TIDMZPHR
RNS Number : 9115W
Zephyr Energy PLC
15 December 2023
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the UK Market Abuse Regulation.
With the publication of this announcement, this information is now
considered to be in the public domain.
15 December 2023
Zephyr Energy plc
("Zephyr" or the "Company")
Operational update
Initial production from Slawson operated wells exceeds
expectations;
significant uplift to Q4 production; and
Paradox project update
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain
oil and gas company focused on responsible resource development
from carbon-neutral operations, is pleased to report that initial
flow rates from the six wells operated by Slawson Exploration
Company in which the Company has working-interests ("the Slawson
wells") have exceeded the Company's expectations. The acquisition
of the Slawson wells was announced on 21 December 2022.
Following the flowback of completion fluids in early November
2023, the Slawson wells were sequentially brought into regular
production over the course of last month. While it is still early
in the life-cycle of the Slawson wells, with a varying number of
days on production for each well, production data adjusted for
uptime shows an average flow rate of 897 barrels of oil equivalent
per day ("boepd") net to Zephyr since inception.
As a result of the initial encouraging performance of the
Slawson wells, the Company's board of directors (the "Board")
forecasts that the year-end production run rate from its
non-operated asset portfolio in the Williston Basin, North Dakota,
U.S. (which includes the Slawson wells) will be between 1,450 and
1,700 boepd, a mid-range increase of 51% versus sales volumes in
the third quarter of 2023 of 1,043 boepd, and a 43% increase over
the 2022 year-end production rate of 1,103 boepd.
Zephyr's working interests in the six Slawson wells ranges from
11% to 32% and the Company estimates the Slawson wells to contain
2P reserves, net to Zephyr, of circa 550,000 barrels of oil
equivalent.
Paradox project update
Zephyr's operations team continues to progress planning for the
"twinned" redrill of the State 36-2 well (the "State 36-2R well").
Over the last 45 days, Zephyr's team has engaged in detailed
internal well-planning activity, a process which has included
relevant input from specialised third-party service providers in
addition to extensive ongoing interaction with Zephyr's well
control insurance providers. As previously announced, the
substantial majority of the cost of the redrill is expected to be
funded by Zephyr's comprehensive well control insurance policy.
At the well site, all equipment (including the work-over rig)
relating to the State 36-2 well operations was mobilised off
location in October / November 2023. More recent operational work
has included:
-- the completion of a full site clean-up and soil testing
(pending approval from the State of Utah);
-- the completion of a regrade of the drill site, with surveying
and staking for the State 36-2R underway;
-- completion of drilling, directional and casing design;
-- commencement of independent, third-party consultation of drilling plans and procedures; and
-- advancing gas marketing and infrastructure partnerships negotiations.
Next steps will include the submission of a final drilling plan
to the State of Utah and the U.S. Bureau of Land Management as part
of a sundry notice amendment to the existing State 36-3 LN-C9 well
drilling permit. Rig sourcing, selection and contracting
workstreams are also underway, as is the planning to select other
major service providers.
Colin Harrington, Zephyr's CEO commented:
"We are extremely pleased to report the strong initial
production rates from the Slawson wells, which now form a
significant portion of our non-operated Williston Basin portfolio.
The new volumes will provide a significant boost to our Q4 2023
sales and provide additional cash flows to the Company in line with
our stated strategy of leveraging non-operated investments to fund
the ongoing development of the Paradox project.
"As 2023 draws towards an end, this positive development will
result in Zephyr ending the year at a higher production run rate
than last year. Over the last 12 months, the Company has continued
to make significant progress with the Paradox project, including
but not limited to, the discovery of a major and productive natural
fracture network at the site of the State 36-2 well and the
proposed State 36-2R well, completion of the Dominion Energy
pipeline which allows for gas sales and export from our acreage,
the expansion of our footprint in the Paradox Basin (including a
farm in agreement for the proven Salt Wash Field which contains
both oil, gas and helium), and detailed flow assurance work on the
State 16-2 well which give us confidence that future production
rates will meet expectations when the well is tied in. In addition,
the team has made great progress developing potential gas marketing
and gas processing partnerships, and we look forward to providing
updates when agreements are executed.
"We have grounds for considerable optimism as we look towards
2024, which is set to be extremely active and characterised by
substantial news flow. In particular, we continue to prepare for
the exciting State 36-2R well redrill, for which we believe
substantially all costs will be covered through insurance, and
after which we hope to utilise the same rig for a second well. In
addition to further delineating the extent of the Paradox project
with the drill bit, we also look forward to delivering first
regular cash flows from the Paradox project as we progress from
exploration to production in the area.
"I would like to thank all of our stakeholders for their ongoing
support and wish everyone a safe and peaceful festive period."
Contacts:
Zephyr Energy plc Tel: +44 (0)20 7225
Colin Harrington (CEO) 4590
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328
Adviser 5656
Jeremy Porter / Vivek Bhardwaj
Turner Pope Investments - Joint Broker Tel: +44 (0)20 3657
James Pope / Andy Thacker 0050
Panmure Gordon (UK) Limited - Joint Tel: +44 (0) 20 7886
Broker 2500
John Prior / Hugh Rich / James Sinclair-Ford
Celicourt Communications - Public Relations Tel: +44 (0) 20 7770
Mark Antelme / Felicity Winkles / Ali 6424
AlQahtani
Qualified Person
Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD,
Technical Adviser to the Board of Zephyr Energy plc, who meets the
criteria of a qualified person under the AIM Note for Mining and
Oil & Gas Companies -June 2009, has reviewed and approved the
technical information contained within this announcement.
*Estimates of resources and reserves contained within this
announcement have been prepared according to the standards of the
Society of Petroleum Engineers. All estimates are internally
generated and subject to third party review and verification.
Notes to Editors
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led
oil and gas company focused on responsible resource development
from carbon-neutral operations in the Rocky Mountain region of the
United States. The Company's mission is rooted in two core values:
to be responsible stewards of its investors' capital, and to be
responsible stewards of the environment in which it works.
Zephyr's flagship asset is an operated lease holding of over
46,000 gross acres located in the Paradox Basin, Utah, 25,000 acres
of which has been assessed to hold, net to Zephyr, 2P reserves of
2.6 million barrels of oil equivalent ("mmboe"), 2C resources of 34
mmboe and 2U resources 270 mmboe.
In addition to its operated assets, the Company owns working
interests in a broad portfolio of non-operated producing wells
across the Williston Basin in North Dakota and Montana. Cash flow
from the Williston production will be used to fund the planned
Paradox Basin development. In addition, the Board will consider
further opportunistic value-accretive acquisitions.
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