Receipt of US$7.5 million drilling funds
Further to its announcement on 18 December 2024, Zephyr is pleased to confirm that it has now received US$7.5 million which will fully-fund the expected costs to drill, complete and production test the extended lateral on the State 36-2 LNW-CC-R well.
The Company continues to expect that the drilling operations will commence in mid-January 2025 and will provide further updates as appropriate.
Background to the funding of the extended lateral
On 10 October 2024, the Company announced that it had entered into a non-binding letter of intent with the wellbore investor to fund a projected US$7.0 million of expected drilling, completion and production testing costs.
Zephyr and the wellbore investor have now completed all required diligence and binding documentation, and below is a summary of the key terms of the funding:
· The wellbore investor has acquired a direct 50% non-operated interest in the State 36-2R wellbore (the “wellbore interest”) for US$7.5 million to fully-fund all expected drilling, completion and production testing costs (including contingency).
· Zephyr will retain operatorship of the well and the wellbore investor will not receive any further interest or option in the Paradox project other than the individual wellbore interest.
· There will be no issue of any Zephyr equity or debt as part of the funding.
· The US$7.5 million is a forecast of 100% of the well costs and includes contingency.
· If costs overruns occur beyond US$7.5 million, additional expense will be shared 50:50 between Zephyr and the wellbore investor.
Outlook for 2025
Drilling of the extended lateral is scheduled to begin in January 2025. The horizontal drilling will extend approximately 5,500 feet into the Cane Creek reservoir from near the base of the existing wellbore. Zephyr’s management projects that the well could ultimately recover up to two million barrels of oil equivalent upon completion.
After the extended lateral drilling is finished, the Nabors rig will be demobilized, and the necessary equipment for completing and conducting production tests on the well will be relocated to the site. Results from the production test are expected by the end of March 2025.
Once the production test results are evaluated and deemed satisfactory, Zephyr Energy will proceed to finalize the gas processing and related infrastructure requirements. This will enable the integration of both the newly drilled well and the State 16-2 LN-CC well as promptly as possible.
Contacts:
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Zephyr Energy plc Colin Harrington (CEO) Chris Eadie (Group Finance Director and Company Secretary)
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Tel: +44 (0)20 7225 4590 |
