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Auctus Advisers Research Note, 21st September 2022

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1H22 in line with expectations

  • 1H22 production was 1,729 boe/d, which is in line with previous indications. 1H22 cashflow from operations before a ~US$5 mm change in working capital (due to a large increase in receivables) was US$19 mm, ahead of our forecasts of ~US$17 mm.
  • At the end of June, Zephyr held US$10.6 mm in cash. In addition there were US$6.8 mm in current receivables (total of US$17.4 mm in cash plus current receivables). This is in line with our expectations of cash plus current receivables of US$18 mm.
  • Net debt as at the end of June was US$18 mm (excluding working capital), dropping to US$11.9 mm as at 3 September.
  • Zephyr has reiterated its FY22 production and net revenue guidance of respectively 1.37-1.51 mboe/d and US$35-40 mm for its non-operated assets.
  • An estimated 30 additional Williston wells (out of 195) in which Zephyr will have working interests are forecast to be brought on production by YE22, which will help to decrease standard portfolio decline rates.
  • We reiterate our target price of £0.16 per share.

Auctus Advisers Research Note, 21st September 2022