Zephyr Energy Plc told investors its portfolio of non-operated well interests, in the Williston Basin, North Dakota, continues to grow – with new drilling and bolt-on acquisitions.
Over the past two months the company has elected to participate in seven new wells and has agreed to acquire interests in eleven additional wells, most of which are newly drilled and await completion, the company said in a statement.
They are minority stakes, across the eighteen new wells the average is 1.4%, and incrementally add to a production profile that has so far performed successfully for Zephyr.
“Cashflows from Zephyr's non-operated portfolio continue to exceed earlier expectations, which allows us to fund additional accretive drilling investments and maintain a strong non-operated production profile without diverting resources from our planned Paradox Basin drilling programme,” chief executive Colin Harrington said.
"The acquisitions announced today are an excellent incremental addition to our non-operated portfolio, are located in prime acreage and fit nicely alongside the continued infill drilling by Whiting on Zephyr's existing Sanish Field acreage.”
Harrington added: "It remains our intention to fortify our non-operated production through continued drilling participation as well the opportunistic acquisition of quality assets.
“Today's announcement demonstrates Zephyr's continuing capacity to grow our underlying asset value, which will in turn provide more resources for the long-term organic development of our Paradox project.”
The company expects the newly added wells will increase production by around 200 to 250 barrels oil equivalent production per day, though it noted that they will come online and begin contributing at varying points during the second half of 2022.
It is paying some US$301,000 to acquire the well interests and the additional capital spending attached to the extra work amounts to an estimated US$1.8mln. Both the acquisition and capital investments are due to be funded out of existing cash resources.
A more comprehensive update of ongoing production, sales and cash flows is expected in due course.
"We look forward to giving a detailed production update and revised forecasts after second quarter sales figures are received," Harrington said.