Emperor Energy (ASX:EMP) has entered into a term sheet to drill an appraisal well on the Judith gas field, described as the largest undeveloped conventional gas field on the East Coast of Australia.

The agreement with Valaris subsidiary ENSCO Australia secures the provision of the Valaris 107 jack-up drilling rig to drill the Judith-2 appraisal well, targeted for April 2027.

The term sheet outlines the principal commercial terms for the drilling campaign and secures the availability of Valaris 107 for an estimated 30 days to drill the well, followed by 15 days for flow testing.

It also includes an option for Emperor to extend the operation to add an additional side track well.

Under the term sheet, Emperor has paid US$1.5 million upon execution, with a further US$2.0 million payable when the full-form drilling contract is signed.

Emperor and Valaris are targeting execution of the full-form drilling contract by 31 October 2026, with all remaining contractual terms to be finalised over the next two months.

Valaris 107 is currently operating in the offshore Gippsland Basin and will continue drilling activities in the region for other operators before moving to the Judith-2 appraisal well. The Gippsland Basin, located off Victoria's southeastern coast, has historically been Australia's most productive offshore petroleum province and remains an active area for conventional gas exploration and development on the East Coast.

“There Valaris 107 jack-up drilling rig is operating nearby at a very high level of safety, efficiency and productivity. Securing this drilling rig for April 2027 is a major step forward for Emperor Energy as the company pushes forward towards drilling the Judith-2 appraisal well,” CEO Tim Handley said.

Emperor Energy has also submitted a revised version of the Judith-2 appraisal well environmental plan (EP) to the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) after receiving a request for additional information. NOPSEMA is the Commonwealth regulator responsible for assessing offshore environmental plans, and its acceptance is a required approval before drilling can proceed. The company now expects final EP approval by the end of September 2026.

The Judith field has been assessed to contain 166 billion cubic feet (BCF) of 2C contingent recoverable gas resource and 1,859 BCF of P50 prospective recoverable gas resource.

Gas was discovered in the Judith field in 1989 by the Judith-1 exploration well drilled by Shell Australia. At the time, the discovered gas resource was not considered for further development because of market conditions and an abundance of existing gas supply from other fields in the Gippsland Basin.

Emperor Energy has since reassessed all available data from the field, including results from a recent 3D seismic survey. Following that reassessment, the company now considers that a substantial economic gas resource exists at Judith.

Mr Handley said the Judith-2 appraisal well drilling program will allow a detailed appraisal of the gas resource and, if successful, could provide Victoria with additional gas reserves as production from existing fields declines.

The timing of the appraisal comes as policy attention in Victoria and nationally has increasingly focused on forecasts of tightening East Coast gas supply in the second half of this decade as legacy fields, including those in the Gippsland Basin, mature. Key milestones ahead for Emperor include NOPSEMA's decision on the environmental plan by the end of September 2026, execution of the full-form drilling contract by 31 October 2026, and spudding of the Judith-2 well in April 2027.

EMP fell 1.30% to 7.6 cents, giving the company a market capitalisation of $75.17 million.

The material provided in this article is for information only and should not be treated as investment advice. Readers are encouraged to conduct their own research and consult a certified financial adviser before making any investment decisions.