Zephyr Energy Plc (AIM: ZPHR): Accretive non-core divestments. Non-binding marketing/funding offers for the Paradox
• Zephyr has completed additional divestments linked to its recent non‑operated acquisition, including ~160 acres of non‑operated, undeveloped leases sold for US$1.3 mm, and royalty plus working interests in a non‑producing Powder River Basin wellbore sold for US$0.4 mm in cash, with the buyer also assuming ~US$0.4 mm of near‑term capex obligations.• These sales were not anticipated and further strengthen Zephyr’s cash position. Including the divestments announced in 2H25, Zephyr has now recovered US$4.7 mm of the US$7.3 mm acquisition cost without material impact on acquired production. In addition, the assets have generated US$1.7 mm of cash flow and US$2.5 mm of approved investment opportunities funded through the drillco JV.
• With stronger oil and gas prices, and benefitting from a largely unhedged position, Zephyr is seeing increased cash flows and an expanded set of near‑term investment opportunities in its portfolio.
• In the Paradox Basin, Zephyr has received indicative, non‑binding proposals that would provide hydrocarbon marketing solutions and funding for additional drilling. We expect an update shortly.
• Enbridge, owner and operator of the 16‑inch gas pipeline connecting to the Williams Northwest Pipeline system, is conducting an in‑line inspection to validate pipeline integrity and is progressing the associated regulatory process.
• We note the pro fossil fuel stance of the US administration and we are not concerned about the local regulatory environment. Notably, TotalEnergies recently reached an agreement with Washington to cancel its US offshore wind projects in exchange for a US$1 bn indemnity and a commitment to invest in US oil and gas instead.
• Pending greater visibility on the Paradox development pathway, we reiterate our £0.16 per share target price.
Non-operated production
4Q25 production averaged 983 boe/d (excluding NGLs), fully in line with our expectations. Output has increased significantly from the 2Q25 average of 632 boe/d.
Valuation and financials
Our Core NAV stands at £0.07 per share, with a ReNAV of £0.16 per share. At the current share price, the market is assigning less than half the value implied by the company’s 2P reserves alone. Our risked upside reflects the value we assign to the 2C resource base and to only one of the eight overlying Paradox reservoirs.
Rose Petroleum is an oil and gas (O&G) and mining company with exploration assets and an operational crushing and flotation mill. Co.'s principal activities are the exploration and development of O&G resources together with the evaluation and acquisition of other mineral exploration targets, principally gold, silver, uranium and copper, and the development and operation of mines in Mexico. In Co.'s O&G division, the area of focus is on two unconventional oil and gas basins in the U.S.: the Uinta Basin and the Paradox Basin. In its mining division, Co. continues its milling operations through its subsidiary, Minerales VANE S.A. de C.V., which owns the SDA Mill in Mexico.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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