Carbon-neutral oil and gas specialist acquires US base in “landmark” £26.5m deal

Carbon-neutral focused oil and gas specialist Zephyr Energy PLC announced the completion of its $36m (£26.5m) acquisition of non-operated working interests in currently producing and near-term production wells in the Williston Basin, North Dakota, USA.

The acquisition consists of working interests in 163 currently producing wells with an average working interest of approximately 4 per cent. In addition, a further 18 drilled but uncompleted wells are scheduled to come online by the end of June 2022, with 47 other locations to be drilled in the future.

Proved reserves acquired were estimated, by third party consultant Sproule Incorporated, to be 2.7 million barrels of oil equivalent, with an estimated post-tax net present value of$57.1m (£42m) at a ten per cent discount rate and a total estimated undiscounted future cash flow of $82m (£60m) at current commodity prices.

Colin Harrington, chief executive of Zephyr, said: “The closing of this acquisition is a landmark moment for the company. We’ve acquired an accretive, high-quality, high-margin production base with significant near-term growth potential, and in doing so we have nearly tripled Zephyr’s existing non-operated production and more than doubled cash flow per fully diluted share.

“Combined with our recent fundraise, the acquisition’s cashflows will support growth across our broader portfolio, including funding a proposed high impact three-well drilling programme on our operated flagship Paradox project in the second half of 2022.

“Finally, in line with our core beliefs and public commitment, we intend to ensure that all net hydrocarbons produced from the acquisition will have a “net-zero” Scope 1 operational carbon impact while under our ownership.

“This will be achieved largely through our programme of purchasing Verified Emission Reduction credits to mitigate all Scope 1 carbon emissions. As always, we will strive to operate as responsible stewards of investors’ capital and of the environment in which we work.”

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