LONDON (Alliance News) - Empyrean Energy PLC Monday said increased production at its Sugarloaf AMI project has resulted in "record financial results" in its recent full year.
Empyrean's pretax profit rose to USD5.2 million in the full-year ended March 31, compared to USD2.8 million in the prior full-year. Revenue increased by 51% to USD13.9 million from USD9.2 million in the comparable period a year earlier, as a result of increased production at the Sugarloaf AMI project in the US state of Texas.
The company said production had increased 50% in the 12 months to March 31, to 335,305 barrels of oil equivalent per day from 223,500 barrels of oil equivalent per day in the full-year that ended March 31, 2013.
The Sugarloaf AMI project, Empyrean's "flagship" site operated by Marathon Oil Corp is an Eagle Ford shale development. Marathon spudded 49 wells, with 39 brought into production during the full-year ended March 31. Well productivity has improved and "drilling and completion costs have reduced and are forecast by Marathon to continue to improve through 2014", said Empyrean.
"Marathon continues to ramp up drilling at our primary asset, and we believe potentially significant reserves upside exists within both the Eagle Ford shale and the Austin chalk, with the latter showing signs of being a transformational pay-zone for the company and its partners following recent successful appraisal wells," said Chief Executive Tom Kelly.
Marathon has spudded 107 wells to the end of March 31, since becoming operator of Sugarloaf in 2011, and "plan to spud approximately 100 wells during the 2014 calendar year," said Empyrean.
Empyrean said the additional development of the Austin chalk, where three wells have been drilled to test the formation "could involve the drilling of approximately 300 further wells.
"These would be in addition to the Eagle Ford Shale wells, for which 330 further wells will be required for full development," the company said.
Empyrean said reserves at Sugarloaf as at December 31, 2013 have been revised. The 1P Reserves have risen by 54% to 3.54 million barrels of oil equivalent and the 2P reserves up 48% to 6.53 million barrels of oil equivalent. 1P reserves are proved, whereas 2P reserves are the lower category of probable.
"The new 2C contingent resource for the Austin Chalk formation of 3.87 million barrels of oil equivalent provides additional short term potential for further reserve increases and value creation should further drilling continue to show promising results," added Chairman Patrick Cross, referring to the best estimate of contingent resources.
"Empyrean continues to benefit from an aggressive work programme being undertaken at two objectives available at Sugarloaf and the board of directors are pleased with the demonstrable increase in value," added Cross.
Empyrean's shares were down 0.8% to 19.92 pence per share Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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