Zephyr Energy : Turner Pope Research Note, 12th April 2023

Turner Pope Research Note, 12th April 2023

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Zephyr yesterday provided an operational update for its State 36-2 LNW-CC well (the 'State 36-2 well or 'the Well') at the Group's flagship project in the Paradox Basin, Utah. Following completion of workover operations on 7 April 2023, apparent failure of a Full Opening Safety (or 'TIW') Valve at surface led to a significant well control incident. Despite multiple attempts by the rig crew to secure the Well, hydrocarbons were released from the wellbore in an uncontrolled manner. Importantly, all personnel were safely evacuated without injury and relevant authorities were notified, as a result of which a specialist well control team (recommended by the Group's insurers) was deployed. On Monday the Well was successfully brought back under control, following which well pad remediation steps immediately commenced. While the remediation process is not expected to present any technical challenges, management will now re-evaluate every aspect of the upcoming production test, including any associated well work needed to help ensure a successful test (which is now understandably delayed but at present expected to get underway in the coming weeks). On a positive note, Zephyr does maintain comprehensive Well Control Insurance with potential to cover the bulk of all direct and indirect costs incurred during this incident, while the extent of gas and condensate flow witnessed during the three days of continuous uncontrolled blowout builds confidence that Zephyr does indeed have a very large well on hand. We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to Zephyr Energy plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination. The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient.

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