Empyrean Energy To Divest Stake In Sugarloaf AMI Project; Stock Climbs 74%

(RTTNews) - Shares of Empyrean Energy Plc (EME.L) were gaining around 74 percent in the morning trading in London after the US onshore oil, gas and condensate company with assets in Texas and California announced Monday its proposed disposal of its stake in Sugarloaf AMI Project for a consideration of up to $71.5 million.

In a statement, the company said it has entered into a conditional purchase and sale agreement with Carrier Energy Partners II, LLC to dispose of all of its right, title and interest in the Sugarloaf AMI development for an initial cash consideration of $61.5 million. The company may also receive, in certain circumstances, a contingent consideration of a maximum of $10 million.

Empyrean currently has a 3% working interest in the Sugarloaf AMI Project, which is operated by Marathon Oil Company, a subsidiary of US major Marathon Oil Corp. (MRO).

Subject to Closing, the deal has an effective date of 1 October 2015 and is expected to close in the first quarter of 2016.

Following the transaction, the company's portfolio will comprise a 58.084% working interest in the Eagle Oil Pool Development Project in southern California, a 7.5% WI in two producing wells and lesser interests in another six producing wells located in the Sugarloaf Block A operated by ConocoPhillips and a 10% WI in the Riverbend Project, located in the Tyler and Jasper counties, onshore Texas.

The company confirmed that it has received irrevocable undertakings from certain Shareholders to vote in favour of the deal in respect of a total of 23.6 percent of the Company's issued share capital.

Empyrean CEO, Tom Kelly, said, "This Transaction crystallises the value of the Sugarloaf AMI Project at a time when there are significant challenges facing the resources sector in general and, specifically, when the additional financing required to support the Company's continued participation in the development of the Asset in the current low oil price environment would incur either an unacceptable cost or unacceptable dilution when compared with the Transaction." Macquarie Capital acted as financial adviser to Empyrean in respect of the Transaction. In London, Empyrean Energy shares are currently trading at 8.70 pence, up 74.05 percent.