Turner Pope Research Note, 7 May 2025
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| Zephyr has reported quite exceptional initial results from its flagship State 36-2 LNW-CC-R well (the ‘Well’) in the under-explored Paradox Basin, Utah. The single well produced a peak rate of 2,848 barrels of oil equivalent per day (‘boepd’), in the form of 11.9 million standard cubic feet per day (‘mmscfd’)and 856 barrels of oil per day (‘bopd) . Achieved on a 18/64-inch choke setting with no material drop in bottom hole pressure, this suggests Zephyr has potentially delivered one of the more productive one-mile lateral wells that the onshore US has seen in recent years. Moreover, well test data gathered from the 5,000-foot lateral suggests occurrence of hydrocarbon inflows across its length, indicating potential for a much larger reservoir volume to be drained compared with the initial completed interval of 130 feet in the previous production test which peaked at 2,100 boepd (as announced back on 6 September 2024). Significantly, no fracture stimulation was performed to achieve this excellent well deliverability result, although future stimulation could offer additional upside potential for both this well and for the broader Paradox project development. The early data suggests significant commercial opportunity for Zephyr, which is expected to be confirmed in due course through further interpretation and analysis, including the generation of updated estimated ultimate recovery forecasts. Given such highly positive observations, the Group’s ongoing discussions with US-based industry and asset-level financial partners with respect of the larger, long-term development of the wider Paradox project is also expected to accelerate. 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. |