Empyrean Energy is reverting back to its original 6 percent well interest in Block B of the Sugarloaf prospect in Texas, which will “dramatically reduce” its cost exposure with immediate effect.

Empyrean will retain its interest in wells on Block A and B that have already been drilled and completed. It will pay 6 percent of costs for a 6 percent interest for all future wells on Block B that it decides to participate in and will revert to a 6 percent interest on the Weston well which is currently drilling. Empyrean will not be participating in further Block A wells under the present arrangement.

Empyrean had already drilled 7 wells out of the 16 well deal with the operator of Block B, Texas Crude Energy Inc.

Empyrean director Tom Kelly said: “The overall potential effect on value to Empyrean is minimal and the immediate effect of reduced cost exposure is dramatic. Empyrean will however have to absorb the impact of writing off a portion of the costs associated with the Weston well that have already been incurred at the higher participating interest.

“The current economic climate globally is tough and the directors of Empyrean have made this decision conservatively. With revenue from already completed Block A wells coming on stream we will be in far better shape to meet our development obligations given the present market conditions.”

Tags: Empyrean Energy