Zephyr Energy PLC (AIM:LON:ZPHR, OTCQB:ZPHRF) has secured funding for the extended lateral drilling of the State 36-2R LNW-CC well at its Paradox Basin project in Utah.
It is receiving $7.5 million from a US-based industry investor, in exchange for a 50% non-operated working interest in the well. The funding does not involve any issuance of equity or debt.
Drilling operations are now expected to begin in January 2025, with results due to follow later in the first quarter.
The investor will be on the hook for its proportional share of operating costs and overheads, whilst net revenues from the well will be split equally from the start of production.
Zephyr retains an option to repurchase the working interest at a discounted rate should the investor choose to sell.
"The US non-operated investment market is growing increasingly active, with notable recent transactions in proven basins such as the Williston, as well as in other emerging plays close to our operations in Utah,” chief executive Colin Harrington said in a note.
“We are delighted to be able to utilise this type of US-specific funding for our Paradox project and view it as a highly attractive form of growth capital.”
"With no issue of Zephyr equity or debt, and with no residual upside exposure in the future development of the Paradox project, this is a strong endorsement of the projects' single well economics.”
Harrington added: “We are hopeful that the extended lateral will be the catalyst that ultimately delivers significant value from many more wells to be developed on our Paradox acreage, and this funding provides Zephyr with full flexibility for that future development.”
“We plan to update the market regularly during the anticipated active start to 2025."