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.

1 December 2022

Zephyr Energy plc

(the "Company" or "Zephyr")

 State 16-2 LN-CC well - Commencement of production test

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain oil and gas company focused on responsible resource development and carbon-neutral operations, is pleased to announce that, following the completion of facilities construction and commissioning operations, the next phase of production testing has commenced on the State 16-2 LN-CC well (the "well") and hydrocarbons are now flowing from the well.  The well is located on the Company's flagship project in the Paradox Basin, Utah, in the United States of America (the "U.S.") (together the "Paradox project").

The well was successfully drilled, completed, and tested in December 2021. Initial production rates peaked at approximately 1,100 barrels of oil equivalent per day despite production being constrained and heavily choked throughout the initial production test due to surface equipment limitations, details of which were announced by the Company on 8 December 2021.

Since the initial test, Zephyr's operations team, working with specialised facility consultants, spent significant time designing and augmenting surface facilities at the well in order to:

a) test plans for improved flow assurance;

b) prepare for eventual gas export and continual production operations; and,

c) obtain further production data for overall well and field management. 

Further updates from the production test are expected to be provided as appropriate in the coming weeks. 

Colin Harrington, Zephyr's Chief Executive, said: "I am pleased to announce that following the completion of the significant upfront planning, design, construction and commissioning operations, the next phase of production testing has commenced and hydrocarbons are once again being produced from the well.

"I would especially like to commend our operations team and contractors who worked tirelessly to get the facilities completed and the test underway, particularly as this work has taken place in parallel with the ongoing drilling of our State 36-2 LNW-CC well.

"We look forward to keeping our stakeholders informed as the test 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."

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.