REG - Zephyr Energy PLC - Q3 2023 results from Williston Basin portfolio

Zephyr EnergyAnnouncement

15/11/2023 07:15

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RNS Number : 4639T  Zephyr Energy PLC  15 November 2023

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.

15 November 2023

Zephyr Energy plc

("Zephyr" or the "Company")

Third Quarter 2023 results from Williston Basin portfolio

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain oil and gas
company focused on responsible resource development from carbon-neutral
operations, is pleased to provide initial third quarter 2023 ("Q3") results
related to hydrocarbon production and cashflows from its non-operated asset
portfolio in the Williston Basin, North Dakota, U.S (the "Williston project").

 Highlights

·    Q3 revenue was US$6.0 million compared to second quarter 2023 ("Q2")
revenues of US$7.1 million (subject to audit). Q3 revenues reflect the
standard decline rates expected from the portfolio.

 

·    Q3 sales volumes averaged 1,043 barrels of oil equivalent per day
("boepd") compared to Q2 sales volumes average of 1,385 boepd, in line with
management expectations.  The average sale price per barrel of oil equivalent
("boe") was US$64.35 per boe in Q3 compared to US$56.64 per boe in Q2 (not
including realised hedging impacts).

 

·    Q3 operating income was US$4.3 million (after taxes, lease operating
expenses, realised hedging impacts, and gathering and marketing fees),
compared to Q2 operating income of US$4.2 million (subject to audit).

 

·    At 30 September 2023, 220 wells in Zephyr's portfolio were available
for production (versus 223 wells at 30 June 2023).

o Net working-interests across the Zephyr portfolio now average 7% per well,
equivalent to 14.7 gross wells in total.

 

·    As announced on 1 November 2023, production has commenced from the
pad site for six wells in which Zephyr acquired a working-interest, and which
are operated by Slawson Exploration Company ("Slawson").  These wells are
expected to lead to a material increase in production rates during the fourth
quarter of 2023 ("Q4") and beyond, and Zephyr intends to update the market on
flow rates after the first thirty days of stabilised production.

Colin Harrington, Chief Executive of Zephyr, said: "Our non-operated assets
continue to deliver strong and robust cash flows, allowing Zephyr to continue
to fund investment and growth across both our operated and non-operated
portfolios.

"Furthermore, I'm pleased that this year's investment in the Slawson wells is
expected to materially boost production rates in the current quarter, and the
resulting cashflows will be utilised to deliver additional growth as we
intensify our operational activity."

Q3 Sales Detail

Zephyr's net sales for Q3 were approximately 93,186 boe.

Q3 sales product mix was 91% crude oil, 3% natural gas, and 6% natural gas
liquids. The table below provides sales volumes, product mix, and average
sales prices for the quarter:

Oil:                                   66,889 bbls at an
average sales price of US$84.69/bbl*

Natural Gas:                     91,778 thousand cubic
feet ("mcf") at an average sales price

of US$2.08 /mcf

Natural Gas Liquids:        13,682 bbls at an average sales price
of US$26.93 per bbl

 *not including hedges

(Note: Q3 volumes and average sales prices figures include field estimates in
respect of September 2023 natural gas and natural gas liquids sales volumes
and are subject to future revision.)

 

In the Williston Basin, cashflow from non-operated interests in newly drilled
wells may lag actual production by up to five months.  Such payments from the
operator accrue on a monthly basis and are paid in full prior to the sixth
month of production, which may result in impacts to quarterly sales volumes
and revenues during times of significant completion activity. Zephyr expects
additional accrued payments from operators during the remainder of 2023 and
into 2024 given the Company's interests in the six Slawson operated wells
(which came online in November of 2023), and the ten Harms East Federal /
Quale Federal wells which are expected to come online in December 2023 or
January 2024.

 

The Company has hedged 67,000 barrels of oil over the next six months at a
weighted-average price of US$82.93 per barrel.  The Company will continue to
evaluate its commodity price risk management strategy on a regular basis.

Contacts

 Zephyr Energy plc                                  Tel: +44 (0)20 7225 4590

 Colin Harrington (CEO)

 Chris Eadie (CFO)

 Allenby Capital Limited - AIM Nominated Adviser    Tel: +44 (0)20 3328 5656

 Jeremy Porter / Vivek Bhardwaj

 Turner Pope Investments - Joint-Broker             Tel: +44 (0)20 3657 0050

 James Pope / Andy Thacker

  Panmure Gordon (UK) Limited - Joint-Broker       Tel: +44 (0) 20 7886 2500

 John Prior / Hugh Rich / James Sinclair-Ford

 Celicourt Communications - PR

 Mark Antelme / Felicity Winkles / Ali AlQahtani   Tel: +44 (0) 20 8434 2643

 

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 46,000-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 270 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.  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.

 

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