Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development, provides an update on its project in the Paradox Basin, Utah, U.S. and progress with the State 16-2 well.

Zephyr is delighted to announce that the State 16-2 stratigraphic test well was successfully drilled to a measured depth of 9,745 feet total depth ('TD'). Drilling operations were safe and effective, were conducted in accordance with Covid-19 related guidance and restrictions, and were completed well within the Company's forecast timeframe.

Zephyr's primary objective was to drill and set casing at 6,437 feet measured depth in order to provide a host wellbore for a future horizontal side track. The Company achieved this goal within 13 days from spud - and subsequently reached TD within 19 days of spud, a marked improvement over historical drilling efforts in this part of the Paradox Basin. The reduction in drilling time represents a major operational success, and demonstrates that the cost of future development wells can be significantly reduced from earlier estimates, thereby improving the overall potential value of the Paradox project for Shareholders.

Zephyr's secondary objective was to acquire new data to improve the understanding of its Paradox acreage position. The Board of Zephyr is pleased to report that Zephyr's data acquisition programme successfully secured the following: Approximately 113 feet of continuous whole core across the historically productive Cane Creek reservoir interval (the 'Cane Creek'); Rotary side wall cores in seven shallower exploration targets and Gamma ray, neutron density, resistivity, formation lithoscanner and sonic wireline log data across the bulk of the Paradox Formation, all of which add significant new petrophysical information to our existing suite of geologic data.

The 113 feet of Cane Creek core, believed to be the first whole core ever retrieved in the northern part of the Paradox Basin, has been shipped from the well site to a laboratory where detailed analysis will now commence.

Initial indications show similar log responses to offset wells, suggesting the presence of hydrocarbons in multiple reservoir intervals. The Company will now begin the work to integrate all log and core data to fully explore the initial findings in these complex reservoirs. The analyses will then be combined with Zephyr's existing 3D seismic data, and Shareholders will be updated with detailed results as they become available over the coming weeks.

Now that drilling and data acquisition operations are complete, the State 16-2 well will be temporarily plugged back at 6,437 feet TD. This provides Zephyr the opportunity to economically re-utilise the existing wellbore as the sidetrack host from which a future horizontal appraisal well can be drilled. Planning for this horizontal lateral is already underway, and it will seek to target a series of features identified by our high-quality 3D seismic data. If successful, the State 16-2 lateral would deliver first commercial production from the Company's Paradox project.

Colin Harrington, Zephyr's Chief Executive, said 'This is a fantastic result - we delivered on our two major objectives by successfully drilling to our target depth ahead of forecast, and by collecting significant amounts of reservoir data across multiple zones that suggest hydrocarbon presence.

'Our drilling team and contractors worked diligently to deliver a safe and effective operation - one which reached our Cane Creek target within 19 days from spud. When compared to all historical wells in the vicinity, this was a 50% reduction in time versus the previous record holder, and a 58% reduction in time versus the average of those historical wells. In addition to the rapid drilling results, hole conditions and well stability remained excellent throughout the operations.

'The ability to reduce drilling time is important in many ways. Most significantly, it demonstrates that with a modern drilling rig, advanced tools and an experienced operations team, development of our leasehold may be executed more quickly and at a lower cost than previous estimates, which therefore increases our already bullish view of future project economics and value.

'The securing of the continuous core is also significant. Our State 16-2 drilling operation successfully acquired the first substantive rock samples from the Cane Creek reservoir in this northern part of the Paradox play. In addition, our sidewall coring collected the first rock capable of measurement from seven additional overlying reservoirs. We also gained high quality log data across the majority of the Paradox Formation. The analysis and interpretation of this data has now commenced and will serve to substantially improve our understanding of the geology, the potential upside - and, when integrated with our existing 3D seismic, how best to target and test the natural fractures that exist in the play.

'It's important to bear in mind the relatively untested potential of the Paradox Basin. The Cane Creek reservoir has produced over 10 million barrels of oil to date. However, the US Geologic Survey estimates a basin-wide, mean potential 1.2 billion barrels of oil equivalent in the Cane Creek reservoir alone, indicating a substantial potential yet to be targeted. Further prospectivity also exists in other overlying reservoirs from which we secured data, and these additional reservoirs also appear to hold the presence of hydrocarbons. The data acquired from the State 16-2, when integrated using modern tools and the resources of our world class academic and industry partners, is a massive step forward in our pursuit to unlock the value which we believe is inherent in our Paradox project and across this Basin.

'I'd like to conclude with a note of gratitude for our team, our partners and our contractors. This well was drilled around the clock in challenging conditions, through snow storms and sub-zero temperatures, and the work kept twenty-two dedicated people away from their families over the holidays. Their collective performance was exemplary, as was their adherence to our COVID-19 protocols. I'd like to thank them all, once again, for their hard work, resilience and professionalism.'

Contact:

Colin Harrington

Tel: +44 (0)20 7225 4590

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