Zephyr Energy, the Rocky Mountain oil and gas company, announces the following update on its project in the Paradox Basin, Utah, U.S.A. (the "Paradox").

Zephyr has been working with a project team led by the University of Utah's Energy & Geoscience Institute ("EGI") in collaboration with the Utah Geological Survey (the "UGS") and other Utah-based partners. The project is entitled "Improving Production in Utah's Emerging Northern Paradox Unconventional Oil Play" - its goal is to assess and perform optimisation analyses for more focused, efficient and less environmentally-impactful oil production strategies in the northern Paradox Basin, particularly in the Pennsylvanian Paradox Formation's Cane Creek shale and adjacent clastic zones. This project is sponsored by the U.S. Department of Energy and its National Energy Technology Laboratory (the "DOE").

As part of this study, the EGI and UGS are planning to drill a vertical stratigraphic test well to gather data to improve the understanding of the Paradox Basin play.  The proposed well would target the Cane Creek and potentially the C18/19 reservoirs, acquiring both core data and a comprehensive well log suite in order to provide valuable new basin data.

Over a period of several months, the project team has analysed multiple potential well locations across the Paradox Basin.  Zephyr is pleased to announce that, subject to negotiation of final funding terms and permitting, the EGI and UGS have selected Zephyr-leased acreage on which to drill the well. The Zephyr location was selected for a number of reasons, including the quality of Zephyr's underlying 3D seismic data which (can be tied into the well results to build a stronger integrated predictive model) as well as a favourable surface location which will be sited on a pre-existing pad.

It is proposed that the test well will be spudded before the end of this year and be funded by the existing DOE grant to EGI.

The spudding of this test well would provide multiple benefits to Zephyr - not only will the Company be able to utilise valuable data acquired from the test well, but Zephyr believes that data gained from the well would be highly beneficial to the Company's continuing farm-in and institutional funding discussions regarding its Paradox acreage.

Colin Harrington, Zephyr's Chief Executive Officer, said,
"I'm delighted by this development which should see the first well spudded on the Company's Paradox acreage before the end of this calendar year.

"The spudding of this test well will be a significant milestone for Zephyr, and the data gained will be of fundamental importance as we move forward with farm-in discussions for our Paradox project.

I would like to thank the DOE, EGI, and UGS for all their efforts to date - we are excited to be partnering and working alongside such respected organisations on this project.

In addition to progressing our Paradox Basin asset, our team continues to evaluate production and development opportunities in the DJ Basin, and we look forward to updating the market on both fronts in the near term."

Paradox Basin, Utah Highlights

• Zephyr operates an approximate 20,000 acre leaseholding with a 75% working interest
• Excellent 3D seismic across the majority of their position
• Potential for a natural fracture development, which may provide better economics than existing U.S. unconventional resource plays
• Partnership with a U.S. Department of Energy funded research team to increase the geologic understanding and industry awareness of the Paradox Basin

KeyFacts Energy Industry Directory: Zephyr Energy