Turner Pope Research Note, 7th June 2022
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| Following completion of the successful test on the State 16-2LN-CC well in December 2021, and after a detailed evaluation of various options for natural gas sales and export, Zephyr’s Board has elected to recommence production from the well in conjunction with the completion of a new Zephyr owned crypto-currency mining facility on the State 16-2 well pad which is now under development. Investment required to launch the initial 1 megawatt (‘MW’) crypto-mining facility (capital expenditure forecast to be less than US$2 million) will be taken from existing cash resources or in conjunction with third party investors, with facility capital payback expected in under two years at current crypto-currency prices. By fast-tracking equipment procurement to enable the crypto-mine to become operational in c.8-12 weeks, with necessary well work being conducted on the same timeframe, Zephyr’s Board expects to meet multiple objectives. These include accelerating revenue generation from the State 16-2LN-CC well, earning additional revenues from the crypto-mine infrastructure and enabling a highly important long-term test capable of providing significant additional information about the well’s production profile. In parallel with this, funding for the planned three well drill programme on the Paradox project that is expected to commence in 2H 2022, will be provided from the Group’s Williston Basin non-operated assets. Altogether this sets Zephyr up for a further period of intense activity in the run-up to 2023 as it moves closer toward its ultimate goal of unlocking the next great unconventional onshore resource play in the US. We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to Zephyr Energy plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination. The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient. |
