Empire Energy Group has attained a milestone at its Beetaloo operations in northern Australia’s Gulf of Carpentaria, completing its new 3310m C-5H horizontal well into the target Velkerri-B shale and obtaining a strong gas flow.
Including the vertical section, the well was successfully completed with 5 1/2” casing to a total depth of 5310m in 41 days, from initial spudding-in to release of the Ensign rig from the permit three days ago.
The latest C-5H well was collared off the same drill pad as the two previous smaller diameter C-2H and C-3H wells. The three holes are the initial components of its Carpentaria pilot project. Drilling at C-5H marks a key step towards Empire achieving its first gas from the program.
While busy drilling, the company has also been active on the financial side, having now executed $28.8 million in new and expanded research and development and performance facilities underwritten by Macquarie Bank in November.
C-5H’s horizontal section is the longest drilled by Empire in its Beetaloo operation. It was run wholly within the Velkerri-B shale and parallel to the shorter C-2H horizontal leg, with strong gas flows reported throughout the program.
Empire says it will kick off fracture stimulation and production testing of the new well early in the second quarter of the new year, as the Northern Territory’s monsoonal wet season subsides. It doesn’t believe the three-month change in the program’s timing will delay first gas sales from the Carpentaria pilot project next year.
The company is looking at beginning stimulation in April, prior to placing the well on an extended production test at IP(30) flow rates.
Empire says the C-5H well cost about $19.7 million from spudding-in to suspension prior to fracture stimulation and attributes a sizeable chunk of the cost to transport and logistics, including the cost of mobilising a rig for a one-hole campaign.
Management expects overall costs and drilling duration per hole would be materially reduced for multi-hole programs. It cites the development of the Queensland coal seam methane industry and the early development period of the United States’ shale basins as examples where drilling and completion costs have reduced by about 80 per cent over time.
Empire Energy Group's managing director Alex Underwood said: “The safe and successful drilling, casing and cementing of C-5H represents a major operational milestone for Empire and the broader Beetaloo Basin.”
Empire has also been working to grow the cash in its kitty to meet ongoing developments. With the completion of a $30m R&D facility and a $5m performance bond facility, Empire has increased available liquidity by about $28.2m, which the company says will significantly reduce the potential dilution of its shareholders’ equity.
Empire executed binding letters of commitment in late November for a total $65m financing package, which includes a $30m R&D facility to fund exploration, appraisal and development activities, including its latest C-5H well and construction of in-field infrastructure.
Management said the new R&D funding access represents an increase and maturity extension of an existing $2.25m facility and has been scaled at 80 per cent of the tax rebates for the 2024 and 2025 financial years under the Australian government’s R&D Tax Incentive Scheme.
A new $5m performance bond facility is the same size as Empire’s existing facility limit. The company has already drawn down $4.2m from the facility to meet its Northern Territory environmental bonding obligations.
The remainder of the November funding package includes a $30m midstream infrastructure facility to support refurbishing and building the company’s Carpentaria gas plant and associated infrastructure.
Documentation for that $30m midstream infrastructure funding availability is expected to be completed in the first quarter of 2025.
Empire now has $25.7m in the bank, with an additional $28.8m available and undrawn under the Macquarie facility.
With C-5H well stimulation and its potential for good flows due to kick off in April, gas production expected from the Carpentaria pilot plant in the new year and a handy bundle of boodle in its swag, Empire looks to be cementing its solid industry position in the Gulf with a promising project at its Beetaloo operation.
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By Doug Bright
