Malcy Comment29 Jan 2021 15:14
Zephyr Energy
Zephyr update the market today with an initial evaluation of the 16-2 well log data which show ‘positive indications of stacked, continuous oil and gas plays with hydrocarbon saturation across a majority of potential reservoirs’.
The company has given substantial detail on the information gleaned so far and detailed the next steps as follows. The drilling and data acquisition operations of the State 16-2 well provided 113 feet of Cane Creek core, as well as 31 sidewall cores from 11 overlying reservoirs. These core samples are currently under evaluation at a laboratory in Houston where detailed analysis is being conducted. The initial results from that analysis will be available in the coming days.
The decision on whether to drill the side track lateral will be made once the Company has full results from all of the data acquired, and the Board currently expects to be able to make that decision by the end of March. In order to assist and expedite activity should the Company decide to proceed with the side track lateral, Zephyr’s team has already commenced the related detailed well design and planning work.
The Company has also contracted to retain the services of the same experienced drilling operations team which successfully completed the vertical portion of the well in record time. In addition, the Company has applied for the necessary permits required to drill the horizontal lateral leg of the well. The State 16-2LN-CC Application to Drill (“APD”), once granted, would allow Zephyr to fully test the commerciality of the Cane Creek reservoir with a goal of achieving near term oil and natural gas production.
There is much more from the statement in the RNS but it is clear already that there are some people who think that this news means that Cane Creek is a gas play, certainly not. I got in touch with Colin Harrington who commented ‘ I just wanted to clarify for you that target is still absolutely oil. Drilling gas, as you well know, is simply evidence of good hydrocarbon charge in zones we crossed during the drill – both gas and oil zones will give off “drill gas” – given the knowledge we have from the surrounding wells and the history of the Cane Creek, it’s oil we are after (although will likely get some gas too)’.
Further to its announcement on 25 January 2021, the Company notes that on 27 January 2021, the Biden Administration released an Executive Order pausing the sale of new oil and natural gas leases on public lands. This halt on new federal leasing does not impact Zephyr’s current leases, as the Company dedicated significant resources over the last eighteen months to solidify all existing federal leases across the 25,353 acres covered by its 3D seismic data.
As importantly, the Executive Order does not impede the issuance of new federal drilling permits. The Company believes the actions dictated in the Executive Order are beneficial for Shareholders, in that substantial undeveloped federal leaseho
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