공고 • Oct 24
Zephyr Energy plc Completes All Preparations Needed to Commence Drilling the Fully-Fundedstate 36-2 Lnw-Cc Well, Pending Receipt of the Final Federal Drilling Permit
Zephyr Energy plc has completed all preparations needed to commence drilling the fully-fundedState 36-2 LNW-CC well, pending receipt of the final Federal drilling permit. While Federal drilling permit approvals have slowed markedly across the entire U.S. domestic oil and gas industry, the Company remains confident it will be able to commence drilling in the near-term. In anticipationof the receipt of the final permit, and in order to be in position to spud the well shortly thereafter, the Company recently completed construction of the shared pad on which the State 36-2 LNW-CC and the State 36-3 LN-C9 wells will be located. The State 36-2 LNW-CC well will be the initial well drilled and will target the Cane Creek reservoir. The State 36-3 LN-C9 exploration well (targeting the shallower C9 reservoir) is being permitted in parallel. The pad for the wells is located in an area with good quality road access and adjacent to the recently acquired 6-inch gas gathering pipeline, providing efficient access to gas export infrastructure. With the exception of the final Federal permit, all regulatory approvals required to drill the State 36-2 LNW-CC well have been secured. The Company is in advanced discussions to execute a rig contract shortly after the final permit is approved, details of which will be announced in due course. The two wells mentioned above are both located within Zephyr's White Sands Unit (the "WSU"), the same Federal unit in which the previously drilled State 16-2LN-CC well is located. A third well is expected to be drilled outside of the WSU, and will be drilled in partnership with, and operated by, Kirkwood Oil and Gas LLC, the Paradox Basin's largest operator, State 16-2LN-CC well production test update; The State 16-2 LN-CC well was successfully drilled, completed and tested in late 2021, although rates were constrained throughout the production test due to surface equipment limitations. Since then, Zephyr's operations team, working with a team of external consultants, has spent significant time designing surface facilities to re-equip the well pad in order to: a) test plans for improved flow assurance; b) prepare for eventual gas export and continual production operations; and, c) obtain further production data for overall well and field management. The Company, which previously announced plans to conduct an additional production test on the well, announced that all permits needed for that production test have been approved and operations to construct further surface facilities on the well pad are in progress. Multiple service providers are currently active on site, and the wellbore has been re-entered to prepare for the commencement of the additional well test, currently envisioned to begin mid to late November 2022. Cooperation Agreement with Kirkwood Oil and Gas LLC; The Company announced it has entered into an agreement with Kirkwood Oil and Gas LLC and its affiliate, Wesco Operating Inc., in which Zephyr and Kirkwood agree to co-operate and collaborate on the extension and further development of the Cane Creek play in Grand County, Utah - including the drilling of a new, Kirkwood-operated well. Kirkwood, based in Wyoming, operates over 500 wells across 39 oil fields in the Rocky Mountain region and is currently the operator of the Cane Creek oil field located 12 miles to the south of Zephyr's White Sands Unit in the Paradox Basin. Kirkwood, via its operating subsidiary Wesco, is the most active regional operator in the northern Paradox Basin. The Agreement allows for the sharing of certain proprietary data in order to assist both companies with the development of their individual acreage positions. In addition, the Agreement also allows for the planning and drilling of a 2-mile horizontal well targeting both Zephyr and Wesco held acreage. The planned well will be located in Grand County, Utah immediately to the south of the Wesco-operated Cane Creek Field. Cooperation on the planned well would involve sharing design and lessons learned from the Zephyr-operated State 16-2LN-CC well and utilising Wesco's considerable experience as operator of the Cane Creek oil field. Wesco will act as the operator of the planned well, and each party will hold a 50% working interest with all expenses shared pro-rata. The objective of the planned well is to test the potential of modern hydraulic stimulation and completion (as recently performed at the State 16-2LN-CC well) on the Cane Creek reservoir within the black oil fairway of the play. The well will be drilled from an existing pad with existing infrastructure, thereby reducing environmental impact and the need for further gathering line infrastructure. The planned well location is immediately offset by a 2014 vintage horizontal well (with a 4,900-foot lateral) which targeted the productive, highly over-pressured, naturally-fractured Cane Creek reservoir. That well was subsequently recompleted with a small volume diesel stimulation and has produced over 188,000 barrels of oil to date, at very low water cut, and is still in production. By applying the latest completion techniques, it is expected that initial oil rate and expected ultimate recovery from the planned well will be increased both by drilling a longer well and improving the overall reservoir drainage. Success at this location would open new play opportunities for both companies on their existing acreage positions. Drilling operations remain subject to regulatory authority approvals.
