Empire Oil & Gas reports that its wholly owned subsidiary, Empire Oil Company (WA) Ltd., will withdraw from permit EP 437 in onshore Perth Basin, Western Australia, by agreement with its joint venture partners in the permit, Key Petroleum (Australia) Pty. Ltd., a wholly owned subsidiary of Key Petroleum Ltd. and Caracal Exploration Pty. Ltd.
Empire requested that it be allowed to withdraw after its Tenement Review found that the position, prospectivity, risk, and reward of EP 437 meant it was not core to Empire and did not meet its future risk-reward parameters.
Empire will save approximately $556,440 (AUD 600,000) in capital expenditure as a result of not having to fund its share of the Dunnart-2 exploration well in EP 437.
All parties have agreed to release and discharge Empire from the EP 437 Joint Venture free of all obligations, liabilities, claims, suits, or demands whatsoever, in respect of Exploration Permit EP 437. In consideration, Empire will assign its current 35% holding, on a pro-rata basis, to Key and Caracal, which will then hold interests of 76.92% and 23.08%, respectively, in EP 437.
Caracal and Empire also agree to release and discharge each other from all obligations, liabilities, claims, rights, and benefits under the Caracal farm-in agreement except that Caracal is entitled to retain the farm-in interest as defined in the farm-in agreement between Empire and Caracal.
Empire will continue to focus on completing its reviews and the upcoming Red Gully-1 perforation and well test program expected to begin in late April. It is also seeking to implement a program to address the under-performance of the Red Gully processing facility, which has been hampered by continuing design and operational commissioning issues, lack of redundancy, and related unexpected downtime. As part of this program, Empire aims to establish a cost-effective way of implementing any proposed actions while ensuring and improving the reliability of the plant.