Oilbarrel 2 Nov 2006 Eagle North 1
http://www.oilbarrel.com/home.html
02.11.2006
Empyrean Energy Looks To Sugarloaf Prospect For Sweet Smell Of Success
"Empyrean Energy Looks To Sugarloaf Prospect For Sweet Smell Of Success
London AIM-listed Empyrean Energy is drilling ahead with the Sugarloaf-1 exploration well in Texas, where it hopes to bring a smile to investors' faces ahead of the Christmas break. Empyrean is earning a 6 per cent equity share in the Sugarloaf Hosston prospect in the onshore Gulf Coast Basin, with initial drilling scheduled for completion later this month, slightly behind original timings.
Empyrean farmed into the acreage earlier this year and partners Aussie duo Aurora Oil & Gas and Adelphi Energy, alongside operator Texas Crude Energy Inc. The proposed total depth of the well, which crosses a number of potentially interesting formations, is around 21,000 feet.
There is clear potential, especially in such a built-up, gas-hungry neighbourhood. Sugarloaf is an 80 km four-way closure that could hold several trillion cubic feet of gas, making it one of the largest undrilled structures onshore US. The P50 resource number on the prospect is 0.97 tcf and it carries a P10 estimate of 2.3 tcf.
But only time will tell how good Sugarloaf will taste. In the meantime, Empyrean can take heart from earlier drilling at its other US play, the Eagle Oil prospect in the San Joaquin Basin in California. A proven oil and gas zone - the area has produced some 12 billion barrels of oil and 11 tcf of gas through the years - the project offers strong potential for near-term production and cash flow.
Empyrean signed up for a 38.5 per cent slice of Eagle Oil just months after its market listing last year, and now partners another reputable Aussie in the shape of Victoria Petroleum NL. But getting the oil out of the ground is the key challenge. A workover rig is testing encouraging oil shows from previous drilling at the Eagle North-1 well, though the project has faced delays due to supply and equipment bottlenecks.
The group plan a future re-entry and sidetrack from the current cased Eagle North-1 well bore in the lower Gatchell oil sand, about 14,000 feet down. This future well test will indicate the size of the Eagle Oil pool, according to Tom Kelly, Empyrean's commercial director. “We know that oil is there,” he says. “We just need to flow test.”
More than a year after its AIM listing, Empyrean has bolstered its portfolio with two promising, and fairly low-risk, US-based projects. An additional capital raising exercise earlier this year means it is well placed to continue its exploration and work towards first production. This includes ongoing site work in Germany, the firm's other core territory.
On the other side of the Atlantic, the UK firm has a stake in the Glantal Prospect, Neues Bergland permit, close to Frankfurt, which is operated by Pannonian International Limited. The joint venture, which gives Empyrean a 40 per cent working interest - and the possibility of raising this to 52 per cent - hopes to extract gas trapped in deep coal beds.
Again, the prospect is thought to contain several tcf of recoverable gas reserves, hugely attractive figures anywhere but especially so in Western Europe's industrial heartland. But there is still some way to go, with further testing planned following initial positive drilling and gas shows."