Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) has told investors that its production test at the State 36-2R LNW-CC well, at the Paradox project, in Utah, is currently in the clean-up phase, with operations proceeding conservatively.
The clean-up is taking longer than originally forecast, it noted.
Production testing will get underway shortly after clean-up and Zephyr intends to provide investors with a further update will be provided once the production test has commenced.
Chief executive Colin Harrington described himself as ‘delighted’ with the operations, ahead of the start of production testing.
“Well clean-up operations are proceeding at a measured and conservative pace, and we are prepared to begin testing production volumes once the clean-up phase is complete.
Zephyr also reported that it had successfully completed the redetermination of its revolving credit facility (RCF) with North Dakota-based First International Bank & Trust, reconfirming the existing $15.15 million facility.
It also secured a new $5.6 million senior secured term loan from FIBT.
The new loan, combined with $400,000 of existing cash, was used to fully repay a $6 million bridge loan.
This financial restructuring has reduced the company's overall blended interest rate to 9.5%, down from 10% at the end of 2023, giving an annual interest saving of $579,000.
“The successful RCF redetermination process and the addition of the new term loan, on favourable terms, is a testament to the strength of the Company and its underlying asset base,” Harrington added.
“The reduction in total debt and the lowered blended interest rate on the remaining borrowings will provide additional free cash flow to help fund future growth across the company.
“I would like, once again, to thank FIBT and its dedicated team for their continued strong support of Zephyr.”
Zephyr also today announced an extension of the drilling deadline for its Salt Wash Field commitment well to September 1, 2024, due to ongoing operations at the State 36-2R well.
Discussions with potential funding partners for the Salt Wash project continue, aiming to cover up to 100% of the well costs.
“Much progress has been made since we executed the agreement, both at the field level (with siting and permitting) and in asset-level partnership discussions with other helium industry participants,” Harrington added. “We look forward to progressing those discussions over the coming month."