Seeking Alpha

Proactive Investor's  Instablog

Proactive Investor
Send Message
Proactiveinvestors is a leading multimedia news organization, investor portal and events management business with offices in New York, Sydney, Toronto and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of... More
My company:
Proactiveinvestors
My blog:
Proactiveinvestors
  • Empire Energy Closer To NT Oil And Gas Exploration 0 comments
    Apr 30, 2013 3:30 AM

    Empire Energy Group (ASX: EEG) has made strides towards progressing exploration of its McArthur Basin, Northern Territory assets that are prospective for both conventional and unconventional oil and gas.

    It has also repaid US$1.62 million (A$1.56 million) of its net debt over the quarter.

    Revenue for the quarter was US$6.4 million, down from US$6.6 million in the December 2012 quarter due to continuing well workovers, well closures due to winter conditions and restrictions on major truck lines.

    Unaudited Field EBITDAX was up US$200,000 to US$4.4 million though estimated group EBITDAX including its Northern Territory exploration expenses was down to US$2.48 million from US$3.3 million in the previous quarter.

    Estimated netbacks for the quarter are US$56.87 per barrel of oil from its Kansas operations and US$3.66 per thousand cubic feet of gas from its Appalachia operations.

    Northern Territory

    Empire Energy's wholly owned subsidiary, Imperial Oil & Gas, continues to progress Traditional Owner negotiations and to undertake the necessary archaeological, work program and policy submissions in preparation for commencement of exploration within its 7 exploration licence areas.

    Notable actions include concluding the terms of the Exploration Agreement for area EP(NYSE:A) 184 with on-site signings with the traditional owners expected to take place in late May 2013.

    It also receives strong support for areas in areas EP(A) 180, 181, 182 & 183 and is moving into the final stages of negotiations for some of these tenements.

    Imperial has also made progress with the 3D geo-modelling of the East Arnhem Land tenements.

    While unconventional shales provide the primary oil & gas target, there are associated carbonate and clastic formations that offer incremental conventional resource potential.

    In addition, the structural modelling work has identified a number of potentially large four-way dip-closed traps in the areas targeted for initial exploration.

    These targets will be evaluated for potential conventional reservoirs in such structures while maintaining a direct focus on shale targets.

    Imperial has also secured approvals to shoot over 200 kilometres of 2D seismic and is in the final stages of appointing a company to undertake the survey. This will cover the targets identified from its structural modelling work.

    Geochemical analysis on the 650 samples collected from relevant existing cores from the prospective McArthur Basin black shale formations is continuing.

    This data will constrain the organic geochemistry, carbonate & clay content of the target shales and help to understand their diagenetic history and petroleum potential.

    This combined with structural and burial history analysis as well as other studies will result in the creation of an integrated model that will characterise the nature and distribution of hydrocarbons in the prospective shales within the license areas and help high rank particular areas for shale oil and gas drilling.

    The McArthur Basin contains a large scale shale oil and gas exploration play in the Barney Creek Formation, which is up to 900 metres thick.

    Empire has previously noted the uniformity of this shale formation, which in light of the strong gas flows from Glyde-1, make it likely that commercial gas flows are possible throughout the Batten Trough of the Basin.

    Imperial holds a 100% working interest in seven petroleum exploration licence areas that cover about 14.6 million acres (59,172 square kilometres).

    Kansas and Appalachia

    Empire Energy has recorded a 1.2% drop in gross oil production to 67,567 barrels and a 3.8% decrease in gas production to 603.9 million cubic feet of gas.

    Kansas oil production was lower due to continuing well work overs and some well closures during winter conditions while in Appalachia gas production was below forecast due to restrictions on major trunk lines.

    Continued gas line shrinkage over the winter period also contributed to lower gas production.

    This will be offset by the completion of negotiations for the acquisition of about 600 miles of pipeline from the local utility.

    The transfer of these pipelines is currently being processed by New York State Department. Once this transfer is completed shrinkage should be reduced by around 50%.

    Macquarie Credit Facility

    Empire Energy had earlier paid US$500,000 to extend of the US$150 million credit facility to 28 February 2016.

    Interest expenses accrued over the quarter were $753,000.

    At the end of the March 2013 quarter the company had US$47.8 million drawn at an average cost of LIBOR + 4.35%.

    It retains credit facility availability of about US$102 million, which can be used for acquisitions and development drilling subject to normal energy borrowing base requirements.

    Analysis

    Empire Energy Group's progress in advancing oil and gas exploration in the Northern Territory comes at a time when activity has picked up.

    Companies such as Total, Santos (ASX: STO) and Armour Energy (ASX: AJQ) have all committed to exploration programs across the Territory.

    This interest could extend to EEG's exploration areas once Native Title agreements are finalised and exploration begins.

    The company had US$5.72 million in cash as of 31 March 2013.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

Back To Proactive Investor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.