Zephyr Energy you may know as the company which was once called Rose Petroleum. The non-core assets have been divested and only Paradox Basin in Utah's Rocky Mountains remains from the old company, and #ZPHR is essentially under new ownership with a new management team and strategy.
London South spoke to Colin Harrington, CEO at Zephyr Energy, who also owns a significant tranche of shares on 19.10.2020. "My partners and I are the major shareholders in this company, and we are doing the hard work to make sure other investors are positioned alongside of us" explained Colin. "There is significant upside, there are many multiples to be made if we can do this right."
"We've got 4 or 5 new board members, a really good independent board, 2 Non Exec Directors with a lot of AIM turnaround experience and Rick Grant as Chairman. He had an incredibly successful career and latterly ran Suez, one of the largest LNG businesses in the world.
"We've restructured the Paradox Basin and spent a lot of time trying to figure out how best to take to take it forward in the most beneficial way to our shareholders. Including a vertical and horizontal well, it would be $6M to drill, which was too much for us. "What we've managed to do with our Government partners is derisk the project significantly and accelerate the timeline. We have a $2M research grant backed by the Federal Government and administered by the University of Utah which has a world-class geo-science department. What it does for them is to increase the visibility of this basin - which is a naturally fractured reservoir and does not need fracking. In this oil-price environment this could be incredibly attractive.
"We'll get 90 feet of continuous core from Cane Creek Reservoir which historically has been prolific, and we'll also be getting logs across a number of other zones as well. With our good quality 3D seismic, and the logs and cores that we will get from the vertical well, we'll have a really good understanding of how best to tap into the Cane Creek here.
"The estimates are 9.9 million bopd equivalent on the Cane Creek alone, if you translate that to an NPV basis that's worth about $50M at today's oil price. That alone for a 2M market cap company we think is very significant. The five additional areas just above Cane Creek mean we hope to see a significant upsize of our resource here.
"The cost of drilling has come down almost 30% in the last few months and we've seen a massive reduction in service costs. Break even is much lower than the current oil price and we see good returns at the $40 to $50 dollar oil price."