Zephyr Energy PLC (AIM:ZPHR) Full Year Results for the year ended 31 December 2021 – Notice of AGM

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 its audited results for the year ended 31 December 2021.

Highlights

A transformational period in which Zephyr evolved from a single project exploration company into a self-sustaining, cash generating, oil producing group with a balanced portfolio of operated and non-operated assets in two established U.S. oil producing basins.

Paradox Project, Utah, U.S. (operated asset)

· First flowing hydrocarbons from the Company’s State 16-2 LN-CC well, a historical and operational milestone after many years of investment in the project.

· Sproule completed Competent Persons Report (“CPR”) which highlighted the scale and resource potential of the project:

o 2P Reserves: First Paradox Basin Proved Reserves of 2.1 million barrels of oil equivalent (“boe”)

o 2C Resources: 27 million boe

o Prospective resources from overlying reservoirs: 203 million net unrisked boe (68 million boe risked with a weighted-average 33% chance of success)

· Preparations are well underway for the commencement of a high impact three-well drilling programme to further delineate the scale of the project.

Williston Basin, North Dakota, U.S. (non-operated assets)

· Following the completion of several discrete acquisitions, the Company now has a cash-generative non-operated portfolio with working-interests in 219 wells in the Williston Basin, North Dakota, U.S.

· First quarter 2022 sales from the portfolio were over 1,600 barrels of oil equivalent per day (net to Zephyr) with corresponding revenues of US$11.5 million.

· Non-operated portfolio expected to have turnover of US$35-40 million in 2022, providing significant operating cash flow available for reinvestment into the Paradox project development.

Financial

· The Group reports a net profit after tax for the year ended 31 December 2021 of US$0.8 million, reflecting the initial cashflows from its non-operated asset portfolio.

· Revenues for the year from the non-operated asset portfolio were US$6 million with a gross profit of US$3.3 million.

· At 31 May 2022, the Group had cash and cash equivalents of US$11.9m (which includes cash receipts from the non-operated portfolio for the month of May 2022 which were received in early June 2022).

Corporate

· In February 2022, the Company announced that it had raised a further US$17.4 million (before expenses) through the placing of new Ordinary Shares in the Company, along with raising US$28 million through a senior debt facility. The net proceeds from these debt and equity instruments were used to complete the Group’s US$36 million acquisition of non-operated assets in the Williston Basin and to fund further drilling activity across the portfolio.

· In line with the Company’s ESG objectives, Zephyr achieved carbon-neutrality across its operational footprint (through the purchase of Verified Emission Reduction credits (or “VERs”)) prior to its published goal of 30 September 2021.

Rick Grant, Zephyr’s Non-Executive Chairman, said:

“The period under review was a time of substantial progress in the ongoing transformation of Zephyr. During this period the Group evolved from a single project exploration company into a self-sustaining, cash generating, oil producing group with a balanced portfolio of operated and non-operated assets located in two established oil producing basins in the U.S.

“The 2022 fiscal year promises to be an equally exciting time for our Shareholders as we aim to bring our State 16-2LN-CC well into commercial production and commence our proposed three well drill programme on the Paradox project. A successful drilling programme will see the Group further defining the Paradox project and materially increasing its reserve base in the project, and expected to deliver significant cashflows. This activity will be fully funded by cashflows from our non-operated asset portfolio in the Williston Basin, North Dakota, U.S. (the “non-operated portfolio”), which was formed during the period under review through a number of discrete acquisitions with the main purpose of funding our proposed activity on the Paradox project.

“Our forthcoming activity across all our operations will be carried out consistent with our core values of being responsible stewards of investors’ capital and responsible stewards of the environment.”

Notice of AGM

The Annual General Meeting of the Shareholders of the Company will be held at 10 a.m. on 21 July 2022 at the offices of Zephyr Energy plc, First Floor, Newmarket House, Market Street, Newbury, Berkshire, RG14 5DP.

Further details are set out in the notice of AGM. A copy of the Company’s annual report and accounts, which includes the notice of AGM, will shortly be available on Zephyr’s website, http://www.zephyrplc.com , and posted to Zephyr’s Shareholders.

Extension of warrants

In November 2019, certain Directors were issued with warrants to subscribe for Ordinary Shares in the Company at a price of 2 pence per Ordinary Share (“Warrants”). These Warrants were issued in connection with the equity placing that was carried out by the Company and announced on 4 November 2019 (the “Placing”). In the Placing, Chris Eadie (Finance Director of Zephyr) invested £10,000, and in accordance with the terms of the Placing, he was issued 454,545 Warrants. Origin Creek Energy LLC (“OCE”) invested £480,000 and was issued with 21,818,182 Warrants. The shareholders and directors of OCE are Rick Grant, the Chairman of Zephyr, and Colin Harrington, the CEO of Zephyr. Colin Harrington is indirectly the controlling shareholder of OCE.

On 22 November 2021 the exercise period for these Warrants was extended until 30 June 2022. However, due to continued circumstances beyond their control these directors have not been able to exercise their Warrants and therefore the Independent Directors (Gordon Stein and Tom Reynolds) have agreed to an extension of the exercise period for these Warrants for a further six months until 31 December 2022.

The agreement to extend the exercise date of the Warrants held by OCE and Chris Eadie is a related party transaction pursuant to rule 13 of the AIM Rules for Companies. Accordingly, the Independent Directors of Zephyr (Gordon Stein and Tom Reynolds) consider, having consulted with the Company’s nominated adviser, that the terms of the transaction are fair and reasonable insofar as the Company’s shareholders are concerned.

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Contacts:

Zephyr Energy plc

Colin Harrington (CEO)

Chris Eadie (CFO)

Tel: +44 (0)20 7225 4590


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