Empire Energy Group Limited (ASX: EEG) is into the production and exploration of oil & gas. The focus of the company involves on-shore oil and gas fields with longer life, which are primarily located in US. The company strategically seeks to produce oil and gas assets with low risk development acreage and lower costs.
The company on 6 March 2019 has announced that the Kansas Production Enhancement Program has continued to generate strong results. The total production rates achieved from the program have continued to increase as new wells have been brought online.
The investments made by the company in the program has already paid out, with total estimated net revenues exceeding total capital investment, despite recent oil price weakness.
The current net revenue interest production rate of the work to date net to Empire (after all royalties) is ninety barrels of oil per day.
Under the terms of the company’s new credit facility with Macquarie Bank Limited, it is entitled to spend up to US$440,000 on the Program, of which approximately US$265,000 has been invested till date.
The Company has a substantial inventory of additional well workover and recompletion candidates in Kansas which it can invest in under the Program. However, further capital investment in the Program has been deferred while the Company evaluates indicative proposals received to acquire part or all its US assets as described further below.
As per the company’s new leadership detailed strategy for wealth creation of shareholders, the company seeks to reduce debt through the sale of US assets to focus on the substantial value creation potential of the Northern Territory assets. Over the recent months, the Company has been actively discussing with numerous Australian and US oil and gas companies that are interested in acquiring the US assets of the company.
Empire has received several proposals from potential acquirers for part or all the US assets, which the directors are considering. In line with the ASX guidance, the company has not disclosed these proposals to the market in accordance with the conditional and confidential terms. The company is into discussions with these parties and others. However, it is important to know that all proposals received till date are incomplete, which are subject to conditions, not binding and there is no certainty of the proposals leading to a transaction.
The company will update the market in accordance with its continuous disclosure obligations, in case a proposal is developed that the Board considers to be in the best interests of shareholders and progresses to a point where a transaction on acceptable terms to the company is likely to materialize.
On the price-performance front, the stock of Empire Energy Group Limited is trading at $0.019 with an increase of ~11.765% during the day’s trade with a market capitalisation of ~$39.32 million. The stock has generated a YTD return of 30.77% and posted negative returns of 19.05% and 5.56% over the last six months and one-month period respectively. It has a 52-week high price of $0.045 and a 52-week low price of $0.011 with an average trading volume of ~1.54 million.
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