TIDMZPHR
RNS Number : 2581H
Zephyr Energy PLC
02 December 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
2 December 2020
Zephyr Energy plc
("Zephyr" or the "Company")
Grant of final approvals for State 16-2 well
Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas
company focused on responsible resource development, provides an
update on its project in the Paradox Basin, Utah, U.S.A (the
"Paradox project"), where the Company is preparing to spud the
'dual-use' State 16-2 well before the end of the year.
The Company is pleased to announce that it has now received all
the final approvals required to proceed with the spud of the State
16-2 well. These approvals include surface rights and rights to
drill from the Utah School and Institutional Trust Lands
Administration ("SITLA"), federal Right of Way approvals from the
Bureau of Land Management ("BLM"), and Application to Drill ("APD")
approval from the Utah Division of Oil, Gas and Mining ("DOGM"). In
addition, the Company has received all necessary consents from its
joint-venture partner on the Paradox project.
With these approvals and permits in place, the Company is
working to finalise project contracts to enable rig mobilisation
over the coming days. The road and site preparation work for the
well has now been successfully completed, and work to responsibly
plug and abandon the existing inactive well on site has
commenced.
Colin Harrington, Zephyr's Chief Executive said "I am delighted
that we have secured the final approvals and consents required to
facilitate the commencement of drilling of the State 16-2 well.
"I would like to thank all parties involved in this process for
their commitment, flexibility and hard work in enabling us to reach
this major milestone within the required timeframe.
"With work on the ground already underway, we are in the final
stages of operational preparations to ensure the safe and
successful spud of the well by our year-end goal."
For further information please visit https://www.zephyrplc.com/
or contact:
Zephyr Energy plc Tel: +44 (0)20 7225 4590
Colin Harrington (CEO)
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328 5656
Adviser
Jeremy Porter / Liz Kirchner
Turner Pope Investments - Broker Tel: +44 (0)20 3657 0050
Andy Thacker / Zoe Alexander
Flagstaff Strategic and Investor Communications
Tim Thompson / Mark Edwards / Fergus Tel: +44 (0) 20 7129
Mellon 1474
Background to the 16-2 well
As announced on 2(nd) September 2020, the Company has been
working with a project team led by the EGI in collaboration with
the UGS and other Utah-based partners. The project is entitled
"Improving Production in Utah's Emerging Northern Paradox
Unconventional Oil Play" and its goal is to assess and perform
optimisation analyses for more focused, efficient and less
environmentally-impactful oil production strategies in the northern
Paradox Basin, particularly in the Pennsylvanian Paradox
Formation's Cane Creek shale and adjacent clastic zones. This
project is sponsored by the U.S. Department of Energy and its
National Energy Technology Laboratory (the "DOE").
As part of this study, the EGI and UGS originally planned to
drill a vertical stratigraphic test well to gather data to improve
the understanding of the Paradox Basin play. It was planned that
the proposed well would target the Cane Creek and potentially the
C18/19 reservoirs, acquiring both core data and a comprehensive
well log suite in order to provide valuable new basin data.
Over a period of several months, the project team analysed
multiple potential well locations across the Paradox Basin, and the
Company was delighted that the EGI and UGS selected Zephyr's
Paradox acreage as the location on which to drill the well.
The Company's location was selected for a number of reasons,
including the quality of the Group's underlying 3D seismic data
(which can be tied into the well results to build a stronger
integrated predictive model) as well as a favourable surface
location which will be sited on a pre-existing pad.
Since Zephyr's Paradox acreage was selected as the location for
the test well, Zephyr has been working with its project partners to
construct a project plan that maximises the opportunity for all
parties.
A key part of this plan is to design the well in such a way that
not only can it be used to obtain all the data required by the
research project, but that it can also be re-used by the Company in
the future as the host for a lateral appraisal well. This approach
not only reduces environmental impact but it will also potentially
significantly reduce future well costs for the Company.
It is currently expected that the total cost of the vertical
well activity is forecast to be between US$2.5 million to US$3
million, of which the first US$2million will be funded by grant
funding from the DOE and up to US$1 million will be funded by
Zephyr. Neither party is liable for any costs in excess of the US$3
million combined project limit.
The primary objectives of the initial stratigraphic well are to
drill vertically to an approximate true vertical depth ("TVD") of
9,850 feet, and to acquire up to 90 feet of continuous core from
the Cane Creek reservoir. The results from the analysis of the core
and from other drilling data are expected to be available within
three months from the completion of drilling.
Once the vertical well is completed it will be temporarily
plugged back to 6,500 feet TVD. Zephyr (or a farm-in partner) will
then have the opportunity to re-utilise the vertical wellbore as a
sidetrack host from which a horizontal appraisal well can drilled.
By re-utilising the vertical portion of the stratigraphic well, the
Company estimates the total costs of drilling a future horizontal
appraisal well will be reduced from circa US$6.0m to circa
US$3.0m.
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