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 unaudited interim results for the six months ended 30 June 2021.
Overview
The first six months of the 2021 financial year, and the period since, were a time of tremendous progress and intense activity during which Zephyr transformed from a single project exploration company into a self-sustaining, cash-generating, carbon-neutral oil and natural gas producer. During this period, significant additional operational and technical milestones were met on our Paradox Project. In addition, the Company completed five separate acquisitions which resulted in a growing portfolio of operated and non-operated assets located in two established U.S. oil producing basins. The Company also delivered on its ambitious goal to commence 100% carbon-neutral Scope 1 operations by 30 September 2021.
Highlights
Paradox Project, Utah, U.S. (operated asset)
· The State 16-2LN-CC horizontal well was safely drilled to a total depth of 14,370 feet (“ft”) with 4,555 ft of horizontal landed successfully in the Cane Creek reservoir target.
o Significant data from an extensive suite of wireline logs, cores and pressure data was acquired from drilling operations and from the subsequent diagnostic fracture injection test (“DFIT”).
o Premier Oilfield Group, a leading consulting specialist with expertise in well completions, was engaged to assist the Company’s multi-month evaluation of optimal completion designs.
o Multiple positive factors from the data analysed led Zephyr’s Board of Directors (the “Board”) to approve the running of production casing and to elect to complete the State 16-2LN-CC by way of hydraulic stimulation.
o Completion operations will take place in the coming weeks, followed shortly thereafter by a production test of the well.
· If development of the overall project through the utilisation of hydraulic stimulation proves successful, the Company estimates the potential for a wider development with up to 200 potential well locations across the project, with a range of risked net recoverable contingent resources of up to 143 million barrels of oil equivalent (“mmboe”) from both the Cane Creek reservoir and eight overlying reservoirs.
· An additional 12,260 acres of Paradox Basin acreage was acquired during the period (with potential resources not yet included in Zephyr’s internal estimates).
Williston Basin, U.S. (non-operated assets)
· Zephyr completed four acquisitions which provide the Company with working interests in 22 wells across multiple pads and operators:
o 7 wells are currently producing, and 15 wells are drilled and currently awaiting completion.
o Q2 2021 production averaged 148 barrels of oil equivalent per day (“boe/d”) net to Zephyr, with an average realised sales price of US$52.90 per barrels of oil equivalent (“boe”).
o August 2021 production averaged 506 boe/d net to Zephyr.
o Monthly production is expected to climb further as existing wells hit peak production and additional wells are brought online.
· Cashflow from the non-operated portfolio will be reinvested into the development of the Paradox project or used to acquire further non-operated assets that meet the Company’s strict criteria.
· In August 2021, the Company executed a Joint Venture agreement with Purified Resource Partners, LLC, a highly experienced Williston Basin team, focused on the generation of additional non-operated deal flow.
Corporate
· Achieved its ambitious Environmental, Social and Governance target to commence 100% carbon neutral operations by 30 September 2021.
· Completed a £10 million fundraise in April 2021 which funded drilling operations on the Paradox project and the acquisition of non-operated assets.
· Commenced cross trading on the OTCQB Venture Market which is expected to facilitate future investor outreach in the U.S.
Colin Harrington, Zephyr’s Chief Executive said: ” I am delighted by the tremendous growth and progress delivered during the period under review. Zephyr is now ideally positioned as a cash generating platform from which to deliver significant future growth for our Shareholders.
“We’ve worked tirelessly to meet or exceed the goals and timelines we publicly set for ourselves, while doing so on budget and in a low-cost manner – and I’m particularly proud that we successfully executed our strategy in line with our twin core values of being responsible stewards of investors’ capital and responsible stewards of the environment in which we work.
“The next few months will continue to see a flurry of corporate and operational activity as we target production from the Paradox project, increase non-operated production and accumulate cash flows from our assets in the Williston Basin.
“These are exciting times, and we look forward to keeping all our stakeholders updated on our progress.”
A copy of the interim results report will be available on the Company’s website later today at http://www.zephyrplc.com.
Contacts:
Zephyr Energy plc
Colin Harrington (CEO)
Chris Eadie (CFO)
Tel: +44 (0)20 7225 4590
