A City broker has lauded the investment strategy of Zephyr Energy PLC, after two material announcements in as many days.
On Tuesday the oiler said it was ready to put its latest well in Utah’s Paradox Basin into production.
It followed this with an update on the financial performance of its non-operated assets in North Dakota’s Williston Basin, which last year generated a better-than-expected US$42.9mln.
Analysts at SP Angel said in a note to clients: “Zephyr’s acquisition and investment in a non-operated portfolio of low-risk, high-margin producing wells in the Williston Basin is generating strong cash flows, which the company is reinvesting at its flagship Paradox Basin project in Utah.”
“The company has entered a period of material news flow, with production tests expected shortly from the State 36-2 and State 16-2 wells, as it aims to unlock the resource potential of its 45,000-acre position in the Paradox Basin.”
The shares were changing hands for 6.08p, up 3%, in early afternoon trade.
Zephyr Energy's key holding is a 45,000-acre lease in the Paradox Basin, Utah, with 2P reserves of 2.6mln barrels of oil equivalent.
The company also owns a portfolio of non-operated producing wells in the Williston Basin in North Dakota and Montana, expected to churn out 1,550-1,750 barrels of oil equivalent per day in 2023.
The cash generated from oil sales will fund the development of the Paradox Basin and potential acquisitions.