Zephyr Energy hedges 50% of production with BP

Zephyr Energy PLC has hedged 328,000 barrels of oil production from its non-operated asset portfolio in the Williston Basin over the next two years with BP.

The programme, which will guarantee US$30mln of forecast revenue, comprises crude oil commodity swap agreements based on a current price of US$100.80 a barrel and declining in stages to US82.20 by the end of the first half of 2024.

 Zephyr added the programme had been structured to provide cashflow surety for its senior debt obligations and materially to de-risk funding requirements for the upcoming drilling at the Paradox Basin project.

The production covered by the agreement amounts to less than 50% of the total forecast production from all reserve categories on its non-operated portfolio over the next two years, it said.

Williston Basin lifting costs are forecast to average approximately US$16 per barrel over the next 24 months.

Zephyr added that Competent Persons Report (CPR) for its Williston Basin assets was also based on prices well below the hedging programme levels.

Colin Harrington, Zephyr’s chief executive, said: "Zephyr successfully completed five acquisitions of producing non-operated assets in the Williston Basin over the last twelve months.  

“The recent and substantial increase in global oil prices has now resulted in prices well above levels expected when we closed those acquisitions, so I'm delighted to be able to announce the implementation of our inaugural hedge programme at this time.

“We expect all our forecast capital commitments, for at least the next twelve months to be fully funded through a combination of existing cash resources and cash flow from production.

 “Key findings of the CPR on the Paradox project are expected early next week,” he added.

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