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.
3 May 2024
Zephyr Energy plc
("Zephyr" or the "Company")
Debt for equity exchange
and
State 36-2R well drilling
update
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the
Rocky Mountain oil and gas company focused on responsible resource
development from carbon-neutral operations, announces that the
Company has retired US$3.88 million (£3.11 million) of existing
debt ("Repayment Amount") through the issuance of US$3.88 million
(£3.11 million) of equity comprised of 64,045,768 new
ordinary shares of 0.1 pence ("p") each in the Company ("Repayment
Shares"), at a price of 4.85p per Repayment Share (the "Issue
Price").
The Issue Price of the Repayment Shares is the
undiscounted mid-market closing price of the Company's shares on 2
May 2024.
The Repayment Shares are being issued to SGR
Investments, LLC ("SGRI"), a US-based institutional investor with a
50-year investment track record. In December 2022, SGRI
provided debt funding (the "SGRI loan note") to Zephyr Williston
LLC, a subsidiary of the Company, to enable Zephyr's group to
acquire a portfolio of Williston Basin wells operated by Slawson
Exploration. The obligation to repay the Repayment Amount was
novated to the Company prior to the allotment of the Repayment
Shares.
The Repayment Shares are being issued using
existing share authorities granted to the Board at the Company's
annual general meeting held on 26 July 2023.
The residual portion of the SGRI loan note is
in the process of being refinanced through the Company's existing
commercial banking facilities as part of its regularly scheduled
semi-annual redetermination process which is expected to be
concluded in May 2024. Post-redetermination, Zephyr's forecast
gross debt is expected to be circa US$30 million.
The Repayment Shares represent approximately 3.7 per cent of the enlarged
share capital of the Company as enlarged by the issue of the Repayment Shares
and will rank pari passu with the existing
ordinary shares of 0.1 p each in the Company
("Ordinary Shares"). Accordingly,
from Admission (as defined below), SGRI will be a shareholder of
approximately 3.7 per cent of the Company's shares.
Application will be made to London
Stock Exchange plc for the Repayment Shares to be admitted to
trading on AIM ("Admission"). It is anticipated that Admission will
become effective at 8.00 a.m. on or around 9 May 2024.
On Admission, the Company will have
1,750,547,591 Ordinary Shares in issue, each with one voting right.
There are no shares held in treasury. Therefore, the Company's
total number of Ordinary Shares in issue and voting rights will be
1,750,547,591 and this figure may be used by shareholders from
Admission as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.
State 36-2R well update
Following its announcement on 25
April 2024 that the State 36-2 LNW-CC-R well (the "State 36-2R
well") had spud, the Company is pleased to report that operations
are progressing as expected. On 26 April, the 17-½ inch surface
section of the well was completed at a total depth at 1,570 feet,
at which point casing was set and cemented prior to the
installation of the blowout preventor. Drilling operations have
since commenced on the 12-¼ inch intermediate section, with a
current hole depth of 3,238 feet. Drilling is planned
to a total depth of 10,362 feet measured depth (9,600 feet true
vertical depth) and will incorporate a short, 270-foot horizontal
reservoir section.
Colin Harrington, Chief Executive of Zephyr,
said:
"We continue to make good progress on the drilling of the
State 36-2R well and remain on track to complete the well within
our forecast thirty-day period."
"In the meantime, the debt for equity exchange will further
strengthen our balance sheet, with no ancillary fees and at no
discount to the current market price, while increasing future cash
flows for reinvestment into our growing asset portfolio. I'm
thrilled to welcome SGRI as a cornerstone equity investor as we
work to deliver the next phase of Zephyr's
growth."
Contacts:
Zephyr Energy
plc
Colin Harrington (CEO)
Chris Eadie (Group Finance Director)
|
Tel: +44 (0)20 7225
4590
|
Allenby Capital
Limited - AIM Nominated Adviser
Jeremy Porter / Vivek Bhardwaj
|
Tel: +44 (0)20 3328
5656
|
Turner Pope
Investments - Joint-Broker
James Pope / Andy Thacker
Panmure Gordon (UK)
Limited - Joint-Broker
Hugh Rich / James Sinclair-Ford
Celicourt
Communications - PR
Mark Antelme / Felicity Winkles / Ali AlQahtani
|
Tel: +44 (0)20 3657
0050
Tel: +44 (0) 20 7886
2500
Tel: +44 (0) 20 8434
2643
|
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 46,000-acre
leaseholding located in the Paradox Basin, Utah, 25,000
acres of which has been assessed to hold, net to Zephyr, 2P
reserves of 2.6 million barrels of oil equivalent ("mmboe"), 2C
resources of 34 mmboe and 2U resources 270 mmboe.
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. 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.
Certain statements in this announcement, are,
or may be deemed to be, forward looking statements. Forward looking
statements are identified by their use of terms and phrases such as
''believe'', ''could'', "should" ''envisage'', ''estimate'',
''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will''
or the negative of those, variations or comparable expressions,
including references to assumptions. These forward looking
statements are not based on historical facts but rather on the
Directors' current expectations and assumptions regarding the
Company's future growth, results of operations, performance, future
capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect
the Directors' current beliefs and assumptions and are based on
information currently available to the Directors.