Zephyr Energy PLC has signed a binding agreement to acquire a package of non-operated interests in producing and near-production assets in North Dakota, adding to a similar asset package acquired earlier this year.
This latest deal sees the company pay up to US$36mln for wells currently producing close to 900 barrels of oil equivalent production per day, and a package of wells due online in 2022 to yield around 1,100 boepd. The assets are spread across 22 well pads in the Williston Basin, North Dakota.
It is expected to more than double Zephyr's non-operated production levels and related cashflow over the next 12 months.
“The acquisition will provide Zephyr with significantly more resources with which to accelerate the development of its Paradox Basin project,” said chief executive Colin Harrington.
In total, Zephyr is acquiring 163 currently producing wells - in the month of September they produced at a rate of 871 boepd net - along with 18 wells designated as either ‘proved but not producing’ (PNP) or ‘drilled but uncompleted’ (DUC) and are expected to provide 1,100 boepd net to the company once delivered into production.
Zephyr also gains interests in some 47 locations designated as ‘proved but not developed’ where future drilling is planned.
The transaction sees Zephyr pay US$3mln immediately as a deposit whilst it arranges financing to fund the remainder of the acquisition via structured debt or other methods that would avoid dilution to equity holders.
"The acquisition announced today is another landmark deal for Zephyr and will further transform the company by adding a significant, low-decline, low-risk, high margin production base - with both near and long-term upside exposure into a further 65 wells, 13 of which have already been drilled and are expected to be online soon,” Harrington said.
"The assets are located in the same core Williston Basin field as many of our existing non-operated wells and will be a significant complement to our current non-operated portfolio.”
Harrington added: “Assuming we complete the acquisition by the end of the year, we will end 2021 having outperformed even my most optimistic expectations, having grown a considerable non-operated portfolio during the year and having achieved a huge milestone with first production from our Paradox project, where production testing data from the State 16-2LN-CC well remains highly encouraging.”