Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) chair Rick Grant describes 2021, in today’s financial results statement, as “a time of substantial progress in the ongoing transformation of Zephyr”.
“During this period the group evolved from a single project exploration company into a self-sustaining, cash-generating, oil-producing group with a balanced portfolio of operated and non-operated assets located in two established oil producing basins in the US,” Grant said.
"The 2022 fiscal year promises to be an equally exciting time for our shareholders.”
Grant highlights that Zephyr is set to bring the State 16-2LN-CC well, part of the Paradox project in Utah, into commercial production and will also soon kick off a three well drill programme.
“A successful drilling programme will see the group further defining the Paradox project and materially increasing its reserve base in the project, and expected to deliver significant cashflows.
“This activity will be fully funded by cashflows from our non-operated asset portfolio in the Williston Basin, North Dakota, US, which was formed during the period under review through a number of discrete acquisitions with the main purpose of funding our proposed activity on the Paradox project.
Zephyr generated some US$6mln of revenue from the portfolio of non-operated interests in the Dakota production wells, for a gross profit of around US$3.3mln for the twelve months ended December 31 meanwhile net profit was reported at US$800,000.
The AIM-quoted company said it had US$11.9mln of cash and equivalents at the end of May.
Operationally, the ‘first flowing hydrocarbons’ from the company's State 16-2 LN-CC well was said to be the key milestone achievement for the period.
Albeit the period also brought a new competent persons report by Sproule which indicated that the first Paradox well could merely be the tip of the iceberg – it represented some 2.1mln barrels of oil equivalent reserves and 28mln barrels of contingent resources, whereas the broader project was estimated to host some 203mln barrels of prospective resources.
An upcoming high-impact three-well drill programme will be the next important test of this prospectivity.
Elsewhere, the company in recent weeks announced the enhancement of the non-operated well portfolio to further add production revenues.
The portfolio currently comprises 219 wells, most of which are in production, and are forecast to generate some US$35mln to US$40mln of revenue net to Zephyr in 2022.
In Q1 2022, they generated US$11.5mln of revenue which translated to US$9.8mln of operating cashflow for Zephyr and, it said, demonstrated its ability to self-finance the operational activity across its portfolio.