Empyrean to increase stake in gas projects in Sacramento Basin, US

Australia-based exploration company Empyrean has signed a new agreement with Sacgasco to increase its interest in multiple gas projects in the Sacramento Basin, California, US.

The agreement will see the company increase its working interest (WI) in the Dempsey prospect from 25% to 30%, targeting one trillion cubic feet (Tcf) conventional gas to be drilled in the third quarter of 2017.

Furthermore, through the agreement, Empyrean seeks to increase its stake in Alvares appraisal prospect from 10% to 25%, targeting two Tcf gas.

The company will now have a 30% interest in Dempsey Trend AMI, including at least three large Dempsey style follow up prospects, in exchange for providing technical assistance to Sacgasco to further mature prospects.

Empyrean CEO Tom Kelly said: "The increased interest in the Sacramento Basin projects reflects our increasing confidence and understanding of the opportunity to be part of an exciting package that offers multiple chances to make very large gas discoveries in a region of the US with increasing gas demand and excellent existing surface infrastructure. 

“Any discovery we make can very quickly be put into production to create early cash flow.”

Under the terms of the agreement, Empyrean will pay a further $90,000 within three working days of signing a definitive farm-out agreement and joint operating agreement (JOA) with Sacgasco.

This will allow Empyrean to secure its right to participate in the Dempsey Prospects.

Upon completing this payment, Empyrean will have to pay $2m towards the dry hole cost of the Dempsey-1 Well to earn its increased 30% WI in the prospects.

As a precursor to increase its WI, the company has also agreed to pay 33.33% of the dry hole well costs in the next Alvares appraisal well.

With respect to Dempsey Trend AMI, Empyrean has to pay 60% of dry hole cost of Prospect #1, and 45% of the dry hole cost of Prospect #2 and Prospect #3.