REG - Zephyr Energy PLC - Operations update

Zephyr EnergyAnnouncement

Yesterday 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:20250717:nRSQ3921Ra&default-theme=true

RNS Number : 3921R  Zephyr Energy PLC  17 July 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.

17 July 2025

Zephyr Energy plc

("Zephyr" or the "Company")

 

Operations update

 

Following the recent completion of a £10.5 million equity placing, Zephyr
Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is pleased to provide updates on its
flagship operated project in the Paradox Basin, Utah, U.S. (the "Paradox
project") and on its proposed acquisition of working interests in accretive
production and development assets in core Rocky Mountain basins, U.S.

Paradox Project

Following the recent successful production test on the State 36-2 LNW-CC-R
well (the "36-2R well"), as announced on 7 May 2025, Zephyr continues work to
deliver the first stage of gas infrastructure for the project.  This includes
equipping the pad for production, reinstatement of the 6-inch pipeline
gathering system, the deployment of gas processing infrastructure to Zephyr's
pre-existing gas plant footprint, as well as planning for tie-in to the
adjacent 16-inch gas export pipeline.

 

Zephyr's operations team is working with the provider of the gas processing
units to develop the optimal initial processing capacity.  At present, the
initial processing capacity is envisaged to handle 5-10 million cubic feet of
natural gas per day while also enabling the sale of valuable liquid streams
consisting of both condensate and NGLs (Natural Gas Liquids). The light
condensate (52-60° API) produced is expected to sell at a premium to other
crudes as it can be blended with lower quality waxy crudes adding value in the
refining process. As an illustration and for context, at current commodity
prices, this level of processing would enable gross (100% share) gas and oil
revenues of circa US$1.6-US$3.2 million per month (excluding NGL sales), as
outlined below:

 

The initial range of processing capacity is below the peak production
potential of the 36-2R well, which the Company believes is an optimal range
for first operations. Over time, the scale of processing capacity is expected
to increase in steps as existing wells (including the State 16-2LN-CC and
Federal 28-11 wells) are tied-in and additional wells are drilled.

 

In parallel, the Company is in advanced discussions with respect to the export
of the processed gas volumes via the nearby 16-inch export pipeline.  The
proposed pipeline tie in point is 70 metres from Zephyr's gas plant site, and
the export pipeline currently has a considerable excess capacity that can
accept both initial processed gas volumes and a meaningful expansion in gas
production.  While conversations with other gas off-take solutions (including
cryptocurrency miners and compressed natural gas operators) are also ongoing,
the Company's top priority is achieving exported gas sales, with associated
condensate and NGL volumes trucked from site to end user buyers. A combination
of gas off-take solutions may be utilised if commercially and economically
viable.

 

In addition to the ongoing infrastructure engineering work, the Company has
commissioned third-party reserve engineer, Sproule, to prepare an updated
Competent Person's Report ("CPR") on the Paradox project. Results from the
updated CPR are expected to be published in the third quarter of 2025,
although timing is dependent on the delivery of the report from Sproule.

The Company has also commenced discussions with potential industry and finance
partners about farm-in opportunities on the Paradox project, with a structured
and formalised process to start shortly.  Given the strong production test
results to date, it is Zephyr's intention to find a partner to accelerate the
next phase of drilling as quickly as possible.

EnerCom presentation

Zephyr's management will be presenting an overview of the Paradox project at
EnerCom's 30(th) Annual Energy Investment Conference at 4:00 p.m. MT on 18
August 2025. The conference is widely attended by industry operators and
investors, and an updated version of the Corporate Presentation will be
provided by the Company on its website after the conference.

 

Proposed Acquisition update

Zephyr is currently completing all remaining confirmatory environmental, title
and operational due diligence ahead of its proposed US$7.3 million acquisition
of working interests in accretive, mature PDP production assets in core Rocky
Mountain basins (the "Proposed Acquisition").

 

Under the terms of the Proposed Acquisition, Zephyr will acquire a working
interest in a portfolio of over 400 wells, 21 of which will be operated by the
Company.  The non-operated wells, in which the Company will own a minority
working interest, are operated by top-tier operators.  At completion of the
Proposed Acquisition, the acquired assets are expected to add an estimated
600,000 barrels of oil equivalent of 2P producing reserves (management
estimate) and 400 barrels of oil equivalent per day, net to Zephyr, of current
production (85% oil).  Zephyr's working interests in the portfolio will
average 7% and represents an equivalent of 31 net wells.

 

The acquisition offers strategic entry into key Rocky Mountain basins within
Zephyr's area of interest, including the Powder River Basin (Wyoming) and the
Denver-Julesburg Basin (Colorado).  In addition to adding current production,
the Proposed Acquisition offers significant potential drilling upside
opportunity for the Company.  Zephyr has been notified of an initial 13 wells
scheduled to be drilled imminently, with net CAPEX of approximately US$2.5
million which will potentially be funded through the Company's US$100 million
strategic partnership funding (as announced on 13 May 2025).

 

In preparation for the completion of the Proposed Acquisition, Zephyr has
applied for regulatory approval to become an operator of record in the states
of Colorado, Wyoming and North Dakota.  The Proposed Acquisition is currently
on track to complete in the near term, with an effective date of 1 June 2025.

 

Colin Harrington, Zephyr's CEO commented:

"Following the completion of our successful fundraise, we continue to make
strong progress across our asset portfolio. We look forward to a prolonged
period of positive news flow as we complete the Proposed Acquisition and move
towards first production on the Paradox project."

 

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

 

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 lease holding of over 46,000 gross
acres 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 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  UPDFFFIFDRIRLIE