A research and development tax offset of $15.6 million – and a healthy bank balance now at $29.3 million – will underpin Empire Energy Group’s bid to take its Carpentaria pilot project to a final investment decision.
The company is planning two stages of development for midstream gas infrastructure at the project in the Northern Territory’s Beetaloo Basin, which it says has the potential to service the Top End and east coast of Australia with more than 500 terajoules of power per day.
The Australian Government’s research and development tax incentive program provides companies engaging in eligible activities with a refundable offset of up to 43.5 per cent. Empire’s refund for the 2022 calendar year took in fracture stimulation and flow testing of its Carpentaria-2H well and the drilling and fracture stimulation of the Carpentaria-3H well.
Management says it plans to use the refund to pay off all or part of a revolving credit facility with the Macquarie Bank, the advancement of the final investment decision of the Carpentaria pilot project, including purchasing lead items for the operation, in addition to providing extra working capital.
Empire Energy Group managing director Alex Underwood said: “Empire’s focus is on funding the Pilot Project in a manner that minimizes dilution of shareholder’s interests in the Company. To that end, Empire is discussing potential debt options with lenders and has commenced discussions with parties interested in acquiring a direct working interest in the project in exchange for funding development activities.”
The pilot project’s first stage will see early works to facilitate the construction of gas gathering, processing, compression and associated midstream gas infrastructure aimed at meeting a sales production rate of up to 25 terajoules a day. The project will utilise the existing McArthur River and Amadeus gas pipelines to service the town of Daly Waters and the McArthur River Mine, in addition to Darwin, Alice Springs and regional centres in the NT.
The second stage of development will see early works kick off on the lead concept, which proposes the construction of a new Beetaloo sub-basin gas pipeline.
Empire recently announced a new deal with infrastructure specialists APA Group to progress gas transport solutions for its Carpentaria shale gas pilot project. APA will fund the infrastructure facilities construction with up to $5 million, materially reducing Empire’s capital requirements to start commercial production.
Management says the initial agreement outlines APA funding the new pipeline subject to entering long-form agreements and believes it could expand to meet growing market demand for gas on the east coast – currently estimated to be in excess of 500 terajoules per day.
The partnering agreement would also see Empire grant APA exclusive rights to develop and execute its midstream gas infrastructure projects. In exchange, APA would become a foundation customer in any multi-user pipelines exporting gas from Empire’s Beetaloo sub-basin assets.
The company has previously announced it is aiming for first gas sales in the first half of next year.
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By Michael Philipps
