Zephyr Energy : Turner Pope Research Note, 26th April 2022

Turner Pope Research Note, 26th April 2022

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Zephyr has published much-anticipated highlights from its updated Competent Person's Report ('CPR') covering its assets in the Paradox Basin, Utah (the 'Paradox Project'). More fully recognising its scale and substantial long-term production potential, the independent reserves and resource evaluation not only permits management to book first Paradox Basin Proved Reserves based on the success of State 16-2, but also details a substantial increase on the 2018 CPR's Contingent Resource estimates across the Cane Creek Reservoir along with a Maiden Prospective Resource Estimate. Combining Zephyr's total Paradox Basin 2P Proved Reserves with those of its existing Williston Basin non-operated portfolio now produces an estimated net present value at a ten per cent discount rate ('NPV-10') of over US$111 million (up from zero value ascribed in 2018) with substantial multiples of additional upside potential from success cases related to its contingent and prospective resources. Management's ambition is now to increase all reserve and resource classes by this time next year and, ultimately to unlock the next unconventional onshore resource play in the U.S. Indeed, the fact that Sproule has estimated the Paradox Project's unrisked recoverable (3P/3C/3U) boe to be more than 3x previously stated management guidance demonstrates the true scale of this opportunity. Given the cash now being generated through the Group's portfolio of non-operated working interests, its ability to deliver exactly this through funded, organic growth now appears to be significant. We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to Zephyr Energy plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination. The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient.

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