Zephyr Energy (LSE:ZPHR) reported progress at its operated Paradox project in Utah during the six months ended 30 June 2026, while production from its non-operated assets exceeded management forecasts.
The company advanced operational and regulatory work required for initial gas exports from Paradox and increased its operated land position during the period. It also continued discussions relating to a potential farm-out and gas offtake arrangements.
Zephyr said its approach to developing the project remains focused on capital discipline, operational safety, risk management and stakeholder engagement.
Pipeline Inspection Supports Paradox Gas Export Plans
During the period, an inline inspection was successfully completed on the Enbridge-operated pipeline intended to transport gas from the Paradox project.
The inspection confirmed the integrity of the pipeline, allowing regulatory work to continue towards increasing its permitted operating pressure.
Zephyr said the results gave its board confidence that the proposed pressure uprating should not result in further operational hurdles and that the regulatory process being led by Enbridge will conclude satisfactorily. These remain company expectations rather than completed regulatory outcomes.
Following the inspection, Zephyr approved initial expenditure from its existing cash resources for additional gas-processing engineering and well-related work.
Zephyr Targets Up to 15 MMscf/d Processing Capacity
The additional engineering work is targeting initial gas-processing capacity of up to 15 MMscf/d, compared with the previous base case of 5 MMscf/d.
Zephyr expects initial Paradox gas production to come from the State 36-2R and Federal 28-11 wells. Additional wells could subsequently be brought into production, subject to available cash flow and required approvals.
The company is also in the late stages of selecting a marketing partner for the project.
Atlas LOI Could Provide Up to US$15 Million
Zephyr has signed a non-binding letter of intent with Atlas Oil Company covering a potential commodity purchase agreement.
If completed, the proposed arrangement could provide up to US$15 million of non-dilutive pre-production financing.
Zephyr said the potential funding could be used for infrastructure, well workovers and expanded gas-processing facilities. The agreement remains non-binding and subject to completion of definitive arrangements.
Non-Operated Production Exceeds Management Forecasts
Production from Zephyr’s non-operated portfolio exceeded management forecasts during the first half.
The company also continued changes to the portfolio through disposals of non-core acreage and the addition of drilling opportunities to its strategic partnership.
Management expects further developments as it works towards initial commercial production from the Paradox project.
About Zephyr Energy
Zephyr Energy is an oil and gas company focused on assets in the Rocky Mountain region of the United States.
Its operated portfolio includes the approximately 70,000-acre Paradox project in Utah, including reserves and resources within the White Sands Unit. The company also owns non-operated production interests across the Williston and other Rocky Mountain basins and has a US$100 million strategic investment partnership.
Leave a Reply