Williston Basin Update

Zephyr Energy PLC

01 November 2023

 

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.

1 November 2023

Zephyr Energy plc

("Zephyr" or the "Company")

Williston Basin Update

Slawson wells commence production; and

semi-annual debt redetermination process reaffirms Company's borrowing base

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 updates on its non-operated asset portfolio in the Williston Basin, North Dakota, U.S. and on its associated borrowings.

Slawson wells commence production

In December 2022, the Company announced that it had acquired a working-interest in six recently spudded wells (the "Wells") operated by Slawson Exploration Company ("Slawson"). The working interests acquired range from 11% to 32% and Zephyr's management estimated the Wells to contain 2P reserves, net to Zephyr, of circa 550,000 barrels of oil equivalent.

Following the recent completion of the associated production facilities, the Company is pleased to announce that is has been notified by Slawson that the Wells are scheduled to be brought online today, 1 November 2023.

The Wells will provide a significant near-term production boost and are expected to generate substantial cashflows for the Company which can be reinvested into the development of its project in the Paradox Basin, Utah, U.S. (the "Paradox project") or into additional non-operated investment opportunities.

Updates on the Wells will be provided in the Company's third quarter 2023 Williston Basin update, which is expected to be announced in mid-November 2023, by which time the Company is expected to have around two weeks of production data.

Semi-annual debt redetermination

Zephyr is pleased to announce a successful outcome to the semi-annual redetermination of the Company's revolving credit facility ("RCF"), carried out by the Company's senior lender, North-Dakota based First International Bank and Trust ("FIBT").

The redetermination process confirmed the existing amounts available under the RCF, with the borrowing base remaining at US$13 million, the level at which it is currently drawn.  In addition to the RCF, at 31 October 2023, Zephyr had an additional US$11.7 million of outstanding borrowings on its amortising senior bank term loan with FIBT (versus US$15.8 million at 31 October 2022).

No value was ascribed to the new Slawson production during the redetermination process (due to production not commencing during the FIBT evaluation period), but Zephyr does expect that the newly commenced Slawson production will allow for a significantly enhanced borrowing base once production is established.

Investor Webinar

The Company will be presenting an investor webinar today at 5.30pm (U.K. local time) to provide an update on Zephyr's activities. You can register for the event by using the following link:

https://www.turnerpope.com/register/

Contacts:

Zephyr Energy plc Colin Harrington (CEO) Chris Eadie (CFO)	Tel: [phone]
Allenby Capital Limited - AIM Nominated Adviser Jeremy Porter / Vivek Bhardwaj	Tel: [phone]
Turner Pope Investments - Joint Broker James Pope / Andy Thacker	Tel: [phone]
Panmure Gordon (UK) Limited - Joint Broker John Prior / Hugh Rich / James Sinclair-Ford	Tel: [phone]
Celicourt Communications - Public Relations Mark Antelme / Felicity Winkles / Ali AlQahtani	Tel: [phone]

Qualified Person

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.

Notes to Editors

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led oil and gas company focused on responsible resource development from carbon-neutral operations in the Rocky Mountain region of the United States. The Company's mission is rooted in two core values: to be responsible stewards of its investors' capital, and to be responsible stewards of the environment in which it works.

Zephyr's flagship asset is an operated lease holding of over 46,000 gross acres located in the Paradox Basin, Utah, 25,000 acres of which has been assessed to hold, net to Zephyr, 2P reserves of 2.6 million barrels of oil equivalent ("mmboe"), 2C resources of 34 mmboe and 2U resources 270 mmboe.

In addition to its operated assets, the Company owns working interests in a broad portfolio of non-operated producing wells across the Williston Basin in North Dakota and Montana. Cash flow from the Williston production will be used to fund the planned Paradox Basin development. In addition, the Board will consider further opportunistic value-accretive acquisitions. 

Glossary of Terms

Reserves: Reserves are defined as those quantities of petroleum which are anticipated to be commercially recovered from known accumulations from a given date forward.

1P: proven reserves (both proved developed reserves + proved undeveloped reserves) 

2P: 1P (proven reserves) + probable reserves, hence "proved and probable" 

3P: the sum of 2P (proven reserves + probable reserves) + possible reserves, all 3Ps "proven and probable and possible"

Contingent Resources: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies.

Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status.

 1C: Low estimate of Contingent Resources

 2C: Best estimate of Contingent Resources

 3C: High estimate of Contingent Resources

Prospective Resources: Those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations.

1U: Low estimate of Prospective Resources

 

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