Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) said it is making progress on its flagship Paradox Basin project in Utah and is close to completing a $7.3 million acquisition of production assets in the Rocky Mountain region, following its recent $10.5 million equity raise.
The company is advancing work on gas infrastructure at the State 36-2R well, where a successful production test was completed in May.
It is preparing for an initial gas processing capacity of between 5 and 10 million cubic feet per day, with plans to expand output over time as additional wells are tied in.
The first production phase is expected to generate up to US$3.2 million in gross monthly revenues from gas and oil sales, with additional income from natural gas liquids not yet included in those figures.
Zephyr plans to export gas via a nearby 16-inch pipeline and is exploring supplementary off-take options, including sales to cryptocurrency miners and compressed natural gas operators.
A new independent reserves report from energy consultancy Sproule is expected in the third quarter, and Zephyr has launched talks with potential partners to fund the next phase of drilling.
CEO Colin Harrington said: "Following the completion of our successful fundraise, we continue to make strong progress across our asset portfolio.
"We look forward to a prolonged period of positive news flow as we complete the proposed acquisition and move towards first production on the Paradox project."
In the update, the company confirmed that due diligence is nearing completion on its proposed purchase of interests in more than 400 producing wells across the Powder River and Denver-Julesburg basins.
The deal includes a mix of operated and non-operated assets and is forecast to add 600,000 barrels of oil equivalent in reserves and net daily production of 400 barrels.
Zephyr said the portfolio offers future drilling opportunities, with 13 new wells already scheduled and a portion of capital costs potentially covered by the company’s $100 million strategic funding facility.
Completion of the acquisition is expected shortly. The company has applied for operator status in Colorado, Wyoming and North Dakota to support the transaction.