Zephyr Energy (ZPHR)
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.
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