Zephyr Energy delighted with the growth and strong cash flows generated from Williston Basin

Zephyr Energy plc (LON:ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development from carbon-neutral operations, has provided second quarter 2022 results related to hydrocarbon production and cashflows from its non-operated asset portfolio in the Williston Basin, North Dakota, U.S.

Q2 2022 Williston Basin Highlights

·    Quarterly revenues totalled US$14.3 million net to Zephyr, up from US$11.5 million in the first quarter of 2022 (“Q1”) and a 16-fold increase from US$0.9 million reported in Q2 2021.

·    Quarterly operating income was US$10.1 million (after taxes, lease operating expenses, hedging impacts, and gathering and marketing fees).

·    Q2 sales volumes averaged circa 1,856 barrels of oil equivalent per day (“boepd”), an increase from circa 1,600 boepd in Q1 2022 and from 148 boepd in Q2 2021.

o  Q2 revenue was positively impacted by deferred payments for production on newly completed wells generated in earlier months but received in Q2. 

o  Q2 wellhead production averaged circa 1,400 boepd, net to Zephyr, in line with management expectations and marginally impacted by temporary shut-ins due to planned “frac-protect” procedures on existing wells while new nearby wells were completed.

·    At the end of Q2, 195 wells in the portfolio were available for production, including 10 wells which came online during the quarter.

o  An estimated 30 additional wells in which Zephyr will have working interests are forecast to be brought on production by the end of 2022, which will help to decrease standard portfolio decline rates.

·    Net working interests across the Williston Basin non-operated portfolio now average 7.1%, equivalent to 15 gross wells, all of which utilised horizontal drilling and modern, hydraulically stimulated completions.

·    Zephyr reiterates its previously released 2022 production and revenue guidance of an expected US$35-40 million in non-operated revenue, net to Zephyr, for FY 2022 based on a forecast production range of 500,000 to 550,000 barrels of oil equivalent (“boe”) for the year.

Q2 Sales Detail

During the second quarter of 2022, the Company reported net sales of approximately 168,880 boe. Product mix for Q2 was 73% crude oil, 15% natural gas, and 12% natural gas liquids. The table below provides sales volumes, product mix, and average sales prices for the quarter:

Oil:                                     123,233 barrels (“bbls”) at an average sales price of US$99.84/bbl

Natural Gas:                     149,860 thousand cubic feet (“mcf”) at an average sales price of US$6.69 /mcf

Natural Gas Liquids:        20,671 bbls at an average sales price of US$50.40 per bbl

(Note: Second quarter production volumes and average sales prices figures include field estimates in respect of June 2022 natural gas and natural gas liquids sales volumes and are subject to future revision.)

During Q2, a number of Zephyr’s existing production wells were temporarily shut-in due to “frac-protect” procedures while new nearby wells were stimulated and completed.  As new infill wells are drilled, existing offset wells may be temporarily shut in to optimise the nearby completion and mitigate offset well production losses. Offset wells are then re-instated for production when the new infill wells are started up for production.

Q2 sales volumes of 168,880 boe include approximately 41,480 boe produced prior to Q2 but for which payments were received during the quarter.  In the Williston Basin, cashflow from non-operated interests in newly drilled wells may lag actual production by up to five months.  Such payments from the operator accrue on a monthly basis and are paid in full prior to the sixth month of production, which may result in impacts to quarterly sales volumes and revenues during times of significant completion activity.  Zephyr expects additional accrued payments from operators in Q3 2022 given the Company’s interests in 10 newly drilled wells which came online during Q2.

Williston Basin production outlook

30 additional producing wells from Zephyr’s existing portfolio are expected to be brought online during the next six months, which will partially mitigate decline rates typical of Williston Basin production.

The Company has hedged just under half of its forecast non-operated production over the next 21 months.  Using an average hedged production price of US$96.28 for the remainder of the 2022 calendar year and using US$90 flat for the remainder of its anticipated production, the Company reiterates its forecast of an expected US$35-40 million in non-operated revenue, net to Zephyr, for FY 2022 based on forecast production range of 500,000 to 550,000 boe for the year.

Colin Harrington, Chief Executive of Zephyr Energy, said: “In the 15 months since we announced Zephyr’s first non-operated acquisition in the Williston Basin, I’ve been delighted with the growth and strong cash flows generated from that part of our portfolio.   Having completed six discrete acquisitions, our non-operated asset base is a now diverse mix of 195 low-risk, high margin producing wells operated by some of the strongest companies in the Williston Basin.  With a further 30 wells expected to come online over the next six months, the platform is demonstrating its capacity for future organic growth.

“This highly attractive portfolio is delivering substantial cashflows which will fuel the ongoing development of our flagship Paradox project, and potentially facilitate further opportunistic portfolio acquisitions.

“It’s an exciting time for Zephyr and we look forward to keeping Shareholders regularly updated on progress in the coming weeks. In particular, we look forward to commencing the upcoming drilling programme on the Paradox project.  With internal development potential fully funded from our existing asset portfolio, we plan on significant further growth over the next twelve months.”

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Share on twitter
Share on linkedin
Zephyr Energy

More articles like this

Zephyr Energy

Oil rises from 9-month low

Oil rose more than 1% on Tuesday from a nine-month low a day earlier, supported by supply curbs in the U.S. Gulf of Mexico ahead of Hurricane Ian and a slight softening in the U.S. dollar. Analyst expectations

Zephyr Energy

Oil prices up

Oil prices ticked up on Tuesday as OPEC and its allies keep producing less than their quotas, but were headed for a fourth monthly decline ahead of an expected further U.S. interest rate hike which may curb economic

Zephyr Energy

Oil ticks up

Oil prices edged higher on Friday but were on track for a weekly decline amid fears of sharp interest rate hikes that would slam global growth and hit fuel demand. Brent crude futures were up 56 cents, or 0.6%,

Zephyr Energy

Oil prices increase on world markets

Oil prices rose on Friday as investors considered Russia’s threat to halt oil and gas exports to some buyers, but crude was set for a second straight weekly decline as central banks’ aggressive rate hikes and China’s COVID-19

Zephyr Energy

Oil prices rise ahead of key OPEC meet

Global oil prices were higher today ahead of OPEC+ meeting later in the day. Oil prices rose more than $2 a barrel to $95.44 a barrel, extending Friday’s gains. Analysts are divided whether the Organization of the Petroleum

Zephyr Energy

Oil prices gain ground

Oil futures tilted higher in Asian trade with US crude off January 26 lows, while Brent climbed from February 18 lows, as the dollar index scaled July 14 highs.  It comes ahead of a spate of US data

Zephyr Energy

Oil prices edge up from 6-month lows

Oil prices rose on Wednesday, recovering from six-month lows hit the previous day, as a larger-than-expected drop in U.S. oil and gasoline stocks reminded investors that demand remains firm, if overshadowed by the prospect of a global recession.

Zephyr Energy

Zephyr Energy appoints Panmure Gordon as joint broker

Zephyr Energy plc (LON:ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development from carbon-neutral operations, has announced that it has appointed Panmure Gordon (UK) Limited as its Joint Broker with immediate effect. Colin Harrington,

Zephyr Energy

Oil prices set for weekly climb

Oil prices were down slightly on Friday but set to rise on the week as recession fears eased though an uncertain demand outlook capped gains. Brent crude futures were down 9 cents, or 0.1%, to $99.51 a barrel 0900

Zephyr Energy

Oil prices edge up

Oil prices edged up on Monday, hovering near their lowest levels in months in volatile trading as positive economic data from China and the United States fed hopes for demand despite nagging fears of a recession. Brent crude

Zephyr Energy

Oil prices edge up on supply concerns

Oil prices rose on Thursday as supply concerns triggered a rebound from multi-month lows plumbed in the previous session after U.S. data signalled weak fuel demand. Brent crude futures rose 10 cents, or 0.1%, at $96.88 a barrel

Zephyr Energy

Oil steady as market juggles Fed hike with supply fears

Oil prices were relatively steady on Monday as the market balanced supply fears with expectations that rise in U.S. interest rates would weaken fuel demand. Brent crude futures for September settlement rose 27 cents, or 0.26%, to $103.47

No more posts to show