TIDMZPHR
RNS Number : 9293P
Zephyr Energy PLC
15 February 2023
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.
15 February 2023
Zephyr Energy plc
("Zephyr" or the "Company")
Fourth Quarter and FY 2022 results from Williston Basin
portfolio
Year-on-year revenue growth in excess of 600%
Year-on-year production growth of over 500%
FY 2023 production guidance reaffirmed
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain
oil and gas company focused on responsible resource development
from carbon-neutral operations, is pleased to provide initial
fourth quarter 2022 ("Q4") and full-year 2022 ("FY 2022") results
related to hydrocarbon production and cashflows from its
non-operated asset portfolio in the Williston Basin, North Dakota,
U.S (the "Williston project").
Q4 2022 and FY 2022 Williston Basin Highlights
-- Q4 revenues totalled US$7.4 million, net to Zephyr, giving
the Company total expected revenues for FY 2022 of US$42.9 million
(subject to audit) - representing a seven-fold increase over
full-year 2021 ("FY 2021") revenues of US$6 million and in excess
of Zephyr's initial public guidance for FY 2022 revenues of
US$35-US$40 million.
-- Q4 sales volumes averaged 1,192 barrels of oil equivalent per
day ("boepd"), giving the Company total sales for FY 2022 of
543,948 barrels of oil equivalent ("boe") - at the high end of the
range of Zephyr's guidance for FY 2022 sales and representing more
than a six-fold increase from FY 2021 sales of 88,037 boe.
o FY 2022 sales volumes averaged 1,490 boepd compared to the FY
2021 sales volumes average of 263 boepd.
o The Company hedged 171,000 barrels of oil in FY 2022 at a
weighted-average price of US$98.04 per barrel of oil.
-- Q4 operating income was US$6.3 million (after taxes, lease
operating expenses, realised hedging impacts, and gathering and
marketing fees). Operating income for FY 2022 was US$35.7
million.
-- At 31 December 2022, 223 wells in the portfolio were
available for production, including 17 wells which came online at
some point during the quarter.
o Net working interests across the Williston Basin non-operated
portfolio now average 6.3% per well, equivalent to 15 gross wells,
all of which utilised horizontal drilling and modern, hydraulically
stimulated completions.
o An estimated eight additional wells in which Zephyr owns a
working interest are forecast to be brought on production by the
end of June 2023, and these wells are expected to significantly
increase daily production rates from the Williston portfolio.
o Zephyr reiterates its previously released guidance of 1,550 to
1,750 boepd, net to Zephyr, for its full-year 2023 ("FY 2023")
Williston Basin production - an estimate which includes
contributions from the six recently acquired Slawson Exploration
("Slawson") operated wellbore interests (as announced to the market
on 21 December 2022).
Colin Harrington, Chief Executive of Zephyr, said : "I am
delighted with the growth and strong cash flows generated from our
Williston portfolio during 2022. We comfortably exceeded our
initial FY 2022 revenue guidance, and production was within the
upper end of the forecast range. Cash flows generated from these
operations have been reinvested back into both our operated and
non-operated asset portfolios, and we expect continued growth in
2023. We fully expect this years' Williston project production to
exceed last years' once again.
"Our non-operated asset base is a now diverse mix of interests
in 223 low-risk, high-margin producing wells with top-tier
Williston Basin operators such as Slawson, the operator of 6 newly
drilled wellbores in which we acquired working-interests in
December 2022 and which will be coming online over the next few
months.
"We have a busy period ahead and we look forward to keeping
Shareholders regularly updated on our ongoing activities over the
coming weeks."
Q4 Sales Detail
Zephyr's net sales for Q4 were approximately 109,706 boe.
Q4 product mix was 72% crude oil, 14% natural gas, and 14%
natural gas liquids. The table below provides sales volumes,
product mix, and average sales prices for the quarter:
Oil: 79,177 barrels ("bbls") at an average sales price of
US$81.55/bbl*
Natural Gas: 92,952 thousand cubic feet ("mcf") at an average
sales price of US$4.73 /mcf
Natural Gas Liquids: 15,037 bbls at an average sales price of US$33.67 per bbl
*not including hedges
( Note: Fourth quarter production volumes and average sales
prices figures include field estimates in respect of Dec 2022
natural gas and natural gas liquids sales volumes and are subject
to future revision.)
During Q4, a number of Zephyr's existing production wells were
temporarily shut-in due to "frac-protect" procedures while new
nearby wells were stimulated and completed. As new infill wells are
drilled, existing offset wells may be temporarily shut in to
optimise the nearby completion and mitigate offset well production
losses. Offset wells are then re-instated for production when the
new infill wells are started up for production.
In the Williston Basin, cashflow from non-operated interests in
newly drilled wells may lag actual production by up to five months.
Such payments from the operator accrue on a monthly basis and are
paid in full prior to the sixth month of production, which may
result in impacts to quarterly sales volumes and revenues during
times of significant completion activity. Zephyr expects additional
accrued payments from operators in the first six months of 2023
given the Company's interests in 18 newly drilled wells which came
online during Q4.
Williston Basin production outlook
Eight additional producing wells from Zephyr's existing
portfolio are expected to be brought online during the next six
months, which will more than mitigate decline rates typical of
Williston Basin production.
The Company reiterates its FY 2023 production forecast of 1,550
to 1,750 boepd from the Williston project (net to Zephyr).
The Company has hedged 157,000 barrels of oil over the next 15
months (starting 1 January 2023) at a weighted-average price of
US$86.89 per barrel. The Company is expecting significant
additional production volumes by the end of March 2023 from new
wells coming online and will continue to evaluate its commodity
price risk management strategy on a regular basis.
Contacts
Zephyr Energy plc Tel: +44 (0)20 7225
Colin Harrington (CEO) 4590
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328
Adviser 5656
Jeremy Porter / Vivek Bhardwaj
Turner Pope Investments - Joint-Broker Tel: +44 (0)20 3657
James Pope / Andy Thacker 0050
Panmure Gordon (UK) Limited - Joint-Broker
John Prior / Hugh Rich / James Sinclair-Ford Tel: +44 (0) 20 7886
/ Harriette Johnson 2500
Celicourt Communications - PR
Mark Antelme / Felicity Winkles
Tel: +44 (0) 20 8434
2643
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
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 45,000-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 240 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.
The Williston portfolio currently consists of working-interests
in over 200 modern horizontal wells which are expected to provide
production of 1,550 - 1,750 barrels of oil equivalent per day, net
to Zephyr, in 2023. 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.
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