Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) told investors it is preparing for a further phase of drilling to extend the State 36-2R LNW-CC well at its flagship Paradox Basin project in Utah.
Chief executive Colin Harrington said it will open up State 36-2R as “a large and highly productive” well.
It follows a successful testing programme at Paradox earlier this year.
The necessary regulatory approvals have been obtained and well planning has been completed. Equipment procurement and the selection of service companies are underway, with drilling expected to commence in the first quarter of 2025.
With the extension, Zephyr aims to reach an additional 5,500 feet in the Cane Creek reservoir from the existing 130-foot horizontal section.
The project will cost an estimated US$7 million and the work with significantly open up the addressable reservoir.
In terms of financing, Zephyr has confirmed that the funding process for the programme is on track, supported by an experienced US-based industry investor.
Zephyr anticipates finalizing the binding documentation in the coming weeks.
"We are excited to be making material progress towards recommencing drilling operations on the well, and we believe that the extended lateral, combined with an effective acidisation completion, will deliver a large and highly productive well,” Harrington said in a statement.
"In parallel with our ongoing operational work, the proposed funding is progressing well and we expect to complete binding documentation in the coming weeks.
“The proposed funding will fully fund the next phase of our operational activity, as outlined above, without any equity dilution at the company level.”
Zephyr also today noted the expansion of its advisory team, appointing Canaccord Genuity (TSX:CF, LSE:CF) Limited as joint broker, joining Turner Pope Investments, which also remains Zephyr’s joint broker.