Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) has strengthened its balance sheet with a A$15.6 million research and development (R&D) tax offset from the Australian Government, designed to encourage companies to pursue R&D activities and facilitate innovation.
The scheme entitles companies with an aggregate global turnover of less than A$20 million to access a refundable tax offset of 43.5% of eligible expenditure on eligible R&D activities.
Empire’s research last year was related to the fracture stimulation and flow testing of the Carpentaria-2H well and the drilling and fracture stimulation of the Carpentaria-3H well in the Beetaloo Sub-basin of the Northern Territory.
Final investment decision imminent
"The Empire team is pleased to have received this R&D tax offset as it positions us to focus on completing the Pilot Project final investment decision (FID) process,” Empire Energy managing director Alex Underwood said.
“We are making material progress on the Pilot Project, advancing field development planning, including identifying locations for and the design of development wells and surface facilities, pipeline access negotiations, a formal gas sales marketing process, regulatory and indigenous approvals, and planning for project financing.
“Empire’s focus is on funding the Pilot Project in a manner that minimises dilution of shareholder’s interests in the company.
“To that end, Empire is discussing potential debt options with lenders and has commenced discussions with parties interested in acquiring a direct working interest in the project in exchange for funding development activities.
“We look forward to updating shareholders as these value accretive initiatives progress.”
EEG believes it is fully funded to progress to the EP187 Carpentaria Pilot Project Final Investment Decision.
Proceeds from the tax offset funding will be applied to repayment of all or part of the Facility A with Macquarie Bank, advancement of the Pilot Project FID process, purchase of long lead items in relation to the Pilot Project and additional working capital.
The company's current cash balance is now A$29.3 million.