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Highlights
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Zephyr Energy PLC Receives Target Price Upgrade: City stockbroker Panmure Liberum has increased its target price to 13.7p, reflecting positive well test results.
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Successful Well Test: The State 36-2R well demonstrated strong initial performance, flowing at 1,350 boepd, significantly exceeding expectations.
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Multiple Development Opportunities: Management is considering various pathways for monetization and development in the Paradox Basin, leveraging strong financial capability.
Article
Zephyr Energy PLC {OTC:ZPHRF} has received an upgrade in its target price from Panmure Liberum, reflecting the success of its latest well test. The brokerage has reiterated a ‘buy’ recommendation, raising its target to 13.7p from the previous 13.5p.
Analyst Ashley Kelty noted that the highly successful test of the State 36-2R well has revealed fresh upside potential, particularly due to the benefits of acid stimulation, which enhances reservoir performance. During the initial testing phase, the well produced at an impressive rate of 1,350 barrels of oil equivalent per day (boepd), significantly surpassing expectations.
Kelty emphasized that the short horizontal section of the well leaves considerable room for higher flow rates in future development wells. The successful results indicate strong deliverability and productivity for upcoming projects, with potential time and capital expenditure savings contributing to improved economic returns.
The positive test outcomes present multiple options for the company to develop and monetize the Paradox Basin. Management is evaluating several strategies, including commencing production from the existing wellbore, drilling a longer horizontal section, or collaborating with industry partners for broader development initiatives.
Zephyr’s strong financial position supports its capability to bring the well into production in the near term, whether through the current well or additional drilling. Following the announcement, Zephyr shares traded 14% higher in London, reaching 3.7p, and are up approximately 37% year-to-date.
