TIDMZPHR
RNS Number : 3595H
Zephyr Energy PLC
03 December 2020
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). With the publication of this announcement,
this information is now considered to be in the public domain.
3 December 2020
Zephyr Energy plc
(the "Company" or "Zephyr")
Award of drilling contract to Cyclone Drilling Inc.
Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas
company focused on responsible resource development, provides an
update on its project in the Paradox Basin, Utah, U.S. (the
"Paradox project"), where the Company is preparing to spud the
'dual-use' State 16-2 well before the end of the year.
The Company is pleased to announce it has signed a drilling
contract with Cyclone Drilling Inc. ("Cyclone"). This follows a
competitive selection process by Zephyr's team, involving extensive
technical and commercial evaluation across multiple potential
drilling contractors. Cyclone, based in Gillette, Wyoming, is one
of the leading providers of rigs in the Rocky Mountain region (the
"Rockies"). Cyclone's fleet of modern rigs was purpose-built for
operating in the remote locations and rugged environment of the
Rockies, and they hold one of the best drilling safety records in
the U.S. oil and gas industry. Additionally, Cyclone has recent
experience drilling similar stratigraphic wells, including a
10,200-foot-deep stratigraphic well drilled in 2019 which was also
part-funded by the U.S. Department of Energy (the "DOE").
For the State 16-2 well, the specific Cyclone rig under contract
is Cyclone Rig #34. This rig is currently active on a drilling
project in Wyoming and will be mobilising to the site of the State
16-2 well in Utah in the coming days, ensuring Zephyr remains on
track for spudding the well prior to the end of this year.
Additionally, the signing of the State 16-2 drilling contract is
a trigger for the Company to draw down the second US$600,000
tranche of the US$2 million grant funds allocated by the DOE for
the drilling of the well. The balance of the DOE funding, a further
US$800,000, will be received by Zephyr in two further tranches once
additional routine well development milestones are met.
Colin Harrington, Zephyr's Chief Executive, said "We are
delighted to be partnering with Cyclone to drill the State 16-2
well. Cyclone has a 40-year history as a respected contractor with
a safe and successful track record of drilling wells, including on
other DOE-funded projects. We are confident in their ability to
help us deliver this well in an efficient and responsible way.
"Awarding this contract is an important milestone in our plan to
spud the State 16-2 well prior to the end of the year, and we look
forward to working with the Cyclone team.
"With the well now fully permitted, the site and road work
complete and the rig contract signed, we are ready to commence
drilling in the very near term."
Contacts:
Zephyr Energy plc Tel: +44 (0)20 7225 4590
Colin Harrington (CEO)
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328 5656
Adviser
Jeremy Porter / Liz Kirchner
Turner Pope Investments - Broker Tel: +44 (0)20 3657 0050
Andy Thacker / Zoe Alexander
Flagstaff Strategic and Investor Communications
Tim Thompson / Mark Edwards / Fergus Tel: +44 (0) 20 7129
Mellon 1474
Background to the 16-2 well
As announced on 2(nd) September 2020, the Company has been
working with a project team led by the EGI in collaboration with
the UGS and other Utah-based partners. The project is entitled
"Improving Production in Utah's Emerging Northern Paradox
Unconventional Oil Play" and its goal is to assess and perform
optimisation analyses for more focused, efficient and less
environmentally-impactful oil production strategies in the northern
Paradox Basin, particularly in the Pennsylvanian Paradox
Formation's Cane Creek shale and adjacent clastic zones. This
project is sponsored by the DOE.
As part of this study, the EGI and UGS originally planned to
drill a vertical stratigraphic test well to gather data to improve
the understanding of the Paradox Basin play. It was planned that
the proposed well would target the Cane Creek and potentially the
C18/19 reservoirs, acquiring both core data and a comprehensive
well log suite in order to provide valuable new basin data.
Over a period of several months, the project team analysed
multiple potential well locations across the Paradox Basin, and the
Company was delighted that the EGI and UGS selected Zephyr's
Paradox acreage as the location on which to drill the well.
The Company's location was selected for a number of reasons,
including the quality of the Group's underlying 3D seismic data
(which can be tied into the well results to build a stronger
integrated predictive model) as well as a favourable surface
location which will be sited on a pre-existing pad.
Since Zephyr's Paradox acreage was selected as the location for
the test well, Zephyr has been working with its project partners to
construct a project plan that maximises the opportunity for all
parties.
A key part of this plan is to design the well in such a way that
not only can it be used to obtain all the data required by the
research project, but that it can also be re-used by the Company in
the future as the host for a lateral appraisal well. This approach
not only reduces environmental impact but it will also potentially
significantly reduce future well costs for the Company.
It is currently expected that the total cost of the vertical
well activity is forecast to be between US$2.5 million to US$3
million, of which the first US$2million will be funded by grant
funding from the DOE and up to US$1 million will be funded by
Zephyr. Neither party is liable for any costs in excess of the US$3
million combined project limit.
The primary objectives of the initial stratigraphic well are to
drill vertically to an approximate true vertical depth ("TVD") of
9,850 feet, and to acquire up to 90 feet of continuous core from
the Cane Creek reservoir. The results from the analysis of the core
and from other drilling data are expected to be available within
three months from the completion of drilling.
Once the vertical well is completed it will be temporarily
plugged back to 6,500 feet TVD. Zephyr (or a farm-in partner) will
then have the opportunity to re-utilise the vertical wellbore as a
sidetrack host from which a horizontal appraisal well can drilled.
By re-utilising the vertical portion of the stratigraphic well, the
Company estimates the total costs of drilling a future horizontal
appraisal well will be reduced from circa US$6.0m to circa
US$3.0m.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
CNTGZMGZFZFGGZZ
(END) Dow Jones Newswires
December 03, 2020 02:00 ET (07:00 GMT)
Zephyr Energy (AQSE:ZPHR.GB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Zephyr Energy (AQSE:ZPHR.GB)
Historical Stock Chart
From Jul 2023 to Jul 2024