Zephyr Energy reports successful second-phase production test at State 36-2R well

Zephyr Energy plc, a company focused on responsible resource development and carbon-neutral operations, has announced a successful completion of the second-phase production test at its State 36-2R LNW-CC well located in the Paradox Basin, Utah, United States. The test results have exceeded expectations, achieving peak production rates of over 2,100 barrels of oil equivalent per day (boepd) from a completed reservoir interval of only 130 feet.

The test marks a significant achievement for Zephyr Energy’s flagship Paradox project and indicates a promising future for the play. The company highlighted that the acidization operation, used for the first time in the Paradox Basin, successfully removed near-wellbore formation damage and enhanced reservoir productivity. This breakthrough technique not only improved permeability but also suggests a potentially lower-risk and cost-effective alternative to hydraulic fracturing, traditionally used in other U.S. onshore resource plays.

Strategic Significance: A New Approach to Reservoir Stimulation

Zephyr Energy’s acidization stimulation method is a notable first for the Paradox Basin and represents a significant step forward in optimizing well productivity. The results demonstrated that acidization could enhance reservoir quality by dissolving calcite and dolomite minerals, increasing porosity and permeability where these minerals were dissolved. This technique offers a promising alternative to hydraulic stimulation, which is often more costly and risky.

The company reported that the second-phase production test yielded variable liquid yields, with peak rates including approximately 510 boepd of condensate/light volatile oil. Notably, the test showed almost zero water production, a key factor that could significantly reduce operational costs by minimizing water disposal requirements.

Expert Insight: Implications for Future Development

Colin Harrington, Chief Executive of Zephyr Energy, highlighted the significance of the test results for the company’s broader development strategy in the Paradox Basin. He stated, “This is a highly significant milestone for the Company in its development of the White Sands Unit and its wider Paradox project acreage. The results from the latest well test could have significant positive implications for the future value of the Paradox project.”

Harrington further emphasized that the acidization results could pave the way for more cost-effective and efficient development strategies in the Paradox Basin. By reducing the need for more invasive hydraulic fracturing, the company could enhance productivity across its acreage.

Future Outlook: Expanding Production Potential and Seeking Partnerships

Given the successful outcomes from the State 36-2R well, Zephyr Energy is exploring opportunities to accelerate the development of the Paradox project. The company has initiated discussions with U.S.-based industry partners to explore potential collaborations, including farm-in agreements or joint ventures, to further appraise and develop the field.

In the near term, Zephyr Energy is considering whether to produce from the well immediately or defer production to potentially extend the lateral and increase overall hydrocarbon recovery. The well is permitted for a 10,000-foot lateral extension, which could significantly enhance connected volumes and leverage the positive impacts of the acidization technique.

With these promising results, Zephyr Energy plans to produce an updated Competent Persons Report to reflect the new data generated from recent tests and enhance the overall valuation of the Paradox project.