Empire Energy (ASX:EEG) Deepens Beetaloo Basin Footprint with Pangaea Assets  

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Summary

  • Empire Energy is acquiring five oil & gas assets in the prolific Beetaloo Basin.
  • The acquisition will involve cash payment and issue of ordinary shares and unlisted options.
  • The deal will allow access to the gas-starved Eastern Australia with a potential of overseas export through the existing LNG terminals.
  • The company is also planning a capital raising program.

Empire Energy Group Limited (ASX:EEG) has reached a binding sale and purchase agreement with Pangaea (NT) Pty Ltd. The agreement is for the acquisition of oil & gas assets in the Beetaloo Sub-basin through cash, ordinary shares and unlisted options in Empire.

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Pangaea controls an 82.5% interest in five tenements in the Beetaloo Basin. The remaining 17.5% interest is held by the Energy and Minerals Group (EMG) of Texas. Empire is in discussions with EMG to acquire full ownership of the assets.

To conclude the Sale and Purchase Agreement, Empire will issue 140 million shares to Pangaea and 8 million options exercisable at a price of A$0.7 in addition to a cash consideration of A$5 million. The acquisition will endow Empire with world-class oil & gas assets with Best Estimate Prospective Resources of 22 TCF natural gas and 630 MMbbl of liquids.

If EMG also agrees to the deal, Empire would further shell out A$1.06 million in cash, 29.7 million of its shares and 1.7 million options @A$0.7, thus gaining 100% stake in the Beetaloo assets.

Overview of Beetaloo Assets

Netherland, Sewell & Associates, Inc. (NSAI) has certified 2C contingent resource of 130 Bcf natural gas and 2.9 MMbbl of liquids, net to Pangaea, on the five assets. The acquisition will grant access to 12 million acres of area in the Beetaloo Basin.

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Pangaea and its JV partner EMG had invested A$110 million during 2013-201616 in the tenements. They drilled one exploration and four appraisal wells on the assets. Two stratigraphic holes were also drilled to study the geology and structure of the subsurface. The acquisition will also grant Empire access to

valuable data sets including 1,800km of 2D seismic survey, airborne survey of over 29,000km and core sample data analysis of more than 3,500m.

Beetaloo is a highly prolific oil & gas basin, with shale being a primary play with high resource concentration and reservoir properties similar to the shale reserves of the US.

Some of the other key players holding strategic assets in the basin are Santos Limited (ASX:STO), Origin Energy (ASX:ORG) and Armour Energy Limited (ASX:AJQ)

Value Addition to Empire After Acquisition

The acquisition will increase the 2C contingent gas resource of Empire by 300% to 171 Bcf while the Company will book maiden resource in the liquid category.

The projects in the Beetaloo Basin are also receiving government support. The government has announced the A$224 million Beetaloo Strategic Basin Plan. The fund could be utilised for exploration as well as development of infrastructure to access the market as well as prospects in the basin.

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Empire could also leverage from the enormous market potential of the gas starved Eastern Australia. The location of the basin makes it ideal for both domestic gas supply as well as international supplies through the Darwin and Gladstone LNG export terminals.

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Share Price Movement

The shares of Empire had a flat opening today at the market. At around 03:22 PM (AEST), the shares were trading at A$0.355 on 14 April 2021. The company has a market cap of A$114.99 million.


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