Zephyr Energy Regulatory News (ZPHR)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

Zephyr Energy plc

(the "Company" or "Zephyr")

11 April 2023

State 36-2 LNW-CC well update

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) provides an update on operations on the State 36-2 LNW-CC well (the "State 36-2 well" or the "well") at the Company's flagship project in the Paradox Basin, Utah, U.S.

On 19 January 2023 the Company announced that it had intersected a major, highly-pressured, natural fracture network while drilling the well. This resulted in a significant influx of hydrocarbons into the wellbore. The well was subsequently stabilised, and on 20 March 2023 the Company announced that workover and subsequent production test operations were set to commence.

On 7 April 2023, as workover operations were being completed, what appears to be a failure in a safety valve led to a significant well control incident despite multiple attempts to secure the well by the rig crew. As a result, hydrocarbons were released from the well in an uncontrolled manner.

In keeping with safety procedures, all personnel were safely evacuated without injury. All relevant authorities were notified and a specialist well control team (recommended by the Company's insurers) was deployed in order to bring the well under control as quickly as possible. 

The Company can now report that well control efforts have proved successful. While the well pad has been impacted by hydrocarbon residue, efforts are already under way to remove impacted soil as well as to clean the service rig and ancillary equipment. Although it is unclear at this time as to the total volume of gas and condensate released, surface impacts appear to be limited to an immediate area around the pad, and the Company plans to conduct a confirmatory environmental survey in the near term.

Regarding progression and timing of the planned well test, the Company will provide a further update in due course once it has had the opportunity to comprehensively assess the situation and complete any necessary additional well work prior to testing.

Contacts

Qualified Person

Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD, Technical Adviser to the Board of Zephyr Energy plc, who meets the criteria of a qualified person under the AIM Note for Mining and Oil & Gas Companies - June 2009, has reviewed and approved the technical information contained within this announcement.

Notes to Editors

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led oil and gas company focused on responsible resource development from carbon-neutral operations in the Rocky Mountain region of the United States. The Company's mission is rooted in two core values: to be responsible stewards of its investors' capital, and to be responsible stewards of the environment in which it works.

Zephyr's flagship asset is an operated 45,000-acre leaseholding located in the Paradox Basin, Utah, 25,000 acres of which has been assessed to hold, net to Zephyr, 2P reserves of 2.6 million barrels of oil equivalent ("mmboe"), 2C resources of 34 mmboe and 2U resources 240 mmboe.

In addition to its operated assets, the Company owns working interests in a broad portfolio of non-operated producing wells across the Williston Basin in North Dakota and Montana. 

The Williston portfolio currently consists of working-interests in over 200 modern horizontal wells which are expected to provide production of 1,550 - 1,750 barrels of oil equivalent per day, net to Zephyr, in 2023. Cash flow from the Williston production will be used to fund the planned Paradox Basin development. In addition, the Board will consider further opportunistic value-accretive acquisitions.