Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

 8 February 2024

Zephyr Energy plc

("Zephyr" or the "Company")

Operations update

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain oil and gas company focused on responsible resource development from carbon-neutral operations, is pleased to provide an update on its operated project in the Paradox Basin, Utah (the "Paradox project") and on its non-operated project in the Williston Basin, North Dakota (the "Williston project").

Paradox Project

Zephyr's operations team continues to progress planning for the forthcoming "twinned" and fully-funded redrill of the State 36-2 well (the "State 36-2R well"). The Company retains full well control insurance and expects to recover substantially all costs associated with the redrill.

In late 2023, to ensure an optimal drilling outcome for the State 36-2R well, Zephyr's team commenced detailed internal well-planning processes (supplemented by multiple high-pressure/high temperature specialist service providers) and continued its extensive interaction with the Company's well control insurance providers. This process has now concluded and resulted in an updated drilling plan which has been submitted to state and federal regulators for approval.

Recently competed operational work has included:

?     Completion of the State 36-2R well geologic programme;

?     Completion of the well basis of design, and completion of all third-party reviews thereon;

?     Completion of the site water plan;

?   Bid processes for major services, including the rig contract, which are ongoing with bids in hand and selection underway;

?    A sundry notice has been submitted to the State of Utah and the U.S. Bureau of Land Management (the "BLM") to amend the existing drilling permit at the well site; and

?    Gas and Natural Gas Liquids ("NGL") processing and sales and marketing contracts (including gas transportation) are at an advanced state.

The sundry notice to the existing permit is expected to result in an expedited approval process from the State of Utah and the BLM and once approved, the Company plans to move rapidly to execute a rig contract and finalise timing of the drilling.

Although dependent on weather conditions and rig availability, it is management's intention to commence drilling as soon as possible once permits are received.

Williston Project

As widely reported in the media, the Company notes this winter's historically cold conditions in the Williston Basin which, combined with certain gas processing constraints, resulted in temporary shut-ins to various portions of the basin's overall oil production primarily during the month of January. 

Zephyr is in contact with its operating partners to assess the impact of any temporary disruptions as related to its own working interests, and expects to provide further updates as part of its fourth quarter 2023 trading update on the Williston project which will be released by the end of February 2024.

Colin Harrington, Zephyr's CEO, commented: 

"Our team continues its intensive and robust planning process for the State 36-2R well and once the sundry amendment to the drilling programme is approved, we will seek to expedite operations at site to commence drilling operations as soon as possible.

"The team has done excellent work in progressing major contracts and infrastructure solutions, and we look forward to providing continued news flow over the coming weeks and months."

Contacts:

Notes to Editors

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led oil and gas company focused on responsible resource development from carbon-neutral operations in the Rocky Mountain region of the United States. The Company's mission is rooted in two core values: to be responsible stewards of its investors' capital, and to be responsible stewards of the environment in which it works.

Zephyr's flagship asset is an operated lease holding of over 46,000 gross acres located in the Paradox Basin, Utah, 25,000 acres of which has been assessed to hold, net to Zephyr, 2P reserves of 2.6 million barrels of oil equivalent ("mmboe"), 2C resources of 34 mmboe and 2U resources 270 mmboe.

In addition to its operated assets, the Company owns working interests in a broad portfolio of non-operated producing wells across the Williston Basin in North Dakota and Montana. Cash flow from the Williston production will be used to fund the planned Paradox Basin development. In addition, the Board will consider further opportunistic value-accretive acquisitions.