Empyrean completes GBP 5.02 million (USD 6.92m) placement in preparation for Jade Prospect drilling in 2021

Petra

energy-pedia news

Empyrean Energy, the oil and gas development company with interests in China, Indonesia and the United States, has placed 83,698,498 new ordinary shares in the Company at a price of 6.0p per New Ordinary Share to raise £5,021,910 (before costs).

The majority of the subscribers to the Placing were institutional and high net worth investors, including both new investors and existing shareholders, and also clients of First Equity Limited in the United Kingdom, who acted as UK manager to the Placing, and Petra Capital, who acted Australian manager to the Placing. Non-executive director of the Company, John (Spencer) Laycock, subscribed for 200,000 New Ordinary Shares in the Placing.

Funds raised under this Placing will primarily be used to secure a suitable drilling rig and order long lead items and for the Company’s general working capital requirements as it prepares to drill the Jade prospect at its 100% owned Block 29/11 license in China, scheduled for late 2021. Funds raised from the exercise of any Warrants will be used for drilling preparation activities and drilling of the Jade prospect and working capital.

The Company has previously been quoted US$18.5m to drill the Jade well with testing of any oil column to be in  addition to this amount. Following the well engineering and design work completed with AGR, the Company has been working towards securing a rig and finalising costs for the well. The Company will now finalise these negotiations and will make a further announcement in due course.

The 2021 drilling campaign is targeting a world class conventional oil target in the Jade prospect, to which Gaffney Cline assigned a Geological Chance of Success (‘GCoS’) of 32%. Subsequent to this independent assessment, the Company has completed a gas cloud study and post stack seismic inversion study that further mitigate risk. As a result, the Company’s internal assessment of the GCoS for the Jade prospect now stands at 41%. The Jade prospect has a Gaffney Cline audited mean in place potential of 225 MMbbl and a P10 in place upside of 395 MMbbl. The drilling of the Jade prospect is the first of the three identified prospects within Block 29/11, which also contains the Topaz and Pearl prospects. The combined audited mean in place potential of all three prospects is 884 MMbbl and a P10 in place upside of 1,588 MMbbl.

Application will be made for the New Ordinary Shares to be admitted to trading on AIM.  Admission is expected to take place on 22 July 2021. The New Ordinary Shares will rank pari passu with existing shares in issue.

Tom Kelly, CEO of Empyrean, commented on the Placing:

‘We are very pleased to successfully complete this placing which provides the necessary funding to accelerate our preparation activities, including the securing of the rig, for the drilling of the extremely exciting Jade Prospect in China, which we are targeting to occur before the end of the 2021 calendar year, as well as providing working capital funding. The Placing Warrant structure with early exercise incentive Substitute and Bonus warrants also provides a mechanism by which the shareholders can potentially achieve a situation where the well is completely funded without the need for asset sales, joint venture or further placing. It puts the Company’s destiny largely into the hands of shareholders. Whilst asset sales, joint venture or further placing are all worthwhile alternatives to drill Jade, it is the Company’s view that the least dilutive solution, given that any asset sale may not settle before drilling starts, is for the remaining funds to come via warrant exercise. We look forward to updating shareholders on what is shaping up to be one of the most exciting wells drilled by a junior oil explorer this year.’