REG - Zephyr Energy PLC - Grant of share options and issue of warrants

Zephyr EnergyAnnouncement

10/04/2024 07:00

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RNS Number : 0026K  Zephyr Energy PLC  10 April 2024

10 April 2024

Zephyr Energy plc

("Zephyr" or the "Company")

 

Grant of share options and issue of warrants

 

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain oil and gas
company focused on responsible resource development from carbon-neutral
operations, announces that the Company has granted options over new ordinary
shares of 0.1p each in the Company (the "Ordinary Shares") under the Company's
share option schemes (the "Options").

 

A total of 61,503,028 Options, representing approximately 3.65 per cent. of
the Company's issued share capital, have been issued to the directors, certain
employees, and a consultant of Zephyr either to reflect historic awards under
the Company's Long Term Incentive Plan ("LTIP"), bonuses for performances
achieved in 2021 and 2022 (the "Bonus Scheme"), to satisfy employee
contractual commitments or commitments in lieu of deferred remuneration from
2020 during the COVID-19 pandemic.

 

Due to the Company's significant corporate activity over the last several
years, it has not been possible to issue the Options until now, although the
majority of the Options being granted today have been previously disclosed and
provided for in the Company's historical financial statements. No bonuses of
any kind have been paid to any of the Company's directors in respect of the
2023 financial year.

 

The Bonus Scheme and the LTIP were created in conjunction with a remuneration
study (the "Independent Remuneration Study") commissioned by Zephyr's
Remuneration Committee (the "RemCom") in mid-2021. The schemes were further
developed by a specialist third party remuneration consulting firm and were
designed to establish a remuneration strategy which offers management
incentives broadly in line with those of AIM market industry peers

 

The Company has consulted with its major shareholders who have indicated their
support in respect of the grant of the Options.

 

Where applicable, the Options and warrants being issued today have been done
so using existing share authorities granted to Zephyr's board of directors
(the "Board") at the Company's annual general meeting held on 26 July 2023.

 

LTIP Plan

 

Of the total number of Options granted, 15,667,200 have been issued to the
executive directors and a senior employee under the Company's LTIP (the "LTIP
Options") in respect of the 2021 and 2022 financial years (and as agreed in
principle by RemCom at that time). The LTIP Options have been issued as "nil
cost" options exercisable at the nominal value of an Ordinary Share, being
0.1p (the "Nil Cost Options").

 

The LTIP Options only vest subject to the achievement of agreed corporate
targets (including total shareholder return, health and safety, and
operational targets) as determined by RemCom. Notwithstanding the LTIP Options
being granted today, the LTIP Options were intended to be granted in the first
quarter following the end of each financial year and accordingly, vest in
three equal tranches on the first, second and third anniversary from the
originally intended date of grant.

 

Given the Company's inability to grant historic options until now, RemCom has
been tracking performance and vesting criteria until the LTIP Options could be
formally granted. Therefore, 2,000,177 LTIP Options vest on the first, second
and third anniversary in respect of the 2021 financial year. 3,222,222 LTIP
Options vest on the first, second and third anniversary in respect of the 2022
financial year.

 

None of the 2021 and 2022 LTIP Options in respect of the 2023 financial year
have vested due to the performance related vesting criteria for the period not
having been met. In addition, there will be no LTIP Options granted in respect
of the 2023 financial year.

 

Bonus Scheme

 

10,609,179 Options have been issued as Nil Cost Options in respect of bonuses
of executive directors and other employees for the financial years ended 31
December 2021 and 2022, which at a meeting in February 2022, RemCom agreed in
principle to pay in equity with the number of Nil Cost Options issued
calculated at the respective year end share prices of 6.95p and 6p. These Nil
Cost Options were agreed as part of the new remuneration strategy approved by
RemCom in September 2021, arising from the Independent Remuneration Study.

 

783,908 Options have been issued as a sign-on bonus to an employee who joined
the Company in 2022 to fulfil contractual obligations under the individual's
employment contract.

 

Reimbursement of deferred salaries from 2020

 

A further 30,998,645 Nil Cost Options have been granted today as payment in
equity in respect of salaries voluntarily deferred by the Board and other
employees during the COVID-19 pandemic (the "Deferred Remuneration Options").
A portion or an entirety of the salaries of all directors and certain
employees and consultants were deferred from April 2020 to September 2020 to
preserve the Company's very limited cash resources at that time during the
uncertain conditions caused by the COVID-19 pandemic.

 

In early October 2020, RemCom agreed to compensate the deferred salaries by
the issue of equity, calculated as accruing monthly for each month of deferral
at the volume weighted average share price of that month. As stated in the
Company's 2020, 2021 and 2022 annual reports, it was intended that these
deferred salaries would be paid by way of the issue of Nil Cost Options and
accordingly, the amounts have since accrued in the Company's accounts.
However, the issue of the Deferred Remuneration Options has not been possible
until now due to ongoing corporate activity.

 

Payment of third-party legal fees

 

Finally, a further 3,444,095 Nil Cost Options have been granted today as
payment in equity in respect of third-party legal fees incurred by the
Company. These Nil Cost Options have been issued to an employee, who was
previously a contractor to the Company, in respect of payment for historic
work carried out prior to the contractor joining the Company.

 

All the Nil Cost Options can be exercised for a period of ten years or within
three years of an Option holder leaving the Company, unless otherwise agreed
by the Company.

 

Director interests

 

Of the total Options issued today, 18,760,137 have been issued to employees
and consultants of the Company and 42,742,891 have been issued to the
directors of the Company as set out below:

 

 Name of Director  Number of Nil Cost Options granted  New Nil Cost Options as percentage of issued share capital  Total number of share options now held  Total number of share options held as percentage of issued share capital
 Colin Harrington  26,601,988                          1.58%                                                       38,601,988                              2.29%
 Chris Eadie       10,447,898                          0.62%                                                       18,347,898                              1.09%
 Rick Grant        2,349,545                           0.14%                                                       6,702,908                               0.40%
 Gordon Stein      1,671,730                           0.10%                                                       4,217,185                               0.25%
 Tom Reynolds      1,671,730                           0.10%                                                       4,489,911                               0.27%

 

The Options granted today represent approximately 3.65 per cent. of the
Company's current issued share capital. In total 106,534,360 options over
Ordinary Shares are now outstanding, representing approximately 6.32 per cent.
of the Company's current issued share capital.

 

Issue of warrants

 

In lieu of services provided, the Company has issued 2,597,143 warrants to a
third-party contractor enabling the contractor to acquire up to 2,597,143 new
Ordinary Shares in the Company at a price of 4.375p per new Ordinary Share.
The warrants can be exercised at any time prior to 12 June 2026.

 

Extension of warrants

 

On 29 March 2021, the Company announced, inter alia, that it had issued its
broker, Turner Pope Investments ("TPI"), 32,500,000 warrants to subscribe for
up to 32,500,000 new Ordinary Shares (the "broker warrants"). The broker
warrants were issued as part of TPI's fees for work undertaken in relation to
the Company's placing of ordinary shares announced at the time. The broker
warrants are exercisable at a price of 3p per new Ordinary share and were
valid until 15 April 2024. The Board has now agreed to extend the expiry date
of these warrants to 15 April 2026.

 

Contacts:

 Zephyr Energy plc                                  Tel: +44 (0)20 7225 4590

 Colin Harrington (CEO)

 Chris Eadie (Group Finance Director)

 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

 Panmure Gordon (UK) Limited - Joint-Broker        Tel: +44 (0) 20 7886 2500

 Hugh Rich / James Sinclair-Ford

 Celicourt Communications - PR

 Mark Antelme / Felicity Winkles / Ali AlQahtani   Tel: +44 (0) 20 8434 2643

 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 46,000-acre leaseholding 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.

Notification and public disclosure of transactions by persons discharging
managerial responsibilities and persons closely associated with them:

 

 1.                                Details of the person discharging managerial responsibilities / person closely
                                   associated
 a)                                Name                                                         PDMRs:

Colin Harrington  Chief Executive Officer
                                                                                                Chris Eadie       CFO
                                                                                                Rick Grant        Non-Executive Chairman
                                                                                                Gordon Stein      Non-Executive Director
                                                                                                Tom Reynolds      Non-Executive Director

 

 2.                                Reason for the Notification
 a)                                Position/status                                              See 1 a) above
 b)                                Initial notification/Amendment                               Initial notification
 3.                                Details of the issuer, emission allowance market participant, auction
                                   platform, auctioneer or auction monitor
 a)                                Name                                                         Zephyr Energy plc
 b)                                LEI                                                          254900TAVH3MBZ1EMC29
 4.                                Details of the transaction(s): section to be repeated for (i) each type of
                                   instrument; (ii) each type of transaction; (iii) each date; and (iv) each
                                   place where transactions have been conducted
 a)                                Description of the Financial instrument, type of instrument   Ordinary shares of 0.1p each in Zephyr Energy plc
                                   Identification code                                          GB00BF44KY60
 b)                                Nature of the transaction                                    Grant of Nil Cost Options

 c)                                Price(s) and volume(s)                                       Price: 0.1p

                                                                                                Volumes:

Colin Harrington  26,601,988
                                                                                                Chris Eadie       10,447,898
                                                                                                Rick Grant        2,349,545
                                                                                                Gordon Stein      1,671,730
                                                                                                Tom Reynolds      1,671,730

 

 d)                                Aggregated information:                                      N/A

                                   ·Aggregated volume

                                   ·Price
 e)                                Date of the transaction                                      10 April 2024

 f)                                Place of the transaction                                     Outside a trading venue

 

 

2.

Reason for the Notification

a)

Position/status

See 1 a) above

b)

Initial notification/Amendment

Initial notification

3.

Details of the issuer, emission allowance market participant, auction
platform, auctioneer or auction monitor

a)

Name

Zephyr Energy plc

b)

LEI

254900TAVH3MBZ1EMC29

4.

Details of the transaction(s): section to be repeated for (i) each type of
instrument; (ii) each type of transaction; (iii) each date; and (iv) each
place where transactions have been conducted

a)

Description of the Financial instrument, type of instrument

 Ordinary shares of 0.1p each in Zephyr Energy plc

Identification code

GB00BF44KY60

b)

Nature of the transaction

Grant of Nil Cost Options

 

c)

Price(s) and volume(s)

Price: 0.1p

 

Volumes:

 Colin Harrington  26,601,988
 Chris Eadie       10,447,898
 Rick Grant        2,349,545
 Gordon Stein      1,671,730
 Tom Reynolds      1,671,730

 

 

d)

Aggregated information:

·Aggregated volume

·Price

N/A

e)

Date of the transaction

10 April 2024

 

f)

Place of the transaction

Outside a trading venue

 

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