Empyrean Regulatory News (EME)

18 Apr 2007 09:51

Empyrean Energy PLC18 April 2007 Empyrean Energy PLC ("Empyrean" or the "Company"; Ticker: (EME)) Project Margarita, Gulf Coast Texas USA --------------------------------------- • Production commenced from the shallow well program.• One well (Milagro) connected to sales line with second (Dos Dedos)being connected.• Commencement of final wells shallow drilling program - drilling expected late May. AIM quoted Empyrean Energy PLC today announces the following update with regards the drilling program at Margarita: 1. El Viejito #1 Well The well flowed gas at a rate up to 210 mscfd within a 24 hour test period,however due to the high vertical permeability of the sands (atypical for thesesands) water influx from below the gas bearing interval gradually choked off gasflow reduce, due to the increased column of water within the production string.If the gas bearing interval had a base seal separating the gas and water thenthe zone would have been a good commercial producer. It was determined thatremedial work to prevent or inhibit water inflow was deemed to be unlikely tosucceed and not cost justifiable; therefore the well was suspended and can beused as a water disposal well for other joint venture wells in the area. 2. Dos Dedos # 1 Well The well is currently being prepared to be connected to a gas sales line andthis should be completed within a few days. It is proposed that the uppermostgas bearing sand in the well will commence production at 150,000 scfd. Probablereserves pertaining to this sand are of the order of 0.35 bcf gross gas. Furtherproduction and pressure data is required to more accurately predict potentialreserves. 3. Milagro #1 well The well was connected to a gas sales line on April 3, 2007 and has beenproducing at rates up to 384,000 scfd, averaging around 375,000 scfd. The wellis currently producing at 348,000 scfd with 1.67 bbls/d of oil. The prognosisfrom log analysis and sidewall cores is that the interval is oil bearing with ahigh gas oil ratio. This is based on a nearby analogue that produced 213,000barrels of oil and 0.3 bcf of gas. Initial flow from the analogue was almostentirely gas before oil flowed. At this time further production and pressuredata is required to more accurately predict potential reserves. Prior tocommencement of production, reservoir engineering analysis calculated potentialreserves within the feature at approx. gross 150,000 bbls oil and this wouldlikely take two wells to adequately recover these volumes. FINAL WELLS SHALLOW DRILLING PROGRAM Under the terms of the farmout agreement with Sun Resources NL a commercialsuccess in the initial 3 well shallow drilling program would trigger thedrilling of a further 3 shallow wells under the same terms. Empyrean will now contribute to the funding of the next three wells, Agavero #1,Dona Carlota #1 & Climaco #1 in the shallow drilling program and earn equityfrom each of the operating USA subsidiaries of Sun Resources, Victoria PetroleumNL ("Victoria") and Wandoo Energy LLC ("Wandoo"). The terms and conditions ofthe farmout are the same as the initial 3 well program with Empyrean earning a44% interest in these wells. The next 3 shallow prospects to be drilled are analogues of Frio and Vicksburgsand production in the area at depths less than 2,000 meters. The drillingprogram is expected to commence around mid May 2007 and run until the end ofJuly 2007. The prospects have the following mean reserve outcomes and totaldepths; Prospect Name Mean Reserves Total DepthAgavero 0.7 bcf 1,340 metresDona Carlota 0.8 1,525 metresClimaco 1.6 1,980 metres DEEP WELLS PROGRAM Conditional upon Empyrean exercising its option on completion of the remaining 3shallow wells, commencement of a deep drilling program on more substantialdeeper targets at the Cook Mountain Formation and Wilcox Formation levels isexpected to commence late September 2007. These prospects have potentialrecoverable gas volumes of 30 to 200 bcf unrisked. Participants in the Margarita Project are: Empyrean Energy PLC* 44.00%Sun Resources NL# 20.00%Victoria Petroleum NL# 20.00%Wandoo Energy LLC + 16.00% 100.00% # ASX listed* AIM listed+ USA Private Interest The information contained in this announcement was completed and reviewed by theTechnical Director of Empyrean Energy Plc, Mr Frank Brophy BSc (Hons) who hasover 40 years experience as a petroleum geologist. For further information:Laurence Read/ Ed PortmanConduit PRTel: +44 (0) 207 429 6605/ +44 (0) 7979955923 Empyrean Energy plcTel : +44(0) 207 182 1746 Rod Venables/ Cecil JordaanHB CorporateTel: +44(0) 207 510 8600 This information is provided by RNS The company news service from the London Stock Exchange