Zephyr Energy PLC agreed further investments in the Williston Basin, North Dakota and announced plans to increase its working interests through a deal with Purified Resource Partners (PRP).
The Rocky Mountain oil and gas company already holds minority interests in seven non-operated production wells in the Williston Basin and has expanded the portfolio through two additional acquisitions. In total, it gains stakes in 15 additional wells which by the end of March 2022 are expected to yield around 200 to 300 barrels of oil per day to Zephyr.
Through a new joint venture with Purified Resource Partners it intends to identify and carry-out more acquisitions, to add further non-operated well interests. To date, Zephyr has been a partner with PRP in each of its four acquisitions in the Williston.
“I'm delighted to report continued progress and significant growth on the non-operated side of our business,” said chief executive Colin Harrington. “We have now closed five separate acquisitions this year - and these deals created a balanced asset base of interests in 22 producing or near-term production wells, provided exposure to additional non-operated drilling expected in 2022, added significant new operated acreage in the Paradox Basin, and tie together nicely with the State 16-2LN-CC well which is lined up for near-term completion and production testing.”
"The acquisitions announced today are in prime locations, and the majority of the wells are operated by Whiting, a leading Williston Basin producer already serving as operator of a number of our existing wells.”
Harrington added: “I've known the Purified principals for over two decades, and have watched as they successfully assembled a top-notch portfolio of Williston Basin non-operated interests for their former sponsor. Over the last year, we've worked together even more closely to successfully close our initial Williston Basin acquisitions, and I look forward to continued collaboration and co-investment from their team.”
Production update
Zephyr took the opportunity to update investors on its production operations which, in August, yielded some 509 barrels of oil per day from seven wells.
Four wells are still being brought into full production, and volumes are expected to rise over the next quarter.
New assets
The first of the two new deals sees Zephyr acquire an average working interest of 5.6% across four drilled but not yet completed new wells, operated by Prima Exploration.
In the other, Zephyr is to pick up an average stake of 3.1% in eleven wells – of which eleven are drilled but uncompleted – and these are operated by Whiting Petroleum (NYSE:WLL).
Zephyr believes all the newly acquired wells will deliver rapid payback, within two years, and will yield high internal rates of return. It expects ultimate recoveries of around 194,000 barrels of oil from its interests in these wells.
The AIM-quoted company will pay a total of US$968,000 for the acquisitions, and, expects to invest US$3.9mln over the rest of 2021 and 2022 for the drilling and completion of the 15 newly added wells.
It is to cover the acquisition and capital costs from existing cash resources and revenues from production.