LONDON (ShareCast) - (Sharecast News) - Zephyr Energy, a Rocky Mountains-based oil and gas company, announced successful results from the second phase of production testing on its State 36-2R LNW-CC well at the Paradox Basin project in Utah on Friday.
The AIM-traded firm said the test yielded peak production rates of over 2,100 barrels of oil equivalent per day - a significant result given the well's limited 130-foot completed reservoir interval.

It attributed the strong performance to the successful acidisation of the well, which removed near-wellbore formation damage and improved reservoir permeability, marking the first known use of the technique in the Paradox Basin.

The positive outcome could reduce future reservoir risks and eliminate the need for costly hydraulic stimulation, common in other US onshore plays.

Zephyr said the test also recorded increased liquid yields, peaking at 510 barrels of oil equivalent per day of condensate and light volatile oil, and notably, almost zero water production - both of which are expected to boost the well's economic viability.

The company said it planned to use the results to explore development opportunities for the Paradox project with US-based industry partners.

It said it was evaluating whether to produce the well in its current form or extend the wellbore to increase long-term hydrocarbon recovery, as the well was permitted for up to a 10,000-foot lateral extension.

Further data analysis, including a detailed fluid laboratory assessment, was underway to better characterise the field's fluid composition and potential.

Zephyr said it was also planning to release an updated competent persons report based on the recent data from the State 36-2R well and other wells in the Paradox project.

The company said it believed the developments offered a strong foundation for accelerating the appraisal and development of its flagship project.

"This is a highly significant milestone for the company in its development of the White Sands Unit and its wider Paradox project acreage," said chief executive officer Colin Harrington.

"This is the first known use of acidisation stimulation in the Paradox Basin and the results have been extremely encouraging - the well's deliverability and permeability are particularly notable, leading to the strong peak production rates witnessed.

"By materially reducing completion costs and increasing chances of high productivity without having to target only major natural fracture zones or deploy higher cost hydraulic stimulation, the results from the latest well test could have significant positive implications for the future value of the Paradox project."

Harrington said the board was now considering all options, including producing from the State 36-2R and the potential to materially increase the drained area of the well via the extension of the current lateral.

"Safe operations and capital efficiency will be taken into consideration when evaluating the next steps for the Paradox project.

"In parallel, and given these highly positive results, we have commenced discussions around asset-level partnership opportunities with US-based industry partners.

"In all, the findings from the two production tests have considerably advanced our understanding of the Paradox Basin and have opened up a highly effective new development alternative."

At 1036 BST, shares in Zephyr Energy were up 12.5% at 4.28p.

Reporting by Josh White for Sharecast.com.

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