TIDMEME
RNS Number : 9915A
Empyrean Energy PLC
30 May 2023
This announcement contains inside information
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
Empyrean Energy plc
Capital raising, Debt Restructure and Company Update
30 May 2023
Empyrean Energy plc ("Empyrean" or the "Company"), the oil and
gas development company with interests in China, Indonesia and the
United States, is pleased to announce a successful capital raise
and debt restructuring as well as an update on future activities at
the Mako Gas Field at the Duyung PSC (Empyrean 8.5%) ("Mako") and
the Topaz prospect at its Block 29/11 permit (Empyrean 100%),
offshore China ("Topaz").
HIGHLIGHTS
-- GBP1.52 million raised at a price of 0.8p
-- Placement oversubscribed
-- Mako Gas Sales Agreement binding terms expected late Q2 and
sell down news expected early Q3
-- Joint regional oil migration study with CNOOC team to be completed
-- 3D seismic inversion project to discriminate light oil from
water to commence at Topaz with a specialist seismic consultancy
with expertise in seismic inversion
-- Convertible Note debt restructure to reduce face value of the
Convertible Note and secure extended moratorium on interest
-- Management participation in the capital raising and agreement
to sacrifice one-third of salary for new equity to minimise cash
burn ahead of key developments
Empyrean is the operator of Block 29/11 in China and has 100%
working interest during the exploration phase. In the event of a
commercial discovery, its partner, China National Offshore Oil
Company ("CNOOC"), may assume a 51% participating interest in the
development and production phase.
Capital Raising
Empyrean is pleased to advise that it has entered into binding
subscription agreements to issue 189,753,783 new Ordinary Shares of
0.2p each in the Company (the "New Ordinary Shares") at a price of
0.8p per New Ordinary Share (the "Issue Price"), raising
GBP1,518,030 (before costs) (the "Subscription").
The Issue Price represents a 22.3% discount to the price of the
Company's ordinary shares of 0.2p each (the "Shares") as at close
of business on 26 May 2023 (1.03p) and a 33.5% discount to the
volume weighted average price of the Shares for the ten days prior
to close of business 26 May 2023 (1.12p) ("10 Day VWAP").
Empyrean advises that the Board has resolved to issue 2,887,500
Shares to advisors of the Company in lieu of part of the fees
incurred for the capital raising (the "Advisor shares").
The Subscription is being completed under the Company's existing
authorities and is not subject to the approval of shareholders.
Following the Subscription and issue of the Advisor shares, the
Company's enlarged issued share capital will comprise 981,073,175
Shares. This figure may be used by shareholders as the denominator
for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest
in, securities of the Company under the Financial Conduct
Authority's Disclosure and Transparency Rules.
Of the total raised under the Subscription, CEO and Managing
Director of Empyrean, Tom Kelly, has subscribed for 6,250,000 New
Ordinary Shares for a total consideration of GBP50,000. Following
his participation in the Subscription, Mr Kelly has an interest in
95,138,888 Shares, representing 9.69% of the enlarged issued share
capital of the Company. In addition, Technical Director of
Empyrean, Gaz Bisht, has subscribed for 1,850,000 New Ordinary
Shares for a total consideration of GBP14,800. Following his
participation in the Subscription, Mr Bisht has an interest in
33,671,429 Shares, representing 3.43% of the enlarged issued share
capital of the Company. Further, Company Secretary of Empyrean,
Jonathan Whyte, has subscribed for 500,000 New Ordinary Shares for
a total consideration of GBP4,000. Following his participation in
the Subscription, Mr Whyte has an interest in 673,572 Shares,
representing 0.07% of the enlarged issued share capital of the
Company.
The funds raised from the Subscription will be used as
follows:
-- for the completion of joint regional oil migration studies with CNOOC at Topaz ;
-- for the completion of a 3D seismic inversion study aimed to
discriminate between oil and water in the reservoir at Topaz;
-- for ongoing prospect, licensing fees and permit costs;
-- for post Jade well consultancy, analysis and residual exploration costs;
-- for front-end engineering design ("FEED"), studies and
surveys at Mako - including gas processing and export gas tie in at
the Kakap KF Platform; and
-- for general working capital requirements
Application will be made for the New Ordinary Shares and the
Adviser Shares to be admitted to trading on AIM. Admission is
expected to take place on 12 June 2023. The New Ordinary Shares and
the Adviser Shares will rank pari passu with existing Shares in
issue.
Future Activities
Mako Gas Field
As previously announced, Conrad Asia Energy ("Conrad"), the
operator and 76.5% partner in Mako has commenced a sell down
process with a global investment bank in order to fund the
development of Mako. Mako is the largest undeveloped gas
accumulation in the immediate region and Conrad have said that
industry interest in the project and sell down process is
encouraging. Mako has received government approval for a Plan of
Development. A Gas Sales Agreement is currently in advanced stages
of negotiation and a binding terms sheet is expected between the
partners, a Singaporean buyer and SKKMIGAS (the Indonesian
regulator) in the near term.
Topaz Prospect
Empyrean intends to conduct two further key projects that
capitalise on the excellent quality 3D seismic acquired by the
Company over the permit, shared regional 3D seismic that CNOOC has
and additional physical well data of both Empyrean and CNOOC. These
projects are designed to help address and mitigate the remaining
primary geological risk at Topaz - oil migration into the Topaz
trap.
Firstly, jointly with CNOOC, Empyrean intends to complete a
regional oil migration study. CNOOC bring excellence in local basin
modelling expertise along with crucial regional data that augments
the data Empyrean has on Block 29/11. The regional data includes
temperature, pressure, timing of oil maturation, and successful oil
migration pathway mapping. The project will map oil migration from
the proven source rock south west of Block 29/11 that charges the
four CNOOC oil discoveries (immediately west of Block 29/11 and
Topaz) and extend this into Block 29/11 and map these migration
pathways to Topaz. In addition, similar work will be conducted from
a new kitchen located entirely within Block 29/11 and oil migration
pathways will be mapped to Topaz. This project is expected to take
approximately 4 months to complete.
Secondly, Empyrean will conduct a 3D seismic inversion project
focussing on Topaz. The 3D seismic inversion project will utilise
the oil properties, reservoir temperature, reservoir pressure and
water salinity data from CNOOC oil discovery wells combined with
reservoir porosity and physical data from Empyrean well logs and
core to maximise the effectiveness of the inversion project
outcomes. The aim of the 3D seismic inversion project is to assess
whether Topaz has different elastic properties to that of three
water bearing wells in Block 29/11 and whether these properties can
discriminate between water and light oil in the high porosity
carbonate reservoir rocks on the high quality Topaz 3D seismic. The
3D seismic inversion project is expected to take approximately 3
months to complete.
Debt Restructuring
In December 2021, the Company announced that it had entered into
a Convertible Loan Note Agreement with a Melbourne-based investment
fund (the "Lender"), pursuant to which the Company issued a
convertible loan note to the Lender and received gross proceeds of
GBP4.0 million (the "Convertible Note").
As announced in May 2022, the Company and the Lender then
amended the key repayment terms of the Convertible Note, which at
that time included the right by the Lender to redeem the
Convertible Note within 5 business days of the announcement of the
results of the Jade well at Block 29/11. The face value of the loan
notes was reset to GBP3.3m with interest to commence and accrue at
GBP330,000 per calendar month from 1 December 2022.
The Company and the Lender have, in conjunction with and
conditional upon the completion of the Subscription, now reached
agreement on amended key terms to the Convertible Note to allow the
sales process for Mako to complete. The key terms of the amendment
are as follows:
1. The face value of the Convertible Note has been reduced from
GBP5.28m (accrued to the end of May 2023) to GBP4.6 million;
2. No interest shall accrue on the Convertible Note until 31
December 2023, with interest accruing thereafter at a rate of 20%
p.a.;
3. The conversion price on the Convertible Note has been reduced from 8p to 2.5p per Share;
4. Unless otherwise required by the joint operating agreement
entered into with Empyrean's licence partners (the "JOA") or with
the prior written consent of the Lender (such consent not to be
unreasonably withheld or delayed), Empyrean may only execute
agreements for the sale of its interest in Mako (in whole or in
part) if the terms of the sale provide for a payment to Empyrean at
completion of immediately available funds and for a sale price of
an amount that is at least the amounts owed to the Lender (as
described in 5 and 6 below):
5. On a successful sale of the Company's interest in Mako,
Empyrean must redeem the face value of the Convertible Note and pay
the Lender the greater of (a) US$1.5 million or (b) 15% of the
proceeds such sale;
6. In the event that the Company repays the Convertible Note
from sources other than a sale of its interest in Mako, Empyrean
must also pay the Lender US$1.5 million on redemption of the
Convertible Note together with a further payment based on either
(a) the actual valuation achieved on any sale within 2 years or (b)
an updated valuation of the Company's interest in Mako if not sold
within that 2 year period, in each case so that the total proceeds
paid to the Lender are 15% of the valuation of the Company's
interest in Mako;
7. In the event that the sale process being run on behalf of the
operator, Conrad, does not result in an offer being made to acquire
all or part of the Company's interest in Mako, then Empyrean must
work with the Lender in good faith to sell the Mako Interest as
soon as reasonably possible and, subject to applicable laws and the
terms of the JOA, may grant rights to the Lender to market this
interest on its behalf.
Salary Sacrifice
While the Company awaits the anticipated signing of the GSA and
the completion of the sell down process noted above, two of its
Directors, Tom Kelly and Gaz Bisht, together with its Company
Secretary, Jonathan Whyte, have agreed to take one third of their
salaries in new Shares ("Salary Sacrifice Shares") in lieu of cash
remuneration in order to preserve capital and ensure more funds are
directed towards project activities. The Salary Sacrifice Shares
will be issued at the same price as the Subscription Price ( 0.8p
per New Ordinary Share ) and will be issued to the relevant
participants at the end of each month starting June 2023. This
arrangement will conclude on the earlier of 31 December 2023 or the
signing of a binding agreement for the sale (in part or whole) of
Empyrean's interest in Mako.
Issue of Warrants
Empyrean advises that the Board has resolved to issue warrants
in respect of 2,833,333 Shares to advisors of the Company, for
consultancy and advisory services provided over the last 12 months
(the "Advisor Warrants").
The exercise price of the Advisor Warrants is 1.5p each and they
will expire on 30 May 2024.
Empyrean also advises that the Board has resolved to issue
incentive warrants in respect of 10,000,000 ordinary shares of 0.2
pence in the Company to the Company Secretary, Jonathan Whyte, or
his nominee (the "Incentive Warrants").
The Incentive Warrants have been granted as part of the
Company's strategy to retain and incentivise directors and
management of the Company. The Incentive Warrants will expire on 30
May 2026.
The Incentive Warrants are to be issued in two equal tranches of
5,000,000. The exercise price of the first tranche of Incentive
Warrants is 1.5p each, which represents an approximate 25% premium
to the volume weighted average price of the Shares for the ten days
prior to the date of grant. The exercise price of the second
tranche of Incentive Warrants is 2.0p each, which represents an
approximate 66% premium to the volume weighted average price of the
Ordinary Shares for the ten days prior to the date of grant.
The technical information contained in this announcement has
been reviewed by Empyrean's Executive Technical director, Gaz
Bisht, who has over 32 years' experience as a hydrocarbon geologist
and geoscientist.
Empyrean CEO, Tom Kelly, stated:
"Empyrean is very pleased with the outcome of this capital
raising and is grateful for the continued support from its
shareholders. We now look forward with great interest to the
conclusion of Gas Sales Agreement negotiations and to developments
on the sell down process of the Mako Gas Field. The macro
environment for gas in South East Asia, and Singapore in
particular, is expected to continue trending favourably with the
region transitioning from coal to gas as the preferred energy
source. Energy demand and gas demand are both forecast to continue
to grow.
In China, we will use the very latest technology to further
de-risk the very large 890 million barrel (P10) target at Topaz.
Following success on the regional oil migration study and 3 seismic
inversion project, we will continue our preparations for drilling
within the November - May 2024 drilling weather window."
For further information please contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 6146 5325
Cenkos Securities plc (Nominated Advisor and Broker)
Neil McDonald Tel: +44 (0) 20 7297 8900
Pearl Kellie
First Equity (Join Broker)
Jason Robertson Tel: +44 (0) 20 7330 1883
NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS
DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY
ASSOCIATED WITH THEM
1 Details of the person discharging managerial responsibilities/person
closely associated
a) Name: Thomas Kelly
----------------------------- ----------------------------------------
2 Reason for the Notification
-----------------------------------------------------------------------
a) Position/Status: Managing Director/CEO
----------------------------- ----------------------------------------
b) Initial notification/ Initial Notification
Amendment:
----------------------------- ----------------------------------------
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-----------------------------------------------------------------------
a) Name: Empyrean Energy Plc
----------------------------- ----------------------------------------
b) LEI: 213800ZRH1WBHEWDFA57
----------------------------- ----------------------------------------
4 Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted
-----------------------------------------------------------------------
a) Description of the financial Ordinary shares of 0.2p each ("Shares")
instrument, type of GB00B09G2351
instrument:
Identification code:
----------------------------- ----------------------------------------
b) Nature of the transaction: Subscription for Shares
----------------------------- ----------------------------------------
c) Price(s) and Volume(s): Price Volume
0.8p 6,250,000
----------------------------- ----------------------------------------
d) Aggregated Information: N/A (Single transaction)
- Aggregated Volume
- Price
----------------------------- ----------------------------------------
e) Date of the Transaction: 30 May 2023
----------------------------- ----------------------------------------
f) Place of the Transaction: London Stock Exchange, AIM (LON:EME)
----------------------------- ----------------------------------------
1 Details of the person discharging managerial responsibilities/person
closely associated
a) Name: Gaz Bisht
----------------------------- ----------------------------------------
2 Reason for the Notification
-----------------------------------------------------------------------
a) Position/Status: Technical Director
----------------------------- ----------------------------------------
b) Initial notification/ Initial Notification
Amendment:
----------------------------- ----------------------------------------
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-----------------------------------------------------------------------
a) Name: Empyrean Energy Plc
----------------------------- ----------------------------------------
b) LEI: 213800ZRH1WBHEWDFA57
----------------------------- ----------------------------------------
4 Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted
-----------------------------------------------------------------------
a) Description of the financial Ordinary shares of 0.2p each ("Shares")
instrument, type of GB00B09G2351
instrument:
Identification code:
----------------------------- ----------------------------------------
b) Nature of the transaction: Subscription for Shares
----------------------------- ----------------------------------------
c) Price(s) and Volume(s): Price Volume
0.8p 1,850,000
----------------------------- ----------------------------------------
d) Aggregated Information: N/A (Single transaction)
- Aggregated Volume
- Price
----------------------------- ----------------------------------------
e) Date of the Transaction: 30 May 2023
----------------------------- ----------------------------------------
f) Place of the Transaction: London Stock Exchange, AIM (LON:EME)
----------------------------- ----------------------------------------
1 Details of the person discharging managerial responsibilities/person
closely associated
a) Name: Jonathan Whyte
----------------------------- ------------------------------------------------------
2 Reason for the Notification
-------------------------------------------------------------------------------------
a) Position/Status: Company Secretary
----------------------------- ------------------------------------------------------
b) Initial notification/ Initial Notification
Amendment:
----------------------------- ------------------------------------------------------
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-------------------------------------------------------------------------------------
a) Name: Empyrean Energy Plc
----------------------------- ------------------------------------------------------
b) LEI: 213800ZRH1WBHEWDFA57
----------------------------- ------------------------------------------------------
4 Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted
-------------------------------------------------------------------------------------
a) Description of the financial Warrants over ordinary shares of 0.2p
instrument, type of each ("Shares")
instrument: GB00B09G2351
Identification code:
----------------------------- ------------------------------------------------------
b) Nature of the transaction: (i) Subscription for Shares
(ii) Grant of 10,00,000 Incentive
Warrants over Shares with an expiry
date of 30 May 2026.
----------------------------- ------------------------------------------------------
c) Price(s) and Volume(s): (i) Price Volume
0.8p 500,000
(ii) Exercise Price(s) Volume(s)
GBP0.015 5,000,000
----------
GBP0.02 5,000,000
----------
----------------------------- ------------------------------------------------------
d) Aggregated Information: N/A (Single transaction)
- Aggregated Volume
- Price
----------------------------- ------------------------------------------------------
e) Date of the Transaction: 30 May 2023
----------------------------- ------------------------------------------------------
f) Place of the Transaction: London Stock Exchange, AIM (LON:EME)
----------------------------- ------------------------------------------------------
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