TPI provides its latest research note on Zephyr Energy plc (ZPHR.L).

Zephyr has announced that it intends to achieve carbon-neutrality across its operational footprint by 30 September 2021. This industry-leading pledge is a major first step towards the near-term delivery of hydrocarbons produced with an operational ‘net-zero’ carbon impact.

Not only is the Board unanimously committed to this initiative, but it also appears to make good business sense. Recent market-based evidence suggests that purchasers and supply chain partners of ‘net-zero’ operated volumes are willing to absorb costs associated with the purchase of Verified Emission Reductions (‘VER’) offsets related to oil and gas production.

While eliminating its operational carbon footprint is important from an environmental perspective, the Board believes that shareholders will also benefit from the potential for premium commodity pricing, access to a wider pool of institutional investors and cheaper cost of capital, as well as enhanced relations with regulatory partners.

With the next few months expected to remain news flow heavy on all fronts, as the Group targets initial production on its Paradox project, further defines the Paradox resource and potentially begins to generate significant cash flow from its non-operated asset portfolio, yet more key objectives look set to follow.

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We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to Zephyr Energy plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination.

The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient.

Copyright © 2021 Turner Pope Investments (TPI) Limited, all rights reserved.


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