AIM-listed Zephyr Energy has announced further increases to its operated land position in the Paradox Basin, Utah, U.S. (the 'Paradox project') through the successful acquisition at auction of 5,692 acres under U.S. federal leases in Utah.
The addition of this new, undeveloped acreage offers the following benefits:
- A circa 10% increase to Zephyr’s overall land footprint, with a location immediately to the north of its existing White Sands Unit (the “WSU”) in an area which Zephyr believes has strong potential for future development contiguous to the WSU (see figure 1 below).
- This location also has the potential for development utilising Zephyr’s existing and planned pipeline and processing infrastructure.
- The acquired acreage includes a lease which hosts the now plugged and abandoned Gunnison Valley Fee 22-9 well, a well which found a full Cane Creek reservoir section with similar reservoir characteristics to the WSU (a valuable data point for future delineation of the acquired area).
- Hydrocarbon exploration and development potential within the Paradox Formation, as well as helium potential below the Paradox Formation across the bulk of the acquired acreage.
- Favorable lease structures, with primary lease terms of ten years.
The acquisition cost of the new acreage was paid from the Company’s existing cash resources.
Zephyr believes that there may be potential to unitise the acquired acreage by: 1) forming a new Federal unit (as was performed at the WSU); or 2) by expanding the WSU, should this be considered the optimal operational path (subject to securing any necessary regulatory approvals).
Colin Harrington, Zephyr’s Chief Executive, said: 'I am pleased with the location and optionality of the acquired acreage, which further increases the scale of our Paradox footprint. With every acquisition of acreage, we consolidate and enhance the attractiveness of our regional holdings.'
'Zephyr’s team continues to be opportunistic in building out a greater Paradox land position in order to advance the substantial underlying value of our interest in the northern Paradox Basin. In addition to this latest acquisition, operations in the field and in partnership discussions continue to progress in a favorable manner. We will update shareholders on additional activity at the Paradox project in the coming weeks.'
Figure 1: Map showing Zephyr’s Paradox project acreage with the recently acquired acreage highlighted in green, and existing acreage is highlighted in yellow. The WSU is outlined in blue.
Source: Zephyr Energy
