REG - Zephyr Energy PLC - Result of Oversubscribed Bookbuild & Notice of GM

Zephyr EnergyAnnouncement

25/06/2025 07:02

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RNS Number : 2661O  Zephyr Energy PLC  25 June 2025

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN (TOGETHER THIS
"ANNOUNCEMENT"), IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA,
CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). IN ADDITION, MARKET SOUNDINGS
(AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS
CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME
AWARE OF SUCH INSIDE INFORMATION, AS PERMITTED BY UK MAR. UPON THE PUBLICATION
OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE
PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF
INSIDE INFORMATION.

 

25 June 2025

 

Zephyr Energy plc

("Zephyr" or the "Company")

 

Result of oversubscribed Bookbuild

and

Posting of notice of General Meeting

 

£10.5 million fundraise comprising a £9.8 million Placing and £0.7 million
proposed Director Subscription

 

On 24 June 2025 the Company announced a proposed equity fundraising by way of
an accelerated bookbuild (the "Fundraising Announcement"). The Board
of Zephyr is pleased to announce that the Bookbuild has concluded and that it
has conditionally raised gross proceeds of approximately £9.8 million at the
Issue Price of 3.0 pence through the Placing of 326,666,667 Placing Shares to
new and existing investors.

 

In addition, certain Directors, management and their affiliates intend to
subscribe for 23,333,333 new Ordinary Shares at the Issue Price to raise a
further £0.7 million for the Company after publication of the Company's
audited results for the year ended 31 December 2024 by 30 June 2025, subject
to the passing of the Resolutions.

 

The Placing was undertaken on the back of three key recent catalysts for the
Company:

 

1.     The Company delivered a highly successful production test on the
State 36-2R well.  The test achieved a notable, choked-back peak flow rate of
2,848 boe per day with no material drop in bottom hole pressure, and without
the use of any fracture stimulation. Detailed test results indicate that the
one-mile well's productivity will rank in the top 6% of all gas wells across
the United States' 'Lower 48'.  The well also demonstrated elevated liquid
yields, and economic estimates appear to be competitive with longer lateral
wells in core U.S. basins.  Additional management analysis suggests that
future, two-mile laterals on the Paradox project will have an estimated P50
individual well performance of 3.6 million boe per well and internal rates of
return in excess of 280% (based on 29 May 2025 prices), significantly higher
figures than exist today in core U.S. basins;

 

2.     A US$100 million commitment from a major U.S.-based oil sector
investor (the 'Investor') to accelerate growth through the drilling activity
in Zephyr's Williston Basin non-operated asset portfolio.  Pairing Zephyr's
proven track record and deep regional expertise with the Investor's financial
strength, the partnership is designed to increase consolidated cash flow
rapidly and deliver attractive returns for all stakeholders; and

 

3.     A proposed accretive, off-market acquisition that will add an
initial 400 boepd net to Zephyr and 600,000 boe of proved developed producing
(PDP) reserves to the portfolio. In addition, the Proposed Acquisition offers
attractive near-term drilling upside potential suitable for the Investor and
accretive to Zephyr.

 

 

Colin Harrington, Chief Executive of Zephyr, said: "I am delighted to announce
the results of the oversubscribed Placing and believe that the Company has now
passed an exciting inflection point in its growth and development trajectory.

 

"Net proceeds from the fundraise will generate immediate accretive production
while also providing a path to first cash flow at the Paradox project.  The
result, following the highly successful State 36-2R well drilling and
production testing operations, puts Zephyr in a position of real strength as
we move to formalise dialogue with potential Paradox project infrastructure
and industry partners.  Further, it comes at a time when we believe we have
"cracked the code" for a highly commercial future development of the Paradox
project.

 

"It is anticipated that there will be considerable news flow as we progress
through this exciting period.  Updates are expected to include an updated
independent Competent Person's Report ("CPR") on the Paradox project,
deployment of initial funds from our strategic partnership, updates regarding
discussions with industry and financial partners related to the acceleration
of future development of the Paradox project, and the finalisation of
infrastructure to enable us to secure sustainable production from our Paradox
project wells.

 

"It should be noted that the Company's primary goal is to deliver production
and returns from the Paradox project as quickly as possible. In addition to
ongoing discussions with local pipeline and gas processing infrastructure
partners, the Company has been approached by multiple parties, including
compressed natural gas service companies and data centre / cryptocurrency
mining operators, expressing an interest in securing direct, near-term offtake
agreements for gas produced by the project.  The Company first considered
these early production concepts in 2022 and, cognisant of today's backdrop,
has seen significant renewed interest from third parties related to this
approach.  These gas sales alternatives would not require any CAPEX
contribution from Zephyr, but could provide for rapid deployment of a
near-term gas sales solution - albeit for a portion of gas produced with the
remainder ultimately sold via pipeline. Should a data centre / cryptocurrency
mining venture come to fruition, the Board would consider the merits of the
Company being paid in, and keeping in treasury, Bitcoin and, potentially,
other mainstream cryptocurrencies.

 

"In summary, we are ready to capitalise on the recent progress made across our
asset portfolio, and, as always, our Company's management and Board remains
fully aligned with our shareholders. To date, management and affiliates have
purchased circa 10% of the Company's issued share capital, and it is our
intention to have meaningful participation in the fundraising.  In light of
recent catalysts and particularly given the excellent progress made delivering
top-tier well results, management believes that Zephyr offers substantial
future upside.  We look forward to participating in this growth alongside all
other shareholders.

 

"I would like to thank our adviser team for the successful execution of the
Placing in challenging market conditions, and I speak for the entire Zephyr
team in welcoming our new shareholders on board."

 

Notice of General Meeting and admission to AIM

 

Due to the limited existing share authorities available to issue new Ordinary
Shares, the Placing will be conducted in two tranches, as follows:

 

·      the First Placing: a placing of the 175,071,902 First Placing
Shares at the Issue Price to be issued pursuant to the Company's existing
authorities to issue and allot equity securities on a non-pre-emptive basis,
granted at the annual general meeting of the Company on 31 July 2024, to raise
approximately £5.3 million gross; and

·      the Second Placing: a conditional placing of 151,594,765 Second
Placing Shares at the Issue Price to be issued conditional on the passing of
the Resolutions at the General Meeting to raise approximately £4.5 million
gross.

 

The First Placing is conditional upon, inter alia, First Admission becoming
effective on or around 27 June 2025 or such later time and/or date as the
Bookrunners and the Company may otherwise agree (being in any event no later
than 8.00 a.m. on 11 July 2025). Application has been made to London Stock
Exchange for First Admission to occur on or around 27 June 2025.

 

The Second Placing is conditional upon, inter alia, the passing of the
Resolutions to be proposed at the General Meeting to be held at the offices
of Haynes Boone, 1 New Fetter Lane London, EC4A 1AN, United Kingdom at 10.00
a.m. on 14 July 2025 and Second Admission becoming effective on or around 15
July 2025.

 

A circular containing further details of the Placing and the notice of General
Meeting is expected to be despatched to Shareholders later today. A copy of
the Circular will be available on the Company's website later today at
https://www.zephyrplc.com/ (https://www.zephyrplc.com/) .

 

Application will be made to London Stock Exchange for admission of the Second
Placing Shares to trading on AIM ("Second Admission"), subject to, amongst
other things, completion of the First Placing and the passing of the
Resolutions. Second Admission is expected to occur on or around 15 July 2025
or such later time and/or date as the Bookrunners and the Company may agree
(being in any event no later than 8.00 a.m. on 29 July 2025).

 

Change to significant shareholdings in the Company

 

As a result of the issue of the First Placing Shares, the shareholding of
Origin Creek Energy LLC ("OCE") will be diluted on First Admission to
approximately 8.25 per cent. (the number of Ordinary Shares that OCE holds
will remain the same at 158,954,546). Rick Grant, the Chairman of Zephyr, and
Colin Harrington, the Chief Executive Officer of Zephyr, are both shareholders
and directors of OCE, and Colin Harrington is indirectly the controlling
shareholder of OCE. Colin Harrington also has an interest in a further
1,453,936 Ordinary Shares and therefore his total interest in the Company
including OCE will also be diluted on First Admission to approximately 8.33
per cent. (the number of Ordinary Shares that he holds in total will remain
the same at 160,408,482).

 

Colin Harington intends to take part in the Director Subscription, which is
expected to complete alongside the Second Placing subject to the passing of
the Resolutions. A further announcement confirming the final details of the
Director Subscription will be made following the announcement of the Results.

 

Total voting rights

 

Immediately following First Admission, the Company will have 1,925,790,922
ordinary shares of 0.1p each in issue, each with one voting right.  There are
no shares held in treasury. Therefore, the Company's total number of ordinary
shares in issue and voting rights will be 1,925,790,922 and this figure may be
used by shareholders from First Admission as the denominator for the
calculations by which they will determine if they are required to notify their
interest in, or a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.

 

Unless otherwise defined, definitions contained in this Announcement have the
same meaning as set out in the Fundraising Announcement.

 

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 - PR

 Mark Antelme / Ali AlQahtani                                  Tel: +44 (0) 20 7770 6424

 

 

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.

 

This Announcement is made in accordance with the Company's obligations under
Article 17 of UK MAR and the person responsible for arranging for the release
of this Announcement on behalf of Zephyr is Colin Harrington, Chief Executive
Officer.

 

IMPORTANT NOTICES

 

Notice to Distributors

 

This Announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This Announcement is not
an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in the
United States, except pursuant to an applicable exemption from registration.
No public offering of securities is being made in the United States.

 

UK Product Governance Requirements

 

Solely for the purposes of the product governance requirements contained
within chapter 3 of the FCA Handbook Product Intervention and Product
Governance Sourcebook (the "UK Product Governance Requirements") and
disclaiming all and any liability, whether arising in tort, contract or
otherwise, which any "manufacturer" (for the purposes of the UK Product
Governance Requirements) may otherwise have with respect thereto, the Placing
Shares have been subject to a product approval process, which has determined
that the Placing Shares are: (i) compatible with an end target market of
retail investors and investors who meet the criteria of professional clients
and eligible counterparties, each as defined in chapter 3 of the FCA Handbook
Conduct of Business Sourcebook ("COBS"); and (ii) eligible for distribution
through all permitted distribution channels (the "UK Target Market
Assessment"). Notwithstanding the UK Target Market Assessment, distributors
should note that: the price of the Placing Shares may decline and investors
could lose all or part of their investment; the Placing Shares offer no
guaranteed income and no capital protection; and an investment in Placing
Shares is compatible only with investors who do not need a guaranteed income
or capital protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits and risks of
such an investment and who have sufficient resources to be able to bear any
losses that may result therefrom. The UK Target Market Assessment is without
prejudice to the requirements of any contractual, legal or regulatory selling
restrictions in relation to the Placing. Furthermore, it is noted that,
notwithstanding the UK Target Market Assessment, the Bookrunners will only
procure investors who meet the criteria of professional clients and eligible
counterparties.

 

For the avoidance of doubt, the UK Target Market Assessment does not
constitute: (a) an assessment of suitability or appropriateness for the
purposes of chapters 9A or 10A respectively of the COBS; or (b) a
recommendation to any investor or group of investors to invest in, or
purchase, or take any other action whatsoever with respect to Placing Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the shares and determining appropriate distribution
channels.

 

EU Product Governance Requirements

 

Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended and as this is applied in the United Kingdom ("MiFID II"); (b)
Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593
supplementing MiFID II; and (c) local implementing measures (together, the
"MiFID II Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which any
"manufacturer" (for the purposes of the MiFID II Product Governance
Requirements) may otherwise have with respect thereto, the Placing Shares have
been subject to a product approval process, which has determined that such
securities are: (i) compatible with an end target market of retail investors
who do not need a guaranteed income or capital protection and investors who
meet the criteria of professional clients and eligible counterparties, each as
defined in MiFID II; and (ii) eligible for distribution through all
distribution channels as are permitted by MiFID II (the "EU  Target Market
Assessment"). The Placing Shares are not appropriate for a target market of
investors whose objectives include no capital loss. Notwithstanding the EU
Target Market Assessment, distributors should note that: the price of the
Placing Shares may decline and investors could lose all or part of their
investment; the Placing Shares offer no guaranteed income and no capital
protection; and an investment in the Placing Shares is compatible only with
investors who do not need a guaranteed income or capital projection, who
(either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The EU Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Placing. Furthermore, it is noted that, notwithstanding the EU
Target Market Assessment, the Bookrunners will only procure investors who meet
the criteria of professional clients and eligible counterparties. For the
avoidance of doubt, the EU Target Market Assessment does not constitute: (a)
an assessment of suitability or appropriateness for the purposes of MiFID II;
or (b) a recommendation to any investor or group of investors to invest in, or
purchase, or take any other action whatsoever with respect to the Placing
Shares. Each distributor is responsible for undertaking its own target market
assessment in respect of the shares and determining appropriate distribution
channels.

 

Forward Looking Statements

 

This Announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would", "could" or
"should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that are not
facts. They appear in a number of places throughout this Announcement and
include statements regarding the Directors' beliefs or current expectations.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Investors should not
place undue reliance on forward-looking statements, which speak only as of the
date of this Announcement.

 

Notice to overseas persons

 

This Announcement does not constitute, or form part of, a prospectus relating
to the Company, nor does it constitute or contain any invitation or offer to
any person, or any public offer, to subscribe for, purchase or otherwise
acquire any shares in the Company or advise persons to do so in any
jurisdiction, nor shall it, or any part of it form the basis of or be relied
on in connection with any contract or as an inducement to enter into any
contract or commitment with the Company.

 

This Announcement is not for release, publication or distribution, in whole or
in part, directly or indirectly, in or into the United States of America,
Canada, Australia, Japan or the Republic of South Africa or any jurisdiction
into which the publication or distribution would be unlawful. This
Announcement is for information purposes only and does not constitute an offer
to sell or issue or the solicitation of an offer to buy or acquire shares in
the capital of the Company in  the United States of America, Canada,
Australia, Japan,  the Republic of South Africa or any jurisdiction in which
such offer or solicitation would be unlawful or require preparation of any
prospectus or other offer documentation or would be unlawful prior to
registration, exemption from registration or qualification under the
securities laws of any such jurisdiction.  Persons into whose possession this
Announcement comes are required by the Company to inform themselves about, and
to observe, such restrictions.

 

Timetable

 

The times and dates set out throughout this Announcement may be adjusted by
the Company in which event the Company will make an appropriate announcement
to a Regulatory Information Service giving details of any revised times and
dates which will also be notified to the London Stock Exchange and, where
appropriate, shareholders of the Company. Shareholders of the Company may not
receive any further written communication.

 

References to times in this Announcement are to the time in London, UK unless
otherwise stated.

 

General

 

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) or any previous announcement made by the Company is
incorporated into, or forms part of, this Announcement.

 

This Announcement has been issued by, and is the sole responsibility of, the
Company.

 

Allenby Capital, which is authorised and regulated by the FCA in the United
Kingdom, is acting as Nominated Adviser to the Company. Allenby Capital will
not be responsible to any person other than the Company for providing the
protections afforded to clients of Allenby Capital or for providing advice to
any other person in connection with the Placing or any acquisition of shares
in the Company. Allenby Capital has not authorised the contents of, or any
part of, this Announcement, no representation or warranty, express or implied,
is made by Allenby Capital in respect of such contents, and no liability
whatsoever is accepted by Allenby Capital for the accuracy of any information
or opinions contained in this Announcement or for the omission of any material
information, save that nothing shall limit the liability of Allenby Capital
for its own fraud. Allenby Capital's responsibilities as the Company's
Nominated Adviser under the AIM Rules for Nominated Advisers are owed solely
to the London Stock Exchange and are not owed to the Company or to any
Director or to any other person.

 

Canaccord, which is authorised and regulated by the FCA in the United Kingdom,
is acting as Joint Broker and Bookrunner to the Company in connection with the
Placing. Canaccord will not be responsible to any person other than the
Company for providing the protections afforded to clients of Canaccord or for
providing advice to any other person in connection with the Placing or any
acquisition of shares in the Company. Canaccord is not making any
representation or warranty, express or implied, as to the contents of this
Announcement. Canaccord has not authorised the contents of, or any part of,
this Announcement, and no liability whatsoever is accepted by Canaccord for
the accuracy of any information, or opinions contained in this Announcement or
for the omission of any material information, save that nothing shall limit
the liability of Canaccord for its own fraud.

 

Turner Pope, which is authorised and regulated by the FCA in the United
Kingdom, is acting as Joint Broker and Bookrunner to the Company in connection
with the Placing. Turner Pope will not be responsible to any person other than
the Company for providing the protections afforded to clients of Turner Pope
or for providing advice to any other person in connection with the Placing or
any acquisition of shares in the Company. Turner Pope is not making any
representation or warranty, express or implied, as to the contents of this
Announcement. Turner Pope has not authorised the contents of, or any part of,
this Announcement, and no liability whatsoever is accepted by Turner Pope for
the accuracy of any information, or opinions contained in this Announcement or
for the omission of any material information, save that nothing shall limit
the liability of Turner Pope for its own fraud.

 

No statement in this Announcement is intended to be a profit forecast and no
statement in this Announcement should be interpreted to mean that the earnings
per share of the Company for the current or future financial years would
necessarily match or exceed the historical published earnings per share of the
Company.

 

This Announcement does not constitute a recommendation concerning any
investor's investment decision with respect to the Placing. Each investor or
prospective investor should conduct his, her or its own investigation,
analysis and evaluation of the business and data described in this
Announcement and publicly available information.

 

The new Ordinary Shares will not be admitted to trading on any stock exchange
other than the AIM market of the London Stock Exchange.

 

The price and value of securities can go down as well as up. Past performance
is not a guide to future performance.

 

 

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