Zephyr Energy Reports Full Year 2025 Results and Progress Towards First Production at Paradox Project

Zephyr Energy full year 2025 results – the big picture for investors

Zephyr Energy has used its 2025 results to tell a very clear story: the non-operated assets are there to generate cash, while the Paradox project is where management thinks the really big upside sits. The operational headline is strong, especially around the State 36-2R well, but the financial statements still show a business that is spending heavily, making losses and relying on funding options staying open.

In plain English, this is a classic AIM oil and gas setup. There is obvious project upside and improving asset quality, but investors still need to keep one eye firmly on cash, debt and execution risk.

Zephyr Energy 2025 key numbers every shareholder should know

Metric	2025	2024
Revenue	US$13.9 million	US$24.3 million
Gross profit	US$2.5 million	US$7.2 million
Net loss after tax	US$10.8 million	US$19.6 million
Cash at year end	US$3.0 million	US$10.3 million
Borrowings at year end	US$23.6 million	US$26.3 million
Non-operated production	864 boepd	1,052 boepd
Sales volumes	302,585 boe	420,724 boe
Peak flow rate from State 36-2R well	2,848 boepd	Not disclosed

Paradox project progress is the real bull case for Zephyr Energy shares

The standout positive here is the State 36-2R well. Zephyr says the well hit a peak flow rate of 2,848 boepd with no material drop in bottom hole pressure and without fracture stimulation, which is the process often used to boost flow rates. That matters because it suggests strong natural reservoir performance rather than a result that needed extra help.

Management goes further and says this places the well in the top 6% of gas wells across the Lower 48 U.S. states. That is the sort of line retail investors will latch onto, and fairly so, because if repeatable it could materially improve the value of the whole Paradox project.

Why the updated CPR is such an important value marker

The updated Competent Person’s Report, or CPR, is the independent technical report investors use to judge how real and how commercial an oil and gas asset looks. On Zephyr’s numbers, it shows a major shift from potential resources into reserves, which is a big step forward because reserves are far closer to generating real cashflow.

• 1P reserves – proved reserves – rose to 14.8 million boe from 0.16 million boe
• 2P reserves – proved plus probable reserves – rose to 35.3 million boe from 1.4 million boe
• Total resources rose to 74.2 million boe from 21.4 million boe
• Unrisked 2U prospective resources were 270 million boe

The CPR also gave a current NPV-10 of circa US$101.0 million for 2P reserves. NPV-10 is a standard valuation measure that discounts future cashflows at 10%, so it is a useful yardstick rather than a cash figure sitting in the bank. It does, however, show why Zephyr is so focused on getting Paradox into commercial production.

Infrastructure, gas marketing and farm-out talks are now the next test

The project is moving from promising well results into the harder part – commercial execution. Zephyr has a framework agreement with Enbridge, has completed the pipeline in-line inspection process, and has formally started the regulatory process needed to export gas.

That is all positive, but first production still depends on a few moving parts landing properly. Gas marketing agreements, plant upgrades, pipeline approvals and a farm-out deal all need to come together. A farm-out is where another company funds part of development in exchange for a share of the asset, and for Zephyr that could reduce funding pressure while speeding up drilling.

Zephyr’s non-operated portfolio is doing its job – but not brilliantly in 2025

The other side of the Zephyr strategy is the non-operated portfolio – minority interests in producing wells run by other operators. This side of the business had a mixed year. It remained cash generative, but revenues and production fell because of lower commodity prices, natural field decline and six Slawson-operated wells being shut in for a large part of the year.

Still, there was some smart portfolio work. Zephyr completed a US$7.3 million acquisition in August 2025 that added circa 400 boepd of production and 600,000 boe of proved developed producing, or PDP, reserves. Then it sold non-core acreage acquired in that deal for circa US$7.0 million in total consideration, including US$5.8 million in cash and US$1.2 million of liabilities removed.

That is a decent bit of capital recycling. In simple terms, Zephyr appears to have bought the producing assets it wanted and then clawed back most of the purchase price through asset sales that did not materially hurt current production.

Zephyr Energy financial results – weaker revenue, lower cash and a crucial funding warning

The financials are where the excitement cools a little. Revenue fell to US$13.9 million from US$24.3 million, gross profit dropped to US$2.5 million from US$7.2 million, and cash at year end fell to US$3.0 million from US$10.3 million.

The net loss improved to US$10.8 million from US$19.6 million, but that was helped by the fact 2024 included a US$14.5 million impairment charge. Strip that out and 2025 still looks like a year where operational promise ran ahead of financial delivery.

The going concern point is not just accounting noise

This is the bit investors should not ignore. The auditor’s report was not qualified, but it included a material uncertainty relating to going concern. That means the accounts are signed off, but there is still meaningful uncertainty around future funding.

The key issue is the revolving credit facility with FIBT, which is due for renewal in December 2026. Directors say it has been renewed in each of the previous four years and they are confident it will be renewed again, but confidence is not the same thing as certainty. If refinancing, asset sales or new funding do not happen, that would matter a lot.

Other points investors should not miss in this RNS

• Zephyr raised US$13.3 million, or £9.8 million, before expenses through a placing in June 2025, plus a further US$0.9 million, or £0.7 million, from directors, management and affiliates.
• The company secured US$2.0 million in loan financing in November 2025.
• In April 2026, a cybersecurity incident led to circa US$0.95 million being diverted to a third-party account. Recovery is still being pursued.
• Paradox acreage has increased to approximately 70,000 acres after the acquisition of a further 24,000 acres.
• There were no lost time injuries in 2025.

What Zephyr Energy’s 2025 results mean for retail investors now

My take is fairly straightforward. Operationally, this was a strong update. The Paradox project looks better than it did a year ago, the CPR adds real credibility, and the infrastructure progress suggests first commercial production is moving closer.

Financially, though, this is still a company that needs things to keep going right. Cash is modest, debt is still meaningful, and the going concern wording reminds you that funding risk has not gone away. So the investment case remains high-upside, but definitely not low-risk.

If Zephyr can secure a sensible farm-out, complete gas marketing, get pipeline approvals through and deliver first production, the market may start valuing Paradox on something more substantial than promise. If any of those steps slip, investors may be reminded that exciting wells alone do not pay the bills.

The AGM is scheduled for 29 July 2026 in London, and management has flagged considerable newsflow in the coming weeks. For shareholders, that next batch of updates could be where this story either really gathers pace or runs into the usual small-cap energy bottlenecks.