Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) informed its investors about its intention to progress the Paradox project in Utah by re-drilling at the original State 36-2 location, aiming to establish a “twin” well.
This decision comes after an earlier “well-controlled incident” that was reported this year.
CEO Colin Harrington sees this move as “the best way forward to capitalize on the substantial discovery” from the first well.
Harrington stated, “Our attention is centered on the immediate potential of the State 36-2 well site, as well as the Paradox project’s long-term prospects. The board remains steadfast in its mission to unveil the next significant onshore US oil and gas venture.”
Harrington stated, “Redrilling offers the advantage of a fresh wellbore, capitalizing on the insights gathered from the State 36-2 well operations so far. We anticipate that our well control insurance will substantially cover the redrill expenses.”
He expressed confidence in his operations team’s ability to produce an efficient twin well and tap into the significant yield noted in the original bore.
Regarding the next steps, he shared, “We’re in the process of securing a drilling rig. Meanwhile, the workover rig at the site will be transferred to the 28-11 well pad. This move aims to create an additional production source for Zephyr. Given the current high oil prices and the liquid-rich nature of the 28-11 Cane Creek well, we foresee swift returns and consistent revenue.”
Zephyr reiterated its previous statement, expecting insurance to cover most expenses from the April well incident.
Further, Zephyr provided an update on the Greentown Federal 28-11 well, acquired in October 2022, which has resumed production. Plans are in place to fit a new pump to maximize production within flaring constraints.
In terms of expansion, Zephyr has entered into an agreement to gain a stake in a 1,047-acre plot in the Salt Wash Field, located south of its White Sands Unit in Utah. The field, discovered in 1961, boasts proven reserves of oil, gas, and helium. Drilling in this field is scheduled for the second quarter of 2024.
Zephyr’s acquisition deal involves an upfront payment of US$300,000, followed by another US$300,000 after 60 days.
Discussing the Salt Wash Field, Harrington mentioned, “We’ve extensively analyzed the potential to revitalize its remaining reserves. This field connects seamlessly with our existing routes and will likely integrate with our recently procured pipeline infrastructure.”
He also touched on the potential helium extraction, “Although helium isn’t our primary objective, we intend to collaborate with industry stakeholders to evaluate this resource, leveraging our regional expertise and operational assets.”
Clarifying Zephyr’s financial plans, Harrington emphasized, “Funding for the Commitment well won’t come from a Zephyr equity raise.”
Reflecting on the future, Harrington voiced his optimism, asserting the chosen direction aligns with Zephyr’s long-term vision. He anticipates bustling activities in the coming months, concentrating on drilling preparations, securing gas sales agreements, and infrastructure development.
He concluded by outlining Zephyr’s growth prospects, “With expected production surge from our non-operated portfolio in the next quarter, we’re adequately financed for the scheduled tasks in our existing portfolio. We also have provisions for possible acquisitions and additional 2024 drilling.”
