Zephyr set to beat revenue forecasts for 2022

Rocky Mountains oil and gas company Zephyr Energy reported a positive fourth quarter and full-year update on hydrocarbon production and cash flows from its non-operated portfolio in the Williston Basin of North Dakota on Wednesday.

The AIM-traded firm said its revenues totalled $7.4m in the fourth quarter of 2022, giving it total expected revenues of $42.9m for the full year.

That would represent a sevenfold increase over 2021 revenues of $6m, and would top Zephyr's initial guidance for 2022 revenues of between $35m and $40m.

The company’s sales volumes averaged 1,192 barrels of oil equivalent per day in the fourth quarter, with total sales for 2022 amounting to 543,948 barrels of oil equivalent - at the high end of its range of guidance for full-year sales.

That represented a more-than-sixfold increase from 2021 sales of 88,037 barrels of oil equivalent.

The firm hedged 171,000 barrels of oil in 2022, at a weighted-average price of $98.04 per barrel.

Zephyr said its operating income totalled $6.3m in the fourth quarter, while its full-year operating income was $35.7m.

At the end of 2022, 223 wells in the portfolio were available for production, including 17 wells that came online at some point during the quarter.

Net working interests across the Williston Basin non-operated portfolio now averaged 6.3% per well, equivalent to 15 gross wells, all of which used horizontal drilling and modern, hydraulically stimulated completions.

An estimated eight additional wells in which Zephyr owns a working interest were expected to be brought on production by the end of June, which was expected to “significantly” increase daily production rates from the Williston portfolio.

Zephyr reiterated its previous guidance of 1,550 to 1,750 barrels of oil equivalent per day net for 2023 Williston Basin production, including contributions from the six recently-acquired Slawson Exploration-operated wellbore interests.

“I am delighted with the growth and strong cash flows generated from our Williston portfolio during 2022,” said chief executive officer Colin Harrington.

“We comfortably exceeded our initial FY 2022 revenue guidance, and production was within the upper end of the forecast range.

“Cash flows generated from these operations have been reinvested back into both our operated and non-operated asset portfolios, and we expect continued growth in 2023.”

Harrington said the company “fully” expected 2023’s Williston project production to exceed last years' once again.

“Our non-operated asset base is a now diverse mix of interests in 223 low-risk, high-margin producing wells with top-tier Williston Basin operators such as Slawson, the operator of six newly-drilled wellbores in which we acquired working-interests in December and which will be coming online over the next few months.

“We have a busy period ahead and we look forward to keeping shareholders regularly updated on our ongoing activities over the coming weeks.”

At 1554 GMT, shares in Zephyr Energy were down 0.98% at 6.04p.

Reporting by Josh White for Sharecast.com.