Paradox reminder8 Apr 2022 12:11
During the test, the well averaged rate-constrained daily rates of 716 barrels of oil equivalent per day ("boepd"), with rate-constrained highs of 1,083 boepd achieved with limited pressure drawdown.
· Initial simulation modelling suggests possible plateau rates of 2,100 boepd are possible when the well is fully equipped and no longer rate-constrained.
o The test was rate-constrained to minimise flow assurance issues from salt deposition in the well bore. Future flow assurance issues are expected to be mitigated when the well's final completion equipment is installed.
· Gas rates are substantially higher than expected, with modelling suggesting the well is capable of production plateau rates of 10 million square cubic feet of gas per day and 500 boepd of liquids.
· Initial data from the production test suggests the State 16-2LN-CC has a single well potential Estimated Ultimate Recovery ("EUR") of 2.65 million barrels of oil equivalent ("mmboe"), significantly higher than the Company's pre-drill estimates of up to 0.85 mmboe.
· 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.
· 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.