Zephyr Energy Plc (AIM: ZPHR): Waiting on well 36-2 test
• FY23 production, revenue and operating income had been reported previously.• At Well 36-2, two thirds of the tubing has already been pulled out and Zephyr is cautiously progressing the activity to pull out the rest. This can take a few more weeks. The timing of the well test is the main factor driving the delivery of first production in the Paradox.
• Well 16-2 is expected to be worked-over once Well 36-2 has been tested. We understand the results of the analysis subsequent to the testing of the well are consistent with a salt blockage. The company is performing some further work on salt precipitation mitigation measures with vendors and testing different water samples.
• The surface facilities will be sized according to the stabilized flow rates achieved at both wells.
• Dominion continues to be expected to start delivering gas to Green River in late 3Q23 or early 4Q23.
• We re-iterate our target price of £0.18 per share in line with our ReNAV.
Balance sheet
Zephir held US$7.5 mm in cash at 16 June. We have assumed that the company has fully drawn on its debt facilities with overall debt standing at ~US$32 mm. The current work at Well 36-2 is covered by Zephyr’s insurance and, while the company has not yet been re-imbursed, we understanding that the insurer has already approved the re-imbursement of some costs. We anticipate minimum net capex in 2H23.
Forecasts and Valuation
We have updated our model to incorporate FY22 actuals. Our ReNAV is broadly at £0.18 per share. With the Slawson, State 36-2 and State 16-2 wells onstream, we continue to forecast overall net production increasing from ~1 mboe/d in 1Q23 to >4.5 mboe/d in 1Q24 and >7.5 mboe/d in 4Q24. We now forecast Zephyr to hold >US$50 mm mm in net cash by YE24. Our unrisked NAV for the 39 mmboe 2C contingent resources in Cane Creek reservoir targeted by the State 36-2 well in the Paradox basin is £0.15 per share.
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.