TIDMZPHR
RNS Number : 0614P
Zephyr Energy PLC
16 June 2022
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.
16 June 2022
Zephyr Energy plc
("Zephyr" or the "Company")
Non-operated asset portfolio drilling update:
acquisition of further Williston Basin working-interests
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 provide an update on
recent activity on its non-operated asset portfolio in the
Williston Basin, North Dakota, U.S (the "non-operated portfolio"),
including the acquisition of working-interests ("WIs") in a further
11 wells.
Zephyr's non-operated portfolio now consists of WIs in 219
wells, the vast majority of which are currently in production.
Highlights
-- Zephyr's non-operated portfolio continues to grow, both
through drilling on existing Zephyr acreage and through the
acquisition of further "bolt-on" WIs in the Williston Basin.
-- Over the past two months, Zephyr elected to participate in
seven new Sanish Field infill wells to be drilled within drilling
and spacing units ("DSUs") in which Zephyr currently holds WIs.
-- Zephyr has also acquired WIs in a further 11 wells (these,
together with the seven Sanish Field wells, the "new wells"), a
majority of which have already been drilled and are awaiting
completion.
o Total consideration for the 11 acquired wells is circa
US$301,000, which has been paid from existing cash resources
-- Zephyr's average WI across the 18 new wells is circa 1.4% per
well, or a total aggregate of circa 24.4% of one net well, and are
comprised of two and three-mile hydraulically stimulated horizontal
wells.
-- In addition to the acquisition price paid for the newly
acquired 11 wells, Zephyr will fund the discretionary net capital
expenditure ("CAPEX") relating to the drilling and completion for
all 18 of the new wells. Zephyr's net CAPEX is forecasted to be
circa US$1.8 million which will be payable over the course of 2022,
and the Board expects to fund this investment from its existing
cash resources.
-- The Company expects all 18 of the new wells to be on
production by the end 2022, resulting in an estimated 80,000
barrels of oil equivalent ("boe") reserve addition to Zephyr.
-- The 18 new wells are expected to generate an incremental
200-250 barrels of oil equivalent per day ("boepd"), although wells
will be brought online at varying points over the second half of
2022. This incremental production will serve to offset typical
decline in Zephyr's existing producing wells.
-- Zephyr now has working interests in 219 gross horizontal,
hydraulically stimulated wells (circa 15 net wells) with an average
WI of circa 6.7% across its portfolio.
Further information on the new wells is outlined below.
Colin Harrington, Zephyr's Chief Executive, said: "Cashflows
from Zephyr's non-operated portfolio continue to exceed earlier
expectations, which allows us to fund additional accretive drilling
investments and maintain a strong non-operated production profile
without diverting resources from our planned Paradox Basin drilling
programme.
"The acquisitions announced today are an excellent incremental
addition to our non-operated portfolio, are located in prime
acreage and fit nicely alongside the continued infill drilling by
Whiting on Zephyr's existing Sanish Field acreage.
"It remains our intention to fortify our non-operated production
through continued drilling participation as well the opportunistic
acquisition of quality assets. Today's announcement demonstrates
Zephyr's continuing capacity to grow our underlying asset value,
which will in turn provide more resources for the long-term organic
development of our Paradox project.
"We look forward to giving a detailed production update and
revised forecasts after second quarter sales figures are
received."
Drilling within the existing non-operated portfolio
Zephyr's current Williston Basin portfolio continues to provide
organic growth opportunities by way of an active drilling programme
on acreage in which Zephyr has existing leaseholder interests:
-- Over the last two months, Zephyr elected to participate in
seven infill well proposals within the Sanish Field, where the
operator, Whiting Petroleum Corporation ("Whiting") continued to
pursue an active infill drilling programme. Production from the new
infill wells is expected to be online during the second half of
2022.
Acquisition of additional WIs
-- Zephyr recently acquired non-operated WIs in a further 11
wellbores, all located within highly productive areas of the
Williston Basin.
o A majority of these newly acquired wells have been drilled and
are awaiting completion, with the remainder to be drilled over the
next six months. They are all expected to add to Zephyr's
non-operated production during the second half of 2022.
o These "bolt-on interests" are considered by the Board to be
highly economic, opportunistic acquisitions, at a time when
commodity pricing remains strong but drilling and acquisition costs
remain favourable versus market comparables.
o Total consideration for the new acquisitions is circa
US$301,000, which has been paid for from the Company's existing
cash resources
o Operators in the newly acquired wells include Kraken Oil and
Gas LLC and Bowline Energy LLC.
In addition to the acquisition price paid for the newly acquired
11 wells, Zephyr will fund the CAPEX relating to the drilling and
completion for all 18 of the new wells. Zephyr's net CAPEX is
forecast to be circa US$1.8 million and the Board expects to fund
this from its existing cash resources.
Overall, Zephyr's average WI across the 18 new and acquired
wells is circa 1.4% per well, or a total aggregate of circa 24.4%
of a net well. Zephyr now has interests in 219 wells, the vast
majority of which are currently on production.
Zephyr's non-operated portfolio averaged 1,600 boepd in the
first quarter of 2022. Updated production and revenue totals, as
well as revised forecasts, will be provided after 2Q 2022 revenue
totals and pricing data are received from our Operators.
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
James Pope / Andy Thacker 0050
Celicourt Communications
Mark Antelme / Felicity Winkles Tel: +44 (0) 20 8434
2643
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.
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