Repayment of the latter $30m facility will be by way of a 70c per gigajoule of production plus CPI by 25 terajoules a day “tolling fee”, payable from first production or the 1st of January 2026, whichever occurs first.
The $30m for exploration and development will be subject to an ongoing interest rate of 5.5 per cent plus the standard bank bill swap rate.
The $5m for the environmental bonds will be subject to a simple 10 per cent interest rate.
The funding package represents an extension and uplift to an existing $2.25 million facility Empire has with Macquarie.
Empire Energy Group managing director Alex Underwood said: “The financing package with Macquarie announced today followed an extensive competitive tender process and provides Empire with the best terms currently available in the debt market. Macquarie has been financing Empire Energy for 15 years. This financing package, along with existing cash resources, will fund the drilling, completion and flow testing of C-5H and the installation of the Carpentaria Gas Plant and associated in-field infrastructure.”
The company revealed in July it has signed a long-term gas sale agreement with the Northern Territory Government for up to 25 terajoules (TJ) of gas per day for 10 years with an option to increase sales by an extra 10TJ per day if its daily production rates reach more than 100TJ per day.
Management recently announced the receipt of an Environmental Management Plan (EMP) approval which enabled the company to kick off a nine-well gas drilling program at the Carpentaria pilot project. The nine-well program will be conducted from a total of four well pads and be finished off with hydraulic fracture stimulation.
The company has also received a crucial production licence for up to 12 wells which will allow for the gas extraction before moving through the gas plant and onwards to the Territory Government controlled McArthur River Pipeline for sale to the Northern Territory government.
The next step for the company is to nail down regulatory clearance to sell its gas under the “Beneficial Use of Test Gas” rules set out in the Northern Territory Petroleum Act.
An important pre-condition of final clearance is the stakeholder consultation process with the local community. Empire has engaged with the Northern Land Council to organise a meeting for the traditional owners to have their say on the project.
The C-5H well is set to be Empire’s biggest horizontal shale well yet, targeting a massive 3,000-metre horizontal section with around 60 fracture stimulation stages which will begin after the rig wraps up its work.
Management says C-5H has been successfully drilled and cased isolating the Cambrian limestone aquifer and is now drilling in the vertical section of the intermediate hole at a measured depth of 770m.
The well path is expected to soon turn towards the Middle Velkerri B shale target zone. When the intermediate section is drilled and cased, the company will then drill and case the horizontal section.
The $65m shot in the arm from Macquarie represents a significant milestone tick for Empire and will likely see it get a long way towards first gas production next year. If all the moons align as Empire expects them too the project can most likely handle a reasonable debt number, enabling Empire to protect its all important capital structure as it hurtles towards the pack of big oil and gas producers in Australia.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au