Zephyr Energy PLC Completion of acquisition of infrastructure assets (2578C)
October 10 2022 - 1:00AM
UK Regulatory
TIDMZPHR
RNS Number : 2578C
Zephyr Energy PLC
10 October 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.
10 October 2022
Zephyr Energy plc
("Zephyr" or the "Company")
Completion of acquisition of infrastructure assets
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
completion of the acquisition of a package of oil and gas assets
located on and around the Company's Paradox project, Utah, U.S.
(the "Paradox project") (the "Acquisition"). Details of the
Acquisition were announced on 14 September 2022.
The Acquisition is comprised of 21 miles of natural gas
gathering lines, the Powerline Road gas processing plant (the
"Plant", which is not currently in operation), rights of way for
additional gathering lines, active permits, five existing wellbores
and additional acreage (the "New Acreage") which is partly
contiguous to the Company's operated White Sands Unit (the
"WSU").
The Acquisition will allow Zephyr to substantially reduce the
capital required to build the necessary gas export infrastructure
for its forecast gas production from the Paradox project. The
estimated replacement cost value of the acquired pipelines and
plant is over US$10.6 million.
The consideration for the Acquisition was US$750,000, which was
satisfied by a payment from Zephyr's existing cash resources, and
as the new owner, Zephyr has assumed responsibility for all future
decommissioning, plugging and abandonment liabilities associated
with the assets (estimated to be approximately US$2.5 million in
today's terms).
Zephyr now operates 45,000 gross acres in the Paradox Basin, the
majority of which the Company holds a 75% or greater working
interest.
A full summary of the assets purchased as part of the
Acquisition was outlined in the Company's announcement on 14
September 2022.
Colin Harrington, Zephyr's Chief Executive, said: "I am
delighted that we have now completed the Acquisition which is
expected to bring multiple commercial benefits to the Company.
"Firstly, it allows us to greatly reduce the capital needed to
build out the gas infrastructure required to sell our produced gas
volumes from the Paradox project into the market. Secondly, it
completes the acquisition of all key acreage covered by the WSU 3D
and thirdly, it provides us with an additional well pad already
tied to the pipeline, which in combination with the newly acquired
acreage will simplify future development drilling. Similarly, the
gas plant, while currently not in use, has excellent potential for
reintroduction to service and can potentially act as a WSU supply
base.
"The Acquisition marks the start of an exciting period for
Zephyr as we kick-off our extended production test on the State
16-2LN-CC well and as we make final preparations for our
forthcoming drilling programme. While supply chain and labour
availability issues continue to exist across the sector, Zephyr's
team is working hard to ensure the necessary pieces are in place in
order to commence drilling shortly after the final federal permit
has been received. Further updates on this will be announced
shortly and will be presented at our Investor Webinar on 25 October
2022, details of which we announced on 28 September 2022."
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
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 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 is planning a three well
drilling program commencing later this year 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 US$35-40
million of revenue, net to Zephyr, in 2022. 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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