Zephyr Energy expects ‘significant activity’ across US assets in the coming weeks
In an operational update on its assets in the United States, (ZPHR ) highlighted that “significant activity” is expected across the group’s asset portfolio in the coming weeks.
Addressing shareholders, Colin Harrington, Chief Executive of the Rocky Mountain-focused oil and gas company said Zephyr Energy has a “great deal of activity” going on across its project portfolio and that he was “delighted” with how everything is progressing to date.
In March 2021, Zephyr completed the acquisition of non-operated working interests in five wells located on three separate pads located in the Williston Basin of North Dakota, US.
These assets, which are operated by Whiting Petroleum Corporation ("Whiting"), include; 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), it noted.
Since the acquisition was closed, Zephyr Energy has received two scheduled monthly revenue payments from the Iverson well. Additionally, both the S-Bar and Feehan wells were completed by Whiting. The company highlighted that the completion operations had progressed ‘as envisioned, at expected lateral lengths, and ahead of initial schedule.’
Zephyr said the S-Bar wells have been placed into production, ahead of forecast schedule, and the Feehan wells are expected to be placed into production within the next month.
The company highlighted that it intends to update shareholders on production rates ‘in the coming weeks’, once the wells have cleaned up and reached a peak initial rate, it noted.
At Zephyr’s flagship project in the Paradox Basin in Utah, U.S, preparations continue ahead of the drilling of the State 16-2LN CC lateral appraisal well (the "lateral") which is scheduled to spud in July and which will target Zephyr’s first production from the Paradox project.
The company informed investors that final permitting is expected shortly and that vendor negotiations (including the rig contract) are expected to be finalised in the coming weeks.
Shares in Zephyr Energy have seen a nearly six-fold increase in value since the beginning of the year. The stock was trading 8.89% higher this morning at 4.9p following the news.
The group said additional evaluation work related to the overlying reservoirs continues to progress, and it is the Company's intention to update the market by the end of the month once final analysis has been received from its third party partners and consultants.
Commenting on the progress, CEO, Colin Harrington, said: "We have a great deal of activity going on across our project portfolio and I'm delighted with how everything is progressing.
We are particularly gratified that Whiting, the operator of five of our Williston wells, worked to accelerate the completion and production dates on the four DUC wells. When we initially agreed to terms on the acquisition of these interests, we ran our economics at a price of US$45 per barrel of oil. With current pricing at over $70 per barrel, we now envisage significant cash flow generation from this part of our portfolio over the coming months.”
He added, "On our flagship Paradox project, we have a fascinating period ahead of us. Preparations for our forthcoming drilling programme continue to move ahead at full speed and we are also excited to finish the evaluation work around the exploration potential of the overlying reservoirs, with more detail on this to come shortly.”
On Friday, Zephyr detailed its intentions to file an application with the OTC Markets Group for its shares to be publicly cross traded on the US-based market, OTCQB Market.
The oil and gas company said it believes that having its shares traded on the OTCQB will provide enhanced investor benefits, ‘including easier trading access for investors located in the U.S., and greater liquidity due to a broader geographic pool of potential investors.’
The group said the move comes on the back of “an already increased level of interest from U.S. investors as a result of the recent expansion of our operational footprint in the U.S.”
Zephyr also recently announced its intention to achieve carbon-neutrality across its operational footprint by 30 September 2021, marking a major first step towards the near-term delivery of hydrocarbons produced with an operational "net-zero" carbon impact.
As part of its pledge, Zephyr is collaborating with the Prax Group who will work with Zephyr to measure, reduce and mitigate greenhouse gas emissions across Zephyr's businesses.
In addition to the environmental benefits that will result from the group’s efforts to reach carbon-neutrality, Zephyr anticipates that this approach will also yield economic benefits - including expanded access to a wider group of potential institutional investors, as total ESG-focused assets under management are currently estimated to be over $30trn globally.
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