Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) told investors it has decided to proceed with drilling an extended lateral on the State 36-2R well, in the Paradox Basin, Utah.
This was among the anticipated potential courses of action and will see the company significantly increase ultimate recoveries from the well.
Estimates suggest the well could now yield as much as two million barrels of oil equivalent as a result.
It follows a recent successful production test that demonstrated production rates exceeding 2,100 barrels of oil equivalent per day.
"Following the recent successful production tests we have been working tirelessly to determine the optimal way forward for the well and the Paradox project as a whole,” chief executive Colin Harrington said in a statement.
"This work has highlighted that the combination of an extended lateral and acidisation will potentially deliver a large and highly productive well, and demonstrate that we have found the key for the long-term development of the Paradox project.”
The work will potentially be supported by new investment, with Zephyr today also announcing it had signed a non-binding letter of intent with a US-based investor, who is expected to fully fund the estimated $7 million cost of the extension.
Drilling is slated to start before the end of 2024 or in early 2025, depending on rig availability and weather conditions.
Harrington added: “We look forward to closing the funding for the extended lateral in the coming weeks, after which we will launch a process to secure a rig contract and additional equipment.”