Zephyr Energy Plc successfully completed itesting of the State 16-2LN-CC well at the Paradox Basin project in Utah, with equipment-constrained rates reaching a peak of 1,083 barrels oil equivalent per day.
A simulated model based on well data indicates potential for the well to yield up to 2,100 boepd, the company added.
The company, in a statement, described the well as a “highly successful appraisal that suggests a large hydrocarbon resource”. Specifically, Zephyr detailed that 23 days of production testing demonstrated the potential to drain a larger hydrocarbon resource and with stronger economics than initially forecast.
"I am incredibly excited about the production test results announced today, and even more so about the significant implications for further drilling and potential full field development of our Paradox project,” said chief executive Colin Harrington.
"The well test data, modelled production volumes and potential EURs [estimated ultimate recoveries] exceed our pre-drill estimates and all indications point to the State 16-2LN-CC as a well which can generate significant shareholder returns.”
Testing indicated that a production well will achieve ‘pay out’ in less than seven months, and is estimated to have a net present value of around US$12.5mln.
Zephyr is now seeking to equip the well and will evaluate export options for the gas and condensate production – including sale to nearby existing infrastructure, or potentially a commercial use case that will involve a cryptocurrency mining operation located at the field, powered by the gas.
Harrington added: "Not only does this successful production test indicate the potential for a highly profitable single well, but we also believe the test will lead to a substantial reduction in development risk across our acreage while allowing for a future systematic development of the project - one with relatively predictable well distribution within both the Cane Creek reservoir as well as across the multiple overlying reservoirs.
Harrington highlighted that Zephyr is excited to have several options to monetise the well’s significant gas potential.
“Given the potential scale of gas volumes, we have already entered into detailed conversations regarding selling produced gas into the nearby pre-existing gas infrastructure.
“Alternatively, we've also been impressed with the return potential related to the co-location of a cryptocurrency mining facility on site with shared economics - and we've seen other forward-looking operators in the Paradox and Williston Basins benefit from such arrangements.”
An advisory board will now assist deliberations in this area of considerable growth, Zephyr added.
"In conclusion, we are delighted to be able to report that we appear to have a large and profitable first well on our Paradox asset - one which has far exceeded our expectations and which has validated the Board's decision to utilise hydraulic stimulation,” Harrington added:
“The board believes that the results add considerable weight to the view that the Paradox asset has the potential to be a project of substantial scale and profitability, one which can be developed to maximise resource efficiency while minimising surface disruptions and offsetting Scope 1 emissions.”