Empire Energy (ASX:EEG) has released its Q3 2024 quarterly report, announcing progress in its Carpentaria Gas Project.
The company focuses on exploring and developing unconventional gas resources across approximately 29 million acres in the Beetaloo Sub-basin of the Northern Territory. Unlike conventional gas, which flows through porous rock and is generally extracted from large reservoirs, unconventional gas is often trapped in impermeable rock formations, like shale, coal seams or tight sandstone. This gas is typically obtained using techniques like hydraulic fracturing (fracking) and horizontal drilling, which enable gas to be released from the rock.
This quarter, Empire’s work centred on the development of its Carpentaria-5H (C-5H) well. Development of the C-5H well is slated to begin in November 2024, with Empire contracting Ensign Australia for drilling and Halliburton for hydraulic stimulation. The well is planned as Empire’s longest horizontal well, targeting a 3,000m lateral section and aiming for optimal productivity with approximately 60 fracture stimulation stages. Empire is incorporating insights from North American shale operations and prior wells in Carpentaria, expecting the well to be one of the most productive in the region. Long lead items, including drill casing and wellheads, have already been secured, and the necessary environmental and regulatory approvals are in place.
Empire’s recent binding 10-year Gas Sales Agreement (GSA) with the Northern Territory Government, signed on 26 July 2024, outlines an initial supply of 25 terajoules (TJ) per day from 2025. The agreement also includes an optional supply of an additional 10 TJ per day if production exceeds 100 TJ per day, potentially delivering 75 petajoules (PJ) over the contract term. Gas will be transported via the McArthur River Pipeline on a take-or-pay basis (an agreement where the buyer agrees to "take" a specified minimum quantity of gas or "pay" a penalty for the shortfall), with prices indexed to the Consumer Price Index. “This agreement marks a pivotal step in our mission to support energy security in Australia,” said Managing Director Alex Underwood. “The NT Government’s commitment underscores the strategic importance of the Beetaloo Basin for the region’s energy future.”
Empire’s cash reserves at the end of the quarter were reported at $39.8m. Empire also received a $4m Research and Development Tax Offset, which will bolster its working capital for advancing the project.
Empire Energy aims to reach a final investment decision (FID) for the project in time for gas sales to commence by mid-2025, dependent on regulatory milestones.
Shares are trading 2.33% higher at 22 cents.
