Turner Pope Research Note, 06 June 2024
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| Drilling operations on the State 36-2R LNW-CC well (‘the well’) at the Group’s flagship project in the Paradox Basin, Utah, were completed safely on 4 June 2024, having successfully achieved to a total depth of 10,290 feet (measured depth). The ability to hit the natural fracture system once again is, of course, critical to obtaining a high flow rate and initial results indicate the well has indeed penetrated a folded and naturally fractured Cane Creek reservoir. Intersecting the top of the reservoir c.15 feet from the original well bore and its natural fracture network, the well encountered drilling mud gas shows of a similar magnitude to the original well. Rock pore pressure analysis suggests formation pressures estimated at c.9,300 pounds per square inch (which is broadly consistent with previously drilled offset wells). Furthermore, it confirms the presence of hydrocarbons within a large structural compartment that falls within Zephyr’s acreage and 3D seismic coverage. The coming weeks will see equipment mobilised for well completion and commencement of production testing. This will determine reservoir pressure, fluid composition, well flow rate, bulk reservoir permeability and deliver an early estimate of the overall potential recoverable resources. A successful outcome could then be translated quite rapidly into 2P reserves and potentially spike overall Group production from Q4 2024/Q1 2025. 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. |
