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(Sharecast News) - Empyrean Energy said in an update on Friday that it has signed a binding term sheet with Conrad Asia Energy resolving a long-running cash call dispute relating to the Duyung production sharing contract and the Mako gas field in Indonesia, securing a funded route to retain economic exposure without future direct cash call obligations.
Under the agreement, Conrad had withdrawn its notice of election of remedy and forced withdrawal, while project finance had been secured to cover Empyrean's future funding exposure through to development.
The AIM-traded firm said the parties saw the settlement as providing a clear pathway to first gas from the Mako field, which was now targeted for the fourth quarter of 2027.
As part of the restructuring, Empyrean's 8.5% participating interest in the Duyung PSC would be transferred to Conrad's subsidiary, West Natuna Exploration, after which Empyrean and Conrad would establish a Singapore-domiciled special purpose vehicle with shareholdings of 8.5% and 91.5% respectively.
Following Indonesian government approvals and a planned farm-in by a majority partner, the vehicle would ultimately own 100% of WNEL, with Empyrean retaining indirect economic exposure to the project through its stake in the vehicle.
Empyrean said it would pay $353,388.50 to Conrad on completion, representing half of the disputed outstanding cash call, with a further $353,388.50 to be paid from Empyrean's share of SPV dividends.
The two payments together would constitute full and final settlement of all past claims.
Empyrean said it would also be entitled to 8.5% of each instalment of consideration paid to WNEL by the incoming majority farm-in partner.
The company said further definitive documentation would be prepared, including arrangements governing control of the SPV and a restructuring of Empyrean's secured convertible note, under which the lender will be paid preferentially from WNEL dividends.
Interim chief executive Gaz Bisht described the settlement as "an outstanding outcome for Empyrean and a pivotal step forward for the company".
"We have retained our ongoing economic exposure to a high-quality gas development with a clear pathway to first gas targeted for the fourth quarter of 2027, while eliminating future direct cash call obligations associated with field development."
He added that, with the dispute resolved, the board was now focused on adding further low-risk, high-quality assets to the group's portfolio.
At 1144 GMT, shares in Empyrean Energy were up 168.86% at 0.09p.
Reporting by Josh White for Sharecast.com.