It is not the number of hours in the working day that’s important i work that gets achieved in those hours that concerns Anderson Le Overtime is not encouraged – excepts on those rare occasions wh absolutely necessary. Anderson Lee prefers employees to work ef the seven and a half hours available each day. Anderson Lee strives to create a productive and positive working environment. The company has a ‘give-‐and-‐take when it comes to it’s employees. It rewards hard work by offering employees incentives like, flexible work hours and time in leu. Tim enables employees who have worked with diligence and efficient time off during quieter times or enjoy a long weekend or extended EMPIRE OIL & GAS NL For personal use only Quarterly Report December 2014 Highly successful December Quarter paves way for increased cashflow and exploration success • • • • Strong reservoir performance leads to significant increase Empire Oil & Gas NL Ltd ABN: 5 5 0 6 3 6 1 3 in gas reserves at the Red Gully Project in WA The reserves upgrade provides increased confidence that Empire can supply all gas under Tranche 2 of the Alcoa contract Tranche 2 sales set to boost cashflow from September 2015 T: +61 8 9286 4600 F: +61 8 9284 6588 E: [email protected] Shareholder approval of the ERM transaction sets up www.empireoil.com.au Empire to unlock the exploration value of its extensive About tenements “This has been a pivotal quarter for Empire. We have established a two-‐pronged strategy for growth. Firstly, we are firmly on track to deliver gas under Tranche 2 of our contract to Alcoa from September 2015. This will see a substantial increase in our cashflow. At the same time, we secured shareholder approval to buy the WA gas assets of ERM Power Limited [ASX: EPW]. By holding 100% equity in the majority of our tenements, we are now ideally placed to initiate an aggressive exploration program.” – Empire Chief Executive Ken Aitken. 7 3 0 Registered Office Ground Floor 229 Stirling Highway CLAREMONT WA 6010 Empire Oil & Gas NL Empire Oil & Gas is an Australian energy company focussed on exploration and production opportunities in the onshore Perth Basin. Empire operates the Red Gully field which has been in production since mid-‐ 2013. Empire holds around half of the highly prospective onshore Perth Basin. The Perth Basin has excellent infrastructure and a strong gas market. 2 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 For personal use only HIGHLIGHTS Production and Development • • • Red Gully Gas Sales 677TJ; Condensate sales 30,960bbls (Gross 100%). JV production in December achieved a record of over 250TJ delivered for the month. Quarterly gas production down 4% compared to the previous quarter due to the five day planned maintenance shutdown in October and a bushfire in the vicinity of the plant in November. Exploration and Appraisal • • • • • Ownership of key Perth Basin permits to increase, in most cases to 100%, via the acquisition of ERM Power Limited’s WA gas assets. Black Swan airborne survey will acquire state of the art airborne geophysical data over the majority of Empire’s Perth Basin acreage commencing late March 2015. Letter of intent signed for a drilling rig for a 2015 drilling programme. Meetings were held with the Department of Mines and Petroleum to discuss work programmes and it is expected that permit compliance and future work programmes will be finalised in Q1 2015. Sale of Carnarvon Basin permits pending. Finance and Corporate • • • • • • A$6.2 million Red Gully EBITDAX for the six months to December 2014 (Empire’s share) (unaudited). Red Gully’s profitability was affected by the impact of the falling oil price on condensate sales but gas sales were not affected as they are sold under a fixed price contract. Acquisition of ERM Power Limited’s WA gas assets received overwhelming shareholder approval at the annual general meeting held 11 December 2014. Placement and credit facility extension with ERM completed. Research coverage initiated by Patersons and Argonaut. $1.7 million cash at bank at 31 December 2014. Post Quarter • Independent reserve assessment shows a major upgrade to Red Gully gas reserves. 2P gas reserves up by 46% to 14.53PJ. 3 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 PRODUCTION For personal use only Production Key Indicators Red Gully Facility (100%) Gas Sales (TJ) Gas Sales for the quarter Cumulative Gas Sales to e nd of quarter Condensate Sales (BBL) Condensate Sales for the quarter Cumulative Condensate Sales to e nd of quarter Plant Performance & Average Daily Rates Average Plant Run Time (% of total hours) Average Daily Rate -‐ Gas Sales (TJ per day) Average Daily Rate -‐ Condensate sales (BBL per day) Empire’s net share of Red Gully (76.39%) Gas Sales (TJ) Gas Sales for the quarter Cumulative Gas Sales to e nd of quarter Condensate Sales (BBL) Condensate Sales for the quarter Cumulative Condensate Sales to e nd of quarter Key Statistics (excluding planned downtime) Red Gully Facility (100%) Plant Performance & Average Daily Rates Average Plant Run Time (% of total hours) Average Daily Rate -‐ Gas Sales (TJ per day) Average Daily Rate -‐ Condensate sales (BBL per day) Dec Quarter Sep Quarter 2014 2014 FY1415 YTD 677.1 3,280 708.5 1,385.5 30,960 152,252 33,232 64,192 84.20% 7.3 90.60% 7.7 87.40% 7.5 336 361 349 509.6 2,506 541.2 1,050.8 23,650 116,305 25,384 49,034 Dec Quarter Sep Quarter 2014 2014 FY1415 YTD 93.80% 7.8 358.9 96.90% 7.9 372.6 95.35% 7.9 365.9 Overall Production Performance The Red Gully-‐1 well maintained excellent flow performance throughout the Quarter. Gas delivered to Alcoa during the Quarter decreased by 4% and condensate delivered to BP decreased by 7% from the previous quarter. For personal use only 4 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 This decrease was due to:-‐ • A planned five day maintenance shutdown in the first week of October. • Cold venting of gas impairing the operations during October. This ceased on 3 November 2014 following modifications to the vent tip design. • The above issues were offset by record production of 250.4TJ in December 2014. • The condensate gas ratio (CGR) reduced by 2% from the previous quarter. Red Gully Processing Facility Uptime The well and facility continued to perform exceptionally well with an uptime of approximately 94% (excluding planned downtime). A planned shutdown for five days occurred in the first half of October. A downhole pressure survey was performed in the Red Gully-‐1 well for reserve determination. The amount of unplanned downtime for the quarter was 138 hours. • During October, the Export Gas Compressor suffered multiple shutdowns post servicing due to faulty valves. This, which accounted for 64 hours. • During November, unplanned downtime was due to minor plant faults and a bushfire in the vicinity of the plant, which accounted for 70 hours. There were only 2 hours of unplanned downtime in the month of December. In December work continued on the commissioning of the Flash Gas Compressor (FGC). The FGC modifications and repairs were completed and the machine was tested in late December. Further software and minor hardware modifications will be undertaken during January to ensure reliability. Cost Reduction Activities Monthly costs related to the operation and maintenance of the Red Gully facilities were reduced by 25% late in Q4 2014. These savings will be fully realised in 2015. All aspects of the operation are being reviewed to identify areas where costs can be further reduced without compromising safety, uptime and the ability to meet all statutory compliance requirements. Empire continues to maintain prudent budgetary discipline. Other Activities Preparations commenced for the remediation of a disused exploration drilling cuttings sump at the Red Gully well pad area. The work program, which is in accordance with the conditions agreed to by the Department of Mines and Petroleum (DMP), will involve replacing the surface soil in the sump, bringing it to the level of the surrounding area. The sump was used as part of the drilling of the Red Gully well in 2009. Sampling undertaken by independent environmental consultants in 2011 found that there was no contamination of the ground water in the area. However, minor levels of hydrocarbons were detected in the top 2m of soil. For personal use only 5 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 Following the appointment of the new Board of Directors in November 2013, the Company developed a plan, in conjunction with environmental consultants, to remediate the sump in accordance with DMP requirements. For environmental and safety reasons, Empire has had to wait until the sump is completely dry to conduct this work. Two flare pits are also being remediated at the same time. As a result, site work is expected to begin in late February 2015. EXPLORATION Key Points • Ownership of key Perth Basin permits to increase following the acquisition of ERM Power Limited’s WA gas assets. • Black Swan airborne survey will acquire state of the art airborne geophysical data over the majority of Empire’s Perth Basin acreage, commencing in March 2015. • Letter of intent signed for a drilling rig for 2015 drilling programme. • Meetings were held with the Department of Mines and Petroleum to discuss work programmes and it is expected that permit compliance and future work programmes will be finalised in Q1 2015. • Sale of Carnarvon Basin permits pending. Perth Basin Empire will significantly increase its ownership of eight Perth Basin exploration permits and two production licences after shareholders voted in favour of the recommended transaction to acquire ERM’s Perth Basin assets. Subject to regulatory approval, Empire will now hold: • 100% of Production Licences L18 and L19, which contain the Red Gully and Gingin West gas fields. • 100% of Exploration Permits EP389, EP432, EP454, EP440, EP416 and EP480. • Ownership in EP426 will increase to 77.78%. • 100% of new permit EP367, located in the south Perth Basin. Ownership in EP368, in which ERM was not a Joint Venture partner, will remain unchanged at 80%. Empire will be the operator of all its Perth Basin permits. As part of the company’s portfolio review, it was concluded that EP 479 in the South Perth Basin has low prospectivity and it is likely the permit will be surrendered in early 2015. EP367 will be evaluated over the coming months to assess its prospectivity. Geophysical survey During the quarter, Empire embarked on an aggressive exploration programme planned for its onshore Perth Basin acreage, agreeing to acquire a state-‐of-‐the-‐art geophysical survey over the majority of it acreage. For personal use only 6 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 Under the contract, signed with CGG Aviation (Australia) Pty Ltd, the Black Swan Airborne Geophysical Survey will acquire approximately 12,775 line kilometres of data across approximately 10,000 sqkm of Empire’s Perth Basin tenements. The survey data, which will be acquired from late March to May 2015, will be used to identify exploration leads and prospects for drilling or further seismic data acquisition. The survey results will also be integrated with the existing seismic database and the final interpretation is expected to be available in the September quarter, 2015. The Black Swan Airborne Geophysical Survey, which is subject to regulatory approval, will be flown over the entirety of EPs 368, 426, 389, 440, 454, 430, 480 and 416. This is the first time a survey of this magnitude will be undertaken across the Perth Basin and is a key early step to quickly and cost-‐ effectively assess the potential of Empire’s extensive acreage holding. Drilling Programme Empire continued to make preparations for its 2015 exploration drilling programme by signing a Letter of Intent (LoI) with drilling contractor Enerdrill. The LoI covers the drilling of up to three wells (subject to successful fundraising). One of these exploration wells is planned to be within permit EP389 and approximately 4 kms north of the Red Gully Production Facility. The locations of the two remaining wells will be determined after Empire has reviewed the results of the Black Swan Airborne Geophysical Survey and integrated this with the existing seismic data set. Empire is working with Enerdrill to finalise a drilling contract in early Q1 2015. Onshore Carnarvon Basin During the Quarter, Empire commenced its exit from all onshore Carnarvon Basin exploration permits in order to focus future exploration efforts on its larger Perth Basin acreage, which is assessed to be significantly more prospective. Consequently, Empire officially withdrew from EP 444 and EP 466, which were interpreted to hold limited prospectivity. The withdrawal has now been accepted by the regulator. In addition, Empire signed a preliminary agreement to sell its remaining acreage in the Carnarvon Basin. Empire intends to sell its subsidiary company, Rough Range Oil Pty Ltd, which holds its remaining six Carnarvon Basin tenements, to Bounty Oil & Gas NL (ASX: BUY) for a small cash consideration and a royalty based payments on any future production. Empire’s interests in these tenements range from 36% to 90%. Empire’s exit from the onshore Carnarvon Basin will allow the company to focus all future drilling funds on the Perth Basin, while retaining potential upside to exploration success and future production on the Carnarvon tenements through the royalty right. 7 For personal use only DECEMBER 2014 Empire Oil & Gas NL Quarterly Report Carnarvon Basin Acreage held by Rough Range Oil Pty Ltd FINANCE & CORPORATE Financial Highlights (unaudited) Red Gully Project Financial Performance (unaudited) Half Year to December 2014 Half Year to December 2014 Empire (76.39%) Red Gully (100%) A$ million A$ million 9.28 12.15 3.07 4.02 6.22 8.14 Unit A$/ Revenue Direct operating costs Red Gully EBITDAX* Production -‐ Unit Costs Gas equivalent (GJE#) A$/GJE 2.33 # # Barrels of oil equivalent (BBOE ) 1GJ=0.172bboe; 1bbl=1bboe A$/BBOE 13.35 8 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 For personal use only EBITDAX does not currently represent operating surplus cashflow as sales of gas (Tranche 1 deliveries) to Alcoa are offset against the $25 million advanced by Alcoa during construction of the Red Gully Production Facility. As at 31 December 2014, the outstanding Red Gully JV liability to Alcoa was 1.71PJ (A$8.55 million in dollars). Empire’s share of that liability as at 31 December 2014 was 76.39% (1.3PJ – A$6.5 million in dollars) but will increase to 100% upon formal completion of the acquisition of ERM Power Limited’s interest. The liability is expected to be fully repaid by September 2015 and gas sales from that point will be delivered against Tranche 2 and Empire will receive cash for these sales. The price for Tranche 2 sales is set in Australian dollars and is at a fixed price indexed to inflation. Cash at Bank was $1.7 million as at 31 December 2014. ERM Transaction On 11 December 2014, shareholders voted overwhelmingly in favour of the proposal to acquire ERM Power Limited’s (ERM) Western Australian gas assets for $15.1 million, funded via interest-‐free vendor finance (see ASX announcement 11 December 2014). The assets included ERM’s interests in eight exploration permits and its 23.61% interest in the two Red Gully production licences, including the Production Facility and the pipeline licence. The acquisition price of $15.1 million was at the lower end of the valuation range determined by KPMG, who prepared an Independent Expert Report for consideration by shareholders. The interest-‐free vendor loan is repayable by 31 August 2016, with the loan principal partially indexed to future share price increases. The acquisition is part of Empire’s strategy to create wealth for its shareholders by discovering more gas and oil on its acreage in the Perth Basin. Empire believes it is crucial that it owns, where possible, 100% of its permits and its Red Gully gas and condensate project in order to achieve this. As part of the agreement reached with ERM and evidence of that company’s continued support and belief in Empire, 769,655,433 shares were placed with ERM for a consideration of $3.8 million in December. Furthermore, the Credit Facility provided by ERM has been extended to 31 March 2015 with a limit of $1.5 million to allow the proposed pro-‐rata share issue to be planned in an orderly timeframe. It is repayable upon the earlier of completion of the pro-‐rata share issue or 31 March 2015. 9 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 For personal use only Legal Matters Proceedings against former directors, Messrs Marshall, Joyce and Warris, continue with Empire and its legal advisors confident of the course of action being pursued, in order to recover $441,632 of Company money spent by the defendants in legal costs incurred in defamation proceedings. Preparation of legal proceedings continued in respect of the deemed withdrawal of Allied Oil & Gas NL from permits EP416, EP426 and EP432 due to that company being in default of its obligations under the respective joint operating agreements for the respective joint ventures. Issued capital as at 31 December 2014 Ordinary shares Unlisted options 7,063,962,875 90,000,000 Post Quarter Activities Independent Reserve and Resource Assessment In November 2014 an Independent Expert Report (IER) was issued by KPMG Financial Advisory Services (Australia) Ltd as part of the process to inform shareholders before voting on the proposed ERM transaction. The IER included a technical specialist report by RISC Operations Pty Ltd (RISC), a leading oil and gas industry advisory firm. ) (RISC Report). It is contained within the Shareholder Notice of Meeting issued on 3 November 2014. Empire appointed RISC in late December to conduct a further independent assessment of reserves and resources. This work took place in the first half of January 2015. The reserve update included a review of the Red Gully-‐1 production and pressure data after 6 months of production. The review also assessed the impact of a new petrophysical log interpretation on the Gingin and Gingin East exploration prospects. Note that there was no update performed in the January reserve study on the Bootine and Wannamal prospective resources. The Table 5 in Appendix 1 is taken from the RISC Report. 10 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 For personal use only Red Gully-‐1 Reserves Appendix 1 includes tables summarising the reserves and resource changes from the RISC Report to the January RISC assessment. All reserves are 100% interest. Key highlights of the Red Gully B Sand 2P Gas reserves are: • 1P Gas reserves up 35.4% to 8.39PJ; • 2P Gas reserves up 46% to 14.53PJ; • 1P Condensate reserves up 18.6% to 340MSTB; • 2P Condensate reserves up 21.2% to 557MSTB. The significant increase in Red Gully reserves justifies Empire’s belief in Red Gully and its purchase of ERM’s 23.61% interest in the Red Gully field. These additional reserves significantly increase the overall value of the Red Gully project. This 2P reserve upgrade provides the Board with increased confidence that the Red Gully B Sand has more than sufficient reserves to cover Tranche 2 of the Alcoa contract. Gingin and Gingin East Resources In the assessment of Gingin and Gingin East, new data was incorporated and included an Empire commissioned independent petrophysical evaluation of the vintage log data available from the Gingin-‐1 and Gingin-‐2 wells (Gingin East Prospect). The new petrophysical interpretation of net pay, porosity and water saturation were provided to update the resources estimates included in the independent technical specialist report dated 3 November 2014. A reclassification based on the assignment of contingent resource to only those intervals, which have both log calculated net pay and flowed gas on test, was applied. Other intervals which had log calculated net pay but that either failed to flow gas on test or were not tested were assigned to the prospective resource category. On a risked resource basis Empire do not consider that the changes are material for the Gingin prospect (renamed Red Gully North). However, the prospective resource assigned at Gingin East has increased significantly. RISC assigns a geological probability of success of 50%. See Appendix 1 Ken Aitken CEO Empire Oil & Gas NL 11 DECEMBER 2014 Empire Oil & Gas NL Quarterly Report For personal use only Appendix 1 – Note all reserves and resources are 100% interest Empire is currently the operator of Production Licences 16 and 17 and exploration permit (EP) 389 in the Northern Perth Basin. The Red Gully-‐1 well is situated in PL16 and the Gingin west -‐1 well is situated in both PL16 and 17. Empire currently holds 76.39% operated interest in the production licenses and EP389. Empire is close to completing a transaction with its joint venture partner ERM gas to purchase the remaining 23.61% in the production licences and EP389. Note that all tables in Appendix 1 indicate gross (100%) reserves. The updated reserves shown in Table 1 below have been revised based on a material balance study using production and pressure data which has been collected from the Red Gully-‐1 well B sand over the period June to December 2014. Gross gas production from the B sand over this period was approximately 1.3 Bcf of gas and 65 Mbbl of condensate. Table 1 also includes D sand reserves, which are unchanged from previous estimates. The material balance study has shown that the B sand reservoir is performing better than expected and has resulted in an increase in the gas and condensate initially in place and a commensurate increase in gas and condensate reserves. The production data also shows a gradual decline in the condensate to gas ratio which in part is due to seasonal variation in ambient temperatures affecting plant efficiency. A gradual decline in condensate to gas ratio is normal in gas-‐condensate reservoirs and has been included in estimates of condensate reserves and resources. Production and pressure data will continue to be collected and may result in further reserve revisions in future. Economic tests have been carried out to determine that the reserves shown in Table 1 and 2 below are cash flow positive using reasonable forecast costs and prices down to the minimum turndown ratio of the Red Gully gas plant of 2 TJ/d. The gas and condensate price assumptions used in this analysis are commercially confidential but are consistent with Empires existing gas and condensate contracts. Condensate prices used have taken into account the recent global oil price reduction. The reserves shown in Table 1 and 2 are estimated to be recoverable through existing wells. Table 1 -‐ Red Gully Reserves and Resources Comparison Reserves RISC Reserves Assessment -‐ 1 Jan 2015 *RISC Assessment -‐ 1 Oct 2014 1P 2P 3P 1P 2P 3P Red Gully Sales Gas PJ 8.39 14.65 17.22 7.0 10.8 15.7 Red Gully Condensate Mstb 340.0 561.5 621.0 316.7 494.0 716.5 Contingent Resource 1C 2C 3C 1C 2C 3C Red Gully Sales Gas PJ 0.25 1.11 7.56 0.25 3.07 6.21 Red Gully Condensate Mstb 13.1 53.2 273.9 11.4 140.7 283.9 Nil Nil Nil Nil Nil Nil Prospective resource Note: 1. Red Gully comprises the B and D Sand reserves discovered by the Red Gully-‐1 Well 2. The reference point for gas is the outlet of the Red Gully gas plant metering facility and the storage tank for stabilized condensate at conditions of 14.7 psia and 60 deg F. 3. Probabilistic and deterministic evaluation methods have been used. * Ref RISC Report dated 3 November 2014 – Table 2.2 and Table 2.3. 12 DECEMBER 2014 Empire Oil & Gas NL Quarterly Report Table 2 -‐ Gingin West Reserves and Resources Comparison For personal use only RISC Assessment -‐ 1 Jan 2015 *RISC Assessment -‐ 1 Oct 2014 1P 2P 3P 1P 2P 3P Gingin West Gas PJ 0.01 0.2 0.3 0.01 0.2 0.3 Gingin West Condensate Mstb 0.5 10.4 15.6 0.5 10.4 15.6 Contingent Resource Nil Nil Nil Nil Nil Nil Prospective resource Nil Nil Nil Nil Nil Nil (Note: 1. Gingin West comprises the D Sand reserves discovered by the Gingin West-‐1 well. 2. The reference point for gas reserves is the outlet of the Red Gully gas plant metering facility and the storage tank for stabilized condensate at conditions of 14.7 psia and 60 deg F. 3. Probabilistic and deterministic evaluation methods have been used. * Ref RISC Report dated 3 November 2014 – Table 2.2 Empire is the operator of Gingin East field situated in Production License 17 in the Northern Perth Basin. Empire is also the operator of the Gingin field is situated in EP389 approximately 4 km North of the Red Gully production facility in the Northern Perth Basin. The wireline logs in the Gingin-‐1 and Gingin-‐2 wells and been re-‐evaluated using modern petrophysical techniques. The revised log interpretation has allowed a better definition of gas sands in both wells and in conjunction with existing well test data has allowed a re-‐allocation of the sands into both Contingent and Prospective resource categories. The revised pay estimates have been used to update the volumetrics of the fields using mapping based on seismic and well data. The recoverable resource estimates are based on Perth Basin analogue field performance and probabilistic volumetric methods. In addition to the Contingent Resources previously reported, Prospective Resources have now been identified in both the Gingin and Gingin East fields. Empire are planning to drill an exploration well on the Gingin exploration prospect in Q3 2015 subject to successful cash raising and government approvals. Empire are tentatively planning to sidetrack the Gingin West well (after end of reserve life) to test the Gingin East prospect. 13 DECEMBER 2014 Empire Oil & Gas NL Quarterly Report Table 3 -‐ Gingin Reserves and Resources Comparison For personal use only RISC Assessment -‐ 1 Jan 2015 *RISC Assessment -‐ 1 Oct 2014 Reserves 1P 2P 3P 1P 2P 3P Nil Nil Nil Nil Nil Nil Contingent Resource 1C 2C 3C 1C 2C 3C Gingin Sales Gas PJ 4.0 7.9 13.7 5.8 11.7 21.4 Gingin Mstb 50 90 160 60 140 260 Prospective resource Low Mid High Low Mid High Gingin Sales Gas PJ 2.4 4.9 9.0 Nil Nil Nil Gingin Mstb 30 60 110 Nil Nil Nil Condensate Condensate Note: 1. Gingin comprise the resources penetrated by the Gingin-‐1 wells. The Gingin prospect has been renamed Red Gully North. 2. The reference point for gas is the outlet of the Red Gully gas plant metering facility and the storage tank for stabilized condensate at conditions of 14.7 psia and 60 deg F. 3. Probabilistic and deterministic evaluation methods have been used. * Ref RISC Report dated 3 November 2014 – Table 2.3. Note that the Prospective Resources disclosed in this report are estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons 5.35 Requirements applicable to reporting prospective resources for material oil and gas projects 5.35 The first time an +entity publicly reports estimates of +prospective resources in relation to a +material oil and gas project, the +entity must include all following information in a market announcement and give it to ASX for release to the market. 5.35.1 The types of permits or licences held by the +entity in respect of the reported estimates of +prospective resources. 5.35.2 A brief description of: • the basis on which the +prospective resources are estimated; and • any further +exploration activities, including studies, further data acquisition and evaluation work, and +exploration drilling to be undertaken and the exp timing of those +exploration activities. 5.35.3 The +entity’s assessment of the chance of discovery and the chance of development associated with the reported estimates of +prospective resour 5.35.4 If risked estimates of +prospective resources are reported, an explanation of how the estimates were adjusted for risk. 14 DECEMBER 2014 Empire Oil & Gas NL Quarterly Report Table 4 -‐ Gingin East Reserves and Resources Comparison For personal use only RISC Assessment -‐ 1 Jan 2015 *IER Assessment -‐ 1 Oct 2014 Reserves 1P 2P 3P 1P 2P 3P Nil Nil Nil Nil Nil Nil Contingent Resource 1C 2C 3C 1C 2C 3C Gingin East Sales Gas PJ 3.0 5.5 9.1 3.7 7.5 13.6 Gingin East Condensate Mstb 140 240 410 170 330 610 Prospective resource Low Mid High Low Mid High Gingin East Sales Gas PJ 16.8 24.4 45.7 Nil Nil Nil Gingin East Condensate Mstb 740 1270 Nil Nil Nil Note: 2060 1. Gingin East comprise the resources penetrated by Gingin-‐2 wells. 2. The reference point for gas is the outlet of the Red Gully gas plant metering facility and the storage tank for stabilized condensate at conditions of 14.7 psia and 60 deg F. * Ref RISC Report dated 3 November 2014 – Table 2.3. Table 5 – Bootine and Wannamal Prospective Resources at 1 October 2014* Bootine Deep Prospect Recoverable Gas (Bcf) Recoverable Condensate (MMbbl) Wannamal Prospect Recoverable Gas (Bcf) Recoverable Condensate (MMbbl) Total Gas Bcf1 Total Condensate MMstb1 Gross P90 (Low) P50 (Best) P10 (High) Net P90 (Low) P50 (Best) P10 (High) 6.5 0.38 11.2 0.67 18.4 1.13 1.5 0.09 2.6 0.16 4.3 0.27 3.0 0.17 6.1 0.36 11.9 0.73 0.7 0.04 1.4 0.09 2.8 0.17 9.5 0.55 17.3 1.03 30.3 1.86 2.2 0.13 4.0 0.25 7.1 0.44 Table 5 – Gross and net prospective resources at 1 October 2014 (Note: 1. Additions beyond the field level have all been made arithmetically, as a result RISC cautions that the Low aggregate quantities may be very conservative estimates and the High aggregate quantities may be very optimistic due to portfolio effects. 2. Probabilistic evaluation methods have been used). * Ref RISC Report dated 3 November 2014 – Table 2.4. 15 Empire Oil & Gas NL Quarterly Report DECEMBER 2014 For personal use only Consents Information on the Reserves and Resources in this release relating to the PL16, PL17 and EP389 assets is based on an independent review and audit conducted by RISC Operations Pty Ltd (RISC), a leading oil and gas industry advisory firm. RISC is independent with respect to Empire Oil & Gas NL in accordance with the Valmin Code, ASX listing rules and ASIC requirements. The review and audit was carried out in accordance with the SPE Reserves Auditing Standards and the SPE-‐PRMS guidelines under the supervision of Mr. Geoffrey J Barker, a Partner of RISC. Mr. Barker is a member of the SPE and his qualifications include a Master of Engineering Science (Petroleum Engineering) from Sydney University and more than 30 years of relevant experience. Mr. Barker meets the requirements of qualified petroleum reserve and resource evaluator in accordance with ASX listing rules and consents to the inclusion of this information in this report which fairly represents the information and supporting documentation reviewed.
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