REG - Zephyr Energy PLC - Paradox project Reserves & Resource Evaluation

Zephyr EnergyAnnouncement

06/10/2025 07:00

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RNS Number : 1677C  Zephyr Energy PLC  06 October 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.

 

 

6 October 2025

 

Zephyr Energy plc

("Zephyr" or the "Company")

 

Paradox project Independent Recoverable Reserves and Resource Evaluation

 

Transformative and substantial increase in Zephyr's Recoverable Reserves

 

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is pleased to announce the
results from an updated Competent Person's Report ("CPR") on its assets in the
Paradox Basin, Utah, U.S. (the "Paradox project").

 

The CPR was compiled by Sproule-ERCE International Limited ("Sproule"), a
leading independent global energy consulting and advisory firm.  The previous
CPR on the Paradox project was completed by Sproule in 2022, the results of
which were announced on 26 April 2022 (the "2022 CPR").

 

Zephyr is transitioning the Paradox project from appraisal to development, and
the Sproule report reaffirms this transformation. The combined basis of
evaluation including the recent well test on the State 36-2 LNW-CC-R well has
contributed to significant increases in recoverable reserves across all
reserve categories reflecting considerable well productivity, driven by high
reservoir pressure, reservoir quality and liquid yields.

 

Zephyr's Paradox project consists of an operated 46,000-acre leaseholding in
Utah.  It should be noted that the updated CPR and comparisons to the 2022
CPR are limited solely to the Cane Creek reservoir on 20,000 acres held within
the Company's White Sands Unit (the "WSU") and which is currently covered by
the Company's 3D seismic coverage.

 

In their NPV-10 calculations, Sproule used the 1 September 2025 strip prices,
resulting in average prices of US$62.50 per barrel of oil and US$3.50 per
MMBTU of gas.

 

Highlights

 

·    A 93-fold increase in Proved Recoverable Reserves (1P Reserves) from
the 2022 CPR, demonstrating the scale and immediate production potential of
the Cane Creek reservoir:

o  14.8 million net barrels of oil equivalent ("boe") proved recoverable
reserves, an increase from 0.16 million net boe in the 2022 CPR

o  Forecast to generate undiscounted free cash flows, net to Zephyr, in
excess of US$115 million, with a current NPV-10 of circa US$36 million (an
increase from US$2.1 million in the 2022 CPR)

o  Seven well locations granted classification as Proved Recoverable Reserves

 

·    A 25-fold increase in Proved & Probable Reserves (2P Reserves)
from the 2022 CPR, highlighting the Paradox project's maturation from
appraisal towards production and wider Cane Creek reservoir field development:

o  35.3 million net boe, an increase from 1.4 million net boe in the 2022 CPR

o  Forecast to generate undiscounted free cash flows, net to Zephyr, of circa
US$400 million, with a current NPV-10 of circa US$101 million (an increase
from US$10.8 million in the 2022 CPR)

o  Twelve well locations classified as Proved + Probable Recoverable Reserves

 

·    A 3.5-fold increase in Total Recoverable Resources, representing full
field development of the Cane Creek reservoir within the WSU (see Table 2
below), a significant increase in the total net resource estimate:

o  74.2 million net boe, compared with 21.4 million net boe in the 2022 CPR

o  Forecast to generate undiscounted free cash flows, net to Zephyr, in
excess of US$880 million, with a current NPV-10 of circa US$158 million (an
increase from circa US$88 million in the 2022 CPR)

 

·    Net Prospective Resources (2U Resources) (unrisked)

o  270 million net boe, compared with 203 million net boe in the 2022 CPR,
encompassing the as-yet-untested overlying reservoirs. The WSU prospective
resources have not been reassessed as part of the CPR, and the increase in 2U
resources since the 2022 CPR reflects Zephyr's increased ownership in the
Paradox project since the 2022 CPR was completed.

 

Additional details and the estimates by Sproule are summarised further below.

 

Colin Harrington, Chief Executive of Zephyr, said: "We are delighted with the
results of the CPR which clearly demonstrate the excellent progress made at
the Paradox project through our successful operations.

 

"I am particularly pleased to see the substantial movement of the Paradox
project barrels from resource to reserve categories, highlighting the
evolution of the asset towards commercial production as the project moves up
the value chain.

 

"The CPR further validates the considerable scale of the Paradox project,
which is why we have launched a process to identify partners to accelerate
drilling and the delivery of value from the asset.

 

"On that note, I am pleased to report that we have opened a data room with
multiple potential partners currently reviewing the project data. The
completion of the CPR will now enable more substantive discussions to take
place. I feel fortunate that we are bringing the project to development and
commercialisation at a time when interest and domestic gas demand is rising in
the western markets, and as western seaboard LNG exports begin to ramp up. We
believe that the Paradox project compares favourably on production and
economic metrics with all of the current crude and natural gas basins in the
U.S.

 

"To date, we have drilled two successful, one-mile horizontal wells utilising
different completion technologies and both demonstrated strong deliverability
and expanded our completion design options for the greater field development.
We have also gathered a substantial amount of data that will help inform
future development plans. Furthermore, we have acquired significant
infrastructure that will enable us to bring the project into full production,
including gas gathering lines, plant infrastructure, permits and future water
disposal wells, and we are close to securing gas export capacity. All this has
been achieved at low development costs, especially when compared with many
other new field startups of a similar size, and this infrastructure should
enable accelerated project development once a suitable partner is secured.
It should be noted that while acceleration of drilling activity and increased
gas processing capacity won't change undiscounted free cash flow totals, they
would enhance the current NPV-10 value of the project by bringing forward
future cashflows.

 

"I should also point out that the CPR only assesses the 20,000 acres covered
by our 3D seismic in the WSU. Our goal is to continually expand the value of
our acreage position, both vertically (through the overlying reservoirs) and
horizontally (through the leasing of significant new acreage around our unit
and infrastructure).  Leased and open acreage without 3D seismic coverage has
not been assessed in the CPR and Zephyr's internal analysis indicates
considerable potential immediately surrounding the WSU. To that end, we have
nominated a significant amount of contiguous acreage with the Bureau of Land
Management for inclusion in future Federal lease sales. On top of the proven
Cane Creek reservoir potential, the eight overlying prospective reservoirs
could all deliver similar recoverable volumes as the Cane Creek within the 3D
coverage of the WSU and surrounding acreage nominated for lease sale
inclusion, should they prove successful on drilling and testing.

 

"The completion of the CPR is an exciting moment for the Company as we seek to
advance the Paradox project into full commercial production and secure a
project partner."

 

 

Background and further details

At the request of Zephyr, Sproule audited the crude oil, natural gas, and
field condensate reserves and contingent resources and the associated future
net revenue attributable to the WSU with an effective date of 30 September
2025.

The scope and nature of Sproule's work was an audit of the specified resource
information for the purpose of expressing an opinion as to whether such
resource volumes, in aggregate, are reasonable and have been estimated and
presented in conformity with generally accepted petroleum engineering and
evaluation principles. Sproule conducted certain tests and spot checks to
confirm the adherence to the Society of Petroleum Engineers (SPE) Petroleum
Resources Management System (PRMS) reserves reporting requirements and that
the data flowing into the Company's reserves and contingent resources
determination system was consistent with available records provided by the
Company.

 

All estimates were prepared in accordance with generally accepted petroleum
engineering and evaluation principles as set forth in the SPE Standards
Pertaining to the Estimating and Auditing of Oil and Gas Reserve Information.

 

Both Zephyr and Sproule identify uncertainties which remain across the areas
planned for development by the Company. These include fluid composition and
compressibility, water production, and continuity of geomechanical properties
across the reservoir and their impact on hydraulic fracture characteristics
and stimulated area around a well (well drainage area).

 

Reserves, Resources and NPV

 

The Company's net reserves and contingent resources and net present value of
the Cane Creek reservoir within the WSU, as estimated by Sproule, are
summarised in the tables below.

 

Table 1: Summary of Company Net Recoverable Reserves and Net Present Value

                                         Net Recoverable Reserves
 White Sands Unit, Cane Creek Reservoir  1P         2P         3P
 Wells                                   7          12         16
 Net Oil Sales Volume (MBBL)             1,934      4,449      6,342
 Net Gas Sales Volume (MMCF)             59,360     142,243    200,516
 Net NGL Sales Volume (MBBL)             2,968      7,112      10,026
 Net Equivalent (MBOE)                   14,795     35,268     49,787
 Net Operating Income ($'m)              182,945    574,360    811,118
 0% Discount Cash Flow ($'m)             117,609    400,575    585,874
 10% Discount Cash Flow ($'m)            36,611     100,703    132,482

 

 

 Table 2: Summary of Company Net Contingent Resources and Net Present Values

Net Contingent Resources
 White Sands Unit, Cane Creek Reservoir  2C
 Wells                                   7
 Net Oil Sales Volume (MBBL)             3,245
 Net Gas Sales Volume (MMCF)             97,702
 Net NGL Sales Volume (MBBL)             4,885
 Net Equivalent (MBOE)                   24,414
 Net Operating Income ($'m)              391,270
 0% Discount Cash Flow ($'m)             301,460
 10% Discount Cash Flow ($'m)            25,391

 

 Table 3: Summary of Full Field Development, Company Net Recoverable Resources,
 Contingent Resources and Net Present Values

Combined Net Recoverable Reserves and Contingent Resources
 White Sands Unit, Cane Creek Reservoir - Full Field Development
 Wells                         23
 Net Oil Sales Volume (MBBL)   9,587
 Net Gas Sales Volume (MMCF)   298,219
 Net NGL Sales Volume (MBBL)   14,911
 Net Equivalent (MBOE)         74,201
 Net Operating Income ($'m)    1,202,388
 0% Discount Cash Flow ($'m)   887,335
 10% Discount Cash Flow ($'m)  157,873

 

 Table 4: Summary of Company's Unrisked Net Prospective resources

Net Unrisked Prospective Resources
                      1U   2U     3U
 Oil (MMBO)           10   62     174
 Gas (BCF)            399  1,248  2,311
 Equivalents (MMBOE)  77   270    559

 

 The evaluation of the WSU Prospective Resources has remained unchanged from
 the 2022 CPR but the Company Share has increased from 75% WI to 100% WI by way
 of acquisition, completed in December 2022.

 Contacts

Zephyr Energy plc                                               Tel: +44 (0)20 3475 4389

 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

 

 

Table 3: Summary of Full Field Development, Company Net Recoverable Resources,
Contingent Resources and Net Present Values

 

 

 Combined Net Recoverable Reserves and Contingent Resources
 White Sands Unit, Cane Creek Reservoir - Full Field Development
 Wells                         23
 Net Oil Sales Volume (MBBL)   9,587
 Net Gas Sales Volume (MMCF)   298,219
 Net NGL Sales Volume (MBBL)   14,911
 Net Equivalent (MBOE)         74,201
 Net Operating Income ($'m)    1,202,388
 0% Discount Cash Flow ($'m)   887,335
 10% Discount Cash Flow ($'m)  157,873

 

 

Table 4: Summary of Company's Unrisked Net Prospective resources

 

 Net Unrisked Prospective Resources
                      1U   2U     3U
 Oil (MMBO)           10   62     174
 Gas (BCF)            399  1,248  2,311
 Equivalents (MMBOE)  77   270    559

 

The evaluation of the WSU Prospective Resources has remained unchanged from
the 2022 CPR but the Company Share has increased from 75% WI to 100% WI by way
of acquisition, completed in December 2022.

 

 

 

Contacts

 

 Zephyr Energy plc                                               Tel: +44 (0)20 3475 4389

 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

 

Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD, Technical
Adviser to the Board of Zephyr Energy plc, who meets the criteria of a
qualified person under the AIM Note for Mining and Oil & Gas Companies
- June 2009, has reviewed and approved the technical information contained
within this announcement.

 

Estimates of resources and reserves contained within this announcement have
been prepared according to the standards of the Society of Petroleum
Engineers.

 

Glossary of terms

 

Reserves: Reserves are defined as those quantities of petroleum which are
anticipated to be commercially recovered from known accumulations from a given
date forward

 

1P: proven reserves (both proved developed reserves + proved undeveloped
reserves)

 

2P: 1P (proven reserves) + probable reserves, hence "proved and probable"

 

3P: the sum of 2P (proven reserves + probable reserves) + possible reserves,
all 3Ps "proven and probable and possible"

 

 

Contingent Resources: Those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations by application of
development projects, but which are not currently considered to be
commercially recoverable due to one or more contingencies.

 

Contingent Resources may include, for example, projects for which there are
currently no viable markets, or where commercial recovery is dependent on
technology under development, or where evaluation of the accumulation is
insufficient to clearly assess commerciality. Contingent Resources are further
categorised in accordance with the level of certainty associated with the
estimates and may be sub-classified based on project maturity and/or
characterised by their economic status.

 

1C: Low estimate of Contingent Resources

 

2C: Best estimate of Contingent Resources

 

3C: High estimate of Contingent Resources

 

Prospective Resources: Those quantities of petroleum which are estimated, on a
given date, to be potentially recoverable from undiscovered accumulations.

 

1U: Low estimate of Prospective Resources

 

2U: Best estimate of Prospective Resources

 

3U: High estimate of Prospective Resources

 

MBOE: thousand barrels of oil equivalent

 

MBBL: thousand barrels of oil

 

MMBO/MMBOE: million barrels of oil / million barrels of oil equivalent

 

MMCF: million cubic feet

 

$'m: million US dollars

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