Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) told investors that it fully expects to deliver a production test of the State 36-2 LNW-CC well at the Paradox project in Utah in the near-term.
The company today provided an update on the well which suffered a “well control incident” earlier this year amid higher-than-anticipated well pressures which triggered equipment failures and damaged production tubing.
In a statement, Zephyr said that it continues a methodical, patient and safe approach to removing stuck tubing from the well and to re-prepare it for a test of the “substantial apparent deliverability of the well and reservoir”.
Once tubing work is complete, the company plans that a final cement squeeze will be performed, followed by the perforation of the casing across the reservoir interval, prior to production testing the well.
"Work on the State 36-2 well has progressed safely, and the team continues to push forward while maintaining control of the well and ensuring the safety of those working on it,” said chief executive Colin Harrington.
“I would like to once again thank our team on the ground for their ongoing efforts in keeping the well stable and safe.”
Zephyr, meanwhile, also noted the receipt of a first payment from its well insurance policy which amounts to around US$800,000, offsetting certain costs of the delay, and further invoices are with the insurer.
Separately, the company noted that a portion of additional acreage to extend the Paradox project has now been approved by the U.S. Bureau of Land Management – of this acreage some 5,000 acres have been ‘high graded’ through Zephyr’s analysis whilst another 5,395 acres are deemed less suitable for development and are being relinquished by the company.
"In relation to the upgraded acreage position in the WSU, we continue to work closely with the BLM and other regulatory authorities to perfect the federal unit by maximising its upside potential and minimising environmental impact in areas not deemed as prospective,” Harrington said.
The Zephyr chief added: "Finally, I would like to note the work being done on the Paradox project away from the 36-2 well, with recent operations including the restart of the Federal 28-11 well where hydrocarbons are now flowing.
“While this well will not have the same volumetric potential as the State 16-2 LN-CC well or the State 36-2 well, we do believe it will have positive economic impact once our infrastructure buildout has been completed. Two other existing wells in the Zephyr portfolio have also had notable prior shows of hydrocarbons and offer potential future locations and/or workover opportunities.
“We look forward to updating investors on continued progress in the coming weeks during this pivotal time for the Paradox project."