Zephyr Energy PLC said it acquired an additional 1,920 acres in the Paradox Basin, Utah, that it expects has immediate development potential.
Zephyr's technical team estimates the acquisition will add more than 4 million barrels of oil equivalent of additional 2C net resources to its flagship asset.
The Rocky Mountain oil and gas company said the new acreage is adjacent to its operated White Sands Unit (WSU), on which the planned State 36-2 LNW-CC and 36-3 LN-C9 well pad is located.
It has the potential to be added to the WSU acreage subject to approval from the US Bureau of Land Management (BLM).
The lateral for the proposed State 36-2 LNW-CC can be fully completed across a 10,000-foot lateral length, subject to final regulatory approval, by adding the new acreage. This is expected to further enhance the well's forecast economics and estimated ultimate recovery, said the AIM-traded company.
“This prime acreage, already located under Zephyr's 3D seismic, adds valuable locations and resources, and just as importantly, it secures an immediate win by providing the opportunity to drill and complete a longer and more effective delineation/development well,” said chief executive Colin Harrington.
The new acreage is close to pre-existing surface infrastructure in the form of a six-inch gas pipeline which traverses the leasehold.
Zephyr recently amended its BLM application for a drilling permit for the State 36-2 LNW-CC well to reflect the enhanced completion design and expects to receive approval shortly.
"With the new acreage secured, we plan to spud the State 36-2 LNW-CC as soon as final permits are received and a rig contract is secured,” said Harrington.
“In the meantime, we are focused on recommencing production testing at the State 16-2 LN-CC, for which operational preparations are largely complete and long lead time items are in process.”
Zephyr acquired the new acreage for an undisclosed sum from its existing cash resources. The unnamed seller will be entitled to receive royalty payments if drilling is successful.
Zephyr also agreed to try to drill at least one well across the new acreage before December 2023, a requirement it expects to meet with the State 36-2 LNW-CC well.
It will operate a total of 39,473 gross acres in the Paradox Basin, mainly through a 75% working interest, as a result of the acquisition.