Zephyr Energy Plc (AIM: ZPHR): Reaching key agreement with Enbridge
• Zephyr has entered into a framework agreement with Enbridge to allow for interconnect services from Zephyr’s Powerline Road Gas Plant into Enbridge’s 16” pipeline, with ultimate access to the Williams Northwest Pipeline and enabling sales into the broader Western U.S. gas market.• This represents a major de‑risking milestone, as securing a tie‑in agreement was the key uncertainty affecting the timeline for first gas from the Paradox project.
• We maintain our expectation of first gas in 2026. Enbridge will construct, own, operate, and maintain the interconnect facilities.
• The Paradox project is strategically positioned to supply the premium‑priced West Coast gas market. Zephyr has received multiple offtake proposals—including options that provide funding for additional drilling—and could announce a term sheet in 1Q26. Discussions with potential farm‑in partners are also ongoing.
• We reiterate our target price of £0.16 per share. The shares currently trade at ~one-third of the business value based on 2P reserves alone. Near-term catalysts include securing a marketing agreement for oil and gas production and progress toward a partner for the Paradox project.
Unexpected US$1.14 mm cash boost
Zephyr received an unsolicited offer for a minority portion of its recently acquired acreage in the Powder River Basin. As no production or development/appraisal activity was planned on this acreage, the company elected to divest it for US$1.14 mm. Taken together, the two non‑core divestments completed since the August acquisition have already recovered roughly US$2 mm of the US$7.3 mm purchase price. Williston Basin production averaged 925 boe/d in 3Q25, excluding NGL volumes of approximately 80–100 boe/d. This marks a significant increase from 632 boe/d in 2Q25. The restart of the Slawson-operated wells in October has added a further ~130 boe/d, providing additional momentum into 4Q25.
Valuation and financials
Our Core NAV and ReNAV stand at £0.07 per share and £0.16 per share respectively. These valuations are underpinned by the company’s 2P reserves, 2C resources, and the risked value of only one overlying Paradox reservoir (out of eight), highlighting the significant upside potential from further development. Despite weaker oil prices, Zephyr’s senior lender has renewed the company’s US$15.15 mm revolving credit facility through 16 December 2026. The facility’s fixed interest rate has been reduced from 10% to 8.99% per annum, reflecting both the lower interest‑rate environment and the reduced risk profile of the business, including its improved financial leverage.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.