Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) CEO Colin Harrington joined Steve Darling from Proactive to provide an important update on the company's State 36-2R LNW-CC well at its flagship Paradox Basin project in Utah during an interview with Proactive. The company has approved an extended lateral drilling operation that could significantly increase production, with estimated recoveries of up to two million barrels of oil equivalent—substantially higher than current production levels.
In a significant development, Zephyr Energy has secured full funding for the extended lateral drilling through a non-binding letter of intent with a U.S.-based industry investor. This arrangement covers 100% of the project costs, without requiring any equity issuance or increasing Zephyr's exposure to its Paradox project. Drilling operations are expected to commence by the end of 2024 or early 2025, depending on rig availability and weather conditions.
Additionally, Harrington shared updates on Zephyr’s financial arrangements with its lender, North Dakota-based First International Bank & Trust. The semi-annual redetermination of the company’s revolving credit facility (RCF) resulted in no change to the existing $15.15 million credit availability. Furthermore, the interest rate on the facility has been reduced from 11% to 10% per annum, bringing down Zephyr’s overall borrowing costs. The company estimates that the reduced rates will lead to a $150,000 reduction in annualized interest expenses.