Zephyr Energy gets another $1m in research grant funding

Rocky Mountains-focussed oil and gas company Zephyr Energy announced the signing of an amended cooperation agreement for an additional $1m in non-dilutive research grant funding on Friday.

The AIM-traded firm said the funds would be used for data gathering during the ongoing drilling of its State 36-2 LNW-CC well in Utah’s Paradox Basin.

It initially received a total of $2.1m in US government-backed research grant funding for operations at State 16-2 in 2020 and 2021.

Since then, the company’s technical team has worked with the research project team, led by the University of Utah's Energy and Geoscience Institute in collaboration with the Utah Geological Survey and other Utah-based partners.

The project funding was still sponsored by the US Department of Energy, and its National Energy Technology Laboratory.

Zephyr said the objective of the additional funding was to acquire further geological data to assist in the understanding of the Cane Creek reservoir, and of the additional reservoirs overlying Cane Creek.

The board said the grant would fund a distributed acoustic sensor (DAS) fibre in the lateral portion of the well to evaluate the stimulation and any post-stimulation fluid production.

That would assist Zephyr and the Energy and Geoscience Institute with understanding frac geometry, and would latterly measure inflow rates along the horizontal part of the well.

It would also be used to deploy ‘QuadCombo’ and lithoscanning logging tools to further evaluate the shallow Paradox Formation, and the C9 clastic zone in particular, as well as to obtain additional cuttings for use in fracture analysis.

“I am delighted to announce the award of this incremental research funding, the results of which are expected to further enhance our technical understanding of the Cane Creek and overlying reservoirs,” said chief executive officer Colin Harrington.

“The expected output from this analysis will assist with future well planning and drilling operations, particularly in relation to the C9 overlying reservoir, as we look to unlock further value from our Paradox project.”

At 1422 GMT, shares in Zephyr Energy were up 3.16% at 5.88p.

Reporting by Josh White for Sharecast.com.