Empire will sell up to 1000 barrels a day of crude from its Rough Range oil field and production facility.

The crude will be delivered using Empire's own purpose-built fleet of road tankers.

There is provision for selling additional crude to the refinery if further reserves are discovered and proved during Empire's drilling program planned for the next quarter of 2005.

"The Rough Range oil field production facility is nearing completion with start-up planned for 30 June," the company said.

In the farmout deal, Australian Oil (AOC) will earn a 25% interest in the permit by paying 50% of the costs of drilling the well. But the Rough Range Oilfield Area is excluded from the arrangement.

Empire subsidiary Rough Range Oil Pty Ltd holds the lease for EP 435. It made the agreement with a wholly-owned subsidiary of AOC.

Empire has promoted prospect drilling on the Bullara Trend, to the east side of the Rough Range Fault, since April.

The timing of structure development, with respect to primary oil migration, is regarded as being more favourable.

If these structures are full to spill point then the Pindan, Dune, Parrot Hill East Prospects – about 50km south of Exmouth township – are estimated to have potential oil reserves estimated at 3.3 million barrels, 2 million barrels and 4.7 million barrels respectively.

The Bullara Trend also extends into Exploration Permits EP 359 and EP 412 where Empire has significant interests.

Should there be a discovery on the east side of the Rough Range Fault, the company is in an excellent acreage position to develop further prospects along the entire Bullara Trend, managing director Craig Marshall said.

An oil discovery at the Pindan or the Dune Prospects would allow for almost immediate production because of their proximity to the Rough Range 1B oil production facility, accessed by a flowline after State Government approval.

The recoverable reserves could be greater as the Dune and Pindan Prospects have the potential to be one structure with a bisecting saddle, Mr Marshall said.

The Parrot Hill East Prospect had a significant and encouraging petroleum geochemical anomaly reported to the ASX on 13 September 2004.

Empire is negotiating with other oil companies to settle the remainder of the farmout.

The arrangements would see Empire being carried through the drilling costs while retaining a 50% equity in the permit.

Drilling at EP 435 is planned to start by the end of September.