Empyrean Energy has huge upside if Jade well comes in, says Cenkos

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Empyrean Energy PLC (AIM:EME, FRA:E1E) is gearing up to drill the high-impact 225mln barrels Jade prospect offshore China before the end of 2021 in what will be a defining year for the oil and gas group, said house broker Cenkos.


Exploration success at Jade would see the risked valuation of the prospect increase from 9.9p to an estimated 41.8p, or a 320% rise said Cenkos, which compares to a current market price of 5.5p.


Success at Jade would also significantly de-risk both the adjacent Topaz and Pearl prospects, said the broker.


Empyrean Energy on track to drill Jade prospect in 2021


Assuming a P10 oil-in-place volume for the Jade prospect increases the unrisked valuation from an estimated 83.7p to 135.7p.


Cenkos adds that following a successful cGBP5m placing in July, Empyrean has sufficient funding to secure a drilling rig and order long-lead items in advance of the planned drilling of the well.


A novel placing warrant structure, meanwhile, with early exercise incentive substitute and bonus warrants has provided a mechanism by which the Jade well could be completely funded without the need for a diluting asset sale, farm-down or further placing.


‘Buy’ says the broker.

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