Zephyr Energy Reports FY 2024 Losses but Highlights Paradox Project Breakthrough and $100M Partnership

• A single 10,000-foot lateral well could deliver ~3.6 million boe (P50 estimate).
• Potential for ~72.5 million boe recoverable (P50) from the Cane Creek reservoir alone across a conceptual 20-well programme.
• Eight additional overlying reservoirs remain untested, offering substantial upside.

The acidisation technique used (dissolving minerals to enhance permeability) appears revolutionary for the Paradox, potentially eliminating the need for costly fracking. A revised Competent Person’s Report (CPR) due H2 2025 is expected to formalise a significant resource upgrade.

The $100 Million Partnership & Williston Engine

While Paradox development accelerates, Zephyr’s non-operated Williston portfolio remains the cash engine:

• Steady Production: ~1,052 boepd net in 2024 from over 200 wells.
• Strategic Leverage: The new $100 million partnership with a US energy-focused capital provider is a masterstroke. It funds 100% of drilling CAPEX on new non-operated acquisitions, with Zephyr retaining the option to co-fund 33% for enhanced returns.

Accretive Acquisition in Flight

Proof of the strategy? Zephyr’s pending $7.3 million acquisition of ~400 boepd production. Crucially:

• Forecast Accretion: Adds ~$4 million operating income over 12 months.
• Reserves Boost: +600,000 boe PDP reserves & significant PUD upside.
• Drilling Inventory: 13 new wells planned, likely funded by the partnership.

This is portfolio building with minimal equity dilution.

Stewardship: ESG & Balance Sheet Discipline

Amid the operational buzz, Zephyr hasn’t lost sight of core principles:

• Zero Harm: No Lost Time Injuries in 2024.
• Carbon Neutrality Pursuit: Ongoing offsetting of Scope 1 emissions via Verified Emission Reduction credits (VERs) with Prax Group.
• Prudent Hedging: Managed programme protects cash flows against oil price swings.

The Road Ahead: Confidence is High

Chairman Rick Grant’s tone says it all: “The fundamental pieces are in place.” The next 12-18 months are pivotal:

1. Paradox Monetisation: Finalising gas marketing, processing infrastructure, and farm-in partnerships to accelerate development.
2. Willistaon Acceleration: Deploying the $100m partnership to rapidly scale the cash-generating non-op portfolio.
3. Resource Validation: The H2 2025 CPR for Paradox could be a major catalyst.

Zephyr exemplifies the energy transition’s nuance: leveraging conventional cash flows to unlock a potentially transformative, responsibly developed resource. The 2024 loss is a footnote; the Paradox breakthrough and strategic financing are the headlines. One to watch very closely indeed.