Zephyr Energy plc (ZPHR), 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").
The Board of Zephyr is delighted to announce that it plans to spud the State 16-2 well, well ahead of the Company's year-end target date for the commencement of drilling. Over the last week, the Cyclone rig mobilised to the well site where it was subsequently assembled and tested. In addition, all ancillary services and service providers are now on site to support drilling operations.
The primary objectives of the well are to drill a mildly deviated well (8 degree maximum inclination) to an approximate true vertical depth ("TVD") of 9,815 feet, so that the Company can acquire up to 100 feet of continuous core from the Cane Creek reservoir. The Company also plans to run a comprehensive well log suite across the entire Paradox Formation, which includes the primary Cane Creek reservoir target and at least five other potential reservoir zones, in order to gain additional insight into the potential of those secondary targets.
Drilling operations are expected to take 30-40 days from this point forward, and the results from the analysis of the core and logs are expected within three months from the completion of drilling.
Once the drilling of the well is completed and the cores and logs acquired, the well will be temporarily plugged back at 6,450 feet TVD. Zephyr (or a farm-in partner) will then have the opportunity to re-utilise the vertical wellbore as a sidetrack host from which a horizontal appraisal well can be drilled. By re-utilising the vertical portion of the well, the Company estimates the total costs of drilling a future horizontal appraisal well will be reduced from circa US$6 million to circa US$3 million.
The spudding of the State 16-2 well is also the trigger for the Company to draw down the third US$600,000 tranche of the US$2 million grant funds allocated to the project by the U.S Department of Energy and its National Energy Technology Laboratory (the "DOE"). The balance of the DOE funding, a further US$200,000, will be received by Zephyr in one final tranche at the completion of operations.
Colin Harrington, Zephyr's Chief Executive, said "The commencement of drilling the State 16-2 well is a watershed moment for the Company as we begin to unlock the considerable value from our Paradox project.
"There has been significant time, money and effort expended by many people over many years to get to this point - from the original leasing program to the considerable investment in modern 3D seismic to the detailed technical work we've undertaken in conjunction with our world-class project partners. All of this work has been funded by the Company's Shareholders, and - from my vantage point on site at the State 16-2 well - I am delighted to be able to personally witness the tangible results of this historical effort and investment.
"Once again, I would like to thank our partners and contractors, and especially the project team, for their commitment to help Zephyr achieve its ambitious timeline of spudding prior to the end of the year - especially in such difficult conditions. We are now 100% focused on achieving our operational goals in the safest and most effective manner possible. I look forward to keeping the market updated on our progress."