Zephyr Energy Plc said the US Bureau of Land Management approved the formation of a new 25,000-acre Federal Unit in its flagship Paradox Basin project in Utah, to be operated by the company.
The unit, to be named the White Sands Federal Unit (WSU), spans all of the company’s existing leases covered by its historic 3D seismic survey. It includes the lease which hosts the State 16-2LN-CC well.
Zephyr described the move as a key milestone in the ongoing development of the Paradox project. As a result, the company said it can focus more optimally on its long-term development plans as this move consolidates more than 20 leases into one overarching land agreement.
"I am absolutely delighted that Zephyr has gained approval for this new Federal Unit,” said chief executive Colin Harrington. “This approval is a direct result of the successful operations completed on the State 16-2LN-CC well to date, and, means that we now have a strong framework from which to hold our lease acreage for the medium and/or long-term.”
The State 16-2LN-CC well - which has been drilled and is undergoing tests - has been designated as a commitment well for the new WSU which means the company will hold the acreage for at least 36 months without further obligations, though Zephyr detailed an active programme is planned.
It expects to drill a second well in 2022 along with a development in recently acquired lease in the historically prolific Cane Creek Field, whilst a further well slated for ‘2022/23’ is expected to be an exploration and appraisal in the shallow Paradox formation.
Harrington added: “Over the past twelve months, the work conducted by Zephyr's technical team and our third-party partners has significantly enhanced our understanding of the Paradox geology.
“Going forward, we will seek to utilise this knowledge, combined with cash flow generated from both our operated and non-operated production assets, to deliver additional wells located on our existing leases.
“If we identify further attractive and accretive acquisition opportunities that fit our stringent acquisition criteria, we'll of course pursue those deals in parallel.”