Empyrean Energy to sell interest in Sugarloaf AMI shale oil
Empyrean will receive an initial $61.5m cash on the close of the Sugarloaf deal, which is expected in the first quarter of 2016 but will first require a shareholder vote that will be scheduled soon, with the amount possibly rising by up to a further $10m depending on how the price of crude oil behaves in the coming two years.
If the average price of WTI crude rise above $55 in the first or second half of 2016, CEP II will pay Empyrean an extra $1m for every whole dollar in excess of $55 per barrel up to a maximum of $5m.
Even if WIT does not recover in 2016, a second contingency applies to 2017 with a WTI price of $60 per barrel.
Following the deal, Empyrean will be a debt-free entity, have a robust level of working capital and a portfolio that will comprise a 58.1% working interest in the Eagle Oil Pool development project in southern California.[break]
Empyrean will have a 7.5% working interest in two producing wells and lesser interests in another six producing wells located in the Sugarloaf Block A operated by ConocoPhillips and; a 10% working interest in the Riverbend project in Texas. ■