Empire Energy Corporation Intl. (fka EEGC)

[Drunken Sailor]

I have dropped Zac Philips a line:

Zac,

I read your note on TXO with interest. In it you say “With a combined Prospective STOOIP of 1.4bn bbl (1.3bn bbl Bellevue, 61mm bbl Thunderbolt)”

http://www.fox-davies.com/media/26688/txoinitiation200412.pdf

However Empire’s recent announcement says:

http://www.sec.gov/Archives/edgar/data/788206/000107878212001081/f8k041712_8k.htm

“Mean Prospective Resources (MMB) for oil from both the Gondwana and Larapintine petroleum systems at Bellevue of 349MMB, and Thunderbolt of 151MMB respectively. The assessment yields more credible realistic prospect probabilities, the chance of success was included for the Bellevue Gondwana Prospect at 24% and was reassessed for the Bellevue Larapintine prospect chance to 22% demonstrating to shareholders that the Bellevue well has a reasonable chance of success. The chance of success was also included for the Thunderbolt Gondwana prospect at 22% and reassessed for the Thunderbolt Larapintine prospect to 18% therefore also giving the Thunderbolt drill hole a reasonable chance of success”

Can you explain why your figures are so much higher than the company’s own figures? Have you reviewed the latest CPR? The previous one conducted by RPS Energy gave very different COS figures, ie 2% for Bellevue and 0.72% for Thunderbolt?

Also you say:

“Empire’s funding should mark the start of a transformation:”

However there has been no confirmation from the company that the $9.9m second tranche of funding has been released. Can you confirm that this has now happened, as all Empire’s announcement says is:

“GSLM is also pleased to announce that it believes it has also secured funding to discharge certain liabilities, which are due this week, and is instructing its legal council to prepare the appropriate discharge documentation of those liabilities and negotiate settlement with the appropriate parties.”

Which is referring to the winding up order against GSLM for a relatively small amount.

https://www.comcourts.gov.au/file/Federal/P/TAD9/2012/actions

Empire have previously made a number of announcements regarding funding which have turned out to be premature, Including the announcement in on 3 Jun 2011

http://www.businesswire.com/news/home/20110602007113/en/Empire-Signs-USD-5M-Convertible-Loan-Agreement

“Empire has sold a 49% stake in return for USD $5 million funding by way of a convertible loan agreement that is part of the larger joint venture partnership. As part consideration and in exchange for the partnership interest, Empire is to be advanced approximately USD $1 million to supplement operational costs and GSLM’s current drilling program, and USD $100,000 was paid upon the signing of the agreement. It is proposed that in exchange for the 49% stake, Empire will be able to exploit the technical and exploration know how of its joint venture partner in addition to approximately USD $4 million in order to recommence on-site drilling operations at the Bellevue #1 site.”

This convertible note was signed with TXO who were in no position at that time or now to honour it, yet many investors, were draw in believe funding had been advanced and that drilling would indeed commence in the Australian spring / summer (it is now autumn and will be nearly winter before any drilling could possibly commence).

http://www.sec.gov/Archives/edgar/data/788206/000107878211002560/empire8k082211ex103.htm

However, provided funding is in place this time, then the other major hurdle that needs to be overcome is the extension of the licence which expires on 16 May.

“ Based on recent operational delays that GSLM has encountered it has made an application for the extension of its terms for Exploration License EL14/2009 to bridge activities associated with the present exploration program.”

How much research have you conducted into the likelihood of this being achieved? This is clearly a significant risk which your note should warn of. Furthermore it is my understanding that MRT processes do not permit extensions in time of this sort of licence, I could be wrong about this and am waiting for MRT to get back to me, but if you already know then maybe you can advise.

A lot of very misleading information has been put out by / about Empire in the past, so I hope you understand why I need to ask these questions.

Regards