Empire Energy Group - Positioning For "Future Normal"

Empire Energy Group Limited (ASX:EEG) is a junior oil and gas producer and explorer with onshore oil & gas shale assets. EEG holds the largest acreage position (>14.5m acres) in the highly prospective, potentially global-scale NT McArthur-Beetaloo basins. This province is fast developing as a gas-rich (and potentially liquids-rich) option to boost east coast Australia’s future energy needs, as well as feeding Darwin’s expanding LNG export terminals, amid strong policy support from both Northern Territory (NT) and Federal governments. The Beetaloo Basin alone is considered to contain recoverable shale dry gas volumes of over 100 Tcf, with liquids upside. EEG also owns conventional gas/oil assets in the US Appalachia, 80%-hedged at US$2.50/mcf for 2020. In March, EEG received approvals to drill its Carpentaria-1 vertical appraisal well into the Kyalla and Velkerri shale targets, aiming to confirm recent better-than-expected seismic mapping results. Crystallising EEG’s longer-term potential rests on successful drilling and securing strategic funding and infrastructure support to commercialise the acreage. Given exceptional COVID-19 uncertainties, EEG has acted decisively to secure its US debt facility covenant waivers until year-end, while conserving cash (A$11.2m gross) and protecting staff and local communities, by deferring drilling until a safe-work plan can be finalised with local authorities.