Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Monte Carlo simulations are a method used by exploration companies to estimate the probability of a well or structure containing hydrocarbons based on the chances of certain key elements (e.g probability of structure, trap, reservoir rock, source rock, reservoir thickness, porosity, permeability etc). The simulations give various outcomes based on the assumptions used and the degree of confidence in the date. Despite the name Monte Carlo simulations are a legitimate scientific tool.
The other issue I see is who is going to invest in a company that could lose it's license in 3 weeks and at best will only hold the license for 1 year and 3 weeks. If Empire get money they MAY get more licenses in Tasmania but who is going to gamble $50-$100 mil on this, particularly in view of Empires pathetic past performance when they did have some money?
I know of two companies who have raised funds in the last two or three years to drill in the Officer Basin which is also a frontier basin with very littlie work been done. Several other companies are now actively exploring in other frontier basin in Australia (Pederika, Amadeus and Arkaringa Basins for example. There is money out there for reputable companies to drill these types of basins. IMO it is the Empire management that is the problem
Money is not tight in the oil sector. AHAVA Energy raised $35mill, ran 1500km of seismic and drilled three wells in the Officer Basin since 2009. Rodinia also raised $50 mil last year and will start drilling in the Officer Basin next month. Central Petroleum and Senex have both raised money for drilling frontier basins. The money is out there for reputable companies.
I agree that the Tasmanian goverment would love to have someone drill for oil onshore Tasmania, which is IMO exactly why they will take the license away from Empire as soon as possible and open the state up for exploration by a company who might actually drill some wells. In 10 years Empire has drilled one mineral well and 272m of surface hole!
I agree with this type of money a good oil company could drill a lot of wells. IMO however Empire Energy would waste it all like they wasted the last $50 mil
This is incorrect. The Hunt rig did not pre-collar the hole at Bellevue, this was done by a Spauldings mineral rig. The Hunt rig did not drill an inch so please get your facts correct.
Hi Texas,
IF any oil was found in Bellevue IMO it would take two years before any significant revenue could be raised. There is no infrastructure in Tasmania for oil production so everything would have to be done from scratch. Once the well was drilled they would have to do an Initial Production test (IPT) to determine the rates that the well could produce and the type of fluid. As only small volumes are normally only produced at this stage the regulatory requirements are not to strict and it should only take 6 months to get this done. After the IPT companies will normally do an Extended Production Test to determine the reservoir character and area that will be drained by the well. As the EPT normally lasts for 6 months or so temporary facilities will need to be put in place to store the oil, separate any produced water and safely transport the oil to a refinery. This process will take at least a year and the costs involved usually far outstrip any revenue from the sale of the oil. Once the extended production test was completed and the reservoir character determined then a permanent production facility could be planned and built which would take a minimum of a year. Just meeting all the regulatory requirements will be a major problem as Tasmania is a very Green state.
Two years before significant revenue may be very optimistic!
Hi Pitts,
You have said several times that MRT took away the license from Empire. I believe that this is incorrect MRT have not taken anything away from Empire - yet. The period of the original license expired after 5 years and Empire were granted a 5 year extension so held the license for 10 years which is the maximum term a SEL can be held for in Tasmania (this is regardless of work commitments being fulfilled or not). At the end of the 10 year period Empire re-applied for the old license area but because IMO MRT were not convinced that they had the funds to drill they only granted Empire a limited area for a limited time. Nothing has been taken away from Empire, the license expired and they were granted a new license.
Despite what some posters are saying Empire is potentially within a few weeks of losing its license as the following extracts from the Mineral Resources Development Act 1995 clearly show. (This is the act which regulates all exploration activites in Tasmania)Also note that Empire had 28 days from the granting of the license to appeal against the conditions of the license to the Mining Tribunal
18. Conditions of exploration licence
(1) The Minister may grant an application for a licence subject to any conditions the Minister
considers appropriate.
(2) If a licence is held by 2 or more persons, those persons are jointly and severally liable for
complying with the conditions of the licence.
(3) The Minister may vary any condition of the licence by rescinding, adding, substituting or
amending a condition.
(4) Before varying any condition of a licence, the Minister, by notice in writing served on the
licensee, is to notify the licensee of –
(a) the intention to vary the condition; and
(b) the nature of the variation; and
(c) the right of the licensee to make submissions in relation to the matter within a period
specified in the notice.
(5) A licensee may appeal to the Mining Tribunal against the Minister's decision to vary the condition within 28 days after the date of the decision.
(6) The variation of a condition of the licence takes effect –
(a) if an appeal is not made under subsection (5), 28 days after service of a notice under
subsection (4); or
(b) if an appeal is made under subsection (5) and the Mining Tribunal makes an order
affirming the decision, 10 days after the date of the order
26. Minimum expenditure
The holder of a licence must make a minimum expenditure in each year as the Minister determines
34. Revocation of exploration licence
(1) The Minister may revoke a licence or part of a licence if –
(a) the licensee fails to comply with, or contravenes –
(i) any provision of this Act; or
(ii) any condition of the licence; or
One other point, why would anyone invest in a company that can't guarantee that they will have a license in two months time?
IMO MRT only granted the license because of pressure from the minister who I believe was convinced by Bendal that the money to drill would be raised by the RO. This did not happen and I do not think Empire will get any further support from the minister.
Empire have had a license to drill for more than 10 years now and I believe MRT are fed up of with all the excuses and lack of results are keen to see someone else given the license. IMO MRT would prefer to have the area available than have it tied up with a non-performer like Empire.
I also believe, contrary to what some posters have said, that there are other companies looking for acreage in Tasmania
Sorry Roger but you are wrong. The terms of the license state that Bellevue MUST be drilled by 17th May 2011. There is not enough time, even if they had the money (which they don't) to mobalise a rig to Tasmania and drill a well. IMO
I believe that the license was granted for two years on the condition that Bellevue was drilled in the first year and Thunderbolt in the second. If Bellevue is not drilled by May this year then Empire will be in breach of the conditions of the license and will probably lose the license.
Never. The courts will not rule in favor of Empire - IMO
IMO Empire has zero chance of their legal challenge winning as they do not have a leg to stand on. The challenge was IMO purely to muddy the waters which Empire appear to be very good at.
The dolerite may be chemicaly stable as it will not contain much clay (which can hydrate and cause hole problems), however these formations can often be mechanically unstable if left open for years. IMO by now the 272m of hole drilled on Bellevue may well be unusable.
The five days was to drill to the top of the first expected target, to drill to the published TD will IMO take 4-6 weeks. With regards to the 272m this hole will probably be unusable by now and will have to be redrilled.
IMO There is absolutely no way Empire could produce any significant oil in less than two years as the process of getting a well on-line is very time consuming, particularly in such a Green state as Tasmania. The following would be a reasonable time frame assuming the money is raised today:
Secure rig and move to Tasmania 2 months
Drill Bellevue 1 month.
Plan initial completion and source completion equipment: 3 months
Conduct initial production test: 3 months
Plan production facility 6 months
Regulatory approval for production facility 6 months
Construct production facility 6 months.
Total 27 months
This would be a minimum time as I suspect regulatory approval for such a project could well take longer than 6 months.
IMO it will cost around $4mil to drill Bellevue. The hole drilled to 273m by Spauldings will probably not be usable by now so they will have to startt from scratch.
They only have a license to drill Bellevue and Thunderbolt but not any of the other so called structures
The problem is, is that EEGC do not have a license for most of these structures and IMO are unlikely to be granted one. Who is going to lend money to a company that does not have a license to drill the so called structures?
I also notice the "subject to due diligence" get out clause is still present.
IMO there are no opportunities for Empire as they have not demonstrated that they have access to anything that is not already available. Recovering flare gas is something that has been developed by many companies for many years and IMO Empire has missed the boat - again.
EEGC does not have time for long term plans. IF they do not drill Bellevue within the next 6 months then IMO they will lose the license - again. But this time I do not think they will get it back.
IMO, not only will drilling not start this year, unless money is found very soon, there is a real danger that they will not be ready to drill before the MRT deadline.
The same report said that there was only a 2% chance of oil and gas being present.
The Spaulding rig was used initially to drill the Dolerite at surface where NO HYDROCARBONS were expected and it is common practice to do this in other areas. However, according to Empires own press release, hydrocarbons MAY be encountered in the next hole section, therefore a rig equipped with API spec BOP's would have to be used.
IMO Empire may try to get MRT to agree to use the Spaulding rig, even though it is not correctly equipped, in a desperate attempt to drill the next section and get some shows to sell to the market.
I agree it is business which is precisely why no drilling contractor wants to work for Empire. All contractors want to get paid and Empire have an appaling record in this department. IF Empire get some money and IF they pay upfront and IF a contractor has a slot available then they may move a rig to Tasmania but it will not happen this year IMO.
They may get a rig to Bellevue but not this year and not until they get some money. No drilling contractor will work for Empire without being paid first.
Spauldings have plenty of work and due to problems with Empire not paying them properly for previous work and IMO would be in no hurry to work for GSLM again
The Spaulding rig is not capable of drilling to more than around 400m (approx) so a best could only drill a small part of Bellevue. It is also possible that MRT will not allow this rig to be used as it does not have BOP (Blow out preventers) which are compulsory equipment for oil and gas exploration wells.
IMO Empire are despratly trying to drill the shallow zone in the hope that they can claim to have found hydrocarbons so that they can get sufficent funds to drill deeper.
According to previous PR’s Bendall had the rights to this so called “flare gas technology” so how come Empire have now acquired it? Was the previous PR incorrect?
As usual Howard you are wrong. There is not one oil drilling rig currently available in Australia. Both the Hunt rigs and Century Rig 7 could be available to start mobilising around mid November. This would mean an early December start (at the earliest) for drilling. This assumes that Empire have the money NOW to pay the drilling contractors and other suppliers up front. If Empire were to use a Spaulding mineral rig they may be able to drill another few hundred meters but could not get to planned total depth.
There is nothing in the recent press release to suggest that Empire has any money and IMO drilling will not start this year.
Both Hunt rigs are currently drilling. Hunt Rig 2 is drilling for Stuart Petroleum in the Cooper Basin and Rig 3 is drilling for Oils Basins near Derby in W.A. While both rigs are on the last well for the current operators it is unlikely either rig will move to Tasmania.
IMO Empire may try to use a Spaulding mineral rig (Spaulding’s drilled the top hole section at Bellevue) to drill the next couple of hundred meters in the hope that hydrocarbons are found so that they can spruk the company to potential investors.
Both Hunt rigs are now working and have had fairly consistant work for the last 9 months so they do not need Empires work.
I agree that hiring a rig from an experienced contractor would be far better than buying one, and provided they had financing should be a lot cheaper as well. However given Empire's appalling track record they may well find it very difficult to find a drilling contractor who will give them a rig, which is possibly why Bendall is so keen to buy one. IMO buying a rig would be a BIG mistake for Empire.
Empire's license only allows them to explore for oil and gas, they would need a new license to explore for coal and CSG. I believe they Empire has applied for CSG licenses in the past and been rejected so IMO there is little chance of them getting another license unless they drill at Bellevue.
The Empire Website home page also needs to be updated as the photos on it are misleading. The hunt rig did not do any actual drilling as is implied in the photo and Empire no longer have License SEL 13/1988
You have missed the point. The point is not how the final location was determined but rather that OEH have managed to drill a well which Empire has not been able to do and IMO are unlikely to ever do.
Funding is not the real problem. The real problem is repeated claims by management that they have obtained funding without ever being able to deliver.