Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) has confirmed the completion of its acquisition of oil and gas assets in Utah, in the Paradox basin, enhancing its position in the project.
The acquired assets include 21 miles of natural gas gathering lines, the Powerline Road gas processing plant, five existing well bores and additional acreage (partly contiguous to the company's White Sands Unit, WSU).
It allows Zephyr to substantially reduce capital requirements at the Paradox project, to develop necessary gas export infrastructure for forecast gas production.
"I am delighted that we have now completed the acquisition which is expected to bring multiple commercial benefits to the company,” chief executive Colin Harrington said in a statement.
"Firstly, it allows us to greatly reduce the capital needed to build out the gas infrastructure required to sell our produced gas volumes from the Paradox project into the market.
“Secondly, it completes the acquisition of all key acreage covered by the WSU 3D and thirdly, it provides us with an additional well pad already tied to the pipeline, which in combination with the newly acquired acreage will simplify future development drilling.
“Similarly, the gas plant, while currently not in use, has excellent potential for reintroduction to service and can potentially act as a WSU supply base.”
Harrington highlighted that “the acquisition marks the start of an exciting period for Zephyr”, pointing to the upcoming extended production test on the State 16-2LN-CC well and a new well drilling programme.
The company paid US$750,000 in cash for the newly acquired assets, which have a replacement value of US$10.6mln. It also assumes responsibility for all future decommissioning, plugging and abandonment liabilities associated with the assets (presently estimated at US$2.5mln).
Zephyr now operates some 45,000 gross acres in the Paradox basin, the majority of which is held with at least 75% working interest.