Auctus Advisers Research Note, 10 July 2023

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First Payment from Insurance Received

• Initial invoices submitted to the insurer have now been approved and reimbursement totalling ~US$0.8 mm have been received. This represents ~100% of the initial claim (after US$0.2 mm full claim deductible was satisfied). Additional invoices are being submitted on a regular basis with payments expected within 30 days of receipt by the insurer.
• Zephyr expects total costs for the remedial work on well State 36-2 to be in the region of US$3-5 mm, all of which are expected to be covered by the insurance. The initial US$0.8 mm reimbursement was largely for well control services and oil-based mud. Greater costs will come later in the process and are expected to be regularly re-imbursed as invoices are submitted.
• To date approximately 7,000 feet of 8,900 feet of tubing in well State 36-2 has been pulled and inspected with circa 15% of the pulled joints requiring replacement. Over the last two weeks Zephyr has retrieved ~500 feet of tubing and, importantly, a difficult area has now been passed and the company is making good progress again.
• Dominion expects to start delivering gas to Green River in late 3Q23 or early 4Q23, as previously announced.
• We re-iterate our target price of £0.18 per share in line with our ReNAV.