Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) has raised £3.15mln of new capital through a share placing and subscription, with the proceeds earmarked for operations at its flagship project in the Paradox basin, in Utah.
It will pay for the upcoming production test from the State 36-2 LNW-CC well along with future infrastructure and gas processing facilities.
The company, in a statement, told investors that preparations on site continue for the well test, with progress coming at a “methodical and expected” pace, and, the test is due to get underway before the end of June.
Safety and control will though determine the speed at which the team moves, it added, and evidence of high pressure and hydrocarbons in the well remain substantial.
Zephyr chief executive Colin Harrington noted that the management team looked at multiple financing alternatives but decided, in light of market conditions, that an equity raise with circa 5% dilution was the optimal choice.
The placing sees some 90mln new Zephyr shares sold to investors priced at 3.5p each, to raise £3.15mln in the placing plus £120,000 from the share subscription.
“The funds raised will enable the company to continue delivering on its key strategic objective of bringing the Paradox project into commercial production over the coming months, while bridging to the significant revenues expected from both the Paradox project and the company's Williston assets,” Harrington said.
He added: "The proceeds raised ensure we remain in a strong position to further advance the Paradox project development, and the board believes that the minimal dilution to shareholders will be outweighed by continued progress and positive newsflow expected over the coming months, both with regards to the upcoming well test and with the cash generative Slawson wells coming on stream by Q4 this year.”