Zephyr Energy PLC Two-year hedging programme implemented (8243I)
21 4월 2022 - 3:01PM
UK Regulatory
TIDMZPHR
RNS Number : 8243I
Zephyr Energy PLC
21 April 2022
21 April 2022
Zephyr Energy plc (the "Company" or "Zephyr")
Hedging programme implemented
US$30 million of non-operated portfolio revenue now hedged over
the next 24 months
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 the
implementation of a hedging programme related to 328,000 barrels
("bbls") of oil production from its non-operated asset portfolio in
the Williston Basin over the next two years (the "Programme"). The
Programme is designed to ensure over US$30 million of forecast
revenue during this two-year period and has been implemented with
BP Energy Company ("BP"), one of the world's leading energy trading
houses, as the hedge counterparty.
Under the terms of the Programme, Zephyr entered into crude oil
commodity swap agreements, which settle on a monthly basis, at the
following prices:
-- Q2 2022: 64,000 bbls at US$100.80/bbl
-- Q3 2022: 57,000 bbls at US$98.00 /bbl
-- Q4 2022: 50,000 bbls at US$94.55 /bbl
-- 1H 2023: 69,000 bbls at US$90.05 /bbl
-- 2H 2023: 61,000 bbls at US$85.40 /bbl
-- 1H 2024: 27,000 bbls at US$82.20 / bbl
The Programme has been structured to provide cashflow surety
related to the Company's senior debt obligations, as well as to
materially derisk funding requirements for the proposed upcoming
drilling campaign at the Company's flagship Paradox Basin project
(the "Paradox project"). The Programme announced today accounts for
less than 50% of the Company's total forecast production from all
reserve categories on its non-operated portfolio over the next two
years, leaving considerable additional exposure to commodity price
fluctuations. Zephyr's Board of Directors will continue to monitor
commodity prices on a regular basis and may layer on additional
hedges if and when it deems appropriate.
The Company estimates that the cash operating cost per barrel
from its Williston Basin production will average approximately
US$16 per barrel over the next 24 months, which implies strong
profit margins for barrels hedged under the Programme. Further,
when Sproule International completed its Competent Persons Report
("CPR") on Zephyr's non-operated portfolio in November 2021
(announced on 22 November 2021), it used an oil price per barrel of
oil of US$71 for 2022, US$68 for 2023 and US$66 in 2024 for its
valuation. The current implied valuation of Zephyr's non-operated
portfolio has therefore increased materially as a result of the
Programme and prevailing commodity prices.
Colin Harrington, Chief Executive of Zephyr, said : "Zephyr
successfully completed five acquisitions of producing non-operated
assets in the Williston Basin over the last twelve months. The
recent and substantial increase in global oil prices has now
resulted in prices well above levels expected when we closed those
acquisitions, so I'm delighted to be able to announce the
implementation of our inaugural hedge programme at this time. The
Programme will both protect our balance sheet and provide certainty
to enable us to deliver on our key objectives over the next twelve
months. We expect all our forecast capital commitments, for at
least the next twelve months to be fully funded through a
combination of existing cash resources and cash flow from
production.
"While balance sheet and capital expenditure protection are the
driving forces behind our hedging strategy, it's important to point
out that the majority of our forecast non-operated production, and
100% of our produced natural gas volumes, retain exposure to future
changes in commodity prices, and that 100% of our oil and gas
production until the end of March 2022 was unhedged and benefited
from the strong recent pricing environment.
"I would like to take this opportunity to thank BP, our hedge
counterparty, and First International Bank & Trust, our senior
lender, for working so diligently to enable us to implement the
Programme.
"2022 is shaping up to be another exciting year for the Company
with a significant amount of corporate and operational activity in
the pipeline - including the release of the key findings of the CPR
on the Paradox project which is expected early next week. Planning
for the drilling of three additional wells on the Paradox project
in the second half of this year is well underway.
"Above all, I would like to reiterate that our mission remains
to operate as responsible stewards of investors' capital and of the
environment in which we work. With a substantial portion of our
forecast production cashflow now locked in at excellent pricing, we
very much look forward to efficiently redeploying that capital over
the coming months."
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 / Vivek
Bhardwaj
Turner Pope Investments - Broker Tel: +44 (0)20 3657
Andy Thacker / James Pope 0050
Celicourt Communications Limited
Mark Antelme / Felicity Winkles Tel: +44 (0) 20 8434
2643
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