Award of Drilling Contract to Cyclone Drilling Inc.

Source: www.gulfoilandgas.com 12/3/2020, Location: North America

Zephyr Energy plc, the Rocky Mountain oil and gas company focused on responsible resource development, provides an update on its project in the Paradox Basin, Utah, U.S. (the "Paradox project"), where the Company is preparing to spud the 'dual-use' State 16-2 well before the end of the year.

The Company is pleased to announce it has signed a drilling contract with Cyclone Drilling Inc. ("Cyclone"). This follows a competitive selection process by Zephyr's team, involving extensive technical and commercial evaluation across multiple potential drilling contractors. Cyclone, based in Gillette, Wyoming, is one of the leading providers of rigs in the Rocky Mountain region (the "Rockies"). Cyclone's fleet of modern rigs was purpose-built for operating in the remote locations and rugged environment of the Rockies, and they hold one of the best drilling safety records in the U.S. oil and gas industry. Additionally, Cyclone has recent experience drilling similar stratigraphic wells, including a 10,200-foot-deep stratigraphic well drilled in 2019 which was also part-funded by the U.S. Department of Energy (the "DOE").

For the State 16-2 well, the specific Cyclone rig under contract is Cyclone Rig #34. This rig is currently active on a drilling project in Wyoming and will be mobilising to the site of the State 16-2 well in Utah in the coming days, ensuring Zephyr remains on track for spudding the well prior to the end of this year.

Additionally, the signing of the State 16-2 drilling contract is a trigger for the Company to draw down the second US$600,000 tranche of the US$2 million grant funds allocated by the DOE for the drilling of the well. The balance of the DOE funding, a further US$800,000, will be received by Zephyr in two further tranches once additional routine well development milestones are met.

Colin Harrington, Zephyr's Chief Executive, said "We are delighted to be partnering with Cyclone to drill the State 16-2 well. Cyclone has a 40-year history as a respected contractor with a safe and successful track record of drilling wells, including on other DOE-funded projects. We are confident in their ability to help us deliver this well in an efficient and responsible way.

"Awarding this contract is an important milestone in our plan to spud the State 16-2 well prior to the end of the year, and we look forward to working with the Cyclone team.

"With the well now fully permitted, the site and road work complete and the rig contract signed, we are ready to commence drilling in the very near term."


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