RE: MM21 Jan 2023 10:29
This one?
Zephyr yesterday provided an operational update on its State 36-2 LNW-CC well (‘the Well’) at the Group’s flagship project in the Paradox Basin, Utah, USA, noting that substantial hydrocarbon flow had been encountered by intersecting an apparent major natural fracture network in the reservoir. As a result, the Board is now evaluating various revised completion options. These may include running production casing and completing the Well without drilling the remainder of the planned lateral, given the significant apparent volumes and that the hydraulic stimulation originally proposed is now unlikely to be required. While assessments remain at an early phase, this suggests potential improvement to Well economics via reduced completion costs, noting that historic Paradox wells that successfully intersect natural fractures have been prolific, enjoying high immediate production rates along with substantial ultimate oil recoveries. Given that the Group’s recently acquired gas infrastructure is seen accepting sales volumes at some point in 2H 2023, while the current drilling programme remains amply funded through c.US$18.5m of liquidity available as of 10 Nov 2022, projected medium term cash flows still appear sufficient to support exploitation of its existing inventory, which includes 2U potential of over 200 million boe across the Paradox. This of course remains key to Zephyr closing in on its ultimate goal of unlocking the next reat unconventional onshore resource play in the US.