Malcy's comment25 Aug 2022 19:10
This is very good news from Zephyr on a number of fronts yet has not been recognised by the market with the rise that the shares deserve. The acquisition of this package of acreage at the Paradox Basin crucially fits into the existing federal lease and makes possible drilling the 10,000 foot lateral section of the 36-2LNW-CC well.
It will mean that it will allow Zephyr to complete the well in the manner that they think is most effective, crucially it was the last core piece of acreage under their seismic which they didn’t own and adds resources in an area they think will be more liquids rich.
I hear that they have been trying to pry this acreage off the seller for a while and the other piece of good news is that the cash consideration is relatively small, under the royalty it is payable in a success case and that indicates to me that the seller wants in on any discovery. Finally, the new acreage is close to pre-existing surface infrastructure in the form of a six-inch gas pipeline which traverses the leasehold adding another box tick for me.
One other thing pleases me here and that is the concern from some investors about the company’s alleged exposure to crypto-currency. Whilst the company had, I understand, been considering investing in facilities they have been adamant here that this is not on the cards at present.
Zephyr is on the verge of a big drilling programme on one of the most exciting prospects in the USA and will start with the testing at the State 16-2 LN-CC well, after that the well now enabled by this deal and others should follow. I expect massive value to be achieved and the smart management has of course got the non-operated Williston portfolio to provide cash, a rare achievement in the industry. Smart investors should take note, this stock is massively undervalued and at the moment a pearl amongst swine…
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