The next focusIR Investor Webinar takes places on 14th May with guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Reposting email to company last week with some rough calculations:
"Hi there
I am a shareholder and investor in Zephyr Energy.
If you don't mind my asking, I have a question relating to today's RNS about the proposed Crypto Facility. The RNS suggests the cost of $2m for the facility will have a ROI of 2 years. My back of an envelope calculations indicate an income of $2,739 per day would be required to cover the $2m cost over 2 years. In turn this ,means around 60boepd, with a natural gas price at $9 per mcf, would give sufficient income to generate around $3000 per day to cover the cost of the Crypto Facility in 2 years.
My question is relating to the production rate of the 16-2 well. Is the well anticipated to produce just 60boepd (approx)? If not what is the expected flow rate for the well estimated at?
Thank you in advance.
Best regards"
Note, the estimate is based on 1boepd = 6000 cu ft of gas (6 mcf). So 6mcf x $9 x 60boepd = $3240 per day.
In contradiction to what I posted a couple of days ago, I sent the email below to the company but have had no reply. (Perhaps because my estimates are way off the mark and it's not worth replying to such a novice). Anyway posting on here to see what people on here think of the numbers:
"Hi there
I am a shareholder and investor in Zephyr Energy.
If you don't mind my asking, I have a question relating to today's RNS about the proposed Crypto Facility. The RNS suggests the cost of $2m for the facility will have a ROI of 2 years. My back of an envelope calculations indicate an income of $2,739 per day would be required to cover the $2m cost over 2 years. In turn this ,means around 60boepd, with a natural gas price at $9 per mcf, would give sufficient income to generate around $3000 per day to cover the cost of the Crypto Facility in 2 years.
My question is relating to the production rate of the 16-2 well. Is the well anticipated to produce just 60boepd (approx)? If not what is the expected flow rate for the well estimated at?
Thank you in advance.
Best regards"
Note, the estimate is based on 1boepd = 6000 cu ft of gas (6 mcf). So 6mcf x $9 x 60boepd = $3240 per day.
Extract from yesterday's RNS:
Paradox Basin three well drilling programme update
Zephyr remains firmly on track to commence its planned three well drilling programme in the second half of 2022. Recent development milestones include:
o All well design work has been finalised
o All permit applications have been filed
o Stimulation optimisation is well advanced
o The vendor selection process continues, with the rig contract award a key short-term objective
o Partner outreach, both with potential upstream and midstream counterparties, is well underway.
From:
https://thelawreviews.co.uk/title/the-energy-mergers-and-acquisitions-review/usa
The oil and gas industry is composed of four separate but related sectors:
a) upstream (companies engaged in the business of extracting hydrocarbons);
b) midstream (companies engaged in the business of transporting hydrocarbons);
c) services (companies engaged in the business of assisting upstream and midstream companies with the extraction and transportation of hydrocarbons); and
d) downstream (companies engaged in the business of refining petroleum after extraction).
From:
https://www.share-talk.com/malcys-blog-oil-price-zephyr-energy-challenger-energy-group-savannah-energy-predator-oil-gas/#gs.2g172g
"This looks like another very smart move by Zephyr management who continue to exhibit a strong lead in all aspects of portfolio management. In this case it is in order to maximise the income from the Paradox Basin in the short and longer term and in ways that most companies have previously thought of.
Zephyr is another stock that I look at that has recently significantly underperformed without any particular reason, indeed with $120 oil and an exciting drilling programme in H2 the shares are unbelievably cheap. On any timescale I think that Zephyr are as attractive as any in the sector and like others recently mentioned here will considerably reward investment."
It'll be good to get production started on 16-2., then see where we get to.
All these conjecture-based calculations are pretty pointless IMHO. Let's get producing, see what's delivered and how much it's worth.
This is a very comprehensive update from the company.
The Paradox is still a high risk play, as can be gleaned from the detail of this RNS, however the rewards could be huge.
The fact well 16-2 testing back in December produced 700bopd is very encouraging. Also, the company obviously believe a $2m spend for the crypto infrastructure with a ROI of 2 years is worth it.
The three well drilling plans are on schedule and rig contracts to be awarded soon.
We'll soon know how much Paradox will give.
....but as there has been no new update to the market regarding State 16-2 or Paradox, I'm not expecting anything of any great significance from today's webinar. It will probably be a rehash of information already in the public domain.
From the 8 December 2021 RNS :
"... We aim to have a path forward by the end of the first quarter 2022 and look forward to providing updates as progress is made and the well is equipped."
Should be close to getting an update.
MEM:
"Disappointed 26 Apr 2022 07:14
Expect a sell off"
As much as you were correct regarding the SP, in a matter of a few days you've swung from disappointed to super optimistic. The company hasn't changed in those few days. Just calling you out as a trader (I have nothing against traders) with an agenda which suits your trading pattern rather than a genuine investor.