TIDMZPHR
RNS Number : 2464N
Zephyr Energy PLC
19 January 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.
19 January 2023
Zephyr Energy plc
(the "Company" or "Zephyr")
State 36-2 LNW-CC well update
Substantial hydrocarbons encountered - revised completion
options being evaluated
Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas
company focused on responsible resource development and
carbon-neutral operations, provides an update on operations on the
State 36-2 LNW-CC well ("the well") at the Company's flagship
project in the Paradox Basin, Utah, U.S.
Drilling of the well commenced on 20 November 2022, with the
prime objective to target potential production from the Cane Creek
reservoir (the "reservoir").
Over the past week, having reached the reservoir at a depth of
9,598 feet true vertical depth, the well experienced a significant
influx of hydrocarbons which consequently led to suspension of
drilling operations while the well was stabilised. The influx was
caused by the well intersecting an apparent major natural fracture
network in the reservoir, and the resultant flowing hydrocarbons
are currently being diverted safely at surface through the drilling
rig flare stack whereby they are subsequently flared. Throughout
this period, Zephyr's operations team followed due well control
procedure and stabilised the well without incident.
Zephyr's team is analysing all options for the well's safe
completion, which may include running production casing and
completing the well without drilling the remainder of the planned
lateral. It is also likely that planned hydraulic stimulation will
not be required for the well.
Further announcements will be made after additional analysis has
been completed and once Zephyr selects the appropriate operational
path forward.
Colin Harrington, Zephyr's Chief Executive, said:
"First and foremost, I want to reiterate that the safety of our
team and our contractors is our top priority, and continuing to
maintain a safe operational environment is of paramount importance
to us.
"While we've long planned to artificially stimulate the
reservoir in order to achieve hydrocarbon production from the well,
we've always known that encountering a natural fracture network was
both a drilling risk and a feature that could significantly enhance
the overall potential productivity of the well. As such, all
necessary procedures and precautions were in place in the event the
well encountered an over-pressured natural fracture network.
"Whilst we're in an early phase of assessment, previous wells in
the Paradox Basin which successfully targeted natural fractures
have historically been prolific production wells.
"I'd like to note that over the past two months, our operations
team dealt with an exceedingly challenging drilling environment,
which included mechanical issues and significant weather impacts
from the historic atmospheric river system flowing over and from
California. While delays in isolation can be frustrating, the
result is we now have confirmed hydrocarbon presence, significant
reservoir over-pressure and the presence of a highly permeable
natural fracture network at this location - all very encouraging
signs for an economic and productive well.
"We will keep the market updated as we select the appropriate
operational path forward to complete and produce the well."
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 / Vivek Bhardwaj
Turner Pope Investments - Joint-Broker Tel: +44 (0)20 3657
James Pope / Andy Thacker 0050
Panmure Gordon (UK) Limited - Joint-Broker
John Prior / Hugh Rich / James Sinclair-Ford Tel: +44 (0) 20 7886
/ Harriette Johnson 2500
Celicourt Communications - PR
Mark Antelme / Felicity Winkles
Tel: +44 (0) 20 8434
2643
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.
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 45,000-acre leaseholding
located in the Paradox Basin, Utah, 25,000 acres of which has been
assessed by third party consultants Sproule International to hold,
net to Zephyr, 2P reserves of 2.1 million barrels of oil equivalent
("mmboe"), 2C resources of 27 mmboe and 2U resources 203 mmboe.
Following the successful initial production testing of the recently
drilled and completed State 16-2LN-CC well, Zephyr has planned a
three well drilling program - commencing in 2022 with the State
36-2 LNW-CC well - to further delineate the scale and value of the
project.
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.
The Williston portfolio currently consists of working-interests
in over 200 modern horizontal wells which are expected to provide
production of 1,550 - 1,750 barrels of oil equivalent per day, net
to Zephyr, in 2023. 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.
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