Unlocking Vast Australian Shale Gas Potential: Empire Energy's Strategic Pathway to Commercialization

• Empire Energy has large shale gas acreage (29 million acres) in the Beetaloo Basin in Australia with over 42 trillion cubic feet of prospective gas resources
• They have been working to de-risk and prove commercial viability of the resources through exploration, drilling horizontal wells, and fracking
• Near-term plan is a 3-phase commercialization strategy, starting with a pilot production project supplying 25 million cubic ft/day to existing pipeline
• Funding plans leverage potential gas sales agreements, project financing, and partnerships to minimize equity dilution
• Timeline to first commercial production and cash flow is about 12 months from now

About Empire Energy

Empire Energy is an Australian upstream oil and gas company focused on developing its highly prospective shale gas acreage in the Northern Territory's Beetaloo Basin. With over 29 million acres under lease, Empire has a "truly globally scaled project" according to Managing Director Alex Underwood, with total prospective gas resources estimated at over 42 trillion cubic feet by external assessors - enough to supply a major LNG export facility. However, proving commercial viability is essential to create value. Underwood outlines Empire's strategic near-term plan to unlock this resource and achieve first commercial production within 12 months.

Interview with Managing Director, Alex Underwood

Exploration Confirms World-Class Potential

Underwood explains that the Beetaloo Basin has been described as "one of the largest accumulations of gas on earth", with four stacked pay zones, one of which is the focus of the industry, which contains over 500 trillion cubic feet of gas in place. Across their 29 million acre lease, Empire Energy started with seismic surveys and four wells drilled to date, including two horizontal wells with fracking, helping to derisk the acreage and confirm this world-class resource. Initial horizontal well results support economic viability:

"Across those 21 Frack stages we used multiple different designs...and yet on that well we achieved about 3 to 3 and a half million cubic feet of gas per day. What excites us about that is that when we move into this next phase of development we will be drilling 3 km horizontal sections and we'll be doing 60 Frack stages and that would allow us to, all other things being equal, get about 9 million cubic feet a day and given the state of the Australian gas market right now, that that looks like a highly economic proposition for us."

Three-Phase Plan Targets First Cash Flow

With the resource derisked, Empire has designed a "three-phase commercialization strategy" focused on achieving first cash flow quickly and efficiently:

"Phase one is involved in putting a relatively modest amount of gas into the existing pipeline that traverses our tenement...Now I say relatively modest but to to fill that pipe which is about 25 million cubic feet of gas a day that would get us to over $100 million of revenue a year which is quite material for a company of our size."

This initial phase will demonstrate commercial viability and provide crucial cash flow to fund further development. Phases two and three target exponentially higher production volumes, ultimately capable of supplying a multi-billion dollar LNG export project. Critically, this staged approach will "ring fence" capital requirements for phase one, maximizing returns for shareholders.

Innovative Funding to Minimize Dilution

As Underwood notes, "The first molecule of gas that we sell will be the most valuable molecule we ever sell because it will completely change the market's perception of us." Securing initial sales agreements and cashflow with minimal equity capital is thus crucial. Empire has several funding avenues lined up to achieve this:

• Seeking gas sales agreements with Northern Territory utilities to enable project financing against future cashflows
• Partnership with pipeline operator APA Group to fund key surface infrastructure
• Potential support from project financiers Macquarie Bank to leverage existing debt facility

As Underwood summarizes: "What we're looking to do here is to minimize the dilution of shareholders' interest." This innovative approach to funding should excite investors focused on capital efficiency.

First Gas Sales in 12 Months

For shareholders focused on milestones, Empire has set an ambitious timeline to reach first commercial production in 12 months. This includes completing regulatory approvals and indigenous agreements in 2024, then installing surface infrastructure and drilling development wells in the second half of the year, targeting first gas sales in early 2025.

As Underwood concludes, "We have a plan for this year that is as follows: over the next 5 months between now and the end of the first half of this year we are working on execution of gas sales agreements...and then also the indigenous signoff...with a view to getting a final investment decision sign off from our board in the middle of the year."

With strong progress on exploration, strategic partnerships, and funding, Empire Energy has positioned itself to potentially unlock shareholder value through prudent, staged commercialization of its world-scale gas resource. Key near-term milestones - gas sales agreements, project financing, regulatory approvals and first gas sales - provide shareholders clear indicators to track Empire's execution in 2024.

The Investment Thesis for Empire Energy

• Massive gas resource de-risked - over 42 TCF prospective gas in place, with strong results from test wells
• Clear path to initial commercial production within 12 months
• Innovative funding model minimizes dilution for early shareholders
• Strong gas market tailwinds in Northern Territory and East Coast Australia
• Strategic infrastructure partnerships add credibility and funding
• Staged low-cost pilot to demonstration commercial viability
• Phase 1 targets over $100 million initial revenue - strong cash flow potential
• Subsequently scalable to much larger LNG export project

Differentiated Strengths:

• Truly massive acreage position and gas resources
• Successful track record on exploration and appraisal derisking
• Strong industry and funding partnerships
• Innovative funding strategy limits dilution
• Disciplined phased development approach
• Near-term milestones provide clarity on execution

Empire Energy provides investors a unique opportunity to access potentially enormous shale gas resources in Australia's Beetaloo Basin, with strong derisking results to date and a clear, staged pathway to initial commercial cashflows within 12 months and subsequent large-scale LNG exports. Its disciplined approach, innovative funding strategy and infrastructure partnerships differentiate it from other early-stage resource developers. Near-term milestones in 2024 will demonstrate management execution and progress realizing this world-scale opportunity.