wellbore which has also contributed to gas production limitations.
While Empire expects the shut-in period and soaking to remove remaining fluids, there are alternative intervention options that are available if required. Any such intervention would be funded from cash at bank.
Early chemical tracer data from the international testing laboratories shows that the whole wellbore is contributing to gas flow.
Flowback analysis has been performed by Subsurface Dynamics Inc on the initial flow data that demonstrates that the connected fracture area is twice the size of C-2H stimulated area and that the majority of the fracture stages appear to be contributing along the wellbore based on the total stimulated reservoir (rock) volume.
C-3H was drilled and stimulated through a range of rock qualities within the Middle Velkerri B Shale and tracer data confirms that the higher graded rocks have produced at higher rates providing further definition over the future target reservoir window to optimise production.
C-3H trialed several fluid systems and ongoing tracer analysis is expected to provide further evidence on fluid selection and optimization.
C-3H was drilled and completed for $5.9 million below the risked budget.
CARPENTARIA-4V UPDATE
Early petrophysical interpretation indicates the net pay at the recently drilled C-4V well within the Carpentaria East Area is materially greater than the earlier drilled C-1V, C-2H and C-3H wells.
The greater depth of formation at C-4V is expected to improve gas in place and reservoir pressure. Porosity, gas saturation, and gross thickness are interpreted to be highly uniform between the drilled locations.
Further work will be carried out to determine whether the increased pay within the Carpentaria East area is due to lateral depositional changes or through post-deposition processes. This will help resolve lateral reservoir improvements throughout the permit. Sidewall cores taken from the Middle Velkerri A, Intra A/B, B and C shales during drilling have arrived in the USA and will be used for further calibration analysis.
BEETALOO COOPERATIVE DRILLING PROGRAM
Empire's wholly owned subsidiary, Imperial Oil & Gas Pty Limited, has three replacement grant agreements with the Australian Government under the Beetaloo Cooperative Drilling Program (the 'Program'). Total grant funding of up to $19.4 million is being provided which offsets 25% of the cost of seismic acquisition and the drilling, hydraulic stimulation and flow testing of three horizontal wells (C-2H, C-3H and C-4V) in EP187.
Empire has submitted its final progress reports under the Program and expects to receive final grant funding under the Program of ~$7.6 million (ex-GST) in the coming weeks.
CONFERENCE CALL AND WEBCAST AT 11AM (AEDT) TODAY
Managing Director Alex Underwood will present via conference call and webcast commencing at 11am AEDT today. Details are as follows:
For Participants
Pre-Registration Link:
Conference Call:
The conference call can be accessed by the telephone numbers below and quotation of the specified Conference ID number.
Conference ID number: 60701
Australia: +61 (2) 9133 7104 (can be used if dialing from international location)
For Listen Only
*To view tables and figures, please visit:
(asx:eeg ) (OTCMKTS:EEGUF) holds over 14.5 million acres of highly prospective exploration tenements in the McArthur and Beetaloo Basins, Northern Territory. Work undertaken by the Company since 2010 demonstrates that the Eastern depositional Trough of the McArthur Basin, of which the Company holds 80% has very considerable conventional and unconventional hydrocarbon potential. The Beetaloo sub-Basin, in which Empire holds a substantial position, has independently assessed world class hydrocarbon volumes in place with a major ramp up in industry activity underway to appraise substantial discoveries already made by major Australian oil and gas operators.
Empire Energy is an experienced conventional oil and gas producer with operations in the Appalachia region (New York and Pennsylvania). Empire has been successfully developing and producing oil and gas since 2006.
Empire Energy Group Ltd E: T: +61-2-9251-1846 F: +61-2-9251-0244 WWW:
MENAFN05032023000111011020ID1105709152
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Empire powers ahead with NT gas play
Matt Birney
SPONSORED
Tue, 31 January 2023 3:30PM
Matt Birney
Activity at the Carpentaria-3H gas well in the Northern Territory.
Activity at the Carpentaria-3H gas well in the Northern Territory. Credit: File
Sydney-based Australian oil and gas company Empire Energy Group has closed the book on a busy December quarter it has hailed as the most active in the firm’s history. The workstream was headlined by its drilling completion of the Carpentaria-3H gas well in the Northern Territory’s world-renowned Beetaloo sub-basin and included a record breaking 2632m horizontal section that was realised on time and significantly under budget.
Importantly, Empire says over 90 per cent of Carpentaria-3H’s horizontal interval penetrated the hydrocarbon-rich Velkerri-B shale formation where strong gas shows were observed. The record-shattering horizontal section notched in Carpentaria-3H’s drilling outshines the length of the company’s previous efforts with its Carpentaria-2H well by 150m.
The company believes the program could also be the most extensive in the history of the Beetaloo basin and the operation’s total outlay of $17.3 million is roughly $3.6 million below its initial projections. Empire has since advanced the well to a program of hydraulic stimulation, or “fracking” and has achieved notable results across each of the bore’s 40 planned stages.
Notably, Empire says 35 of the 40 stages activated in its fracking of Carpentaria-3H were executed within the zone’s Velkerri-B shale target – an area the Northern Territory government believes could house as much as 500 trillion cubic feet of gas.
Fracking is often executed on horizontal, gas-bearing shale wells such as Carpentaria-3H and enables companies to optimise the placement of a well’s fractures in order to maximise gas production rates. The fractures are typically positioned along a bore’s target zone and are essentially a site at which an explorer will look to pierce the ground’s geology and release the zone’s gas resources. The number of stages is contingent on an asset’s depth, with deeper bores – such as the over 2600m Carpentaria-3H – generally accommodating more intervals.
To maximise the volume of hydrocarbons extracted in a gas well companies generally frack a bore by piercing the reservoir with a chemical mixture known as fracking fluid. The formulation is pumped downhole at high pressures and can be derived from a suite of ingredients. According to Empire, it used a host of hydraulic fluids in the fracking of Carpentaria-3H’s 40 stages including, crosslink, slickwater and a hybrid blend of both formulations.
The company previously used slickwater to great effect in its nearby Carpentaria-2H gas well and says the material can deliver economical gas recovery rates along with its reduced inclusions of chemical additives. The company has since initiated flowback activities at the well and says 17 per cent of its fracking fluids have been recuperated. The work is key in moving Empire closer to production.
The Empire team has hit the ground running in early 2023. Our key focus is on moving into pilot production. This involves multiple work streams including Front End Engineering and Design, pipeline transportation and gas sales negotiations, indigenous consents and regulatory approvals. We look forward to updating shareholders further as this critical work proceeds.
Empire Energy Managing Director, Alex Underwood
The company also targeted and intersected the Velkerri Formation shales with its Carpentaria-4V well over the December period. In August last year the company declared its assets in the Beetaloo held a 2C contingent resource of 554 billion cubic feet of gas and 3.5 million barrels of liquid and after the quarter’s activities management says it expects material growth.
Empire also filled its coffers to the tune of $7.8 million over the period after getting its hands on a research and development tax offset and claimed another $1.4 million in cash courtesy of the Federal Government’s Beetaloo Cooperative Drilling Program.
Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au
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