Cenkos - imminent drilling activity27 Aug 2021 10:32
Empyrean Energy Upgraded
Cenkos report
27 August 2021 2021 Annual Results Empyrean Energy Plc
Imminent Drilling Activity
Empyrean has published its 2021 Annual Report in advance of what will be a defining period for the Company. Following a successful c£5m placing in July, Empyrean has sufficient funding to secure a drilling rig and order long lead items in advance of the planned drilling of the high-impact 225mmbbls Jade prospect before the end of 2021. A novel placing warrant structure, with early exercise incentive substitute and bonus warrants has provided a mechanism by which the Jade well could be completely funded without the need for an asset sale, farm-down or further placing, putting the Company’s destiny in the hands of shareholders and avoiding any unnecessary dilution.
Exploration success at Jade would see our risked valuation of the Jade prospect increase from 9.9p to an estimated c.41.8p, a c4.2x increase. Success at Jade would also significantly de-risk both the adjacent Topaz and Pearl prospects.
Unrisked (the point at which there is 0% risk) our valuation of the Pmean resources at Jade would increase to c.83.7p.
With all but one of the adjacent CNOOC oil discoveries “filled to spill�, their recoverable resources are close to the P0/P10 oil in place volumes. Assuming a P10 oil in-place volume for the Jade prospect increases our unrisked valuation from an estimated c.83.7p to c.135.7p. BUY.
� In the Hands of the Shareholders Following the Company’s successful placing in July, Empyrean has the required funds to secure a suitable drilling rig and order long-lead items in advance of the drilling of the high-impact 225mmbbls Jade prospect before the end of 2021.
Subscribers to the July placing received one warrant exercisable at 12p for every two new ordinary shares subscribed, exercisable for 12 months. If the placing warrants are exercised within three months, subscribers will receive a replacement incentive warrant exercisable for 15 months with an exercise price of 12p plus a bonus warrant exercisable for 24 months with an exercise price of 18p. Funds raised from the exercise of any warrants will be used for drilling preparation activities and the drilling of the Jade prospect. The Company is optimistic that the full funding commitments for the Jade well will be met through the exercise of these warrants, with several near-term share price catalysts leading up to drilling, being the securing of a drilling rig, the completion of site survey and the confirmation of a spud date, which will be conducive to securing the remaining funding for the well.
At an estimated well cost of c.US$18.0m, the placing warrant structure with early exercise incentive substitute and bonus warrants provides a mechanism by which the shareholders can potentially achieve a situation where the well is completely funded without the need for asset sales, joint ventures or further placings.
Continued...
With Thanks to Jemjem fr
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