Zephyr Energy Plc (AIM: ZPHR): Production guidance for non op. assets in line. Waiting for results of well test in the Paradox.
• 2Q24 production in the Williston Basin was 1,226 boe/d. This excludes natural gas liquids (historically 150-200 bbl/d). This represents an increase of 7% compared to 1Q24 but 2Q24 production from the six wells Slawson wells continues to be partially impacted by gas export infrastructure constraints.• The FY24 production guidance for the Williston Basin has been set at 1.1-1.3 mboe/d excluding natural gas liquids. Including natural gas liquids, we estimate that this would equate to 1.25-1.5 mboe/d. This is in line with our expectations.
• The key near term newsflow is the upcoming result of the acidization and subsequent well test at the State 36-2R LNW-CC well in the Paradox Basin. The purpose of the acidization test is to further remove any drilling mud emulsion from the fracture network.
• In the event the acidization does not remove sufficient mud from the fracture network, we note that the design of the initial horizontal well was for a (up to) 10,000’ lateral and the well could therefore be re-entered accordingly. Such a well would target a much larger area of natural fractures and have hydraulic stimulation.
• Pending the result of this second test at State 36-2R LNW-CC well, we re-iterate our target price of £0.12 per share.
Valuation
Our ReNAV is unchanged at £0.12 per share. Fully derisking the Cane Creek contingent resources would add £0.04 per share to our ReNAV.
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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