Zephyr Energy

Zephyr has announced it has entered into an agreement with a U.S.-based capital provider focused in the energy sector (the “Investor”) to fund growth in the Company’s non-operated asset portfolio in the Williston Basin in North Dakota and Montana, U.S.  As part of the Transaction, Zephyr also announces the formation of an acquisition vehicle, Zephyr Hawk LLC, a subsidiary of Zephyr which will hold the Company’s non-operated working interests acquired pursuant to the Agreement.

Under the terms of the Agreement, Zephyr will be responsible for acquiring non-operated assets (“Non-Op Assets”) and the Investor will make available up to US$100 million to fund 100% of capital expenditures (“CAPEX”) related to the drilling, completing and equipping of those Non-Op Assets, which will be contained within a defined geographical area (the “Program Area”). The Program Area consists of counties located in the Williston Basin, although both parties may consider opportunities in other Rocky Mountain basins upon mutual consent. The Investor may elect to participate in opportunities at its discretion, on a case-by-case basis, after conducting its own financial and technical verification. Zephyr retains the right (but not the obligation) to fund up to 33% of pro rata CAPEX. The Investor will earn a majority of the cash flows generated by its pro rata working interest in each well until an agreed upon initial hurdle rate is met.

The Agreement is for an initial term of six months. Whilst there can be no guarantee that appropriate opportunities will be forthcoming or lead to funding, Zephyr expects that it will be in a position to present a number of opportunities to the Investor over the initial six months of the Agreement from its current and expected pipeline.

Since 2021, Zephyr has completed 14 discrete acquisitions in the Williston Basin and built a highly experienced team which previously managed over 4,000 non-operated wells throughout the region. Zephyr’s current Williston Basin investments have become a successful cash-generating engine for the Company, funding all corporate costs and the Company’s ongoing investment in its operated asset in the Paradox Basin, Utah. 

The Transaction contemplated by the Agreement positions Zephyr to capitalise on a robust pipeline of opportunities across the Williston Basin. The combination of Zephyr’s deep regional expertise with the Investor’s financial strength is designed to accelerate the Company’s non‑operated growth, enhance consolidated cash flow, and drive attractive returns for all stakeholders.

Seaport Global Securities LLC served as advisor to Zephyr in connection with the Agreement.

Colin Harrington, Zephyr’s Chief Executive, said:
“We are delighted to announce the entry into this strategic Agreement with a highly respected energy-sector investor and the formation of Zephyr Hawk LLC. Zephyr’s management and deal sourcing capabilities should allow for significant new growth in our non-operated portfolio. 

We view this new Agreement as an excellent way to utilise experienced industry capital to further grow our cash flow foundation.”

Following the fantastic result from the Paradox Basin last week I have spoken to Colin and will write more tomorrow. Suffice it to say that as what is one of the top 10% of all US wells it has the scope to change life in the Paradox for ever. But the Zephyr management has always been better than that and the acquisition of non-operated production has shown the vast gap between them and the rest.

They say ‘everything we do in the Williston is a foundation to help us build the Paradox. We need to grow on both sides and good news in the last few days on both fronts’. This makes so much sense that I think we are going to see plenty of deals being sourced made easier by current market conditions.

Zephyr is quite categorically amongst the best value stocks in the sector, and I look forward to adding more in due course.

PetroTal Corp

Further to its announcement on May 12, 2025, PetroTal Corp has provided additional details on the syndicated term loan facility it has entered into with Banco Interamericano de Finanzas (“BanBif”) and Corporacion Financiera de Desarrollo (“COFIDE”), the Development Bank of Peru. All amounts are in US dollars unless stated otherwise.

Key Highlights

• The Term Loan has been established for the purpose of financing PetroTal’s ongoing investments in erosion control infrastructure in the vicinity of the Bretana oil field; for the common benefit of the operations and the community;
• Drawable in two tranches ($50 million and $15 million), with total commitments of up to $65 million, for a 4-year amortizing term;
• Fixed annual percentage rate of 8.65%, with manageable covenants and no material restrictions on distributions to shareholders – highly competitive terms in a challenging macro environment; and
• This is COFIDE’s first loan focused on environmental and social financing in Peru’s extractive resource sector. PetroTal’s long-standing commitment to the district of Puinahua, and the permanent benefits of the erosion control project for the village of Bretana, were key factors in the Company’s ability to secure the credit facility.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer of PetroTal, commented:
“We are very happy to work with BanBif and COFIDE on this credit facility. Since PetroTal began operations in 2017, our stakeholders in the district of Puinahua have been integral to the success of our Company. Our ongoing commitment to the residents of Puinahua has been evidenced by the establishment of the 2.5% social fund, through which we have now returned a total of $21 million to the district. The erosion control project, which will benefit the village of Bretana for decades to come, is a continuation of our commitment to the region.”

Camilo McAllister, Executive Vice President and Chief Financial Officer of PetroTal, commented:
“PetroTal has evaluated a number of options to finance our ongoing investments in erosion control, and we are pleased to have found valued partners in BanBif and COFIDE. This term loan will be used to fund the construction of critical erosion control infrastructure, allowing us to unlock the full value of the Bretana field, while protecting the surrounding community. Importantly, this loan reinforces our liquidity position and should relieve any doubt about our ability to finance this project without compromising our ongoing development program.”

Jose Antonio Sarmiento Giove, General Manager COFIDE, commented:
“PetroTal has played an important role in the district of Puinahua, since 2017. The Company has always sought to ensure that the local communities benefit from production at Bretana, through improvements in education, health, infrastructure, and sustainability, and this erosion control project is another example of that. The project will aim to reduce further erosion along the river line, protecting local communities and ensuring that villagers can continue to go about their day to day lives without further worry. We look forward to working with the PetroTal team on this project.”

Juan C. García-Vizcaíno, General Manager of BanBif, commented:
¨This loan represents a milestone in our commitment to strengthening collaboration and trust between the private banking sector and the extractive resources industry. The recent formalization of the loan with PetroTal reflects our shared dedication to a stronger and more sustainable energy future. “

Rationale for the Term Loan

Although PetroTal remains well capitalized to execute its 2025 capital program, which includes investments in erosion control infrastructure, the Company has been evaluating alternate means of financing the project. PetroTal sees the erosion control project as critical infrastructure that will ensure the Company captures the full value of Bretana resource for years to come. However, these costs are ultimately expected to be non-recurring, and the Company acknowledges investor concerns that the project represents a drain on near-term free cash flow. With that in mind, this loan essentially ring-fences erosion control expenses within a credit facility, allowing PetroTal to repay project costs over the next four years on favorable terms. There are no material changes to cost estimates for the erosion control project at this time; PetroTal continues to guide to total project costs of $65-75 million, of which $35-40 million has been budgeted for 2025.

Additional Information on the Term Loan

The Term Loan is drawable in two tranches, the first for $50 million and the second for $15 million. With the signing of the contract and the disbursement documents, the amount of the first tranche will be deposited in the escrow account, from which PetroTal will be able to withdraw amounts corresponding to the disbursements already paid. The balance will be held in the escrow account until it is withdrawn to fund cash expenses associated with the erosion control project. The project will begin with the construction of breakwaters 1, 2, and 3, which are for the benefit of the community and in which COFIDE is involved. The second tranche can be drawn within 18 months of the first tranche and will come due at the same date. This is an amortizing term loan, with a maturity date of April 2029. The loan is being extended to PetroTal’s Peruvian subsidiary, PetroTal Peru, with a parent guarantee in place.

The term loan carries a fixed annual interest rate of 8.65%, plus a 1.4% structuring fee payable at loan execution. Key covenants include a liquidity ratio greater than 1.2x, a debt ratio less than 2.0x, and a debt service coverage ratio greater than 1.2x. Dividends may be distributed as long as this does not lead to a breach of financial covenants.

I’m not sure I need to add anything here, following news that PTAL would borrow for the erosion funding, which seems eminently sensible, here is the detail. And with four senior executives adding their few bobs worth it all seems what you would expect for such a loan. 

Touchstone Exploration

Touchstone has announced that its wholly owned Trinidadian subsidiary, Touchstone Exploration (Trinidad) Ltd. (“TETL”), has entered into a Fourth Amended and Restated Loan Agreement (the “Amended Loan Agreement”) with its existing Trinidad-based lender.

As previously disclosed, on December 12, 2024, TETL entered into a Share Purchase Agreement (the “SPA”) to acquire 100 percent of the share capital of a Trinidadian company from a third party (the “Acquisition”). Upon closing, TETL will pay $23 million in cash, in addition to the acquired entity’s December 31, 2024 cash and abandonment fund balances, subject to purchase price adjustments. The total estimated consideration is approximately $28.5 million. Completion of the Acquisition remains subject to the satisfaction or waiver of certain outstanding conditions precedent.

Touchstone currently has $33.5 million in outstanding debt across its two term loan facilities and revolving loan facility. On May 12, 2025, TETL executed the Amended Loan Agreement, which includes the following key terms:

• a new $30 million six-year non-revolving term loan facility, with no principal payments due in the first eleven months, followed by twenty-one equal quarterly repayments;
• revised financial covenants; and
• a two-year extension of the maturity date of the existing revolving loan facility, with optional two-year renewal periods subject to mutual agreement.

Touchstone intends to draw the full $30 million under the new term facility to finance the Acquisition and meet obligations under the amended lending arrangements.

In connection with the revised financing arrangement, the parties to the SPA have agreed to extend the Acquisition’s long-stop date to May 16, 2025. The parties must satisfy or waive all remaining conditions precedent by this date, with closing to occur on a mutually agreed date thereafter.

Again nothing new to see here, TXP announced the Central Block deal a while ago and said that as part of the financing a facility of this magnitude would be confirmed alongside the equity raise, announced last week.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog