Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain oil and gas company focused on responsible resource development from carbon-neutral operations, is pleased to announce the completion of the acquisition of a package of oil and gas assets located on and around the Company’s Paradox project, Utah, U.S. (the “Paradox project”) (the “Acquisition”).
Details of the Acquisition were announced on 14 September 2022.
The Acquisition is comprised of 21 miles of natural gas gathering lines, the Powerline Road gas processing plant (the “Plant”, which is not currently in operation), rights of way for additional gathering lines, active permits, five existing wellbores and additional acreage (the “New Acreage”) which is partly contiguous to the Company’s operated White Sands Unit (the “WSU”).
The Acquisition will allow Zephyr to substantially reduce the capital required to build the necessary gas export infrastructure for its forecast gas production from the Paradox project. The estimated replacement cost value of the acquired pipelines and plant is over US$10.6 million.
The consideration for the Acquisition was US$750,000, which was satisfied by a payment from Zephyr’s existing cash resources, and as the new owner, Zephyr has assumed responsibility for all future decommissioning, plugging and abandonment liabilities associated with the assets (estimated to be approximately US$2.5 million in today’s terms).
Zephyr now operates 45,000 gross acres in the Paradox Basin, the majority of which the Company holds a 75% or greater working interest.
A full summary of the assets purchased as part of the Acquisition was outlined in the Company’s announcement on 14 September 2022.
Colin Harrington, Zephyr’s Chief Executive, said: “I am delighted that we have now completed the Acquisition which is expected to bring multiple commercial benefits to the Company.
“Firstly, it allows us to greatly reduce the capital needed to build out the gas infrastructure required to sell our produced gas volumes from the Paradox project into the market. Secondly, it completes the acquisition of all key acreage covered by the WSU 3D and thirdly, it provides us with an additional well pad already tied to the pipeline, which in combination with the newly acquired acreage will simplify future development drilling. Similarly, the gas plant, while currently not in use, has excellent potential for reintroduction to service and can potentially act as a WSU supply base.
“The Acquisition marks the start of an exciting period for Zephyr as we kick-off our extended production test on the State 16-2LN-CC well and as we make final preparations for our forthcoming drilling programme. While supply chain and labour availability issues continue to exist across the sector, Zephyr’s team is working hard to ensure the necessary pieces are in place in order to commence drilling shortly after the final federal permit has been received. Further updates on this will be announced shortly and will be presented at our Investor Webinar on 25 October 2022, details of which we announced on 28 September 2022.”
Zephyr Energy plc
Colin Harrington (CEO)
Chris Eadie (CFO)
Tel: +44 (0)20 7225 4590
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