London AIM-listed oil and gas explorer Empyrean Energy has been given more time to drill a well in its 29/11 offshore block in China.
Empyrean said Wednesday that, due to the COVID-19 pandemic and the resultant global control policies, it engaged with China National Offshore Oil Corporation ("CNOOC") and applied for a 12-month extension to the first phase of the exploration period for the Petroleum Contract for Block 29/11.
"The company is pleased to announce that CNOOC has now granted a 12-months extension to the first phase of exploration. As a result, the first phase of the exploration period for the Petroleum Contract for Block 29/11 has been extended to 12 June 2022," Empyrean said.
The exploration commitment for the first phase of exploration is to drill an exploration well. The 1806 square-kilometer block is located in the Pearl River Mouth Basin, offshore China, approximately 200km southeast of Hong Kong.
"The Company is taking all necessary steps for safely drilling the first exploration well on Block 29/11 as soon as practicable," Empyrean added.
Empyrean CEO, Tom Kelly, said the extension provided "enormous de-risking and flexibility with respect to the planning and drilling of the first phase exploration well in Block 29/11 without having to invoke force majeure."
Kelly said: "COVID-19 has made many operations unsafe and uncertain, especially travel, and this extension provides the flexibility for a much safer approach to our operations. It is Empyrean's intention to drill this first exploration well as soon as practicable and we continue to take proactive steps towards a safe drilling operation in China. Put simply, if we can safely drill this first well ahead of the new extension - we will."
Empyrean is the operator with 100% of the exploration rights of the permit during the exploration phase of the project. In the event of a commercial discovery, China National Offshore Oil Corporation Limited (CNOOC) will have a back in right to 51% of the permit.
Empyrean in 2017 carried out 3D seismic survey over the block, identifying three large prospects were matured.
Prospective resources (un-risked) of all three prospects on the Block (Jade, Topaz and Pearl) were independently validated, by Gaffney, Cline & Associates, who completed an audit of the Company’s oil in place estimates in November 2018. Total mean oil in place estimates on the three prospects are now 884 MMbbl.