Zephyr Energy, an oil and gas company focused on responsible resource development in the Rocky Mountain region, provides an update on its project in the Paradox Basin, Utah, U.S. where the Company is preparing to spud the 'dual-use' State 16-2 well before the end of the year.

As previously announced, Zephyr is 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, to drill the vertical State 16- 2 well. This project is sponsored by the U.S. Department of Energy and its National Energy Technology Laboratory (the "DOE"), with the first US$2 million of well expenditure funded by way of a DOE grant. Up to US$1 million of incremental expenditure in excess of the DOE's grant will be funded by Zephyr, utilising a portion of the proceeds from the Company's recent oversubscribed equity placing.

With the funding of the State 16-2 well secured, Zephyr's team is focused on the operational preparations for the drilling of the well. New milestones achieved include the following:

• A US$600,000 initial tranche of DOE funding has been received by Zephyr. The funds received, equivalent to 30% of the US$2 million grant total, will be partially utilised to cover near-term costs including bonding, permitting and preliminary ground works at the site of the 16-2 well. The balance of the DOE funding will be received by Zephyr in three further tranches once additional routine well development milestones are met.
• Zephyr has bolstered its operations team with the appointment of Bruce Houtchens, a highly experienced Drilling Manager who will assist the Company on the State 16-2 project. Bruce previously served as Manager of Drilling & Completions for Fidelity Exploration & Production, the most active and successful driller in the Paradox Basin over the last decade. At Fidelity, Bruce coordinated all of Fidelity's drilling and completions operations in the Paradox and the Bakken, with direct management of annual drilling budgets of up to US$400 million. He brings a wealth of Paradox Basin drilling experience to the Zephyr team.
• A detailed initial well design is largely completed, which has allowed the Company to commence the tender process for project contracts. Project contracts currently out for bid include the solicitation of major items such as the rig contract. The newly bolstered Zephyr project team has expedited this process in order to award contracts in a timely manner to continue to ensure drilling activities before the end of the year.

Colin Harrington, Zephyr's Chief Executive, said 
"I am delighted with the progress made to ensure a successful and timely spud of the State 16-2 well.

"In particular, I'm very pleased to welcome Bruce to our project team - I'm not aware of anyone who's drilled more successful horizontal Paradox Basin wells over the last decade. I know he is excited to continue to deliver safe and successful wells within this basin, and to continue the process of overseeing systematic well cost reductions to improve future project profitability.

"Bruce's direct drilling experience in the Paradox Basin will be absolutely invaluable as we move forward with our own drilling activity - activity which we believe will also benefit from our excellent 3D seismic coverage and site selection of a top-ranked location in our portfolio.

"I'd also like to continue to thank the EGI and our other Utah-based partners, all of whom are working very hard to assist Zephyr with the launch of this exciting project. I'm very encouraged by the momentum that we are building.

"We will keep the market updated regularly as we work to unlock the value from our Paradox Basin holdings."

KeyFacts Energy Industry Directory: Zephyr Energy