The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
What were you expecting to hear micru? Don't think new news is going to be telegraphed to Malcy before an RNS to the market.
The main point is Malcy and CH think the Sproule CPR is a great one and things are progressing nicely.
Thought to repeat-post an extract from Malcy's Blog (he's been correct on Zephyr to date) :
"The combined Paradox Basin and Williston total 2P proved reserves on an NPV-10 basis of over $111m is huge and given that it comes with potential for ‘many multiples of added value of potential upside’ and that the management plan to increase reserves and resources within a year their confidence is high. Indeed the fact that Sproule have given Zephyr the OK to book as proved reserves from the State 16-2 well should confirm that.
Given the time differences I havent yet had an opportunity to speak to Colin so I may add further comments in due course but there is no doubt that this is an exceptional CPR which makes it more surprising that the share price has fallen this morning.
Investors who have followed this story closely know that it is backboned by what I consider to be a very high quality management team who have put together a company based on firstly a plan for the Paradox which worked and then skilful addition of production in order to fund the drilling programme.
The shares at today’s 7p are a steal and I must get Colin in front of a camera shortly…"
ART123, the extract below is from Turner Pope research note published today ( https://mcusercontent.com/d9ebd7c1aa0f3dbc5fab42eca/files/a86286ae-dde5-d834-306c-e7e3978691e1/ZephyrEnergyplc_ResearchUpdate_8April2022__FINAL_BG.01.pdf ) :
"Sproule’s Paradox Competent Persons Report anticipated in coming days
Originally expected to be released in March 2022, Sproule is expected to release its CPR covering the Zephyr’s flagship project
(including overlying reservoirs) in the Paradox Basin, Utah, in the coming days. This is expected to provide significant insight to
the Paradox Project’s upside, potentially with 1 billion boe in place of which between 5% to 15% considered recoverable."
At current prices, if they've left 16-2 flowing, it should be close paying for itself :
"The test indicates a highly successful appraisal of a substantial new gas condensate resource and one which the Company forecasts will deliver strong single well economics. Using updated production forecasts and realised prices of US$3.00 per thousand cubic feet ("mcf") of gas and US$65 per barrel of oil ("boe"), the Company estimates that the well will pay out in under seven months and have a net present value at a ten per cent. discount rate (NPV-10) of US$12.5 million.
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· Zephyr is currently evaluating well equip and export options in order to put the well on full production as soon as practicable. The Company is also appraising a number of potential profitable solutions for selling the substantial volumes of natural gas expected to be produced from the well. These solutions, detailed below, include the sale of gas into nearby existing infrastructure, as well as the potential to co-locate a cryptocurrency mining facility onsite in a similar manner to other nearby operators in the Paradox and Williston Basins."
At current prices, if they've left 16-2 flowing, it should be close paying for itself :
"The test indicates a highly successful appraisal of a substantial new gas condensate resource and one which the Company forecasts will deliver strong single well economics. Using updated production forecasts and realised prices of US$3.00 per thousand cubic feet ("mcf") of gas and US$65 per barrel of oil ("boe"), the Company estimates that the well will pay out in under seven months and have a net present value at a ten per cent. discount rate (NPV-10) of US$12.5 million.
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· Zephyr is currently evaluating well equip and export options in order to put the well on full production as soon as practicable. The Company is also appraising a number of potential profitable solutions for selling the substantial volumes of natural gas expected to be produced from the well. These solutions, detailed below, include the sale of gas into nearby existing infrastructure, as well as the potential to co-locate a cryptocurrency mining facility onsite in a similar manner to other nearby operators in the Paradox and Williston Basins."
The Market Capitalisation figure on LSE is not up to date. The last Total Voting Rights RNS on 30 Nov 2021 stated the company had 1,304,746,001 ordinary shares.
With the new placing shares this will go up to around 1,560,746,001 ordinary shares on February 11 2022. Therefore at today's price of 5.15p, the market capitalisation will be circa £81m.
Debt, if the full senior debt facility is used, will be around $28m+$3m=$31m.
The debt facility and placing, funds the 163 producing well acquisition and also the infrastructure costs to take State 16-2 well to production.
The end of December combined run rate was 1759boepd (including the new acquisition) for Zephyr's non-operated portfolio. At $72 per barrel, the revenue from this is around $3.5m per month or $42m per annum.
All sounds very promising and looking good for the future. Very well managed company IMHO.
From RNS:
"1. First placing shares
A total of approximately £3.325 million, representing the issue of 66,500,000 Placing Shares at the Issue Price (the "First Placing Shares"), has been raised within the Company's existing share allotment authorities which were granted at the Company's annual general meeting held on 30 June 2021 (the "First Placing"). Application has been made for the First Placing Shares to be admitted to trading on AIM and it is expected that their admission to AIM will take place on or around 1 February 2022 ("First Admission"). The issue of the First Placing Shares is conditional, inter alia, on First Admission and the Placing Agreement becoming unconditional in respect of the First Placing Shares and not being terminated in accordance with its terms prior to First Admission. The issue of the First Placing Shares is not conditional on the Second Placing completing."