In its recent interim results statement, Zephyr Energy PLC (AIM: ZPHR, OTCQB: ZPHRF) informed shareholders that it anticipates seeing returns from its active phase for both the Williston Basin assets and the Paradox project in the coming months.
Chief Executive Colin Harrington stated, “We have allocated substantial new capital to both the Williston assets and the Paradox project.” He continued that the initial returns from these investments are expected to start in Q4 2023 with the initiation of the Slawson wells and will continue until the first sustained revenues from the recently drilled wells in the Paradox project are realized.
Harrington emphasized the company’s positive outlook, mentioning the diverse portfolio, potential for substantial growth, strong financial position, and a committed team, making them highly optimistic about Zephyr’s future prospects.
Despite delays at Paradox due to a well control incident, Harrington noted the incident underscored the project’s significant production potential. The company has comprehensive insurance and has already reclaimed approximately US$3.7 million, expecting to recover most costs associated with the incident.
Zephyr intends to progress with transforming the Paradox project into a source of revenue, supported by access to a recently completed third-party pipeline. The Williston operations, meanwhile, averaged volumes of 1,225 barrels of oil equivalent per day in the first half, generating a revenue of US$13.4 million and a gross profit of US$9.6 million, showcasing high margins from its production.
The company’s portfolio in Williston consisted of 223 wells available for production as of the end of June, with an average net working interest of around 7% per well. Zephyr acquired interests in wells drilled by Slawson, which are expected to be operational in the fourth quarter, providing a significant production boost.
Zephyr also revealed its decision to invest in 10 new wells operated by Continental Resources, located in a promising area of the basin. Financially, Zephyr reported a cash balance of US$6.2 million at the end of June, with recent figures indicating US$3.5 million as of September 5.
The company has net borrowings of US$27.5 million, and its assets exceed a book value of US$100 million, contributing to a reported net loss of US$2.3 million after tax.
