Empire Oil and Gas (ASX: EGO) is pleased with the subscriptions for A$4.7 million in new shares it has received to fund its share of development costs for the Red Gully Gas and Condensate Processing Facility and drilling exploration wells.
The company will now place the shortfall of A$2.9 million worth of shares priced at A$0.011 each from the Share Purchase Plan to ensure that it has enough cash to undertake its planned exploration and production activities over the next 12 months in the onshore Perth Basin.
Shares issued under the SPP will be allotted today.
Red Gully Gas and Condensate Processing Facility
Proceeds from the fund raising will be used to meet Empire's share of costs for developing the Red Gully Gas and Condensate Processing Facility.
Empire had in August estimated the total cost of construction and commissioning of the Red Gully facility would cost about A$29.1 million.
With Alcoa funding A$25 million of this under its Gas Sales Agreement with the Empire-led EP 389 joint venture, this leaves the JV obliged to fund the remaining A$4.1 million of which Empire's share is A$2.82 million.
Commissioning of the facility, which will process gas from the Red Gully-1 and Gingin West-1 wells is expected to start in the first week of January 2013.
Partners in EP 389 are Empire (68.75%), ERM Power (ASX: EPW) with 21.25% and Wharf Resources (10%).
Black Arrow and Charger
Funds will also be used for the drilling of the Black Arrow-1 and Charger-1 wells in the onshore Perth basin.
Black Arrow-1 targets 10 million barrels of recoverable oil in EP 432 and will be followed by Charger-1 which targets 30 million barrels of recoverable oil in EP 454.
Black Arrow is a north-south trending tilted fault block located on the Cadda Terrace in the northern portion of the North Perth Basin that contains two highs. The target Arranoo Sandstone is sealed by 50 metres of marine shales at the top Kockatea Shale, a proven source rock in the northern Perth Basin.
The approximate costs to Empire of drilling Black Arrow-1, a permit work obligation, is A$350,000 for its 42.5% interest in in EP432.
Charger-1 targets a seismically defined simple anticline with four way dip closure with the sandstones of the late Yarragadee Formation as the main reservoir objectives.
The oil prospectivity of the Yarragadee has been demonstrated by oil recovery from the Dandaragan-1 well located to the south while its hydrocarbons are believed to be sourced from the early Jurassic Cattamarra Coal Measures in the deeply buried Dandaragan Trough.
Charger-1 will cost Empire about A$400,00 for its 43.33% stake in EP 454.
Both wells are relatively shallow with planned total depths of about 1000 metres.
Other exploration work that Empire is looking to undertake over the next 12 months include the 100 square kilometre Wannamal 3D seismic survey in EP 389 that will cost about A$2.4 million, the Launer 2D seismic survey to fulfil permit work obligations in EP 430 (A$700,000) and the Waugh-1 well in EP 437 (A$250,000).
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