Appalachia


Mayville – New York gas production

  • 303,000 gross acres, spanning 9 counties in New York and 1 in Pennsylvania
  • 98% of properties operated by Empire Energy
  • Gross Estimated Annual Production = 2 Bcf
  • NRI = 76.5%
  • Well depths range from approximately 3,200ft – 4,000ft
  • 100’s of Pud well locations for drilling at economic gas prices
  • Field operations focused on reducing shrinkage from a current estimated 10% to 12% of production. Inroads have been made in this area over the past 12 months since Empire Energy acquired the assets, as shown by gross gas production below. Further improvements are expected over 2011 as Empire Energy seeks to acquire up to 100 miles of pipeline, plus gathering networks which will enable more rapid repair and closer operational management.


Hawthorne Gas Production

  • 6,500 gross acres, spanning three counties in Pennsylvania
  • 100% of properties operated by Empire Energy
  • Gross Estimated Annual Production 0.33 Bcf
  • WI=97.0% / NRI = 74.0%
  • Well depths range from approximately 3,000ft – 3,200ft
  • +50 Pud well locations for drilling
  • Long life, slow decline natural gas wells
  • Until increase in natural gas prices focus on increasing operating efficiencies

Exploration - Marcellus/Utica Shale Potential

  • In 2010 Empire Energy sold 5,897 acres Marcellus and Utica Shale in Pennsylvania for $4,250 / acre.
  • Continue geological and engineering studies on the 303,000 acre land holding in the western New York State and NW Pennsylvania. 
  • On current geological and engineering studies, the following potential shale resources have been estimated:

(i) Shale Oil Potential Resources

 

Formation
Type Category MBls Calculated
Acres
Acres Held
(net)
Marcellus (1) 3P/4P Shale (Oil) Possible/
Resource
70,295  100,422 186,240 (2)
Notes:

1. Wells within the defined Marcellus oil resource zone were calculated to produce between 2-5,000 Bbls/5 acres. The most likely outcome was utilized with a 3% RF (recovery factor).

2. Resource calculations based on 5 western Counties only.

(ii) Shale Gas Potential Resources

 

Formation Type Category GIP (Bcf) Calculated
Acres
Acres Held
(net)
Marcellus 3P/4P Shale
(Gas)
Possible/Resource

199.4

20,006

186,240

Utica (3) 4P Shale/Gas Resource

4,638.0

18,571

186,240

4,837.4

Note:

3. Utica shale GIP resources has only been calculated for the region where drill data is available. Very few wells have been drilled into the Utica and estimates for GIP have only been made were the few existing wells have been drilled. Empire holds additional acreage outside the current potential resource region. It is expected that as with shale characteristics, the shale formations will continue within the remaining acreage.

(iii) Calculation of Possible/Potential Resources

  • Reserve and resource estimates were prepared by Ralph E Davis Associates Petroleum Engineers, using acceptable evaluation principals
  • In-Place and recoverable volumes were determined through use of both probabilistic and deterministic techniques as appropriate for available data. The probabilistic technique used to determine gas in place (GIP) and recoverable gas was a Monte Carlo simulation. The outputs from the simulations were continuous distributions of GIP and recoverable gas. For presentation, the P50 case (50% certainty), calculated the GIP (Resource), as being the “Most Likely” case. Natural gas volumes are unrisked.
  • The quantities presented are estimated reserves and resources of oil and natural gas that geologic and engineering data demonstrate are “In-Place”, and can be recovered from known reservoirs. All volumes presented here are gross volume (8/8ths), and have not subtracted associated royalty burdens.