REG - Zephyr Energy PLC - Final Results
Mon 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250630:nRSd8646Oa&default-theme=true
RNS Number : 8646O Zephyr Energy PLC 30 June 2025
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.
30 June 2025
Zephyr Energy plc
("Zephyr", the "Company", or the "Group")
Full Year Results for the year ended 31 December 2024
Notice of AGM
The Board of Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is pleased to
announce the Group's audited results for the year ended 31 December 2024.
Rick Grant, Zephyr's Non-Executive Chairman, said:
"On behalf of the Company's Board of Directors, I am pleased to share the
Company's results for the 2024 financial year, a period of continued progress
as the Company works to unlock what we believe to be the next prolific onshore
oil and gas play in the U.S. The results reflect the ongoing efforts and
commitment of the Zephyr team, who are working to build a Company of which all
stakeholders can be proud.
"During the period we have continued to deliver on our dual-strategy of
building an income-generating non-operated asset portfolio in the Williston
Basin, U.S. (the "Williston project") in parallel with the pursuit of
increased value through our development of the project in the Paradox basin,
Utah, U.S. (the "Paradox project").
"This is a pivotal time in the evolution of the Paradox project, and we
believe that the fundamental pieces are in place to drive the project forward
to first gas and commercial production. The Paradox project is on the cusp of
realising its potential as a project of substantial scale, and we will be
working tirelessly to deliver this value over the next period.
"On the Williston project, our recent fundraise will enable us to complete our
proposed acquisition which is expected to be accretive to both earnings and
reserves, as well as provide strategic entry into key areas and enhance our
competitive position in core Rocky Mountain oil and gas producing basins.
"It is anticipated that there will be considerable newsflow as we progress
through the next phase in our development and we look forward to keeping
Shareholders updated on our progress.
"I would like to express my appreciation to our team for their dedication in
helping us deliver on our vision. My thanks also go to my fellow Board
members, the leadership team, our advisers, and, above all, our shareholders
for their continued trust and support.
"The Board looks forward to the coming months with confidence, as we continue
to open up the next prolific oil and gas basin in the U.S."
Notice of AGM and posting of annual report
The Annual General Meeting of the Company (the "AGM") will be held at 11
a.m. on 30 July 2025 at the offices of Haynes and Boone CDG LLP, 1 New
Fetter Lane, London, EC4A 1AN.
A copy of the Company's annual report and accounts, and the notice of AGM,
will shortly be available on Zephyr's website, http://www.zephyrplc.com
(http://www.zephyrplc.com/) , and will be posted to Zephyr's shareholders
today.
Contacts
Zephyr Energy plc Tel: +44 (0)20 7225 4590
Colin Harrington (CEO)
Chris Eadie (Group Finance Director and Company Secretary)
Allenby Capital Limited - AIM Nominated Adviser Tel: +44 (0)20 3328 5656
Jeremy Porter / Vivek Bhardwaj
Turner Pope Investments - Joint Broker Tel: +44 (0)20 3657 0050
James Pope / Andy Thacker
Canaccord Genuity Limited - Joint Broker Tel: +44 (0)20 7523 8000
Henry Fitzgerald-O'Connor / Charlie Hammond
Celicourt Communications - Public Relations Tel: +44 (0) 20 7770 6424
Mark Antelme / Ali 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.
Notes to Editors
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led oil and
gas company focused on responsible resource development 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 46,000-acre leaseholding located in
the Paradox Basin, Utah. 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.
CHAIRMAN'S STATEMENT
OVERVIEW
On behalf of the Company's Board of Directors (the "Board"), I am pleased to
share the Company's results for the 2024 financial year, a period of continued
progress as the Company moves ever closer to unlocking what we believe to be
the next prolific onshore oil and gas play in the U.S. The results reflect the
ongoing efforts and commitment of the Zephyr team who have been working to
build a Company of which all stakeholders can be proud.
Over the last five years, the Company has grown from a circa US$2 million
market capitalisation using a dual strategy of:
1. Acquisitions: We built an income-generating non-operated asset
portfolio in the Williston Basin, U.S. (the "Williston project") to drive
long-term value and capital growth. To date, we have completed 14
acquisitions, are expecting to close on the next acquisition in the near term,
and have moved from zero production to approximately 1.5 million net barrels
of oil equivalent ("boe") produced from 2021 to 2024; and
2. Value creation via drilling activity: We reinvested capital from our
non-operated assets to advance the Company's flagship project in the Paradox
Basin, Utah, U.S. (the "Paradox project"). The Paradox project is an
underexplored basin where modern oil and gas technology has yet to be fully
applied. To date, we have drilled three wells with significant hydrocarbon
presence, demonstrated strong test results, secured a large contiguous acreage
position, and acquired critical data and infrastructure to support the full
development of the Paradox project.
During the period under review, we continued to deliver on this dual strategy,
and will continue building on this solid platform by growing both our
non-operated portfolio and utilising the resulting cashflow and our
partnerships to deliver first gas and commercial production from the Paradox
project.
We are supported by a capable team and strong partnerships, and I remain
confident that this foundation allows us to execute our strategy and deliver
sustainable growth and value for our Shareholders.
The health, safety, and wellbeing of our team and contractors continues to be
a core priority. We maintain a zero-harm safety culture, with a strong focus
on continuous improvement to ensure a safe and injury-free workplace. The
Board is pleased to note that there were no Lost Time Injuries ("LTIs")
recorded during the period.
The Board remains committed to aligning its actions and investment decisions
with our core values -namely, acting as responsible stewards of both
Shareholder capital and of the environment. This includes a continued focus on
minimising our environmental footprint through proactive measures and
safeguarding the ecosystems in which we operate.
OPERATIONAL ACTIVITY
Paradox project
Zephyr has made excellent progress in driving the Paradox project forward,
culminating in the recent production test on the State 36-2 LNW-CC-R well (the
"State 36-2R well").
The test achieved a peak flow rate of 2,848 boe with no material drop in
bottom hole pressure, and without the use of any fracture stimulation,
suggesting that the well ranks in the top 6% of gas wells across the Lower 48
(the U.S. excluding Alaska and Hawaii), and further demonstrating the
potential of the Paradox project.
The test results indicate that 10,000-foot lateral wells drilled on the
Paradox project could achieve a P50 individual well performance of 3.6 million
boe, affirming that the Cane Creek reservoir is a highly productive and
valuable asset, on par with some of the leading oil and gas plays in the U.S.
If these single-well metrics are applied across a potential 20 well programme,
the Company estimates potential P50 recoverable resources of circa 72.5
million boe across the Cane Creek reservoir alone. Furthermore, it is worth
noting that there are eight additional overlying reservoirs offering
exploration upside and further resource expansion potential.
In summary, the Paradox project is on the cusp of realising its potential as a
project of substantial scale, and we will work to deliver this value over the
next period.
Our next steps include commissioning an updated Competent Person's Report
("CPR"), continuing to engage with farm-in and strategic partners to help in
the funding for the large-scale development of the project, finalising the gas
marketing agreements and completing the build out of our gas processing plant
infrastructure.
In parallel, we will also be looking at opportunities to continue to expand
the Paradox project through additional lease acquisitions or by further
delineating the additional potentially productive zones overlying the Cane
Creek reservoir.
This is an exciting time in the evolution of the Paradox project, and the
Board believes that the fundamental pieces are in place to drive the Paradox
project forward to first gas and commercial production - and in doing so, to
further unlock the value of the project for our Shareholders.
Williston project
Our cash generative non-operated asset portfolio with low operating risk
continues to perform in line with our expectations, enabling us to proceed
with our ongoing Paradox project development.
We continue to appraise, acquire and manage high-return non-operated assets in
core Rocky Mountain basins, U.S., resulting in a growing and diverse base of
assets with low maintenance capital expenditure ("CAPEX"), significant free
cashflow and plenty of potential future drilling upside.
The non-operated portfolio is currently made up of over 200 developed
producing wells. In 2024, the wells produced 1,052 barrels of oil equivalent
per day ("boepd ") with associated revenues of over US$24 million, net to
Zephyr, and a net revenue interest average of 5.1 per cent.
We continue to look at a number of opportunities to increase the scale of our
Williston project and are excited by two recent developments that will
potentially have a substantive impact to the portfolio.
In May 2025, we announced our US$100 million strategic partnership with a
major U.S.-based capital provider focused on the energy sector (the
"investor"). The combination of Zephyr's regional expertise and the investor's
financial strength is designed to accelerate the Company's non-operated
growth, enhance consolidated cashflow, and drive attractive project returns.
Under the terms of the partnership, the investor will provide up to US$100
million to fund 100% of the CAPEX related to the drilling, completing, and
equipping of newly acquired assets. Zephyr will be responsible for any
acquisition costs and will retain a right (but not an obligation) to co-fund
up to 33% of pro rata CAPEX to maximise returns. We will utilise Zephyr Hawk
LLC, a subsidiary company of Zephyr, to serve as the acquisition vehicle for
the purposes of the partnership.
We also announced the proposed acquisition of accretive, mature non-operated
production assets located across core Rocky Mountain basins, and on attractive
financial terms. For an acquisition price of US$7.3 million, Zephyr will
acquire circa 400 boepd of existing production. The proposed acquisition also
offers significant further drilling opportunities, including up to 13 new
wells to be drilled with CAPEX envisioned to be funded by our strategic
partnership.
Following the announcement of the result of the Company's oversubscribed
placing on 25 June 2025, the proposed acquisition is expected to complete by
the end of July 2025, with an effective date of 1 June 2025, and is forecast
to add operating income of US$4 million over the next 12 months (based on
strip prices at 29 May 2025) and add approximately 600,000 boe of producing
well ("PDP") reserves along with the potential proved but undeveloped well
("PUD") upside.
Overall, the proposed acquisition is expected to be accretive to both earnings
and reserves, strengthen the balance sheet, provide strategic entry into key
areas, and enhance our competitive position in core Rocky Mountain oil and gas
producing basins.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
Followers of Zephyr will be familiar with our commitment to stewardship of
both the natural environment and of shareholder capital. Prudent cash
management and careful development of the asset base were key operating
principles throughout the period
We believe good environmental and operational performance, supported by the
appropriate levels of governance, is the optimal way to drive superior
investor returns.
As Zephyr continues to grow, we remain committed to fostering a safe working
environment and maintaining strong engagement with the communities in which we
operate. Supporting these communities through responsible environmental
practices, social engagement, and sound corporate governance is a natural
extension of our mission and reflects our commitment to making a lasting,
positive impact.
There are many stakeholders who work alongside our people and support the
Company. Sturdy relationships, formed over the years of working with multiple
state and federal regulators, proved of great benefit during our recent
drilling programme on the State 36-2R well.
Our relationship and knowledge-sharing partnership with the U.S. Department of
Energy and the University of Utah continues to benefit all parties.
I am also pleased to report the continued progress in our pursuit of
carbon-neutral status as an oil and gas producer. Through our Verified
Emission Reduction credits ("VERs") programme - administered by Prax Group, a
leading UK-based energy trading firm - we aim to offset all Scope 1 carbon
emissions from both our operated and non-operated assets.
FINANCIAL
For the 2024 financial year, the Group reported revenues of US$24.3 million
(2023: US$25.2 million), a gross profit of US$7.2 million (2023: US$7.2
million), and a net loss after taxation of US$19.6 million (2023: US$3.5
million). The net loss after taxation includes a US$14.5 million non-cash,
accounting impairment charge in respect of the Williston project, which is
primarily as a result of lower commodity prices at 31 December 2024 compared
to the prior year.
These results were in line with our forecasts and reflect the lower oil price
environment over the period.
The Group reported Adjusted EBITDA of US$10.9 million for the year ending 31
December 2024 (2023: US$11.8 million). (Adjusted EBITDA represents loss before
tax adjusted for DD&A, ECL, impairment, share-based payments, unrealised
foreign exchange gains/losses, net finance costs and unrealised losses on
derivative contracts).
Production increased over the year, which was the result of the Group's wells
operated by Slawson Exploration Company ("Slawson") being online for much of
the financial year ended 31 December 2024 ("FY 2024"), offset by the natural
decline of the portfolio.
The 2024 financial year was a tumultuous time geopolitically, with significant
volatility in global commodity prices. These events have carried over into
2025 with continued oil price volatility due to ongoing geopolitical tensions.
We expect this volatility to continue over the coming months, and we
continually review how fluctuating commodity prices could potentially impact
our operations. To mitigate this, over the last few years we have managed a
hedging programme to protect the Group against potential downside risks. This
hedging programme is a key tool in helping the Group meet its ongoing funding
obligations. The Group has a policy of layering on hedges to take advantage of
spikes in the oil price and has a broad policy of looking to hedge a
significant portion of its forward non-operated production.
In December 2024, the Group announced that it had secured US$7.5 million to
fund all expected drilling and completion costs for the drilling of the
lateral extension on the State 36-2R well. The funding was provided by a U.S.
based industry investor in exchange for a 50% non-operated working-interest in
the 36-2R well.
On 25 June 2025, the Company announced that it has raised approximately
US$13.5 million (£9.8 million) (before expenses) through the placing of
326,666,667 new Ordinary Shares of 0.1 pence each in the Company to new and
existing institutional and professional investors at an issue price of 3 pence
per new Ordinary Share (the "issue price"). In addition, certain Directors,
management and their affiliates intend to subscribe for 23,333,333 new
Ordinary Shares at the issue price raising a further US$0.9 million (£0.7
million) for the Company, after publication of the Company's audited results
for the year ended 31 December 2024, subject to the passing of certain
resolutions to be put to Shareholders at a general meeting of the Company to
be held on 14 July 2025.
CONCLUSION
I would like to express my appreciation to our team and contractors for their
dedication in helping us deliver our vision. My thanks also go to my fellow
Board members, the leadership team, our advisors, and, above all, our
Shareholders for their continued trust and support.
The Board looks forward to the coming months with confidence, as we continue
to progress the opening-up of the next prolific oil and gas basin in the U.S.
RL Grant
Chairman
27 June 2025
CHIEF EXECUTIVE OFFICER'S REPORT AND OPERATING REVIEW
PRINCIPAL OBJECTIVES AND STRATEGIES
Zephyr Energy plc is an oil and gas exploration and production group operating
in the Rocky Mountain region of the U.S. The Group's mission is to unlock the
next prolific onshore U.S. oil and gas play through the development of our
flagship Paradox project. Zephyr is committed to being a responsible steward
of both investors' capital and the environment.
To achieve this mission, the Group continues to prioritise:
· Building and strengthening a high-calibre team with significant
U.S. oil and gas sector expertise, particularly in operations, development,
governance, finance, M&A, and turnarounds. Following several key hires and
internal promotions during 2024, Zephyr entered the new financial year ending
31 December 2025 with an enhanced operational platform to support delivery in
2025 and beyond;
· Maintaining a clear and disciplined strategic focus on
responsible exploration and production within the Rocky Mountain region;
· Developing a cash-generative, non-operated portfolio to provide
capital for reinvestment into the Paradox project, reinforcing the Group's
self-sustaining dual strategy;
· Embedding ESG at the core of operations, including robust
corporate governance practices, a commitment to operational carbon neutrality,
and ongoing, proactive engagement with the local communities;
· Leveraging strategic partnerships (such as the U.S. Department of
Energy, regional operators, debt providers, asset level investors and
Shareholders) to support long-term value creation;
· Advancing a technology-driven acquisition framework to enable the
rapid assessment and execution of new opportunities, whether through
acquisition, farm-in agreements, or joint ventures; and
· Maintaining rigorous financial discipline and prudent cash
management to ensure capital efficiency across the business.
REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS
Overview
The 2024 financial year, and the period since, were dominated by the ongoing
operational activity at the Paradox project and, in particular, operations on
the State 36-2R well.
The period began with the planning and preparations for the State 36-2R well,
which was then successfully drilled along with the subsequent lateral
extension, and culminated in the recent production test on the State 36-2R
well, which included a peak flow rate of 2,848 boe (achieved with no material
drop in bottom hole pressure and without fracture stimulation) and which
suggests that that the well ranks in the top 6% of gas wells across the Lower
48 in the U.S.
The test results suggest that 10,000-foot lateral wells drilled at the Paradox
project could potentially achieve a P50 individual well performance of 3.6
million boe. The Group's P50 estimate of gross ultimate recoverable resources
in the Cane Creek reservoir is 72.5 million boe, with eight additional
overlying reservoirs offering meaningful exploration upside and further
resource expansion potential.
In summary, our recent work has confirmed the substantial scale and potential
value of the Paradox project and our key operational focus for the next period
is to begin to unlock this value for our Shareholders.
Our income generating non-operated Williston assets continue to deliver strong
cashflows, enabling us to progress ongoing development at the Paradox project.
Over the last four years we have built a highly experienced operations team
which is well positioned to appraise, acquire and manage high-return
non-operated assets in core Rocky Mountain basins, resulting in a growing and
diverse base of assets with low maintenance CAPEX, significant free cashflow
and plenty of potential future drilling upside. The portfolio is currently
made up of over 200 developed producing wells.
In addition to our existing production, two recent developments will
potentially make a meaningful impact to the future growth of the Williston
project.
Firstly, we have entered into a US$100 million strategic partnership with a
major U.S.-based capital provider focused on the energy sector to help us
drive forward the Williston project. The combination of Zephyr's regional
expertise and the investor's financial strength will accelerate the Group's
non-operated growth, enhance consolidated cashflow, and drive attractive
project returns. Under the terms of the partnership, the investor will provide
up to US$100 million to be used to fund 100% of the CAPEX related to the
drilling, completing and equipping of newly acquired assets.
Secondly, and following the announcement of our fundraise in June 2025, we are
proposing to complete an acquisition of mature non-operated production assets
located across core Rocky Mountain basins on attractive financial terms. For
an acquisition price of US$7.3 million, Zephyr will acquire circa 400 boepd of
existing PDP production and further potential PUD upside. We will soon receive
13 AFEs to be drilled with CAPEX envisioned to funded by our strategic
partnership.
The proposed acquisition is expected to complete by the end of July 2025, with
an effective date of 1 June 2025, and is forecast to add operating income of
US$4 million over the next 12 months (based on strip prices at 29 May 2025)
and will add approximately 600,000 boe of PDP reserves (along with the
significant PUD upside previously mentioned).
Paradox project - operated asset
Background
Zephyr holds operated leases over more than 46,000 gross acres in the Paradox
Basin. Of this acreage, 25,000 acres are contiguous and largely covered by
modern 3D seismic data - these acres have previously been assessed by
third-party consultant Sproule International ("Sproule") to contain, net to
Zephyr, 2P reserves of 2.6 million barrels of oil equivalent ("mmboe"), 2C
contingent resources of 34 mmboe, and net unrisked 2U prospective resources of
270 mmboe.
Following the successful recent drilling programme, and subsequent production
test, on the State 36-2R well, a revised CPR will be prepared for the Paradox
project in the second half of 2025 and the Group expects to see a significant
rise in potential recoverable resources from the Paradox project, above and
beyond the previous Sproule CPR.
The Group's proactive land management strategy has resulted in a robust and
expanding acreage position - one which the Board believes is increasingly
difficult to replicate given today's evolving regulatory and political
landscape.
State 36-2R well
In February 2024, the Group announced that it had received the regulatory
approvals and permits required to proceed with the drilling of the State 36-2R
well and in March 2024, Zephyr announced that it had signed a rig contract
with Helmerich & Payne to drill the State 36-2R well.
The key objectives of the State 36-2R well were:
· To successfully complete drilling operations to total depth
safely and without harm to people, the environment or equipment;
· To successfully twin the previously drilled State 36-2 LNW-CC
well (the "State 36-2 well") and intersect the same Cane Creek reservoir
natural fracture system identified by it;
· To confirm the presence of hydrocarbons as found by the State
36-2 well, and further appraise the Cane Creek reservoir at Zephyr's federal
White Sands Unit ("WSU"); and
· Should the original well result be replicated, to assess the
reservoir productivity by flow testing the new well.
In April 2024, the Group announced that full drilling operations had commenced
and, in June 2024, Zephyr announced that the State 36-2R well had been
completed safely and successfully, with the State 36-2R well drilled to a
total depth of 10,290 feet (measured depth) where it intersected the same Cane
Creek reservoir within 15 feet of the State 36-2R well.
Analysis from the drilling indicated that the State 36-2R well, like the State
36-2 well, penetrated a folded and naturally fractured section of the Cane
Creek reservoir. The well encountered drilling mud gas shows of a similar
magnitude to the State 36-2 well and pore pressure analysis suggested
formation pressures estimated at approximately 9,300 pounds per square inch
(which is broadly consistent with previously drilled offset wells).
The State 36-2R well further confirmed the presence of hydrocarbons within a
structural compartment, within Zephyr's acreage and 3D seismic coverage.
Following the successful drilling operation, Zephyr proceeded with the
production tests on the State 36-2R well to determine reservoir pressure,
fluid composition, well flow rate, bulk reservoir permeability and deliver an
early estimate of the overall potential recoverable resources.
It is worth noting that the Group recovered substantially all costs associated
with the drill under the well control insurance policy it had in place
following the well control issue on the State 36-2 well. In total, the Group
received US$19.3 million under the State 36-2 well control insurance policy.
State 36-2R initial production tests and decision to proceed with the extended
lateral
In July 2024, the Group announced that it had successfully completed the
initial phase of the well production test on the State 36-2R well, in which
the State 36-2R well was tested at multiple rates and choke settings to
ascertain its production potential. Initial production test observations were
encouraging, including:
· High reservoir deliverability and high initial reservoir
pressures;
· Peak production rates achieved during the production test were
1,350 boepd, at which level the well was still choked back and constrained;
and
· Significantly higher condensate-yield than Zephyr's previously
drilled Paradox project well (with more than a three-fold increase in
condensate rate versus that from the State 16-2LN-CC well).
o Condensate yield peaked at over 600 barrels of condensate per day.
Condensate produced had an average American Petroleum Institute gravity of 58
degrees, making it a highly desirable barrel for Utah's refinery market. The
condensate produced from the well to date was sold to a Utah refinery at a
price close to current WTI crude oil prices (inclusive of trucking costs).
o The elevated liquid yield had potential to be a significant driver of
improved project economics.
o Almost zero evidence of water production, another potential boost to the
well's economics by reducing the need for water disposal.
While the initial test was successful on multiple fronts, there was also
evidence that the natural fracture network was partly disconnected from the
greater reservoir at this well location. A decision was therefore made to
acidise the well to further remove any drilling mud emulsions from the natural
fracture network and maximise the well's connectivity with the larger
reservoir.
In September 2024, following the completion of the acidisation process and the
follow up testing, the Group announced the following results from the second
production test:
· Peak production rates achieved during the second test were over
2,100 boepd, a significant production rate for an onshore U.S. well with only
130 feet of completed reservoir interval;
· The acidisation operation successfully removed any remaining
near-wellbore formation damage and generated very high reservoir
deliverability, with a notable improvement to near-wellbore reservoir
permeability after each acid treatment. As such, the operation not only
removed damage but also enhanced reservoir productivity;
· This was the first known example of acidisation stimulation in
the Paradox Basin, and the result was highly positive for the development of
the Paradox project, with the potential for substantially reduced reservoir
risk and removal of the need for costly hydraulic stimulation as used in other
U.S. onshore resource plays; and
· Continued evidence of almost zero water production, another
potential boost to the well's economics by material reducing the need for
expensive water disposal.
Results from the second test had multiple positive implications. In addition
to cleaning up any remaining formation damage, the acidisation appeared to
have had the unanticipated benefit of significantly enhancing near-wellbore
reservoir quality (by dissolving calcite and dolomite minerals known to exist
in the reservoir, creating higher porosity and permeability where those
minerals have been dissolved away). The Group had previously observed
widespread minor fracturing in the reservoir cores of the State 16-2 well and
other Cane Creek wells. The analysis suggested that acidisation could
materially enhance the permeability of the overall reservoir matrix, including
the minor fracturing (which may be present across the Group's entire Paradox
project acreage position) as well as any major fracture networks encountered.
This implied that acidisation, when utilised across a longer lateral, may
offer a cost-effective completion technique compared to the hydraulic
stimulation operation used in other U.S. resource plays and that this
alternative completion technique could also offer a broader and lower risk
method for the long-term development of the Paradox project versus solely
targeting major natural fracture networks (the historical development approach
in this part of the Paradox Basin).
Following the production test, the well was temporarily shut in for a brief
period of time while all the information gathered from the production tests
was evaluated.
In October 2024, following a detailed assessment process, the Board approved
the drilling of an extended lateral on the well.
This decision was based on the following two key factors:
· Estimated Ultimate Recoveries ("EURs") from the well were
expected to be substantively higher once the proposed extended lateral was
completed; and
· The acidisation process used in the well production tests was
extremely effective and had the benefit of significantly enhancing
near-wellbore productivity. The Board believed that the combination of a
longer completed interval and subsequent acidisation could potentially be one
of the key factors in the successful long-term development of the Paradox
project, reducing costs and improving EURs from the well. This could result in
significantly reduced project risk and enhanced project economics.
Drilling of the extended lateral on the State 36-2R well
In December 2024, the Group announced that it had secured US$7.5 million to
fund all expected drilling and completion costs from a U.S. based industry
investor in exchange for a 50% non-operated working-interest in the single
well, and on 23 December 2024, Zephyr announced that it had signed a rig
contract with Nabors Drilling USA ("Nabors") to drill the extended lateral.
Drilling operations commenced in January 2025 targeting an additional 5,500
feet of the Cane Creek reservoir. Exactly 30 days later, on 20 February 2025,
drilling operations were concluded safely and successfully. The well
trajectory of the extended lateral section was drilled as planned and
correlated with the existing 3D seismic data. 97% of the lateral was drilled
within the Cane Creek reservoir section demonstrating the ability to
accurately steer within the reservoir across a structurally complex play.
Encouragingly, elevated mud gas levels with notable peaks were evident
throughout the drilling of the Cane Creek reservoir.
Production testing on State 36-2R well following the completion of the
extended lateral
During the production test, which commenced in April 2025, the well was tested
at multiple flow rates in order to gather data to determine the flow capacity
of the well, to provide an early estimate of potential resource volumes, and
to obtain high quality fluid samples. The production test successfully
delivered on all its objectives and delivered results that were at the top end
of management expectations.
In summary, the test included a peak flow rate of 2,848 boepd, achieved with
no material drop in bottom hole pressure and suggested that the well ranks in
the top 6% of gas wells across the Lower 48 (despite not using any fracture
stimulation) - further demonstrating the potential of the Paradox project.
Well test data and interpretation suggest that there is more than sufficient
well deliverability for a commercial well.
The well test results suggest that the chosen completion strategy (hydra-jet
abrasive perforation and matrix acidisation) was highly successful, and it
should be noted that no fracture stimulation was performed to achieve this
excellent well deliverability result. Management believes that fracture
stimulation could offer further upside potential for both the well, and for
the broader Paradox project development.
As a result of a successful production test from the State 36-2R well, the
Group will work to finalise gas processing and related infrastructure
requirements for the project, to tie in both the Federal 28-11 well and the
State 16-2 LN-CC well as soon as practicable.
Potential Paradox development plan
Following the analysis of the well test data, management applied the results
to a conceptual full field development plan to better understand the potential
resource range of the Cane Creek reservoir (under the current 3D seismic
coverage).
This conceptual development plan suggests the potential for a further twenty
Cane Creek reservoir horizontal wells (plus the previously drilled State 16-2
LN-CC and State 36-2 wells), with preliminary management estimates of gross
ultimate recoverable gas in a low-mid-high scenario range of recoverable
condensate as set out in the table below.
Estimated Ultimate Recovery LOW MID HIGH
Gross Recoverable Gas (BCF) 174.0 341.0 501.0
Gross Recoverable Condensate (MMBC) 3.5 15.7 29.0
Total Gross equivalent (MMBOE) 32.5 72.5 112.5
Initial management estimates of ultimate recoverable resources, net to Zephyr
are set out in the table below.
Estimated Ultimate Recovery LOW MID HIGH
Net Recoverable Gas (BCF) 137.0 271.0 399.0
Net Recoverable Condensate (MMBC) 2.7 12.5 23.1
Total Net equivalent (MMBOE) 25.6 57.7 89.5
The test results infer that 10,000-foot lateral wells drilled on the Paradox
project could achieve a P50 individual well performance of circa 3.6 million
boe an NPV-10 of US$25.2 million.
In summary, the evaluation of the production test confirmed that the Cane
Creek reservoir is highly productive and potentially ranks alongside some of
the most productive oil and gas plays in the U.S. The results also suggest
that there may be a considerable increase in the project's recoverable
resources.
Next steps
The Board believes that the fundamental pieces of a significant oil and gas
play are present. Over the coming months, there are a number of key
deliverables that will enable the Group to move towards the commencement of
commercial production from the Paradox project. The next tasks include:
· A new CPR to be commissioned in the second half of 2025;
· Completion of gas marketing agreements and build out of gas
processing plant infrastructure;
· Completion of contracts with Enbridge Gas Utah, the owner of the
operational 16-inch pipeline which runs adjacent to our gas plant, regarding
the terms and timetable for the transportation of gas produced from the
Paradox project;
· Structured engagement with potential farm-in, strategic and
investment partners to help fund and accelerate a larger scale Paradox project
drilling programme;
· Continued leasing of additional nearby acreage;
· Acceleration of legacy workovers on existing 28-11 and 16-2 wells
to bring online additional production at reduced cost; and
· Testing of overlying reservoirs (potentially using an existing
vertical wellbore).
Williston project - non-operated asset
Overview
Zephyr continues to develop a portfolio of working interest positions in
accretive, high-quality, high-margin production assets with significant
near-term growth potential in the Williston Basin.
Following 14 discrete acquisitions, the Williston project has generated strong
cashflows for the Group, moving from zero production to over 1.5 million boe
produced from 2021 to 2024.
Over the last four years we built a highly experienced operations team to
appraise, acquire and manage high-return non-operated assets in core Rocky
Mountain basins, resulting in a growing and diverse base of assets with low
maintenance CAPEX, significant free cashflow and plenty of potential future
drilling upside.
The 2024 financial year was another solid year for the Williston project, with
operational performance in line with management expectations. The historical
investment in the portfolio continues to compound cashflow which enables
Zephyr to pursue the potential of the Paradox project.
The financial performance of the Williston portfolio is exposed to
fluctuations in commodity prices, albeit the Group's hedging strategy aims to
alleviate this exposure. Nonetheless, and primarily as a result of lower
commodity prices at 31 December 2024 compared to the prior year, the Directors
have recognised a non-cash, accounting impairment provision of US$14.5 million
(2023: nil). See note 4. It should be noted that recent rebound in commodity
prices have resulted in a rebound in the overall valuation of the Williston
project.
At 31 December 2024, 229 wells in Zephyr's portfolio were available for
production. Net working interests across the Williston Basin non-operated
portfolio average 7% per well, equivalent to 16 net wells to Zephyr.
2024 sales volumes and production summary
FY 2024 sales volumes averaged 1,149 boepd or 420,724 boe for the year, an
increase over FY 2023 sales volumes of 1,116 boepd or 407,340 boe for the
year.
Of the total revenue in FY 2024, 90% comprised crude oil sales, 4% natural gas
sales and 6% from natural gas liquid sales.
FY 2024 revenues from the portfolio were US$24.3 million, versus FY 2023
revenues of US$25.2 million. The 3.6% year-on-year decline in revenues,
despite increased sales and production in FY 2024, was primarily the result of
lower commodity prices in FY 2024 compared to the prior year.
2024 production from the non-operated portfolio averaged circa 1,052 boepd
versus FY 2023 production of 1,040 boepd. The increase in production
year-on-year was the result of the Group's wells operated by Slawson being
online for much of FY 2024, offset by the natural decline of the portfolio.
Hedging
In FY 2024 the Group hedged 103,000 barrels of oil.
· 67,500 barrels of oil were hedged at a weighted-average price of
US$81.43 per barrel of oil.
· 35,500 barrels of oil were hedged by way of financial collar
options which enabled the Group to lock-in a minimum price for these barrels
of oil. These collar options gave the Group a weighted average floor price of
US$72.73 per barrel of oil and a weighted average ceiling price of US$84.31
per barrel of oil.
The Group continues to evaluate its commodity price risk management strategy
on a regular basis.
Business development
There have been two recent developments that will potentially provide
significant upside to the Williston project.
Strategic partnership
In May 2025, Zephyr announced a new US$100 million strategic partnership with
a major U.S.-based capital provider focused on the energy sector. The
partnership, which will utilise a combination of Zephyr's regional expertise
and the investor's financial strength, is designed to accelerate Zephyr's
non-operated growth, enhance consolidated cashflow, and drive attractive
returns. The Board view this partnership as an excellent way to utilise
experienced industry capital to further grow the Group's cash generating
foundation.
Under the terms of the partnership, the investor will provide up to US$100
million to be used to fund 100% of the CAPEX related to the drilling,
completing and equipping of newly acquired assets, which will be contained
within a defined geographical area (the "Programme Area").
The Programme Area consists of counties located in the Williston Basin,
although both parties may consider opportunities in other Rocky
Mountain basins upon mutual consent. The Investor may elect to participate in
opportunities at its discretion, on a case-by-case basis, after conducting its
own financial and technical verification. Zephyr retains the right (but not
the obligation) to fund up to 33% of pro rata CAPEX. The Investor will earn a
majority of the cashflows generated by its pro rata working interest in each
well until an agreed upon initial hurdle rate is met.
The partnership agreement is for an initial term of six months. Whilst there
can be no guarantee that appropriate opportunities will be forthcoming or lead
to funding, Zephyr fully expects that it will be in a position to present a
number of opportunities to the Investor over the initial six months from its
current and expected pipeline.
Proposed acquisition
We were also delighted to be able to announce the proposed acquisition of
mature non-operated production assets located across core Rocky Mountain
basins. For an acquisition price of US$7.3 million, Zephyr will acquire circa
400 boepd of existing production. The proposed acquisition also offers
significant further drilling opportunities, with up to 13 new wells to be
drilled with CAPEX to be potentially funded by our strategic partnership.
Following the announcement of the Company's fundraise in June 2025, the
proposed acquisition is expected to complete by the end of July 2025, with an
effective date of 1 June 2025, and is forecast to add operating income of US$4
million over the next 12 months (based on strip prices at 29 May 2025) and
adds approximately 600,000 boe of PDP reserves (along with the PUD upside
previously mentioned).
Overall, the proposed acquisition is accretive on both an earnings and reserve
basis, will strengthen the balance sheet, offers the Group strategic entry
into key areas of interest and enhances our competitive position within core
Rocky Mountain basins.
Corporate
Health and safety of our people remains at the top of our priorities, and the
Group is pleased to report that no health or safety incidents occurred during
FY 2024.
In April 2024, the Company granted a total of 61,503,028 share options to
Directors, certain employees and consultants to the Company, to reflect awards
under the Company's Long-Term Incentive Plan, discretionary bonuses for
performance achieved in 2021 and 2022, and discretionary awards in lieu of
deferred remuneration and fees from 2020, during the COVID-19 pandemic. See
note 27.
In May 2024, the Group announced that it had been awarded an additional
US$0.25 million of grant funding from the U.S. Department of Energy ("DOE")
for operations on the State 36-2R well. This brings the total DOE grant
funding made available to the Group to over US$2.7 million in recent years.
In May 2024, the Company retired US$3.88 million of existing debt through the
issuance of US$3.88 million of equity comprised of 64,045,768 new Ordinary
Shares at a price of 4.85 pence per new Ordinary Share. The issue price of the
new Ordinary Shares was the undiscounted mid-market closing price of the
Company's Ordinary Shares on 2 May 2024. The new Ordinary Shares were issued
to SGR Investments LLC ("SGRI"), a US-based institutional investor to repay a
portion of the debt SGRI provided to fund the Group's acquisition of the
Slawson wells in December 2022.
In June 2024, the Group announced a new US$5.6 million term loan. The new term
loan amortises monthly over four years and has an interest rate of 10% per
annum. Proceeds from the new term loan were used to repay the balance due to
SGRI in respect of the Slawson acquisition credit facility, which has now been
fully repaid.
Outlook
2024 was another year of strong progress for the Group, and we continue to
build on this momentum into 2025.
In recent months we have delivered on both components of our stated dual
strategy with operational successes on the Paradox project, our exciting
strategic partnership and the proposed acquisition on the Williston project.
With our balanced portfolio geared for substantial growth, we are looking
forward to the year ahead with confidence.
The Directors' statement in respect of going concern can be found in the
Directors' Report and Note 3 to the consolidated financial statements.
JC Harrington
Chief Executive Officer
27 June 2025
FINANCIAL REVIEW
The 2024 financial year was characterised by further investment in the Paradox
project, and particularly the ongoing activity on the State 36-2R well.
The Williston project continued to deliver in line with expectations albeit
against a backdrop of lower commodity prices in 2024 compared to the prior
year.
INCOME STATEMENT
During the year ended 31 December 2024, the Group generated revenue of US$24.3
million (2023: US$25.2 million) and reported a gross profit of US$7.2 million
(2023: US$7.2 million).
The Group reported Adjusted EBITDA of US$10.9 million for the year ending 31
December 2024 (2023: US$11.8 million). (Adjusted EBITDA represents loss before
tax adjusted for DD&A, ECL, impairment, share-based payments, unrealised
foreign exchange gains/losses, net finance costs and unrealised losses on
derivative contracts).
Administrative expenses for the year were US$6 million, in line with the prior
year (2023: US$6 million).
The Group has reported an allowance for expected credit losses of US$1.2
million in accordance with IFRS 9 Financial instruments. See note 16.
At 31 December 2024, the Directors identified indicators of impairment in its
proved oil and gas properties and carried out an impairment test in accordance
with IAS 36 Impairment of assets. The results of the test indicated that a
non-cash, accounting impairment charge of US$14.5 million should be recognised
(2023: nil). See notes 4 and 14.
The Group reports foreign exchange gains of US$1 million for the year (2023:
loss of US$2.8 million).
Finance charges of US$3.3 million (2023: US$3.5 million) have been charged in
respect of interest and associated costs relating to the Group's borrowings
and unwinding of discount on decommissioning. See note 7.
During the year ended 31 December 2024, the Group has recognised a deferred
tax credit, and a corresponding reduction in its net deferred tax liability of
US$0.4 million relating to unrelieved tax losses and temporary timing
differences arising in the U.S. businesses (2023: US$1.6 million).
The Group reports a net loss after tax of US$19.6 million or a loss of 1.13
cents per Ordinary Share for the year ended 31 December 2024 (2023: net loss
US$3.5 million or a loss of 0.21 cents per Ordinary Share). The increase in
the loss from the prior year is largely the result of the US$14.5 million
impairment charge.
BALANCE SHEET
Total investment in the Group's exploration and evaluation assets as at 31
December 2024 was US$53.2 million (2023: US$50 million) reflecting the ongoing
investment in the Paradox project.
Total investment in property and equipment as at 31 December 2024 was US$41.8
million (2023: US$50.8 million) reflecting depreciation, depletion and
amortisation, decommissioning obligations and a working-interest disposal on
the non-operated asset portfolio.
The carrying value of the Group's property and equipment, at 31 December 2024,
net of the US$14.5m non-cash, accounting impairment provision is US$27.3
million (2023: US$50.8 million).
Trade and other receivables decreased by US$5.2 million during the year under
review. The decrease is primarily due to a provision at 31 December 2023 of
US$2.9 million in respect of insurance recoveries that was settled during the
year, together with a provision for expected credit losses of US$1.2 million
(2023: nil). See note 16.
Cash and cash equivalents as at 31 December 2024 were US$10.3 million (2023:
US$3.6 million). Included within cash and cash equivalents is the sum of
US$7.4 million (2023: nil) received in exchange for a 50% non-operated
working-interest in the State 36-2R well. Use of these funds is restricted to
the funding of drilling, completion and production testing costs for the State
36-2R well. See notes 13 and 17.
At 31 December 2024, the Group recognised a current liability of US$7.4
million in respect of the advance from our joint partner in respect of its 50%
non-operated working-interest in the State 36-2R well. This liability will
reduce as the funds are utilised to develop the well.
The Group's borrowings as at 31 December 2024 were US$26.3 million (2023:
US$35.4 million).
In April 2024, the Company granted a total of 61,503,028 share options to
Directors, certain employees and consultants to the Company, to reflect awards
under the Company's Long-Term Incentive Plan, discretionary bonuses for
performance achieved in 2021 and 2022, and discretionary awards in lieu of
deferred remuneration and fees from 2020, during the COVID-10 pandemic. See
note 27.
In May 2024, the Company settled US$3.88 million of existing debt through
the issuance of US$3.88 million of equity comprised of 64,045,768 new
Ordinary Shares in the Company at a price of 4.85 pence per new Ordinary
Share. The issue price of the Ordinary Shares was the undiscounted mid-market
closing price of the Company's Ordinary Shares on 2 May 2024.
In June 2024, the Group announced that it had fully repaid the remaining US$6
million of the loan that it had with SGRI. This was achieved largely through
utilising proceeds from a new US$5.6 million amortising term loan with First
International Bank & Trust ("FIBT").
GOING CONCERN
The Directors' statement in respect of going concern can be found in the
Directors' Report and Note 3 to the consolidated financial statements.
SUBSEQUENT DEVELOPMENTS
In May 2025, the Group announced that it had entered into an agreement with a
U.S. based capital provider focused on the energy sector to fund growth in the
Williston project. Under the terms of the agreement, Zephyr will be
responsible for acquiring non-operated assets and the investor will make
available up to US$100 million to fund 100% of CAPEX related to the
drilling, completing and equipping of those non-operated assets, which will be
contained within a defined geographical area.
In June 2025, the Group announced the proposed acquisition of mature
non-operated production assets located across core Rocky Mountain basins. For
an acquisition price of US$7.3 million, Zephyr will acquire circa 400 boepd of
existing production. The proposed acquisition also offers significant further
drilling opportunities, with up to 13 new wells to be drilled with CAPEX to be
potentially funded by our strategic partnership. The proposed acquisition is
accretive on both an earnings and reserve basis, will strengthen the balance
sheet and offers the Group strategic entry into key areas of interest and
enhances our competitive position within core Rocky Mountain basins.
On 25 June 2025, the Company announced that it has raised approximately
US$13.5 million (£9.8 million) (before expenses) through the placing of
326,666,667 new Ordinary Shares of 0.1 pence each in the Company to new and
existing institutional and professional investors at an issue price of 3 pence
per new Ordinary Share (the "issue price"). In addition, certain Directors,
management and their affiliates intend to subscribe for 23,333,333 new
Ordinary Shares at the issue price raising a further US$0.9 million (£0.7
million) for the Company, after publication of the Company's audited results
for the year ended 31 December 2024, subject to the passing of certain
resolutions to be put to Shareholders at a general meeting of the Company to
be held on 14 July 2025.
KEY PERFORMANCE INDICATORS
As part of Zephyr's ongoing development of the Paradox project and the
build-out of the non-operated portfolio in the Williston Basin, the Board
tracks its performance against indicators that reflect the strategic,
operational and financial progress, as well as our impact on society and the
environment. These indicators allow the Board, management and stakeholders to
compare Zephyr's performance to its goals.
Safety performance Why we measure Performance
· The Group has a zero-harm safety culture focused on continuous · There were no reported LTIs during the 2024 financial year (2023:
improvement to achieve an injury-free and safe work environment nil)
· We require employees and contractors to work in a safe and
responsible manner and provide them with the training and equipment to do so
Adjusted EBITDA Why we measure Performance
Loss before tax adjusted for DD&A, ECL, impairments, share-based payments, · Indicator of the Group's cash generation to fund expenditures · 2024 Adjusted EBITDA was US$10.9 million
unrealised foreign exchange gains / losses, net finance costs and unrealised and/or return capital to Shareholders
losses on derivative contracts · 2023 Adjusted EBITDA was US$11.8 million
· The difference between the Adjusted EBITDA for 2024 and the prior
year was primarily the result of lower commodity prices in 2024
Net sales volumes Why we measure Performance
· Indicator of revenue generation potential · FY 2024 sales volumes of 420,724 boe
· Measure of progress towards achieving production forecasts and · 3% increase in sales from FY 2023 sales volumes of 407,340 boe
driving profitable production growth
· Increase primarily the result of a full-year of production from
the six Slawson wells, offset by standard production decline of the
non-operated asset portfolio
Growth of Paradox project reserves / resources Why we measure Performance
· Indicator of economic viability and long-term production · At 31 December 2024, the Group had Paradox Basin 2P reserves of
potential of projects 2.6 mmboe, 2C resources of circa 34 mmboe and 2U resources of 270 mmboe
· It is expected that a revised Competent Persons Report on the
Paradox project will be prepared in the second half of 2025 following the
successful production test of the State 36-2R well
Carbon emissions Why we measure Performance
· Zephyr Energy is committed to sustainable and responsible oil and · Pursued Scope 1 carbon-neutrality from both operated and
gas production non-operated assets
· VERs credit partnership with Prax
CJ Eadie
Group Finance Director
27 June 2025
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2024
2024 2023
Notes US$'000 US$'000
Revenue 6 24,279 25,225
Operating and transportation expenses (5,809) (6,964)
Production taxes (2,046) (1,878)
Depreciation, depletion and amortisation 14 (9,241) (9,607)
Gain on derivative contracts 18 14 412
Gross profit 7,197 7,188
Administrative expenses (5,976) (5,997)
Allowance for expected credit losses 16 (1,226) -
Impairment of property and equipment 14 (14,541) -
Share-based payments 27 (3,129) (6)
Foreign exchange gains/(losses) 1,007 (2,776)
Finance income 2 -
Finance costs 7 (3,303) (3,472)
Loss on ordinary activities before taxation 8 (19,969) (5,063)
Taxation credit 11 395 1,560
Loss for the year attributable to owners of the parent company (19,574) (3,503)
Loss per Ordinary Share
Basic and diluted, cents per share 12 (1.13) (0.21)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
2024 2023
US$'000 US$'000
Loss for the year attributable to owners of the parent company (19,574) (3,503)
Other comprehensive (loss)/income
Items that may be subsequently reclassified to profit or loss
Foreign currency translation differences on foreign operations (1,007) 2,772
Total comprehensive loss for the year attributable to owners of the parent
company
(20,581) (731)
CONSOLIDATED BALANCE SHEET
As at 31 December 2024
2024 2023
Notes US$'000 US$'000
Non-current assets
Exploration and evaluation assets 13 53,236 49,941
Property and equipment 14 27,292 50,840
80,528 100,781
Current assets
Trade and other receivables 16 2,676 7,897
Cash and cash equivalents 17 10,267 3,611
Derivative contracts 18 3 278
12,946 11,786
Total assets 93,474 112,567
Current liabilities
Trade and other payables 19 (4,383) (6,983)
Advance from joint operator 20 (7,394) -
Borrowings 21 (20,933) (28,950)
Lease liabilities (31) (39)
Derivative contracts 18 (86) -
Provisions 23 (549) -
(33,376) (35,972)
Non-current liabilities
Borrowings 21 (5,384) (6,401)
Lease liabilities (17) (31)
Deferred tax 22 - (395)
Provisions 23 (3,560) (5,067)
(8,961) (11,894)
Total liabilities (42,337) (47,866)
Net assets 51,137 64,701
Equity
Share capital 24 42,649 42,568
Share premium account 26 74,792 71,735
Warrant reserve 25 1,887 1,557
Share-based payment reserve 26 5,665 3,270
Cumulative translation reserve 26 (14,219) (13,212)
Accumulated deficit 26 (59,637) (41,217)
Equity attributable to owners of the parent company 51,137 64,701
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
Share premium account Share-based payment Cumulative
Shares to be issued Warrant reserve reserve translation reserve Accumulated
deficit
Share capital Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2023 42,412 66,847 539 1,557 3,284 (15,984) (37,929) 60,726
Transactions with owners in their capacity as owners:
Issue of equity shares 156 5,318 - - - - - 5,474
Exercise of warrants - - (539) - - - - (539)
Expenses of issue of equity shares - (430) - - 195 - - (235)
Share-based payments - - - - 6 - - 6
Transfer to accumulated deficit in respect of expired options
- - - - (215) - 215 -
Total transactions with owners in their capacity as owners
156 4,888 (539) - (14) - 215 4,706
Loss for the year - - - - - - (3,503) (3,503)
Other comprehensive income:
Currency translation differences - - - - - 2,772 - 2,772
Total other comprehensive income for the year
- - - - - 2,772 - 2,772
Total comprehensive loss for the year
- - - - - 2,772 (3,503) (731)
As at 31 December 2023 42,568 71,735 - 1,557 3,270 (13,212) (41,217) 64,701
Transactions with owners in their capacity as owners:
Issue of equity shares 81 3,816 - - - - - 3,897
Grant of warrants - (49) - - 49 - - -
Exercise of warrants - - - - (3) - 3 -
Expenses of issue of equity shares - (380) - - 371 - - (9)
Warrant exercise extension - (330) - 330 - - - -
Share-based payments - - - - 3,129 - - 3,129
Transfer to accumulated deficit in respect of expired and lapsed options
- - - - (1,151) - 1,151 -
Total transactions with owners in their capacity as owners
81 3,057 - 330 2,395 - 1,154 7,017
Loss for the year - - - - - - (19,574) (19,574)
Other comprehensive loss:
Currency translation differences - - - - - (1,007) - (1,007)
Total other comprehensive loss for the year
- - - - - (1,007) - (1,007)
Total comprehensive loss for the year
- - - - - (1,007) (19,574) (20,581)
As at 31 December 2024 42,649 74,792 - 1,887 5,665 (14,219) (59,637) 51,137
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2024
2024 2023
Notes US$'000 US$'000
Operating activities
Loss for the year before taxation (19,969) (5,063)
Adjustments for:
Allowance for expected credit losses 1,226 -
Impairment of property and equipment 14,541 -
Finance income (2) -
Finance costs 3,303 3,472
Depreciation and depletion of property and equipment 9,292 9,630
Share-based payments 3,129 6
Unrealised foreign exchange (gains)/losses (1,006) 2,772
Operating cash inflow before movements in working capital 10,514 10,817
Decrease/(increase) in trade and other receivables 1,315 (403)
Unrealised loss on derivative contracts 362 1,029
Increase in trade and other payables 788 191
Cash generated from operations 12,979 11,634
Income tax paid - -
Net cash generated from operating activities 12,979 11,634
Investing activities
Additions to exploration and evaluations assets (12,768) (21,643)
Additions to oil and gas properties (962) (10,467)
Decrease in capital expenditures related payables (3,367) (5,754)
Proceeds on disposal of oil and gas properties - 2,262
Insurance proceeds received in respect of exploration and evaluation assets 11,420 7,712
Grant funds received in respect of exploration and evaluation assets 250 302
Interest received 2 -
Net cash used in investing activities (5,425) (27,588)
Financing activities
Net proceeds from issue of shares 1 3,700
Net advance from joint operator 7,394 -
Proceeds from borrowings 5,600 13,260
Repayment of borrowings (9,958) (4,244)
Repayment of lease liabilities (65) (7)
Interest and fees paid on borrowings (3,868) (2,140)
Interest paid on leases (2) -
Net cash (used in)/generated from financing activities (898) 10,569
Net increase/(decrease) in cash and cash equivalents 6,656 (5,385)
Cash and cash equivalents at beginning of year 3,611 8,996
Effect of foreign exchange rate changes - -
Cash and cash equivalents at end of year 17 10,267 3,611
SELECTED NOTES TO THE FINANCIAL STATEMENTS (the full set of notes are
available in the annual report and accounts)
For the year ended 31 December 2024
2. ADOPTION OF NEW AND REVISED STANDARDS
STANDARDS ADOPTED DURING THE YEAR
The Group has adopted all of the new or amended Accounting Standards and
interpretations issued by the International Accounting Standards Board
("IASB") that are mandatory and relevant to the Group's activities for the
current reporting period.
The following new and revised Standards have been adopted but have not had any
material impact on the amounts reported in these financial statements:
· Amendments to IAS 1 - Classification of liabilities as current or
non-current
· Amendments to IFRS 16 - Lease liability in a sale and leaseback
· Amendments to IAS 1 - Non-current liabilities with covenants
· Amendments to IAS 7 and IFRS 7 - Supplier finance arrangements
STANDARDS ISSUED BUT NOT YET EFFECTIVE
Any new or amended Accounting Standards or interpretations that are not yet
mandatory (and in some cases, had not yet been endorsed by the UK Endorsement
Board) have not been early adopted by the Group for the year ended 31 December
2024. They are as follows:
· Amendments to IAS 21 - Lack of exchangeability
· Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets
between an investor and its associate or joint venture
· IFRS 18 - Presentation and disclosures in financial statements
· IFRS 19 - Subsidiaries without public accountability: disclosures
· Amendments to the SASB standards to enhance their international
applicability
· Amendments to IFRS 9 and IFRS 7 regarding the classification and
measurement of financial instruments
· Annual improvements to IFRS accounting standards - Volume 11
· IFRS S1 - General requirements for disclosure of sustainability -
related financial information
· IFRS S2 - Climate-related disclosures
The Directors do not expect that the adoption of these Standards or
Interpretations in future periods will have a material impact on the financial
statements of the Company or the Group.
3. MATERIAL ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements have been prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies
Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared on the historical cost basis,
other than certain financial assets and liabilities, which are stated at fair
value. Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
The consolidated and the Company financial statements are presented in United
States dollars ("US$"). All amounts have been rounded to the nearest thousand
unless otherwise indicated.
The functional currency of the Company is pounds sterling ("£") and that of
the U.S. subsidiaries is US$.
As described below, the Directors continue to adopt the going concern basis in
preparing the consolidated and the Company financial statements.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these financial statements.
The preparation of the financial statements in compliance with UK-adopted
international accounting standards requires management to make estimates and
the Directors to exercise judgement in applying the Group's accounting
policies. The significant judgments made by the Directors in the application
of these accounting policies that have significant impact on the financial
statements and the key sources of estimation uncertainty are disclosed in note
4.
GOING CONCERN
The Directors have prepared cashflow forecasts for the Group and Parent
Company for the period to 31 December 2026 based on their assessment of both
the discretionary and the non-discretionary cash requirements of the Group
during this period. The Directors have also considered the impact of certain
sensitivity scenarios on the cashflow forecasts.
These cashflow forecasts include the forecast revenues from, and the operating
costs of, the Group's operations, together with all financing costs, committed
development expenditure and operational cashflows. The Company announced a
US$14.4 million equity placing on 25 June 2025, for which all proceeds are
expected to be received by mid-July 2025.
The Group and the Parent Company have existing borrowings, as disclosed in
note 21, including a revolving credit facility with FIBT that is due for
renewal in December 2025. To meet this obligation, the Group and the Parent
Company will require debt refinancing of these borrowings or raising of new
funding to repay the obligation. The facility has been renewed in each of the
previous three years, and the Directors are confident that this will be the
case in 2025.
As such, the Group and the Parent Company's ability to continue as going
concerns is dependent on debt refinancing of existing borrowings or
alternatively raising new funding, which is not guaranteed. This indicates the
existence of a material uncertainty which may cast significant doubt over the
Group and the Parent Company's ability to continue as going concerns, and
therefore, the Group and the Parent Company may be unable to realise their
assets and discharge their liabilities in the normal course of business.
The Directors have a high degree of confidence that the Group and the Parent
Company will be able to refinance their existing borrowings and will have
sufficient funds to enable the Group and the Parent Company to continue in
operation for at least the next 12 months from the date of approval of the
financial statements.
In addition, the Directors have extensive experience in raising capital for
projects and ventures and remain confident in the Group and the Parent
Company's ability to raise the capital necessary to maintain and deliver on
its commitments and continue as a going concern.
The Directors continue to adopt the going concern basis in preparing the
consolidated financial statements. The financial statements do not include any
adjustments that would be required should the going concern basis of
preparation no longer be appropriate.
5. SEGMENTAL INFORMATION
When considering the requirements of IFRS 8 Operating segments, the Board of
Directors have determined that the Group has one main operating segment, the
exploration, development and production of oil and gas resources based in the
U.S. As a result, no segmental information is presented.
6. REVENUE
Petroleum and natural gas revenue earned by the Group in the U.S. is
disaggregated by commodity, as follows:
2024 2023
US$'000 US$'000
Crude oil 21,782 22,609
Natural gas liquids 1,594 1,657
Natural gas 903 959
24,279 25,225
7. FINANCE COSTS
2024 2023
US$'000 US$'000
Loan interest and fees 2,916 2,888
Lease interest 2 -
Other interest charges 21 -
Amortisation of debt costs 130 215
Unwinding of discount on decommissioning 234 369
3,303 3,472
8. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
The loss before taxation for the year has been arrived at after
(crediting)/charging:
2024 2023
US$'000 US$'000
Gains on derivative contracts (14) (412)
Depreciation and depletion of property and equipment
9,292 9,630
Staff costs excluding share-based payments 3,113 2,664
Allowance for expected credit losses 1,226 -
Impairment of property and equipment 14,541 -
Share-based payments 3,129 6
Expense relating to short-term leases - 30
Foreign exchange (gains)/losses(1) (1,007) 2,776
(1) Foreign exchange (gains)/losses include a gain of US$1.0 million (2023: loss US$2.7 million) in respect of the translation of GBP designated loans between the Company and its U.S. subsidiary entities at 31 December 2024.
12. LOSS PER ORDINARY SHARE
Basic loss per Ordinary Share is calculated by dividing the net loss for the
year by the weighted average number of Ordinary Shares in issue during the
year. Diluted loss per Ordinary Share is calculated by dividing the net loss
for the year by the weighted average number of Ordinary Shares in issue during
the year adjusted for the dilutive effect of potential Ordinary Shares arising
from the Company's share options and warrants.
The calculation of the basic and diluted loss per Ordinary Share is based on
the following data:
2024 2023
US$'000 US$'000
Losses
Losses for the purpose of basic and diluted loss per Ordinary Share being net
loss for the year
(19,574) (3,503)
2024 2023
Number Number
'000 '000
Number of shares
Weighted average number of shares for the purpose of basic and diluted loss
per Ordinary Share
1,728,196 1,644,490
2024 2023
US$'000 US$'000
Loss per Ordinary Share
Basic and diluted, cents per share (1.13) (0.21)
The Company has options issued over 102,238,428 (2023: 44,764,000) Ordinary
Shares, and warrants issued over 134,730,952 (2023: 132,305,238) Ordinary
Shares that are potentially dilutive. See notes 25 and 27.
Due to the losses incurred from continuing operations in the years presented,
there is no dilutive effect from the existing share options or warrants.
13. EXPLORATION AND EVALUATION ASSETS
US$'000
Cost
At 1 January 2023 37,986
Additions 22,643
Decommissioning - additions and change in estimates 177
Insurance proceeds (10,563)
Funds received in lieu of grants (302)
At 1 January 2024 49,941
Additions 12,768
Decommissioning - additions and change in estimates (472)
Insurance proceeds (8,751)
Grant funds (250)
At 31 December 2024 53,236
PARADOX ACQUISITION
On 10 February 2023, the Group completed the acquisition of the remaining 25%
working interest in the WSU in the Paradox Basin, Utah from Rockies Standard
Oil Company LLC ("RSOC").
Under the term of the acquisition agreement, total consideration of up to US$3
million is payable by the issue of up to 40,449,284 new Ordinary Shares of 0.1
pence each in Zephyr Energy plc, at a price of 6.05 pence per new Ordinary
Share.
The new Ordinary Shares would be issued in two tranches:
· A first tranche of 13,483,095 new Ordinary Shares to be issued in
settlement of loan notes of US$1 million, on completion of the acquisition.
· A second tranche of 26,966,189 new Ordinary Shares to be issued
in settlement of loan notes of US$2 million, upon Zephyr's final investment
decision with respect to the commencement of operations at the Powerline Road
gas processing plant which was acquired in August 2022. If the final
investment decision is not made by 1 January 2029 the Group has no further
obligation to issue the second tranche.
On 10 February 2023, the Group issued 13,483,095 new Ordinary Shares of 0.1
pence each in Zephyr Energy plc, at a price of 6.05 pence per new Ordinary
Share, in respect of the first tranche. The second tranche has not yet met the
criteria for issue. See note 24.
STATE 36-2 WELL CONTROL INCIDENT
On 7 April 2023, as workover operations were being completed on State 36-2,
the well experienced a significant control issue. All relevant authorities
were notified, a specialist well control team recommended by the Group's
insurers was deployed to bring the well under control as quickly as possible,
and remediation and clean-up operations were successfully completed in
accordance with the State of Utah's Division of Oil, Gas and Mining
requirements. A third-party confirmatory environmental survey found no
evidence of lingering environmental impact.
The Group has comprehensive well control insurance coverage and has recovered
substantially all costs associated with the incident. The Group's policy
covers expenses up to the policy limit of US$20 million for clean-up,
remediation, plugging and abandonment of the original well, and the cost of a
new well of similar design up to the point at which the incident occurred.
On 6 June 2024, the Group announced that it had completed drilling operations
in respect of the redrill of the State 36-2 well, the State 36-2R LNW-CC well.
At 31 December 2024, a total of US$19.3 million had been recovered from the
Group's insurer in final settlement of the claim. A receivable of US$0.2
million has been recognised in respect of expenditure not yet recovered at 31
December 2024, which has been recovered in full since the year end. See note
16.
STATE 36-2R WELL JOINT OPERATION
On 17 December 2024, the Group entered into an agreement with a U.S. based
industry investor to fund all expected drilling, completion and operating
costs of the State 36-2R well.
Under the terms of the agreement, the investor is obligated to pay 100% of the
drilling and completion costs up to US$7.5 million for the lateral extension
of the well in exchange for an immediate 50% non-operated working interest in
the State 36-2R well.
The Group entered into a Joint Operating Agreement ("JOA") to govern
operations for the project and the well. The Group remains the operator and if
costs on the project exceed US$7.5 million, the expense will be met by the
parties in accordance with their working interest.
The Group has retained a right of first refusal to repurchase the working
interest at a discount to fair market value in the event the investor chooses
to sell its interest in the future.
The Group has classified its interest as a joint operation and will account
for its interest by recognising its share of assets and liabilities, and
revenue and expense in accordance with its contractually conferred rights and
obligations.
At 31 December 2024, the Group had received the total contribution of US$7.5
million of which US$0.1 million had been utilised on initial costs of the
project. See note 20.
SALT WASH PROJECT
On 18 October 2023, the Group announced a proposed farm-in to a minimum 75%
working interest in a 1,047-acre leasehold position in the Salt Wash Field, a
previously producing asset with proven oil, gas and helium reserves, located
three miles to the south of the Group's WSU.
The key terms of the farm-in which completed on 6 September 2023, were as
follows:
· An initial payment of US$0.3 million due within 30 days of the
transaction completing;
· A second payment of US$0.3 million due within 60 days of the
transaction completing;
· The Group is committed to drill, log and case one vertical
delineation well, with spudding prior to 30 June 2024 to obtain a 100% share
in the leasehold; and
· The seller has the option to back-in to the lease holding at a
25% working interest, with no historic cost exposure, once the delineation
well is drilled and a field development plan has been proposed by Zephyr.
Thereafter, the seller would become a fully paying 25% working interest
partner.
The total consideration of US$0.6 million was treated as an acquisition of
assets at 31 December 2023.
In June 2024, the Group announced that the drilling deadline had been extended
to 1 September 2024 and in July 2024, the State of Utah's Department of
Natural Resources approved the Application for Permit to Drill ("APD").
In August 2024, the Group received confirmation from the mineral owners that
the initial work to be undertaken by the Group would satisfy the requirements
of the lease agreements, despite the fact that drilling was not expected to
commence until 2025.
U.S. DEPARTMENT OF ENERGY FUNDING
On 29 May 2024, the Group announced that it had secured an incremental
US$250,000 research grant from the University of Utah's Energy and Geoscience
Institute ("EGI"), to support well testing activity on the State 36-2R well.
The carrying value of the Group's exploration and evaluation assets have been
presented net of the funds received.
IMPAIRMENT
The Directors assessed the indicators of impairment as set out in IFRS 6 and
no indicators or impairment were identified. On this basis the Directors have
satisfied themselves that there was no requirement to perform an impairment
test at 31 December 2024 and, as a result, no provision for impairment has
been made in respect of these assets at 31 December 2024 (2023: nil).
14. PROPERTY AND EQUIPMENT
Group Company
Oil and gas properties Office equipment Right-of-use Office equipment Right-of-use
US$'000 US$'000 assets Total US$'000 assets Total
US$'000 US$'000 US$'000 US$'00
Cost
At 1 January 2023 66,220 24 - 66,244 24 - 24
Additions 10,468 - 77 10,545 - 77 77
Disposals (2,792) - - (2,792) - - -
Decommissioning -additions and change in estimates
463 - - 463 - - -
Exchange differences - 1 - 1 1 - 1
At 1 January 2024 74,359 25 77 74,461 25 77 102
Additions 1,336 - 43 1,379 - - -
Disposals (612) - - (612) - - -
Decommissioning -additions and change in estimates
(715) - - (715) - - -
Exchange differences - - (1) (1) - (1) (1)
At 31 December 2024 74,368 25 119 74,512 25 76 101
Accumulated depreciation
At 1 January 2023 14,421 18 - 14,439 18 - 18
Charge for the year 9,607 2 21 9,630 2 21 23
Disposals (449) - - (449) - - -
Exchange differences - 1 - 1 1 - 1
At 1 January 2024 23,579 21 21 23,621 21 21 42
Charge for the year 9,241 2 49 9,292 2 39 41
Disposals (233) - - (233) - - -
Exchange differences - - (1) (1) - (1) (1)
At 31 December 2024 32,587 23 69 32,679 23 59 82
Impairment
At 1 January 2023 and 2024
- - - - - - -
Charge for the year 14,541 - - 14,541 - - -
At 31 December 2024 14,541 - - 14,541 - - -
Carrying amount
At 31 December 2024 27,240 2 50 27,292 2 17 19
At 31 December 2023 50,780 4 56 50,840 4 56 60
At 1 January 2023 51,799 6 - 51,805 6 - 6
The Group depreciation and depletion charge has been allocated to the income
statement as follows:
2024 2023
US$'000 US$'000
Depreciation, depletion and amortisation 9,241 9,607
Administrative expenses 51 23
9,292 9,630
IMPAIRMENT
At 31 December 2024, the Directors identified depressed commodity prices as an
indicator of impairment in its proved oil and gas properties. The Directors
consider that its proved oil and gas assets represent the smallest
identifiable group of assets whose output has an active market and which
generate largely independent cashflows, and therefore consider the assets to
be a single CGU.
The recoverable amount of the CGU was determined based on fair value less
costs of disposal and calculated based on the discounted future cashflows of
the proved plus probable reserves as at 31 December 2024 using forward prices
and cost estimates, prepared by the Company's independent competent person.
The measurement of fair value less costs of disposal has been categorised as
Level 3 in the fair value hierarchy as the valuation is reliant on
management's assumptions and models, rather than readily available market
data.
The evaluation of discounted future cashflows was performed using a post-tax
discount rate of 11% (pre-tax rate of 15.8%).
At 31 December 2024, the impairment test prepared by the Directors indicated a
recoverable amount based on fair value less costs of disposal of US$27.3
million compared with a CGU carrying amount of US$41.8 million. The Directors
determined, therefore, that the fair value less costs of disposal is less than
the carrying amount of the CGU and have accordingly recognised an impairment
provision of US$14.5 million (2023: nil).
Sensitivity
The key assumptions within the cashflow relate to commodity prices and the
discount rate which are inherently difficult to forecast. The Directors
assessed the sensitivity of the impairment analysis based on potential
fluctuations in these assumptions.
These changes in estimates were calculated to have the following impact on the
impairment charge:
· A 10% decrease in commodity prices would result in an additional
impairment charge of US$5.4 million.
· A 10% increase in commodity prices would result in a reduction in
the impairment charge of US$5.4 million.
· A 20% decrease in commodity prices would result in an additional
impairment charge of US$11.0 million.
· A 20% increase in commodity prices would result in a reduction in
the impairment charge of US$10.7 million.
· A 1% decrease in the discount rate would result in a reduction in
the impairment charge of US$1.1 million.
· A 1% increase in the discount rate would result in an additional
impairment charge of US$1.0 million.
· A 2% decrease in the discount rate would result in a reduction in
the impairment charge of US$2.3 million
· A 2% increase in the discount rate would result in an additional
impairment charge of US$2.0 million.
18. DERIVATIVE CONTRACTS
The Group faces volatility in market prices affecting the predictability of
its cashflows from commodity sales. To manage this risk the Group utilises
derivative financial instruments. At 31 December 2024, these instruments
included collars (put and call options) and swaps:
· Collars - Arrangements that include a fixed floor price
(purchased put option) and a fixed ceiling price (sold call option) based on
an index price have no net costs overall. At the contract settlement date, (i)
when the index price is higher than the ceiling price, the Group pays the
counterparty the difference between the index price and ceiling price, (ii)
when the index price is between the floor and ceiling prices, no payments are
due from either party ;and (iii) when the index price is below the floor
price, the Group will receive the difference between the floor price and the
index price.
· Swaps - When the Group sells a swap, it agrees to receive a fixed
price for the contract while paying a floating market price to the
counterparty.
At 31 December 2024, the fair values of the Group's derivative financial
instruments were:
Fair value
Strike price 31 December 2024
Oil Volume per bbl US$
Contracts Bbl Pricing point US$ Term
Swap 4,000 WTI NYMEX 67.00 1 January 2025 to 28 February 2025 (17,336)
Swap 2,000 WTI NYMEX 66.68 1 January 2025 to 28 February 2025 (7,786)
Call 4,000 WTI NYMEX 70.00 1 January 2025 to 28 February 2025 (10,661)
Put 4,000 WTI NYMEX 63.00 1 January 2025 to 28 February 2025 580
Call 2,000 WTI NYMEX 69.75 1 March 2025 to 30 April 2025 (8,497)
Put 2,000 WTI NYMEX 63.00 1 March 2025 to 30 April 2025 2,203
Swap 18,000 WTI NYMEX 68.27 1 January 2025 to 30 June 2025 (41,966)
The fair value of the outstanding contracts at 31 December 2024 has been
recognised as follows:
2024 2023
US$'000 US$'000
Current assets 3 278
Current liabilities (86) -
(83) 278
The fair value measurement of derivative contracts has been categorised as
Level 2 in the fair value hierarchy as they are valued using inputs and
outputs other than quoted prices that are observable for the assets and
liabilities.
The recognised gain on derivative contracts was as follows:
2024 2023
US$'000 US$'000
Realised gain 376 1,441
Change in fair value (362) (1,029)
14 412
21. BORROWINGS
Group
2024 2023
US$'000 US$'000
FIBT facility
First term loan 6,467 10,943
Second term loan 5,013 -
Revolving credit 15,000 15,000
26,480 25,943
Capitalised debt issue costs (163) (119)
26,317 25,824
SGRI
Revolving credit - 9,494
Capitalised debt issue costs - (56)
- 9,438
Promissory note
Loan - 89
Total borrowings 26,317 35,351
Current borrowings 20,933 28,950
Non-current borrowings 5,384 6,401
26,317 35,351
REMAINING CONTRACTUAL MATURITY ANALYSIS
The following table details the Group's remaining maturity for its borrowings.
The table has been drawn up based on the undiscounted cashflows based on the
earliest date on which the borrowings are required to be paid. The table
includes both principal and interest cashflows.
Group
2024 2023
US$'000 US$'000
Maturity analysis
Less than 6 months 4,151 13,109
6 months to 1 year 19,148 18,103
1 year to 2 years 3,403 5,086
2 years to 5 years 2,563 1,699
29,265 37,997
FIRST INTERNATIONAL BANK & TRUST ("FIBT")
On 16 February 2022, the Group entered into credit facility agreements with
FIBT through its U.S. subsidiaries. Under the terms of the agreements the
Group received a term loan ("first term loan") of US$18 million, and a
12-month revolving credit facility of US$10 million.
FIBT has a lien on the assets of the Group's U.S. subsidiaries, Zephyr Bakken
LLC and Rose Petroleum (Utah) LLC.
Term loans
The first term loan is repayable by 48 monthly instalments and incurs interest
at a rate of 6.74% per annum
On 19 June 2024, the Group entered into a new facility agreement with FIBT.
Under the terms of the agreement, the Group received a new term loan ("second
term loan"), of US$5.6 million. The second term loan is repayable by 48
monthly instalments and carries interest at a fixed rate of 10% per annum.
Revolving credit facility
The revolving credit facility has a standard redetermination every six months.
In October 2023, the repayment term of the revolving credit facility was
extended to 16 October 2024, and the interest charge was adjusted to a
variable rate equal to the Wall Street Prime Rate plus 2.5% subject to a
minimum rate of 6.74% per annum.
On 21 December 2023, the revolving credit facility was increased to a
commitment of up to US$15.2 million with the same repayment and interest
terms.
In October 2024, the repayment term of the revolving credit facility was
extended to 16 December 2025, and the interest charge was adjusted to a fixed
rate of 10% per annum.
At 31 December 2024, the Group had drawn US$15 million in respect of the
facility.
Under the terms of the FIBT agreements, the credit facilities are subject to a
financial covenant which is a debt service coverage ("DSC") ratio, measured
annually as of 31 December. The Group has always been compliant with the DSC
covenant.
SGRI
On 19 December 2022, the Group entered into a loan agreement under the terms
of which the Group received a 12-month revolving credit facility of up to US$8
million incurring interest at a rate 12% per annum.
On 13 October 2023, the revolving credit facility was increased to US$8.6
million and the repayment term was extended to 19 March 2024, on which date,
it was further extended to 30 April 2024.
On 30 April 2024, the repayment term of the revolving credit facility was
further extended to 31 May 2024, on which date, it was further extended to 30
June 2024.
Interest and fees have been added to the loan and are due for repayment on the
same terms as the facility.
On 3 May 2024, the Group announced that it had settled US$3.88 million of the
credit facility through the issuance of US$3.88 million of equity comprised of
64,045,768 new Ordinary Shares of 0.1 pence each in Zephyr Energy plc at a
price of 4.85 pence per new Ordinary Share. See notes 24 and 27.
In June 2024, the Group repaid the remaining US$6 million of the credit
facility in full.
PROMISSORY NOTE
On 1 August 2023, the Group entered into an agreement for a principal sum of
US$160,000 repayable in six monthly instalments of US$16,500 and a final
payment of US$75,000 due in February 2024. The note was repaid in full during
the year.
The movement in total borrowings during the year was:
2024 2023
US$'000 US$'000
At 1 January 35,351 25,393
Net cashflows - financing activities - net (repayment of)/additions to
borrowings
(4,358) 9,016
Non-cash movements - movement in capitalised interest and loan costs (789) 942
Non-cash movements - share-based payment (3,887) -
At 31 December 26,317 35,351
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FLMMTMTJTTBARecent news on Zephyr Energy
See all newsREG - Zephyr Energy PLC - Total Voting Rights
AnnouncementREG - Zephyr Energy PLC - Director Subscription to raise £0.7 million
AnnouncementREG - Zephyr Energy PLC - Final Results
AnnouncementREG - Zephyr Energy PLC - Holding(s) in Company
AnnouncementREG - AIM - AIM Notice - 27/06/2025
Announcement