Turner Pope Research Note, 13 May 2025
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Zephyr has entered into a strategic agreement (the ‘Agreement’) with a highly experienced US-based energy-sector institutional investor (the ‘Investor’) to access up to US$100m to fund growth in the Group’s non- operated asset portfolio in the Williston Basin across North Dakota and Montana (the ‘Transaction’). The Agreement aims to combine Zephyr’s management, regional expertise and deal sourcing capabilities with the financial strength of a blue-chip private equity investor; the goal being to grow production and net asset value on a highly accretive basis. In recent years, this type of asset-level institutional financing has emerged as an efficient means for US-based oil and gas operators to deliver growth without issuing equity or taking on additional debt-based liabilities. The Agreement, which is for an initial term of six months, positions the Group to capitalise on a robust pipeline of identified opportunities, including a number which already exist within the Group’s current and expected portfolio. On a shared risk basis, Zephyr expects the Transaction to accelerate its non-operated growth, enhance consolidated cash flow and drive attractive returns. Coming less than a week after confirming quite exceptional initial results from its flagship State 36-2 LNW-CC-R well in the under-explored Paradox Basin, Utah, today’s news underlines Zephyr’s ambition to utilise its team’s relationships and expertise to build a strong cash flow foundation which will ultimately be used to develop the substantial apparent upside at the Paradox project. We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to Zephyr Energy plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination. The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient. |