Zephyr Energy, the Rocky Mountain oil and gas company, has provided results for the quarter ended 30 September 2024 related to hydrocarbon production from its non-operated asset portfolio in the Williston Basin, North Dakota, U.S.
- Q3 production from the portfolio averaged 1,047 barrels of oil equivalent per day ("boepd") net to Zephyr, and 96,324 barrels of oil equivalent for the period, compared to average production in the second quarter of 2024 ("Q2") of 1,226 boepd.
- Q3 production rates were in line with management expectations, and were lower than in Q2 due to natural production decline.
- For the 2024 financial year, management continues to expect average production rates in line with its previous forecast of 1,100-1,300 boepd, an increase from an average 1,040 boepd achieved in the 2023 financial year.
- At the end of Q3, 228 wells in Zephyr's portfolio were available for production (versus 231 wells at the end of Q2).
- Net working interests across the Zephyr portfolio currently average 7.0 per cent. per well (equivalent to 16.0 total wells net to Zephyr).
- The Company has hedged a total of 27,500 barrels of oil ("bbls") over the fourth quarter of 2024 ("Q4"). 10,500 of these are hedged at a price of US$80.91 per barrel of oil ("bbl") and the other 17,000 bbls are hedged by way of financial collars with a weighted average floor price of US$71.35 per bbl and a weighted average ceiling price of US$84.38 per bbl.
- The Company's Q4 update, which is expected to be published by the end of February 2025, will contain an update on sales and revenues from the Williston project for the twelve months ended 31 December 2024.
Extension of warrant exercise period
On 26 January 2022, the Company announced that, in connection with a £12 million equity fundraise, it would issue warrants to subscribe for new ordinary shares of 0.1 pence each in the Company ("Ordinary Shares") (together the "Warrants"). In February 2022, the Company issued 89,566,666 Warrants. The Warrants are exercisable at a price of 7.5p ("Exercise Price") per new Ordinary Share for a period of three years from the date of issue and are due to expire on 11 February 2025. No director of the Company (the "Board" or the "Director") holds any Warrants.
The Warrants remain unexercised and, following agreement with the holders of the Warrants, the Board has extended the expiry date of the Warrants from 11 February 2025 to 30 September 2026. All other terms of the Warrants, including the Exercise Price, remain unchanged. The Exercise Price represents a 183% premium to Zephyr's mid-market closing price on the last trading day before this announcement.
In the event that all the Warrants are exercised, this will generate cash proceeds of £6.7 million for the Company.
Colin Harrington, Chief Executive of Zephyr, said: 'Our non-operated asset portfolio continues to deliver strong cash flows and production rates in line with expectations. Cash generated from the portfolio covers all corporate costs and allows us to continue to advance the Paradox project, where we are preparing to commence drilling operations for the extended lateral section of the State 36-2R LNW-CC well early next year.
'Further to our update on 14 November 2024, I am pleased to report that our asset level funding process for our forthcoming drilling operations continues to progress well and in line with our expectations. We fully anticipate signing the binding documentation for the asset level funding later this month.
'I am pleased that the Board has been able to extend the expiry date of the Warrants, which would provide the Company with significant additional investment and development capital should the Warrants be exercised.'
Source: Zephyr Energy
