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.

21 November 2022

Zephyr Energy plc

(the "Company" or "Zephyr")

 State 36-2 LNW-CC well - Drilling Operations Commenced

Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development and carbon-neutral operations, is pleased to announce that drilling operations have commenced on the State 36-2 LNW-CC well (the "well") at its flagship project in the Paradox Basin, Utah, in the United States of America ("U.S.") (the "Paradox project").

Summary of drilling operations

Over the last week, CWC Ironhand Drilling Rig 118 ("Rig 118") mobilised to the well-site, where it was subsequently assembled and tested.  In addition, all necessary ancillary service providers arrived on site to support drilling operations.

The fully-funded well will target the Cane Creek reservoir, and drilling is planned to a total depth ("TD") 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).  

Drilling operations are expected to take approximately 30 days.  After reaching TD and dependent on schedule and availability, a completion crew will subsequently be mobilised by the Company to hydraulically stimulate the horizontal portion of the well, immediately after which production testing shall commence.  Further updates will be provided in due course.

Colin Harrington, Zephyr's Chief Executive, said: "The commencement of drilling of the State 36-2 LNW-CC well is another landmark moment for the Company in its pursuit of unlocking the significant potential upside value from the Paradox project.

I'd like to thank our many partners and contractors who worked tirelessly through challenging conditions to meet our ambitious timeline following receipt of the final permit earlier this month. The focus now turns to drilling and operating in the safest and most effective manner possible, and I know this commitment is shared by all personnel on the drill site.

"While Zephyr's primary objective for the well is to target production from the Cane Creek reservoir, we also plan to use the drilling operation to acquire important additional data from overlying reservoir targets. 

"We look forward to keeping our stakeholders informed as drilling progresses over the coming weeks, and, as always, we will endeavour to operate in line with our core mission:  to be responsible stewards of our investors' capital and responsible stewards of the environment in which we work."

Dawn rises over the CWC Ironhand Drilling Rig 118 at the State 36-2 LNW-CC well

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, 25,000 acres of 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 has planned a three well drilling program - commencing in 2022 with the State 36-2 LNW-CC well - 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$40-45 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.