TIDMZPHR
RNS Number : 9617I
Zephyr Energy PLC
18 August 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.
18 August 2021
Zephyr Energy plc
(the "Company" or "Zephyr")
Positive results from the analysis of the State 16-2LN-CC well
log data;
initiation of diagnostic fracture injection test;
and next steps
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) , the Rocky
Mountain oil and gas company focused on responsible resource
development and carbon-neutral operations, provides an update on
its flagship project in the Paradox Basin, Utah, U.S.A.
The Company recently drilled the State 16-2LN-CC well to a Total
Depth ("TD") of 14,370 feet ("ft"), at which point a full suite of
wireline logs was run and production casing was set. During
drilling operations, the Cane Creek reservoir target indicated
hydrocarbon charge across its entirety based on wireline logs,
cuttings and mud gas readings. Multiple overlying reservoirs also
indicated hydrocarbon charge.
The Company is now pleased to report that the initial analysis
of wireline log and other data from the State 16-2LN-CC has been
completed.
Highlights
-- The horizontal portion of the well penetrated 4,555 ft of the
Cane Creek reservoir. Wireline log data suggests a high percentage
of the lateral portion of the well (approximately 85 per cent) can
be completed for production.
-- The State 16-2LN-CC well drainage area from the Cane Creek
reservoir is estimated to hold a potential 1.2 to 4.5 million
barrels of oil equivalent ("mmboe") of hydrocarbons in place.
-- Ultimate well performance and recoverable oil and gas will be
determined by matrix permeability, reservoir pressure, the level of
moveable water in the reservoir and the degree of successful
stimulation:
o Primary reservoir facies show average porosity of
approximately 7 per cent, rising to approximately 12 per cent in
places. Porosity is comparable with earlier core results from the
State 16-2 vertical well.
o Analysis indicates good matrix permeability for a
Hydraulically Stimulated Resource Play ("HSRP") development, based
on State 16-2 core permeability measurements and correlation with
core porosity.
o Initial well production rates and recoverable resources will
be estimated following the injection test and selection of an
optimal completion method as detailed below.
-- In addition, mass spectrometry of the well's mud gas from the
Cane Creek reservoir indicated the following:
o The presence of oil, gas and condensate and
o Low water saturation
Based on the positive analysis to date, the excellent
positioning of the lateral portion of the well within the Cane
Creek reservoir, and the potential to utilise the State 16-2LN-CC
completion as a proof of concept well for wider development of the
Paradox asset base via hydraulic stimulation, the Company has opted
to initiate a diagnostic fracture injection test ("DFIT") on the
well.
The DFIT operation will commence on site today. Results from the
DFIT, in combination with the reservoir analysis detailed above,
will allow Zephyr to finalise the method for optimal well
completion in the near term, with production testing commencing
immediately after a successful completion of the well.
Colin Harrington, Zephyr's Chief Executive, said: "As announced
last week, the State 16-2LN-CC landed successfully in the Cane
Creek reservoir with excellent positioning throughout the
horizontal portion of the well. I'm now pleased to report that our
analysis suggests that up to 85 per cent of the lateral has the
potential to be completed for well testing and production. I'm also
pleased to see porosity and permeability estimates equivalent to
other producing basins with prolific HSRP development, as well as
mud gas mass spectrometry evidence for the presence of oil, gas and
condensate with corresponding apparent low water saturations.
"Based on the preponderance of positive data received, we
elected to initiate a DFIT to provide additional insight into the
potential for successful hydraulic stimulation on our acreage
position. As the State 16-2LN-CC is the first horizontal well in
this part of the Paradox Basin, the ability to develop a strong
understanding of reservoir mechanical properties is crucially
important as we assess the series of options for wider potential
development. It's also important to note that if the HSRP
completion route is selected, we believe it could allow for a
simpler surface footprint and more predictable well patterns,
including the grouping of multiple wells from a single pad, thereby
maximising resource efficiency and project economics while
minimising environmental and surface disruption.
"The current wellbore provides an excellent platform from which
to assess these development options prior to production testing the
well. We expect DFIT operations and monitoring to progress over the
course of the next week, after which a final decision regarding
selection of method for well completion will be made. Completion
operations and production testing will begin as soon as possible
thereafter, and we look forward to keeping Shareholders informed as
more milestones are reached."
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 / James Pope
Flagstaff Strategic and Investor Communications
Tim Thompson / Mark Edwards / Fergus Tel: +44 (0) 20 7129
Mellon 1474
Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD,
Technical Adviser to the Board of Zephyr Energy plc, who meets the
criteria of a qualified person under the AIM Note for Mining and
Oil & Gas Companies - June 2009, has reviewed and approved the
technical information contained within this announcement.
Estimates of resources and reserves contained within this
announcement have been prepared according to the standards of the
Society of Petroleum Engineers. All estimates are internally
generated and subject to third party review and verification.
Glossary of Terms
Hydrocarbon Initially In Place (HCIIP) - Quantity of hydrocarbon
that is estimated, as of a given date, to be contained in known
accumulations before production. HCIIP may be subdivided into
commercial, sub-commercial, and the portion remaining in the
reservoir as unrecoverable.
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END
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