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.

30 December 2025

Zephyr Energy plc

(the "Company" or "Zephyr")

Year-end update

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is pleased to provide a year-end update, including:

·      A material increase in hydrocarbon production from the non-operated asset portfolio during the third quarter of 2025 ("Q3"), compared to the second quarter of 2025 ("Q2");

·      An active portfolio management strategy which continues to generate value and additional cash proceeds;

·      An extension to the initial six-month term of the strategic partnership which was announced in Q2 and is designed to fund non-dilutive growth in the Company's non-operated portfolio;

·      A successful renewal of, and lowered interest rate on, Zephyr's existing revolving credit facility; and

·      An update on ongoing activity at the Company's flagship project in the Paradox Basin, Utah, U.S. (the "Paradox project"), including progress towards first gas and the receipt of marketing/funding proposals.

Q3 production - initial results

·      Q3 production from the Company's non-operated asset portfolio averaged 925 barrels of oil equivalent per day ("boepd"), net to Zephyr, versus average net production in Q2 of 632 boepd.

o  The increase demonstrates the impact of the $7.3 million acquisition of accretive production assets announced on 26 August 2025 (the "Acquisition"), offset by standard decline of the existing non-operated portfolio.

o  As previously announced, production in Q2 and Q3 was impacted by six wells operated by Slawson Exploration (the "Slawson wells") which were shut-in during those periods. Production from the Slawson wells recommenced in October 2025 and is expected to add additional production of circa 130 boepd, net to Zephyr, in the fourth quarter of 2025 ("Q4").

·      At 30 September 2025, Zephyr's post-Acquisition portfolio consisted of interests in over 600 gross wells (or approximately 30 net wells) available for production, versus 228 gross wells at the end of Q2.  Zephyr's portfolio now consists of well and acreage interests in Utah, Colorado, Wyoming, Montana and North Dakota, providing diversity across multiple operators and basins.

·      During Q3, the Company hedged a total of 24,000 barrels of oil ("bbls") at a weighted average price of $65.18 per barrel of oil ("bbl").

Non-operated portfolio management and update to strategic partnership

The Company continues to actively manage its non-operated asset portfolio to generate value for shareholders.

While the Acquisition valuation was based solely on the production assets acquired, approximately 6,350 undeveloped acres in the Williston and Powder River Basins were also acquired as part of the transaction.

Since the completion of the Acquisition, the Company has evaluated the incremental acreage to assess its current and future value potential.  In parallel with this internal valuation process, the Company received an unsolicited offer for a minority of the newly acquired acreage in the Powder River Basin, Wyoming. 

As the Company deemed this acreage non-core and with a significant lead time to development, a transaction was negotiated and closing occurred on 29 December 2025.  Zephyr is pleased to announce it received initial cash proceeds of $1.14 million (subject to post-closing adjustments) and has not relinquished any existing production as part of the transaction.

In addition, after closing the Acquisition the Company disposed of small, operated assets in North Dakota, Wyoming and Colorado for a total consideration of a further $1.5 million (comprised of a combination of cash and assumption of near-term plugging and abandonment liabilities).

The non-operated leasehold portfolio continues to provide access to new drilling investment opportunities, and Zephyr expects more non-operated drilling activity across its portfolio in the new year.  As a direct result of this, and by mutual agreement, Zephyr is pleased to have agreed an extension to the initial six-month term of the strategic partnership with a U.S. based capital provider focused on the energy sector (the "Investor").  As announced on 13 May 2025, the Investor will make available up to $100 million to fund 100% of capital expenditures related to the drilling, completing and equipping of new non-operated wells within the Williston Basin (although the parties may consider opportunities in other Rocky Mountain basins).  To date, circa $2.5 million has been committed to the programme.

Extension of Revolving Credit Facility

Following the recent successful refinancing of the Company's term loans (as announced on 20 November 2025), the Company's senior lender has also completed its annual renewal of Zephyr's $15.15 million revolving credit facility (the "facility") through to 16 December 2026.  

As part of the renewal, the fixed interest rate on the facility was reduced from 10% to 8.99% per annum.  $11.0 million of the $15.15 million facility is currently drawn.

Paradox project update

The Company continues to make solid progress towards delivering first commercial production from the Paradox project, and is pleased to report it has reached a framework agreement with Enbridge, the owner of the pipeline positioned to provide interconnect services from Zephyr's Powerline Road Gas Plant to the Williams Northwest Pipeline for sales to the U.S. gas market. 

As detailed by the framework agreement, Enbridge will construct, own, operate, and maintain the interconnect facilities.  The operations being conducted by Enbridge include survey, engineering, environmental, land and right-of-way work, as well as the design, inspection and obtaining regulatory approvals required to run bi-directional flows on the existing Enbridge pipeline.  Zephyr will update shareholders on Enbridge's timing as their operational and regulatory processes advance.

In the interim, Zephyr continues to evaluate marketing and joint venture/farm-in partners with potential to accelerate further development of the Paradox project.  Given the recent strength of the western U.S. gas markets, the Company has been encouraged by the level of interest from potential partners.  At present, Zephyr is in receipt of multiple proposals which could provide hydrocarbon marketing solutions and funding for additional drilling across its operated acreage. While there is no guarantee that a marketing/financing transaction will come to fruition in the near-term, Zephyr will update the market as negotiations progress.

Colin Harrington, Zephyr's Chief Executive, said:

 "2025 was an extremely active year, during which we successfully drilled, completed and tested a highly encouraging well on our Paradox acreage, and subsequently received a significant upgrade to our reserves and resource estimates.  We also continued to grow our non-operated portfolio via acquisition and third-party investment, and I am pleased to see both increased production and the delivery of additional value through the divestment of non-core acreage and operations.

"I believe 2026 will bring the next significant phase of growth for Zephyr as we utilise our strong foundation to create value for shareholders.  Interest in the Western U.S. gas and oil markets markedly increased during 2025, and the Company is encouraged by its ongoing discussions regarding the acceleration of Paradox development activity.

"I would like to thank our shareholders, stakeholders, advisers and employees for all their support in 2025 - and wish everyone a healthy and fulfilling 2026. We are entering the new year with strength, momentum and a clear pathway to deliver significant growth and value."

Contacts

Qualified Person

Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD, Technical Adviser to the Board of Zephyr Energy plc, who meets the criteria of a qualified person under the AIM Note for Mining and Oil & Gas Companies - June 2009, has reviewed and approved the technical information contained within this announcement.

Notes to Editors

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led oil and gas company focused on responsible resource development in the Rocky Mountain region of the United States.

Its flagship operated asset is the 46,000-acre Paradox project in Utah, where an independent 2025 Competent Persons Report by Sproule International confirmed 2P reserves of 35.3 million barrels of oil equivalent ("boe") and total recoverable resources of 74.2 million boe.

Zephyr also holds a portfolio of non-operated production interests across the Williston and other Rocky Mountain basins, supported by a US$100 million strategic partnership designed to accelerate growth and enhance cash flow.