Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development and carbon-neutral operations, provides an update on its flagship project in the Paradox Basin, Utah (the "Paradox project").
Commencement of drilling
The Board of Zephyr is delighted to announce the commencement of drilling operations on the State 16-2LN-CC appraisal well, ahead of the Company's month-end target date.
Over the last week, Cyclone Drilling Inc.'s Rig #34 mobilised to the well site where it was subsequently assembled and tested. In addition, all necessary ancillary service providers arrived on site to support drilling operations.
Drilling is expected to take approximately 20 days and further updates will be provided in due course.
Non-dilutive funding for additional data acquisition
The primary objective of the State 16-2LN-CC drilling operation is to drill a safe, responsible and successful well to test the natural fracture play in the Cane Creek reservoir - with a goal to deliver the Company's first production from the Paradox project. A second key objective is to gather additional data from the eight high-graded reservoirs overlying the Cane Creek to help determine the potential of these reservoirs, should operational conditions allow.
Over the last year, Zephyr has worked closely with a project team led by the University of Utah's Energy & Geoscience Institute ("EGI"), in collaboration with the Utah Geological Survey (the "UGS") and other Utah-based partners (together, the "Project Team"). The Project Team's analysis of the Paradox Basin is sponsored by the U.S. Department of Energy and its National Energy Technology Laboratory (the "DOE"), and in 2020 the Project Team provided $2 million to assist with drilling and data acquisition costs related to Zephyr's State 16-2 "dual-use" well which was completed in January 2021.
Today, Zephyr is pleased to announce that EGI has agreed to fund additional data acquisition efforts, specifically including the funding of Dipole Sonic logs to be deployed during the drilling operations of the State 16-2LN-CC well. This additional funding and continued collaboration will be useful to help both the Company and the Project Team further define the potential of the overlying reservoirs.
Colin Harrington, Zephyr's Chief Executive, said: "The commencement of drilling of the State 16-2LN-CC well is a pivotal moment in our efforts to unlock value from the Paradox project. I'd like to thank our many partners and contractors who worked tirelessly to help meet our ambitious timeline and pre-drill objectives. The focus now turns to drilling and operating in the safest, most effective manner possible - and I know this commitment is shared by everybody on the drill site.
"While our primary goal is to seek production from natural fractures across the Cane Creek reservoir, we also plan to use the drilling operation to acquire important additional data from our eight high-graded overlying reservoir targets.
"Additional data is a critical component in the effort to define and develop a viable pathway to the considerable potential upside which we believe exists in our overlying reservoirs. The same data is useful to the EGI Project Team's efforts to improve the understanding and production of the larger emerging Paradox Basin play. We are extremely grateful for our collaboration with the Project Team and look forward to a continuation of these efforts going forward.
"We will continue to keep our stakeholders informed as operations progress over the coming weeks, and - as always - we will adhere to our core mission to be responsible stewards of our investors' capital and responsible stewards of the environment in which we work."