Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) CEO Colin Harrington speaks to Proactive about the company’s recent operational progress, including a major reserves upgrade at its Paradox project, development plans, and growth strategy.
Let's take a closer look at what was said.
Proactive: Colin, very good to speak with you today. It's been a busy year so far for Zephyr. Latest update being an updated competent person's report on Paradox. What were some of the highlights?
Colin Harrington: We released the CPR last week, and we wanted to give investors some time to digest. For me, the biggest highlight was the substantial progression from contingent resources to proved and possible reserves. Just take the numbers alone — we had a 25 times increase to 35 million barrels in 2P reserves. That’s projected to generate $400 million in cash flow over time, with a present value today of around $100 million.
It's a substantial increase. We see the same trend in our contingent resources. There’s a huge amount of overlying reservoir — 270 million barrels. This is a strong validation of the work we’ve done, and I think we’re on an upward trajectory, which makes me excited about what comes next.
Proactive: As you said, Colin, a substantial increase and seemingly from many parts of the Paradox. How significant is this?
Colin Harrington: Yeah, it's really significant. First of all, when you compare it to our current market cap — we've just put out 2P reserves valued at $100 million. When you add in the Wilson numbers, that’s another $50 million, bringing it to $150 million of approved asset value. That doesn’t account for any of the upside. If you back out roughly $20 million of debt, we’re trading well under the value of just our approved asset base.
And this only covers about 20,000 acres where we have seismic. So the potential value could be considerably higher as we expand.
Proactive: What's next then for Paradox, as you move from appraisal to development? What should shareholders be looking out for?
Colin Harrington: We're always looking at ways to increase value — what we call HVA: H for horizontal expansion, V for vertical development, and A for acceleration. We've nominated lands around existing acreage to expand horizontally. Vertically, we're planning to test the overlying reservoirs — eight of them — which show similar characteristics and could help move some of the 270 million barrels from 2U to contingent.
For acceleration, the idea is to move from a slow, organically funded drilling programme to something faster, ideally with a partner. If we can do that, we increase today’s project value substantially.
Proactive: What about your non-operated portfolio, Colin?
Colin Harrington: We've integrated our most recent acquisition and are looking closely at ways to increase value. We just did a deal under our private equity partnership — the first one — where some of the wells from the acquisition are being funded by the partner. We expect to do more of those soon. The non-op portfolio is growing, and we’ll see a substantial production increase in the second half of the year because of that deal.
Proactive: Colin, what are your priorities for the rest of the year?
Colin Harrington: Operationally, we're focused on partnerships and getting volumes to market. We're working with Enbridge — the pipeline owner — on commercial agreements, regulatory steps, and engineering to bring the existing wells online.
On the strategic side, we’ve kicked off a process to find a larger partner. This is now a bigger project and could attract other operators or investors. We have a data room open and several parties reviewing it. We’re focused on bringing in the right partner to accelerate cash flows.
Proactive: Any final message to shareholders, Colin?
Colin Harrington: I really appreciate the diligence, time, and patience that everyone has shown. This is a seminal moment for us — we’re now booking serious reserves. There’s still a huge amount of growth we can access. We’ve proved out the play, and now it’s about turning that into cash flow as quickly as we can. Thanks to everyone for staying with us, and we’ll be back soon with more news.
Proactive: Well, I hope you'll keep us posted on your progress. Thank you very much for speaking with us.