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Empire Energy Group's Oil & Gas Net Revenue Rises In June Quarter

Jul. 17, 2013 7:35 PM ET
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Empire Energy Group (ASX: EEG) has posted a 6.25% gain in revenues for the second quarter of 2013 as gas production from its U.S. assets increased by 8.3% to 653.8 million cubic feet.

Revenues for the second quarter was US$6.8 million (A$7.4 million), up from the US$6.4 million it made in the first quarter.

Field EBITDAX increased from US$4.4 million in the first quarter to US$4.7 million in the second quarter, while estimated Group EBITDAX rose 8.8% to US$3.22 million.

During the quarter, the company repaid US$2 million in debt and completed two oil wells in Mid-Con operations in Kansas.

As of 30 June 2013, Empire Energy had US$45.8 million drawn at an average cost of LIBOR + 4.34% from its Credit Facility with a further US$104 million available for acquisition and development drilling.

It also has US$4 million cash in hand.

U.S. Production

Empire Energy noted that production in Kansas was lower than forecast due to continuing well workovers and electrical problems caused by electrical storms and tornado's.

This reduced oil production by 2.1% to 66,123 barrels.

However, this was offset by the higher gas production from its Appalachia operations in New York State as wells are brought back on line following repairs to pipelines.

The company has also completed negotiations for the acquisition of about 100 miles of pipeline from the local utility in Chautauqua County, which is the western gateway to New York State with its location in the extreme southwest corner of the state.

Owning the pipeline will remove the company's dependence on third parties to make repairs. This is expected to gas shrinkage - currently estimated at about 10% in the region where the pipelines are located - by at least 50% to 60%.

It had previously added the pipelines will also allow it to - at minimal cost - redirect additional gas in this region between two sales points, based on price and the ability to move gas to other utilities.

This allows the company to direct gas to sales meters providing higher prices, which could make a difference of up to US$0.50 per thousand cubic feet.

In addition, at least 34 wells are currently shut-in - some for as long as three years - awaiting pipeline repairs before they can be brought back on line.

In Kansas, Empire Energy is currently completing the Barnhart 24-1 well in Pratt County and the Burmesiter 1-18 well in Meade County.

The Viola zone in Barnhart 24-1, where 10 feet of pay was intersected, is currently being fracture stimulated and will be brought on line over the next few days. The well also intersected 8 feet of potential Lansing/Kansas City zone.

Burmesiter 1-18 has been perforated and fracced and its currently producing a small amount of gas and liquid.

It had intersected 10 feet of potential Morrow Lime at 5,816 feet. In the Mississippian Lime sequence, 36 feet of potential Chester Lime at 5,830 to 6,060 feet and 42 feet of St Genevieve Lime at 6,098 feet.

Northern Territory

In the Northern Territory, Empire Energy has signed the exploration agreement for EP(A) 187 and continues to progress Traditional Owner negotiations for the remaining six areas.

The seven exploration licence areas comprise a total of 14.5 million acres and cover around 75% of the petroleum-prospective central trough of the onshore McArthur Basin.

Work is underway to start exploration on EP(A) 187. This includes the evaluation of tenders submitted by candidate seismic, drilling and related service providers to undertake the planned operational work.

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.

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