Positive :10 Jul 2023 11:34
Zephyr Energy plc
TPI is pleased to provide its latest research note on Zephyr Energy plc (ZPHR.L).
Zephyr has released an update covering various operations at its flagship Paradox Project in the Paradox Basin, Utah (the ‘Paradox project’). Significantly, this confirms satisfactory progress continues to be made with respect to the State 36-2 LNW-CC well, with continuing expectation that it will deliver a production test in the near-term. The Board also notes that payment of initial invoices submitted to the Group’s insurer with respect to last April’s well control incident, amounting to c.US$0.8m have been received, with additional claims now being submitted on a regular basis. A further positive is that Zephyr’s recent application for a portion of the additional leased acreage it acquired on 25 August 2022 to be included within a larger Expansion/Contraction amendment of the White Sands Unit (the ‘WSU’) has now been granted, resulting in an amended federal unit with an upgraded and manageable land position. Finally, it also states that assessment is now underway on the Group’s recently acquired Greentown wells, as part of which its operations team recently recommenced production from the Federal 28-11 well in order to understand its potential contribution to overall field production when ongoing infrastructure work has been completed. Taken all together, today’s news further reinforces confidence that Zephyr’s management can secure the full potential of the Paradox project for shareholders. While it is true that the State 36-2’s workover has been a little slower than initially expected, the goal remains for both it and the State 16-2 LN-CC well to be brought into full production before the year end. In the meantime, the 36-2’s pressures and hydrocarbon potential remain substantial. Given the Group’s commitment to continue accelerating the Paradox development and the large potential scale of the project, various alternatives, including partnership, joint-venture (‘JV’) and farm-in structures, will be explored in the coming months.
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~~~ A positive endorsement ~ IMO .