Turner Pope Research Note, 6 September 2024
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| Zephyr has completed the much anticipated second phase (the ’second test’) of the production test on its State 36-2R well (‘the Well’). The acidisation operation successfully removed near-wellbore formation damage and generated very high reservoir deliverability, with a notable improvement to near-wellbore reservoir permeability after each acid treatment. Peak production rates achieved during the second test were over 2,100 barrels of oil equivalent per day (‘boepd’), up from the 1,350 boepd reported following the first test, which is a particularly high for an onshore US well with only 130 feet of completed reservoir interval. Elevated liquid-yields were observed along with continuing evidence of almost nil water production. Zephyr’s Board also notes a further, important and unanticipated benefit from the acidisation operation, in that it appears to have significantly enhanced the near-wellbore reservoir quality. From this, it concludes that similar utilisation across a longer lateral may offer a cost-effective completion technique compared to the hydraulic stimulation operations used in other US resource plays. Given the positive implications this has for the broader Paradox project, Zephyr has decided to immediately launch a process to identify a suitable US industry or asset-level financial partner to accelerate further appraisal and field wide development. 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. |
