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.

10 October 2022

Zephyr Energy plc

("Zephyr" or the "Company")

Completion of acquisition of infrastructure assets

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 announce the completion of the acquisition of a package of oil and gas assets located on and around the Company's Paradox project, Utah, U.S. (the "Paradox project") (the "Acquisition"). Details of the Acquisition were announced on 14 September 2022.

The Acquisition is comprised of 21 miles of natural gas gathering lines, the Powerline Road gas processing plant (the "Plant", which is not currently in operation), rights of way for additional gathering lines, active permits, five existing wellbores and additional acreage (the "New Acreage") which is partly contiguous to the Company's operated White Sands Unit (the "WSU").  

The Acquisition will allow Zephyr to substantially reduce the capital required to build the necessary gas export infrastructure for its forecast gas production from the Paradox project.  The estimated replacement cost value of the acquired pipelines and plant is over US$10.6 million.

The consideration for the Acquisition was US$750,000, which was satisfied by a payment from Zephyr's existing cash resources, and as the new owner, Zephyr has assumed responsibility for all future decommissioning, plugging and abandonment liabilities associated with the assets (estimated to be approximately US$2.5 million in today's terms).

Zephyr now operates 45,000 gross acres in the Paradox Basin, the majority of which the Company holds a 75% or greater working interest.

A full summary of the assets purchased as part of the Acquisition was outlined in the Company's announcement on 14 September 2022.

Colin Harrington, Zephyr's Chief Executive, said:  "I am delighted that we have now completed  the Acquisition which is expected to bring multiple commercial benefits to the Company.

"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.

"The Acquisition marks the start of an exciting period for Zephyr as we kick-off our extended production test on the State 16-2LN-CC well and as we make final preparations for our forthcoming drilling programme. While supply chain and labour availability issues continue to exist across the sector, Zephyr's team is working hard to ensure the necessary pieces are in place in order to commence drilling shortly after the final federal permit has been received.  Further updates on this will be announced shortly and will be presented at our Investor Webinar on 25 October 2022, details of which we announced on 28 September 2022."

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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 45,000-acre leaseholding located in the Paradox Basin, Utah which has been assessed by third party consultants Sproule International to hold, net to Zephyr, 2P reserves of 2.1 million barrels of oil equivalent ("mmboe"), 2C resources of 27 mmboe and 2U resources 203 mmboe. Following the successful initial production testing of the recently drilled and completed State 16-2LN-CC well, Zephyr is planning a three well drilling program commencing later this year to further delineate the scale and value of the project.

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.  The Williston portfolio currently consists of working-interests in over 200 modern horizontal wells which are expected to provide US$35-40 million of revenue, net to Zephyr, in 2022.  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.