Zephyr Energy Plc (AIM: ZPHR): All eyes on upcoming CPR for the Paradox
• 2Q25 sales (excluding NGLs) averaged 632 boe/d, reflecting continued operator-imposed constraints on the six Slawson wells due to prevailing low commodity prices. Aggregate production from these wells in 1H25 was 141 boe/d, below management’s forecast of 214 boe/d. Importantly, there are no reservoir integrity concerns. With the recent completion of a production acquisition which has added approximately 380 moe/d from June, and the potential for the Slawson wells to come back online, we believe production in 2H25 will be significantly improved.• We identify two near-term catalysts that could drive a share price re-rating. First, Zephyr is expected to publish a Competent Person’s Report (CPR) for the Paradox project imminently. This report is anticipated to include a material resource upgrade and greater clarity on the forward development plan.
• Second, we expect imminent approval by Zephyr’s funding partner for several drilling opportunities across the non-operated Rockies portfolio. Up to 18 locations are under consideration, with funding potentially sourced from Zephyr’s US$100 mm strategic partnership facility.
• Ahead of the Paradox CPR release, we reiterate our target price of £0.15 per share.
Path forward for the Paradox
Following the imminent publication of the CPR, Zephyr will look for a farm-in or investment partner to accelerate and scale-up the development of the Paradox. The company also needs to improve the gas processing infrastructure and complete the gas marketing agreements. The contracts with the owner of the nearby 16-inch pipeline need to be also completed. Operationally, Zephyr plans to undertake workovers on the legacy 28-11 and 16-2 wells to bring additional volumes online. Beyond the core Cane Creek reservoir, the company is targeting the overlying formations, which hold an estimated 270 mmboe of prospective resources—representing significant upside potential pending successful appraisal.
Valuation
Our Core NAV is unchanged at £0.04 per share with a ReNAV of £0.14 per share. Our total unrisked NAV, including the shallower reservoir overlying the Cane Creek in the Paradox, is ~£0.80/sh.
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.
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