Is it time to sit up and take notice of Empyrean Energy? The company recently announced a very healthy set of cash receipts from oil and gas production & sales Operations for the last six months: The Company’s USA based production assets including the Sugarloaf Project, Hercules Project and Riverbend Project ACCRUED US$1,676,388.10cents, (June 2011 through to November 2011) which represents a 55% increase in revenue over the prior six months update that was released on 3 June 2011.
Now that kind of increase should begin to raise eyebrows as there’s a lag behind the actual receipts the company explained it as thus;
“Generally speaking, cash received from hydrocarbon sales in any given month relates to production accumulated from approximately two months earlier. That is, there is a lag between production sales and cash received and this varies between projects and also varies according to whether the sales were from oil or from gas.” So in actual fact what they are telling the market is that the recent cash receipts do not fully reflect the companys cash, production position, it is in effect 2 months behind. A simple way of looking at it is thus; add 2 months production onto the figures and 2 months of receipts onto the cash position. Remember they are not behove to one well; Empryean have small percentage interests/shares in over 24 wells with more to come. A small company that are proving up their business model.
The Sugarloaf project is beginning to firm up and should certainly increase the value of the sp over the next 12 months. With a significant increase of the 1p & 2p reserves with an Upgraded total of 3.2Million Barrels of Oil Equivalent (“MMboe”) (2p) provides NPV (10) of 16.8p/share* Empyrean’s proven reserves (1P) have increased by 41.7% to 1.5 MMboe* Empyrean’s probable reserves have increased by 37.1% to 1.7 MMboe* Empyrean’s proven plus probable reserves (2P) have increased by 39.1% to 3.2 MMboe* NPV (10) of 1P reserves of US$30.8m equates to approximately 8.9p/share*NPV (10) of 2P reserves of US$57.7m equates to approximately 16.8p/share* Empyrean are currently trading at 5.2p per share.
The Sugarloaf Project is now firmly into a development phase and the upward trend in revenue is expected to continue as further wells are brought into production. They are certainly under-value in my opinion and it’s only a question of time before investors switch on. They have recently been written about in the National Press which should help to raise their profile. They are under the radar so now is as good a time as any to get researching them. They could easily double in value over the next few months once the City settles down. Great chance here of 10p+ value being hit.