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.

 27 July 2026

Zephyr Energy plc

("Zephyr" or the "Company")

Letter of Intent for Paradox Commodity Purchase Agreement

Provides for up to US$15 million in non-dilutive pre-production financing

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is pleased to announce the signing of a non-binding Letter of Intent (the "LOI") with Atlas Oil Company ("Atlas"). The LOI details a proposal for a Prepaid Commodity Purchase Agreement (the "CPA") and sale of hydrocarbon marketing rights at Zephyr's project in the Paradox Basin, Utah, U.S. (the "Paradox project").  The CPA will provide up to US$15 million in non-dilutive pre-production financing to Zephyr (the "proposed funding").

Highlights

·      Up to US$15 million of non-dilutive pre-production financing for the Paradox project;

o  No issue of new Zephyr equity and no sale of asset-level working interests.

·      Provides funding to support the Paradox project infrastructure build-out, well workovers and potentially upsized gas processing facilities.

·      Proposed funding is not contingent on the timing of first gas production.

·      Atlas and its team have detailed knowledge of the Paradox project, having supported prior oil marketing and logistics activities on site since 2021.

·      The proposed funding provides benefits and flexibility to the ongoing farm-out process, while also allowing for a standalone Paradox project development operated by Zephyr.  The proposed funding would allow Zephyr to get to first commercial production at a larger scale, while existing Zephyr resources can be reallocated for future well planning and drilling.

·      Repayment of the proposed funding would come from future production sales proceeds, aligning funding with future project cash generation.

Colin Harrington, Zephyr's Chief Executive, said:

"I am delighted to be announcing this proposed funding with Atlas. Over the years, we have developed an excellent working relationship with the Atlas team. The Atlas team has marketed and transported all the Company's oil volumes from the Paradox project since the testing of the State 16-2 well in 2021.  The proposal to provide up to US$15 million of prepayment financing demonstrates strong confidence in the Paradox project from a sophisticated, longstanding industry player. 

"At the same time, the LOI contemplates the completion of the Paradox project farm-out, and the Atlas financing would be both supportive of a farm-out or allow Zephyr to continue the Paradox project development on a standalone basis, depending on what is the most value-accretive solution for our Shareholders."

Chris Dillman, Atlas's General Manager of Crude Trading, said:

"Atlas knows Zephyr well through our prior marketing and logistics activities associated with the Paradox project. Based on that experience and our understanding of the asset, we believe the Paradox project has the potential to become a meaningful oil and gas development as its production and infrastructure are advanced.

"This transaction reflects Atlas's broader approach of combining commodity trading and marketing capabilities with structured capital solutions to support upstream and midstream infrastructure development. We look forward to continuing our work with Zephyr."

Background

Under the terms of the CPA, the proposed funding would involve the payment to Zephyr of up to US$15 million in tranches, in exchange for Atlas holding the exclusive right to market, purchase, and sell all hydrocarbons produced from an agreed Paradox project asset area during a specified term.

Zephyr would use the funds received to complete the infrastructure build out for the Paradox project and to commence workovers on the State 36-2R wells and other existing wells.  It would also allow the Company to consider a range of larger processing solutions and to advance planning for the drilling of additional Paradox project wells. 

No asset-level working-interest will be sold to Atlas under the proposed terms of the CPA, and no Zephyr equity will be issued as part of the proposed funding.  Atlas would be compensated and repaid solely from production sales proceeds.

Closing of the proposed funding is contingent upon the signing of a binding definitive CPA and ancillary agreements, along with final confirmatory due diligence, all of which is expected to be completed in the third quarter or early in the fourth quarter of 2026.  Further updates will be provided in due course.

In the meantime, the Company is continuing with its ongoing Paradox farm-out process.  There are a number of interested parties active in the data room, and the Company will provide updates in due course.

The proposed funding demonstrates Atlas' knowledge of and confidence in the Paradox project. The proposed funding is not contingent upon timing of first gas production at the site.

Contacts

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 U.S.

Its flagship operated asset is the circa 73,000-acre Paradox project in Utah.  An independent 2025 Competent Persons Report by Sproule International of the Company's White Sands Unit (20,000 acres) confirmed 2P reserves of 35.3 million barrels of oil equivalent ("boe") and total recoverable resources of 74.2 million boe across the unit.

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.

About Atlas (www.atlasoil.com)

Founded in 1985, and headquartered in Houston, Atlas is a long-established U.S.-based independent hydrocarbon marketing and structured finance company. 

Atlas offers single-source solutions for fuel, transportation and logistics and is one of the largest fuel distributors in the U.S., delivering over 1 billion gallons of fuel annually to customers in 49 states.

Atlas Oil's Supply & Marketing division provides global delivery of refined fuel solutions including gasoline, diesel, crude, ethanol, and NGLs.

Zephyr has worked closely with members of the Atlas team for many years, including the testing, marketing and trucking of all previous oil volumes related to the Company's historical Paradox project production tests (which began in 2021).