Empire Energy has announced a maj or independent upgrade in the Prospective Resources held within its 100% owned acreage in the Beetaloo Sub-basin and the McArthur Basin in the Northern Territory.

The NSAI report has seen a 96% rise in the Prospective Gas Resource within the key Velkerri shale sequence to 2,339 Billion Cubic feet (Bcf). This incorporates gas in the three main Velkerri shale units (Velkerri A, B and C). The report also opines for the first time on the liquid potential of the shallower Kyalla shale sequence, where a modest, but strategically important 14 million barrels of liquids has been identified as a Prospective Resource.

Exploration update

Empire completed the planned 2D seismic survey acr oss its pr ime Beetaloo Sub-basin acreage in late 2019. Initial int er pr et at ion has confirmed a thick sequence of prospective sediments on the wester n portion of EP 187, as expected. The seismic data set has allowed the Empire to confirm the basin extension and has also confirmed the presence of both Velkerri and Kyalla shale sequences in the permit. These two shales are the primary targets for the large exploration campaigns being undertaken by adjacent operators (Santos and Origin) in their high-profile exploration plans in the region.

The seismic indicates that the prospective intervals are continuous across this portion of the Beetaloo Sub-basin. The prospective sequences demonstrate similar seismic signals to the nearby Tanumbirini well and importantly, are located at a shallower depth, provide greater liquid potential and likely lower drilling costs. Both these factors would be accretive to value in a commercial outcome.

The seismic allowed advances in the EP 187 exploration program and assisted in defining the optimal well locat ion for Empire’s planned Carpentar ia-1 well. The seismic was also crucial in raising confidence in the acreage, which was a key indicator for the upgraded Prospective Resource estimate by NSAI.

Well planning for Carpentaria-1 is underway. Extensive well design work has been under taken and the company is advancing rig selection for the drilling in 2020. In parallel, EEG is developing a Covid-19 management plan in conjunction with other industry participants and APPEA. The plan will ensure the risk of Covid-19 transmission is minimized among the contractors, the workforce and more importantly through the local Northern Territory communities.

Update on Regional Activity in NT

Drilling and stimulation activity was initiated in the Beetaloo in late 2019 after the long-awaited moratorium on unconventional activities was lifted by the Northern Territory government.

The most advanced of the previous exploration programs, led by Santos and Origin, have progressed in 2020. However, the oil price decline and the Covid-19 pandemic have arrested the progress and further activity is on hold.

In EP 161, immediately west of Empire’s acreage, Santos Limited completed a 4-stage stimulation on the previously drilled Tanumbirini- 1 well which subsequently tested at rates in excess of 1.2 million cubic f eet per day (mmscfd). This was an exceptional result from a vertical fracture stimulation and was reported by Santos to have “exceeded initial expectations”.

Santos subsequently booked an initial net 2C Contingent Resource at Tanumbirini of 22 million barrels of oil equivalent (mm BOE), which equates to a 170 PJ of gross gas in the immediate vicinity of the Tanumbirini well.

Forward plans for drilling two new horizontal wells at Tanumbirini and nearby Inacumba were slated for 2020 but have been delayed due to internal cost- cutting measures and the issue surrounding Covid-19. Santos has confirmed a big investment in the Northern Territory, primarily focussed on delivering additional gas into the Darwin LNG scheme. The Beetaloo acreage appears to be a crucial part of this long- term plan.

Santos operates the project with a 75% joint venture share. Tamboran Resources (Unlisted) retains the remaining 25% share.

To the east of Santos, Origin Energy has operated the Kyalla 117 well which entailed the drilling of a vertical well and a kick-off into an extended reach horizontal well. After some drilling issues, the horizontal well reached a lateral extent of 1,579 metres. Fracture stimulation and testing activities have been delayed due to the Covid-19 issues. At this point, ORG anticipates a restart involving testing at Kyalla and further drilling to be undertaken from late 2020.

Origin operat es the Beetaloo project with a 77.5% equity interest in the Joint venture. Falcon Oil and Gas (TSX and AIM listed) reduced its holding to 22.5% after a recent farmout transaction with Origin. The farmout values the permit areas at approximately $330 million and emphasises the confidence in the progress of the venture by the Origin.

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