TIDMZPHR
RNS Number : 8326G
Zephyr Energy PLC
29 July 2021
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the UK Market Abuse Regulation.
With the publication of this announcement, this information is now
considered to be in the public domain.
29 July 2021
Zephyr Energy plc
(the "Company" or "Zephyr")
Williston Basin operations update
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain
oil and gas company focused on responsible resource development and
carbon-neutral operations, is pleased to provide an update on
recent progress on its non-operated asset portfolio in the
Williston Basin, North Dakota, U.S.A.
Williston Basin update - Whiting operated wells
In March 2021, Zephyr completed the acquisition of non-operated
working interests in five wells located on three separate pads
operated by Whiting Petroleum Corporation ("Whiting"):
-- The producing Iverson 11-14HU well;
-- The S-Bar 11-7HU and 11-7TFHU wells (which were drilled but
not completed ("DUC" wells) at the time of acquisition); and
-- The Feehan 11-9HU and 11-9TFHU wells (which were also DUC wells at the time of acquisition).
In the period since the completion of the acquisition, Zephyr
has received its scheduled monthly revenue payments related to its
interests in the producing Iverson well. In addition, the S-Bar and
Feehan wells were all completed by Whiting during the second
quarter of 2021 - completion operations progressed as envisioned,
at expected lateral lengths and ahead of schedule.
Zephyr is now pleased to announce that all acquired DUC wells on
both the S-Bar and Feehan pads are tied into infrastructure and
have been placed into production, and with a minimum of temporary
gas flaring. Zephyr will update Shareholders on initial production
rates once the wells have cleaned up and reached peak rate.
Williston Basin update - Continental operated wells
In May 2021, Zephyr announced the acquisition of 11.6 acres in
the Williston Basin, North Dakota (the "Continental acreage") which
gave Zephyr working interests in a drilling spacing unit ("DSU")
operated by Continental Resources Inc. ("Continental"), the largest
operator in the Williston Basin. The Continental acreage is located
approximately ten miles from the Company's Whiting wells, in a
highly attractive part of the Basin. Continental had already
commenced drilling two initial wells on the DSU ("Initial wells")
at the time of Zephyr's acquisition, with up to an additional 22
future wells ("Future wells") forecast to be drilled commencing in
2022.
Zephyr is now pleased to announce that the two Initial wells
have been completed and are currently being placed into production.
For the Initial wells drilled and completed, Zephyr's forecasted
net capital expenditure (CAPEX) is approximately $135,000 and is
being funded from existing cash resources. First revenues from the
Initial wells are expected to be received by the end of the October
2021.
Zephyr's CAPEX for the 22 Future wells is forecast to be
approximately $710,000, which it also proposes to fund from the
Group's internal cash resources. The additional CAPEX on the Future
wells is discretionary, and Zephyr's Board of Directors will elect
whether to participate in those wells on a case-by-case basis.
Williston Basin update - future growth opportunities
Zephyr's working interests in the seven wells detailed above
were acquired in the first half of 2021 and are projected to
deliver strong economics via exposure to low-risk near-term
production with additional development upside.
Now that these acquired wells are online, Zephyr's Williston
Basin interests are expected to provide the Company with
substantial additional oil production over the coming months. The
resulting cashflows, which will be sheltered from federal
corporation tax due to Company's historical tax loss position of
circa US$16 million, will be utilised to fund additional
development of the Company's flagship Paradox Basin project and/or
to acquire other attractive non-operated assets located in the
Rocky Mountain regions where the Company continues to pursue
accretive transactions.
Colin Harrington, Chief Executive of Zephyr, said : " We have a
great deal of activity taking place across our project portfolio,
and I'm delighted with the milestones being met. Now that our
interests in the seven acquired Williston Basin wells are drilled,
completed and online - and at a time of strong commodity prices -
we expect significant cash flow generation from the non-operated
portion of our portfolio over the coming months.
"Cash flow generated in the second half of 2021 is forecast to
be rapidly redeployed into additional accretive opportunities -
either into our flagship Paradox project, on additional drilling
opportunities in the Williston, on further accretive acquisitions,
or on all of the above. Combined with the ongoing drilling
operations at State 16-2LN-CC wellsite and our recent acreage
addition in the Paradox Basin, our goal is to deliver substantial
Shareholder value during the remainder of 2021.
"I look forward to keeping our Shareholders and partners updated
regularly."
Contacts:
Zephyr Energy plc Tel: +44 (0)20 7225
Colin Harrington (CEO) 4590
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328
Adviser 5656
Jeremy Porter / Liz Kirchner
Turner Pope Investments - Broker Tel: +44 (0)20 3657
James Pope / Andy Thacker 0050
Flagstaff Strategic and Investor Communications
Tim Thompson / Mark Edwards / Fergus Tel: +44 (0) 20 7129
Mellon 1474
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