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2 November 2022

Zephyr Energy plc

("Zephyr" or the "Company")

Award of Federal Drilling Permits

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 that, further to the Company's announcement on 24 October 2022, it has received approval of its Application for Permit to Drill ("APD") from the U.S. Bureau of Land Management (the "BLM"), the final regulatory approval required to spud the State 36-2 LNW-CC well on its project in the Paradox Basin, Utah, U.S. (the "Paradox project").  Zephyr simultaneously received approval of its APD for the State 36-3 LN-C9 exploration well, which has been permitted to target the shallower C9 reservoir and which is planned to be drilled from the same well pad.

The State 36-2 LNW-CC well is fully-funded and will target the Cane Creek reservoir. Drilling is planned to a total depth at 20,456 feet measured depth (9,598 feet true vertical depth) incorporating a 10,346 feet horizontal reservoir section.  The well's objective is to further delineate the Cane Creek reservoir beyond the productive State 16-2 LN-CC well and the nearby Federal 28-11 well (which was recently acquired by Zephyr and is currently shut-in due to infrastructure constraints - details of which were announced by the Company on 14 September 2022). 

In parallel with the permitting process, Zephyr has completed all road and site preparation work at the well-site in order to spud the well as soon as possible following the execution of a rig contract.  The Company is in the process of finalising a rig contract, and will update the market on the expected timeline for the spud of the well upon award of the contract.  The timeline for drilling two additional wells (the State 36-3 LN-C9 exploration well and the non-operated Kirkwood Oil & Gas well targeting the oil-prone Cane Creek reservoir near the Cane Creek Field) will be determined after the State 36-2 LNW-CC has been drilled, factoring in infrastructure capacity and rig availability.

Colin Harrington, Zephyr's Chief Executive, said: 

"We are delighted to have cleared the final regulatory hurdle for the spud of the 36-2 LNW-CC well and are close to finalising the rig contract. Once the rig contract is awarded, Zephyr will recommence its Paradox drilling activity which we believe will be a major step forward in our efforts to unlock what may be substantial potential across our 45,000 acres of Paradox Basin holdings.

"We look forward to sharing further updates on the drilling programme, including expected completion and testing schedules, once the rig contract has been awarded.

"As we embark on this potentially transformational drilling programme, I would like to reiterate that our mission, as always, is to be responsible stewards of investors' capital while also being responsible stewards of the environment."

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 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.