Zephyr Energy PLC (LON: ZPHR) share price rallied 16% after completing a highly successful well test at its State 16-2LN-CC well in the Paradox Basin project located in Utah.
The oil and gas company revealed that the well generated an average of 716 barrels of oil daily despite having a rate-constrained high of 1,083 barrels of oil.
The firm revealed that the well’s peak production could hit 2,100 barrels of oil equivalent daily without the constraints implemented to minimise flow assurance issues from the salt deposited in the wellbore.
Zephyr also revealed that gas production rates were higher than expected, coming in at 10 million cubic feet squared of gas daily and 500 barrels of oil equivalent in liquids produced daily.
The initial tests indicated that the State 16-2LN-CC has a single well ultimate recovery potential of 2.65 million barrels of oil equivalent, much higher than the pre-drill estimate of 0.85 million.
Investors cheered the test results, as evidenced by the significant rally in Zephyr Energy’s share price.
Colin Harrington, Zephyr’s CEO, said: “I am incredibly excited about the production test results announced today, and even more so about the significant implications for further drilling and potential full-field development of our Paradox project.”
“Not only does this successful production test indicate the potential for a highly profitable single well, but we also believe the test will lead to a substantial reduction in development risk across our acreage while allowing for a future systematic development of the project.”
Zephyr also has multiple options for monetising the significant gas potential discovered at the well, such as selling it to the nearby gas infrastructure. The company could also sell the gas to a crypto mining facility colocated within the area.
The oil and gas company has appointed an experienced advisory board to guide it in deliberations about moving the project forward.
Harrington concluded: “In conclusion, we are delighted to be able to report that we appear to have a large and profitable first well on our Paradox asset – one which has far exceeded our expectations and which has validated the Board’s decision to utilise hydraulic stimulation.”
Investors interested in Zephyr Energy may find its current share price quite attractive as they have pulled back to the 7.79p support/resistance zone if the level holds for the next few days.
*This is not investment advice. Always do your due diligence before making investment decisions.
Zephyr share price.
Zephyr Energy share price rallied 16.03% to trade at 8.76p, rising from Tuesday’s closing price of 7.55p.
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