REG - Zephyr Energy PLC - State 36-2 LNW-CC well update

Zephyr EnergyAnnouncement

19/01/2023 07:00

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RNS Number : 2464N  Zephyr Energy PLC  19 January 2023

 

Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.

 

19 January 2023

Zephyr Energy plc

(the "Company" or "Zephyr")

 

 State 36-2 LNW-CC well update

Substantial hydrocarbons encountered - revised completion options being
evaluated

 

Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas company focused
on responsible resource development and carbon-neutral operations, provides an
update on operations on the State 36-2 LNW-CC well ("the well") at the
Company's flagship project in the Paradox Basin, Utah, U.S.

 

Drilling of the well commenced on 20 November 2022, with the prime objective
to target potential production from the Cane Creek reservoir (the
"reservoir").

 

Over the past week, having reached the reservoir at a depth of 9,598 feet true
vertical depth, the well experienced a significant influx of hydrocarbons
which consequently led to suspension of drilling operations while the well was
stabilised.  The influx was caused by the well intersecting an apparent major
natural fracture network in the reservoir, and the resultant flowing
hydrocarbons are currently being diverted safely at surface through the
drilling rig flare stack whereby they are subsequently flared.  Throughout
this period, Zephyr's operations team followed due well control procedure and
stabilised the well without incident.

 

Zephyr's team is analysing all options for the well's safe completion, which
may include running production casing and completing the well without drilling
the remainder of the planned lateral. It is also likely that planned hydraulic
stimulation will not be required for the well.

 

Further announcements will be made after additional analysis has been
completed and once Zephyr selects the appropriate operational path forward.

 

Colin Harrington, Zephyr's Chief Executive, said:

"First and foremost, I want to reiterate that the safety of our team and our
contractors is our top priority, and continuing to maintain a safe operational
environment is of paramount importance to us.

"While we've long planned to artificially stimulate the reservoir in order to
achieve hydrocarbon production from the well, we've always known that
encountering a natural fracture network was both a drilling risk and a feature
that could significantly enhance the overall potential productivity of the
well.  As such, all necessary procedures and precautions were in place in the
event the well encountered an over-pressured natural fracture network.

"Whilst we're in an early phase of assessment, previous wells in the Paradox
Basin which successfully targeted natural fractures have historically been
prolific production wells.

"I'd like to note that over the past two months, our operations team dealt
with an exceedingly challenging drilling environment, which included
mechanical issues and significant weather impacts from the historic
atmospheric river system flowing over and from California.  While delays in
isolation can be frustrating, the result is we now have confirmed hydrocarbon
presence, significant reservoir over-pressure and the presence of a highly
permeable natural fracture network at this location - all very encouraging
signs for an economic and productive well.

"We will keep the market updated as we select the appropriate operational path
forward to complete and produce the well."

 

Contacts

 

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

 Colin Harrington (CEO)

 Chris Eadie (CFO)

 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

 John Prior / Hugh Rich / James Sinclair-Ford / Harriette Johnson

 Celicourt Communications - PR

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

 

 

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 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 45,000-acre leaseholding located in
the Paradox Basin, Utah, 25,000 acres of which has been assessed by third
party consultants Sproule International to hold, net to Zephyr, 2P reserves
of 2.1 million barrels of oil equivalent ("mmboe"), 2C resources of 27 mmboe
and 2U resources 203 mmboe. Following the successful initial production
testing of the recently drilled and completed State 16-2LN-CC well, Zephyr has
planned a three well drilling program - commencing in 2022 with the State 36-2
LNW-CC well - to further delineate the scale and value of the project.

 

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.

 

The Williston portfolio currently consists of working-interests in over 200
modern horizontal wells which are expected to provide production of 1,550 -
1,750 barrels of oil equivalent per day, net to Zephyr, in 2023.  Cash flow
from the Williston production will be used to fund the planned Paradox
Basin development. In addition, the Board will consider further opportunistic
value-accretive acquisitions.

 

 

 

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