Material Increase in Carpenteria-2H IP30 Flow Rate

Highlights

• Carpentaria-2H (“C-2H”) has achieved a new average flow rate over 30 days (“IP30”) of 2.81 mmscf per day, equating to a normalized flow rate of over 3 mmscf per day per 1,000m of horizontal section. This represents an increase of approximately 17% over the initial IP30 rates announced in September 2022 despite partial reservoir depletion following the initial 51-day flow testing program. The current flow rate is 2.3 mmscf per day.

• This excellent result, achieved with a highly experimental and therefore unoptimized stimulation design, validates the soaking strategy that Empire has employed and will be incorporated into Empire’s development planning process which is well underway.

• North American reservoir engineering firm Subsurface Dynamics, Inc. (“SSD”) has analysed the flow testing performance of C-2H. SSD’s analysis indicates that development wells with 3km laterals in the C-2H area could generate total estimated ultimate recovery (“EUR”) of 6.2 BCF gas per well on a P50 basis and 8.1 BCF gas on a P10 basis. Most of this gas would be produced in the first 3 – 5 years, consistent with US shale basins, which would drive rapid recovery of invested capital.

• Based on Empire’s existing drilling and stimulation cost performance, the operations team estimates that development wells with 3km lateral sections and 60 fracture stimulation stages in the pilot phase can be drilled, fracture stimulated and completed for production for approximately $20 million per well (and likely below $15 million per well in larger scale development scenarios given the economies of scale that would be generated).

• This indicates that Empire could achieve upstream development costs of approximately A$2.00 to A$3.00 per mscf in future development scenarios. 

• Flow testing is ongoing, and Empire’s management, subsurface and operations teams are progressing the work required to take a proposal to the Board for a Final Investment Decision for the pilot project later this year (“Pilot FID”). 

• Current cash balance is $15.7 million with approximately $3.5 million remaining to be paid in relation to the 2022 drilling and stimulation programs. The $15 million credit facility is available but undrawn providing further liquidity. The final Beetaloo Cooperative Drilling Program progress payment of ~$7.6m is expected to be received soon. This leaves Empire well capitalized to carry out the preparatory work for the Pilot FID. 

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