Delays in Stimulation and Stakeholder Consent Could Challenge Empire’s 2025 Gas Targets
Empire Energy has successfully drilled its longest well to date, secured a $65 million financing package, and received environmental approval for its Carpentaria Pilot Project, setting the stage for first gas deliveries later in 2025.
- Carpentaria-5H well drilled to 5,310 metres with a 3,310 metre horizontal section
- Secured $65 million financing package with Macquarie Bank
- Northern Territory Government granted environmental approval for Carpentaria Pilot Project
- Fracture stimulation and flow testing of Carpentaria-5H scheduled for Q2 2025
- First gas deliveries expected later in 2025, pending regulatory and stakeholder approvals
Carpentaria-5H Drilling Success
Empire Energy Group Limited (ASX: EEG) has reported a significant milestone in its Northern Territory operations with the successful drilling, casing, and cementing of the Carpentaria-5H well. Reaching a total depth of 5,310 metres, including a 3,310 metre horizontal section within the target Middle Velkerri B shale zone, this well represents the company's longest drilled to date. Notably, the drilling was completed in 41 days, ahead of the 45-day forecast, and slightly under budget at approximately $19.7 million.
The horizontal section was drilled with an increased casing size of 5 1/2 inches and incorporated enhanced completion strategies, including higher horsepower and doubled pump rates, aiming to optimize gas productivity. These improvements build on lessons learned from previous wells, Carpentaria-2H and Carpentaria-3H, focusing on fluid selection, pump strategies, and perforation techniques to potentially increase gas recovery and flow rates.
Financing and Environmental Approvals
During the quarter, Empire secured a binding $65 million financing package with Macquarie Bank Limited. This package includes an upsized $30 million R&D Facility, a $5 million Performance Bond Facility, and a $30 million Midstream Infrastructure Facility. The funds are earmarked for advancing the Carpentaria Pilot Project (CPP), including drilling, infrastructure construction, and gas plant refurbishment. Importantly, this financing approach reduces shareholder dilution compared to equity financing.
Complementing the financial progress, the Northern Territory Government granted environmental approval for the CPP, encompassing up to nine new wells, the Carpentaria Gas Plant, and associated facilities. This approval is a critical regulatory milestone, enabling Empire to proceed with project development and gas export plans.
Next Steps Toward Gas Production
Empire plans to conduct fracture stimulation and flow testing of Carpentaria-5H in the second quarter of 2025, following the northern Australian wet season to mitigate weather-related risks and avoid costly equipment standby charges. The stimulation program is expected to include over 60 stages along the horizontal section, applying optimized techniques to maximize well performance.
First gas deliveries from the Carpentaria Pilot Project are anticipated later in 2025, contingent on the construction of midstream gas processing infrastructure and receipt of Beneficial Use of Test Gas approval under the Northern Territory Petroleum Act. This approval requires Traditional Owner consent, with the Northern Land Council facilitating consultations. An on-country meeting to seek consent is scheduled for April 2025, with stakeholder negotiations expected to conclude by mid-year.
Financial Position and Corporate Updates
Empire ended the quarter with total liquidity of $53.8 million, comprising $25.6 million in cash and $28.3 million undrawn under the Macquarie credit facilities. The company also received a $4.0 million R&D tax offset for FY2023, bolstering its cash position. Post-quarter, $1.827 million was applied to repay drawings under the revolving credit facility.
Additionally, Empire appointed Gillian Nairn as Company Secretary, signaling continuity in corporate governance as the company advances its operational and financial objectives.
Broader Industry Context
Empire’s progress occurs amid increasing activity in the Beetaloo Basin, with peers such as Tamboran Resources and Santos advancing their exploration and infrastructure projects. The region is emerging as a significant hydrocarbon province, with infrastructure developments like the Sturt Plateau Pipeline expected to enhance gas market access in coming years.
Empire’s strategic focus on optimizing well performance, securing financing, and navigating regulatory and stakeholder processes positions it well to capitalize on the Beetaloo Basin’s potential. However, the timing of gas production remains dependent on successful stimulation, infrastructure completion, and Traditional Owner agreements.
Bottom Line?
Empire Energy’s disciplined execution and financing set the stage for a pivotal year in unlocking Beetaloo Basin gas production.
Questions in the middle?
- Will the fracture stimulation and flow testing of Carpentaria-5H meet performance expectations to support commercial gas production?
- How smoothly will the Traditional Owner consent process proceed, and could it impact the project timeline?
- What are the implications of the new Macquarie financing structure on Empire’s future capital strategy and shareholder dilution?
