Final Results
Summary by AI BETAClose X
Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.
30 June 2026
Zephyr Energy plc
("Zephyr", the "Company" or the "Group")
Full Year Results for the year ended 31 December 2025
Notice of AGM
The Board of Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is pleased to announce the Group's audited results for the year ended 31 December 2025.
Rick Grant, Zephyr's Non-Executive Chairman, said:
On behalf of the Company's board of directors (the "Board"), I am pleased to share the Company's results for the 2025 financial year, a period of significant progress as the Company prepares to unlock what we believe to be the next prolific onshore oil and gas play in the United States (the "U.S."). The results reflect the ongoing effort and commitment of the Zephyr team who have been building a Company of which all stakeholders can be proud.
During the period we continued to deliver on our dual strategy of building an income generating non‑operated asset portfolio in the Rocky Mountain region of the U.S. (the "non‑operated portfolio") in parallel with the pursuit of increased value through the successful development of our operated project in the Paradox Basin, Utah, U.S. (the "Paradox project").
Operational progress in 2025 was demonstrated by the drilling and excellent production test results from the State 36-2 LNW-CC-R well (the "State 36-2R well"), which achieved a peak flow rate of 2,848 barrels of oil equivalent per day ("boepd") with no material drop in bottom hole pressure, and without the use of any fracture stimulation, suggesting that the well ranks in the top 6% of gas wells across the Lower 48 U.S. states.
The State 36-2R well performance formed a core basis for the updated Competent Person's Report ("CPR"), independently prepared by Sproule-ERCE International Limited ("Sproule"), which was published in October 2025, and which demonstrates the progress made at the Paradox project through our successful ongoing operations.
It is an exciting time on the Paradox project as we push to deliver first commercial production. We continue to advance the project's development, through our infrastructure build out and by expanding our acreage position. We also continue with our farm-out and gas marketing negotiations and expect considerable newsflow in the coming weeks.
On the non‑operated portfolio, we completed the US$7.3 million acquisition during the year, which consisted of working interests in production assets across core Rocky Mountain basins ("Acquisition"). The Acquisition was accretive to both earnings and reserves, strengthened the Group's balance sheet, provided strategic entry into key areas of interest and enhanced our competitive position within core Rocky Mountain basins.
As part of our ongoing portfolio management, we also completed multiple cash‑generative divestments of non‑core, non‑producing acreage obtained in conjunction with the Acquisition. Since completion of the Acquisition, we have generated circa US$7.0 million in total consideration from these divestments with no material impact to current production, and we continue to evaluate options for the remaining undeveloped acreage.
In addition, we announced a US$100 million strategic partnership with a major U.S.‑based capital provider focused on the energy sector. The combination of Zephyr's regional expertise and the investor's financial strength is designed to accelerate the Group's non‑operated growth, enhance consolidated cashflow and drive attractive project returns. The first transaction under the partnership was announced in October 2025, and we continue to evaluate additional assets for inclusion.
I would like to express my appreciation to our team for their dedication in helping us deliver on our vision. My thanks also go to my fellow Board members, the leadership team, our advisers and, above all, our shareholders for their continued trust and support.
The Board looks forward to the coming months with confidence, as we continue in our pursuit of opening-up the next prolific oil and gas basin in the U.S."
Notice of AGM and posting of annual report
The Annual General Meeting of the Company (the "AGM") will be held at 11.00 a.m. BST on 29 July 2026 at the offices of Haynes and Boone CDG LLP, Alder Castle, 10 Noble Street, London, EC2V 7JX.
A copy of the Company's annual report and accounts, and the notice of AGM, will shortly be available on Zephyr's website, http://www.zephyrplc.com, and will be posted to Zephyr's Shareholders later today.
Contacts
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Zephyr Energy plc Colin Harrington (CEO) Chris Eadie (Group Finance Director and Company Secretary)
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Tel: +44 (0)20 3475 4389 |
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Allenby Capital Limited - AIM Nominated Adviser Jeremy Porter / Vivek Bhardwaj
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Tel: +44 (0)20 3328 5656
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Turner Pope Investments - Joint-Broker Guy McDougall / Andy Thacker
Canaccord Genuity Limited - Joint-Broker Henry Fitzgerald-O'Connor / Charlie Hammond
Celicourt Communications - PR Mark Antelme / Kristina Qevani |
Tel: +44 (0)20 3657 0050
Tel: +44 (0)20 7523 8000
Tel: +44 (0) 20 7770 6424 |
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Qualified Person
Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD, Technical Adviser to the Board of Zephyr Energy plc, who meets the criteria of a qualified person under the AIM Note for Mining and Oil & Gas Companies - June 2009, has reviewed and approved the technical information contained within this announcement.
Notes to Editors
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) is a technology-led oil and gas company focused on responsible resource development in the Rocky Mountain region of the United States.
Its flagship operated asset is the circa 70,000-acre Paradox project in Utah. An independent 2025 Competent Persons Report by Sproule International of the Company's White Sands Unit (which makes up 20,000 of the total 70,000 acres) confirmed 2P reserves of 35.3 million barrels of oil equivalent ("boe") and total recoverable resources of 74.2 million boe across the unit.
Zephyr also holds a portfolio of non-operated production interests across the Williston and other Rocky Mountain basins, supported by a US$100 million strategic partnership designed to accelerate growth and enhance cash flow.
CHAIRMAN'S STATEMENT
OVERVIEW
On behalf of the Company's board of directors (the "Board" or the "Directors"), I am pleased to share the Company's results for the 2025 financial year, a period of significant progress as the Company prepares to unlock what we believe to be the next prolific onshore oil and gas play in the United States ("U.S.").
The results reflect the ongoing effort and commitment of the Zephyr team who have been building a Company of which all stakeholders can be proud.
The Company has continued to employ its well-established dual strategy of:
1. Value creation via non-operated investments: We have built an income-generating non-operated asset portfolio in the Rocky Mountains, U.S. (the "non-operated portfolio") to drive long-term value and capital growth, with a highly accretive US$7.3 million acquisition completed during the period (the "Acquisition"); and
2. Value creation via drilling activity: We have made significant advances towards commercial production at the Company's flagship project in the Paradox Basin, Utah, U.S. (the "Paradox project").
During the year, we continued to deliver on this dual strategy, and we plan to continue to grow the non-operated portfolio and utilise the resulting cashflow (in conjunction with our existing commercial and financial partnerships) to deliver first gas and commercial production from the Paradox project.
We are supported by a capable team and strong partners, and I remain confident that the Company's solid foundation will allow us to execute our strategy and deliver sustainable growth and value for our Shareholders.
The health, safety, and wellbeing of our team and contractors continues to be a core priority as we maintain a zero-harm safety culture, with a particular emphasis on ensuring a safe and injury-free workplace. The Board is pleased to note that there were no lost time injuries ("LTIs") recorded during the period.
The Board believes that strong operational performance must always be underpinned by an uncompromising approach to health, safety and environmental stewardship. We remain focused on ensuring that our people, partners and operators meet appropriate standards, and that our own operated activities are conducted within a robust safety culture and compliance framework.
As the Paradox project moves towards full commercial development, safe operational execution remains a priority. As we scale up our activity, the Board remains committed to ensuring that safety, regulatory compliance and responsible operations are embedded into our project delivery and capital allocation decisions.
OPERATIONAL ACTIVITY
Paradox project
Operational progress in 2025 can be demonstrated by the drilling and excellent production test results from the State 36-2 LNW-CC-R well (the "State 36-2R well") which achieved a peak flow rate of 2,848 barrels of oil equivalent per day ("boepd") with no material drop in bottom hole pressure, and without the use of any fracture stimulation, suggesting that the well ranks in the top 6% of gas wells across the Lower 48 U.S. states.
The 36-2R well performance formed a core basis for the updated Competent Person's Report ("CPR"), independently prepared by Sproule-ERCE International Limited ("Sproule"), which was published in October 2025, and which demonstrates the progress made at the Paradox project through our successful ongoing operations.
In particular, we were pleased to see the substantial movement of the Paradox project hydrocarbons from resource to reserve categories, highlighting the evolution of the asset towards commercial production. The CPR also provided further validation of the considerable scale of the Paradox project, and it should be noted that the CPR only assessed 20,000 acres of our 46,000 acre position at the time of the CPR. Leased acreage without 3D seismic coverage was not assessed in the CPR and Zephyr's internal analysis indicates considerable potential in the area immediately surrounding the acreage covered by the CPR. In addition, subsequent to the reporting period, we completed the acquisition of a further 24,000 of contiguous acreage, further enhancing the scale of the project.
The substantial scale of the project was a significant reason behind the launch of our process to identify partners, to help accelerate drilling with the goal of delivering material value from the asset, and we continue to evaluate marketing and joint venture/farm-in proposals.
We are bringing the project to development and commercialisation at a time when interest and domestic gas demand is rising in the western markets, and as western seaboard LNG exports begin to ramp up. We believe that the Paradox project compares favourably on production and economic metrics with the current crude and natural gas basins in the U.S.
The project infrastructure buildout continues, which is expected to enable gas export from the project, in cooperation with Enbridge Inc. ("Enbridge") (the owner and operator of the 16-inch pipeline that will export gas from Zephyr's Powerline Road Gas Plant to the Williams Northwest Pipeline system). We were pleased to see the recent successful completion of the gas pipeline in-line inspection process (the "ILI"). This is a significant step forward in relation to the development of the Paradox project and allows for the formal commencement of the regulatory approval process required to ship gas on the publicly regulated pipeline connected to Zephyr's leaseholding in the Paradox project.
Further operational work currently being conducted by Enbridge includes survey, engineering, environmental, land and right-of-way work, as well as progressing the regulatory process required to operate bi-directional flow on the existing Enbridge pipeline. This will allow both the export of gas to the Northwest Pipeline and the supply of gas to customers in the City of Green River.
In parallel, and as mentioned above, we are looking at opportunities to expand the Paradox project through additional lease acquisitions and by further delineating the additional potentially productive zones overlying the Cane Creek reservoir. In this regard we were pleased to recently announce the acquisition of a further 24,000 acres of new and contiguous acreage in the Paradox Basin taking the Company's total Paradox project acreage position to approximately 70,000 acres, providing further scale to our Paradox project and which, we believe, will further enhance the project's commercial value.
This is an exciting time in the evolution of the Paradox project, and the Board believes that the fundamental pieces are in place to drive the Paradox project forward to first gas and commercial production over the coming months.
Non-operated portfolio
Zephyr's non-operated portfolio was established in 2021, and Zephyr continues to deliver on its strategy of acquiring low-risk working interest positions in value accretive, high-quality, high-margin production assets with significant near-term growth potential.
The non-operated portfolio continues to deliver strong returns, and cashflows generated from the portfolio (in conjunction with cashflows generated from the disposal of non-producing acreage) continue to be recycled into the Paradox project development programme and other non-operated drilling opportunities, in addition to covering Zephyr's general and administrative costs.
At 31 December 2025, Zephyr had working interests in over 600 gross wells (or approximately 30 net wells) available for production, versus 229 gross wells (or 16 net wells) at the end of the second quarter of 2025 prior to the completion of the Acquisition. Zephyr's non-operated portfolio consists of well and acreage interests in Utah, Colorado, Wyoming, Montana and North Dakota, providing strong diversity across multiple operators and basins.
We continue to look at ways to increase the scale and/or realise value from our non-operated portfolio and during the period there were several developments that positively impacted the portfolio and will help sustain the portfolio in the future:
· In August 2025, the Company completed the Acquisition which consists of working interests in production assets located across core Rocky Mountain basins. Under the terms of the Acquisition, Zephyr acquired circa 400 boepd of existing production, 600,000 barrels of oil equivalent ("boe") of producing well ("PDP") reserves. The Acquisition was accretive on both an earnings and reserve basis, strengthened the Group's balance sheet, offered the Group strategic entry into key areas of interest and enhanced our competitive position within core Rocky Mountain basins.
· As announced in May 2026, and as part of our ongoing portfolio management, we completed multiple cash generative divestments of non-core, non-producing acreage obtained in conjunction with the Acquisition. Following the completion of the Acquisition, Zephyr's team undertook a detailed evaluation of this undeveloped acreage to determine its current and future value potential. The Company deemed the acreage divested to date to be non-core, with the potential for significant future capital expenditure and/or long lead times for development. Since the completion of the US$7.3 million Acquisition, we have generated circa US$7.0 million in total consideration from the divestment of non-core assets (comprised of US$5.8 million in cash proceeds and the divestment of US$1.2 million in near-term plugging, abandonment and capital liabilities). The Company is currently evaluating options for the remaining undeveloped acreage acquired.
· In May 2025, we announced a US$100 million strategic partnership with a major U.S.-based capital provider focused on the energy sector. The combination of Zephyr's regional expertise and the investor's financial strength is designed to accelerate the Group's non-operated growth, enhance consolidated cashflow, and drive attractive project returns. In October 2025, we announced the first deal under the partnership which is made up of 13 newly drilled wells with CAPEX, net to the investor, expected to be approximately US$2.5 million, with no further financial commitment from Zephyr. The transaction is expected to deliver undiscounted cashflows, net to Zephyr, of circa US$1.8 million. The Company continues to evaluate additional assets for the partnership, including assets purchased in the Acquisition.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
Followers of Zephyr will be familiar with our commitment to stewardship of both the natural environment and of Shareholder capital. Prudent cash management and careful development of the asset base were key operating principles throughout the period
We believe a disciplined approach to operational performance, supported by the strong levels of governance and environmental awareness, is the optimal way to drive superior investor returns.
As Zephyr continues to grow, we remain committed to fostering a safe working environment and maintaining strong engagement with the communities in which we operate. Supporting these communities through responsible environmental practices, social engagement, and sound corporate governance is a natural extension of our mission and reflects our commitment to making a lasting, positive impact.
There are many stakeholders who work alongside our people and support the Company. Sturdy relationships, formed over the years of working with multiple state and federal regulators, proved of great benefit during our recent drilling programme on the State 36-2R well.
Our relationship and knowledge-sharing partnership with the U.S. Department of Energy and the University of Utah continues to benefit all parties. A capstone report on our work with both parties can be found at https://doi.org/10.2172/3015844.
FINANCIAL
For the 2025 financial year, the Group reported revenues of US$13.9 million (2024: US$24.3 million), a gross profit of US$2.5 million (2024: US$7.2 million), and a net loss after tax of US$10.8 million (2024: US$19.6 million).
These results were in line with our forecasts and reflect the lower oil price environment over the period combined with the standard decline in the non-operated asset portfolio. We also experienced a reduction in revenues from six wells operated by Slawson Exploration (the "Slawson wells") which were shut-in by the operator for a significant part of the year due to low commodity prices.
We expect to see an increase in revenue and profitability in the 2026 financial year due to the recent spike in commodity prices, the Slawson wells being online and a full year of revenues from the Acquisition.
The 2025 financial year was a tumultuous time geopolitically, with significant volatility in global commodity prices over the period. These events have carried over into 2026 with continued oil price volatility due to ongoing geopolitical tensions. We expect this volatility to continue over the coming months, and we continually review how fluctuating commodity prices could potentially impact our operations. To mitigate this, over the last few years we have managed a hedging programme to protect the Group against potential downside risks. This hedging programme is a key tool in helping the Group meet its ongoing funding obligations. The Group has a policy of layering on hedges to take advantage of spikes in the oil price in order to protect its balance sheet and cost structure.
In June 2025, the Company raised US$13.3 million (£9.8 million) (before expenses) through the placing of 326,666,667 new ordinary shares of 0.1 pence each in the Company ("Ordinary Shares") to new and existing institutional and professional investors at an issue price of 3 pence per new Ordinary Share (the "issue price"). In addition, certain Directors, management and their affiliates subscribed for 23,333,333 new Ordinary Shares at the issue price raising a further US$0.9 million (£0.7 million) for the Company. The funds raised were used to complete the Acquisition and for the ongoing development of the Paradox project.
CONCLUSION
I would like to express my appreciation to our team and contractors for their dedication in helping us deliver our vision. My thanks also go to my fellow Board members, the leadership team, our advisors, and above all, our Shareholders, for their continued trust and support.
The Board looks forward to the future with confidence and excitement as the Company continues its quest to open up the next prolific oil and gas basin in the U.S. It is anticipated that there will be considerable news flow in the coming months as Zephyr progresses to the next phase in its development.
We have an exciting period ahead of us, and I strongly believe that we have all the key pieces in place to enable us to successfully deliver on our strategic objectives.
RL Grant
Chairman
29 June 2026
CHIEF EXECUTIVE OFFICER'S REPORT AND OPERATING REVIEW
PRINCIPAL OBJECTIVES AND STRATEGIES
Zephyr Energy plc is an oil and gas exploration and production group operating in the Rocky Mountain region of the U.S. The Group's mission is to unlock the next prolific onshore U.S. oil and gas play through the development of our flagship Paradox project. Zephyr is committed to being a responsible steward of both investors' capital and the environment.
To achieve this mission, the Group continues to prioritise:
· Maintaining a clear and disciplined strategic focus on responsible exploration and production within the Rocky Mountain region;
· Maintaining a high-calibre team with significant U.S. oil and gas sector expertise, particularly in regard to operations, subsurface, governance, finance and mergers and acquisitions;
· Developing a cash-generative, non-operated portfolio to provide capital for reinvestment into the Paradox project, reinforcing the Group's self-sustaining dual strategy;
· Embedding ESG at the core of operations, including robust corporate governance practices and ongoing, proactive engagement with the local communities;
· Leveraging strategic partnerships (such as the U.S. Department of Energy, regional operators, debt providers, asset level investors and Shareholders) to support long-term value creation;
· Advancing a technology-driven acquisition framework to enable the rapid assessment and execution of new opportunities, whether through acquisition, farm-in agreements, or joint ventures; and
· Maintaining rigorous financial discipline and prudent cash management to ensure capital efficiency across the business.
REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS
Overview
During the 2025 financial year and in the period since, Zephyr continued to deliver against its dual strategy: to build a resilient, cash-generative non-operated production portfolio in the Rocky Mountains, while advancing the Paradox project towards first commercial production.
Our technical results at the Paradox project, including the successful operations on the State 36-2R well and the subsequent CPR, reconfirmed the substantial scale and potential value of the Paradox project. The key operational focus for the next period is to deliver first commercial production from the project and to begin to unlock the project's substantial potential value for our Shareholders.
Our progress on the Paradox project was combined with disciplined portfolio growth and a material strengthening of our non-operated portfolio. Following the completion of the Acquisition and through our US$100 million strategic partnership we expect to see continued growth from the non-operated assets. We will continue to be opportunistic in both sourcing and funding further non-operated opportunities that will enable the Group to continue to grow its overall portfolio.
During the period, we remained fully focused on capital discipline, safe operations and responsible stewardship. We are fully aware that as the Paradox project transitions into full development, the importance of consistent execution, risk management and stakeholder engagement will become even more pronounced. The Board and management team remain aligned that these disciplines will continue to underpin every major decision made by the Company.
Over the last four years we have built a highly experienced operations team which is well positioned to appraise, acquire and manage high-return, non-operated assets in core Rocky Mountain basins, resulting in a growing and diverse base of assets with low maintenance capital expenditure ("CAPEX"), solid free cashflow and significant future drilling upside potential.
Paradox project
During the 2025 financial year and in the period since, the Company made significant progress in advancing the Paradox project towards first commercial production.
Over the period the Company drilled a lateral, completed and production tested the State 36-2R well, following which it commissioned an updated CPR on the project which affirmed a strong increase to the scale and potential value in the project.
The Company and its partners are currently building out the necessary infrastructure to bring the project into production.
A detailed summary of activity on the project over the 2025 financial year is set out below.
State 36-2R well
Following the completion of the drilling and initial production tests on the State 36-2R well, the decision was made in late 2024 to proceed with the drilling of an extended lateral on the well (the "extended lateral").
Drilling operations for the extended lateral commenced in January 2025, targeting 5,500 feet of the Cane Creek reservoir. Exactly 30 days later, on 20 February 2025, drilling operations were concluded safely and successfully. The well trajectory of the extended lateral section was drilled as planned and correlated with the Company's existing 3D seismic data. Circa 97% of the extended lateral was drilled within the Cane Creek reservoir section demonstrating the ability to accurately steer within the reservoir across a structurally complex play.
Production testing on State 36-2R well following the completion of the extended lateral
During the subsequent production test on the State 36-2R well, which commenced in April 2025, the well was tested at multiple flow rates to gather data to determine the flow rate capacity, to provide an early estimate of potential resource volumes, and to obtain fluid samples. The production test successfully delivered on all its objectives and delivered results that were at the top end of management expectations.
In summary, the test included a peak flow rate of 2,848 boepd, achieved with no material drop in bottom hole pressure and suggested that the well ranks in the top 6% of all horizontal resource play gas wells drilled across the Lower 48 since 2000 (despite not using any fracture stimulation). Well test data and interpretation suggest that there is more than sufficient well deliverability for a commercial well.
The well test results suggest that the chosen completion strategy (hydra-jet abrasive perforation and matrix acidisation) was highly successful, and that fracture stimulation could offer further upside potential for both the well and the broader Paradox project development.
As a result of the successful production test from the State 36-2R well, work commenced to finalise gas processing and related infrastructure requirements for the project.
Updated Competent Persons Report
Following the completion of work on the State 36-R well the Company took the opportunity to complete an updated CPR on the Paradox project.
The CPR was compiled by Sproule, a leading independent global energy consulting and advisory firm. The previous CPR on the Paradox project was completed by Sproule in 2022, the results of which were announced on 26 April 2022 (the "2022 CPR").
Zephyr's Paradox project consists of an operated 46,000-acre leaseholding in Utah. It should be noted that the updated CPR and comparisons to the 2022 CPR are limited solely to the Cane Creek reservoir on 20,000 acres held within the Company's White Sands Unit (the "WSU") and which is currently covered by the Company's 3D seismic coverage.
In their NPV-10 calculations, Sproule used the 1 September 2025 strip prices, resulting in average prices of US$62.50 per barrel of oil and US$3.50 per one million British Thermal Units ("MMBTU") of gas.
In summary, we were particularly pleased to see the substantial movement of the Paradox project barrels from resource to reserve categories, highlighting the evolution of the asset towards commercial production as the project moves up the value chain. The CPR also further validates the considerable scale of the Paradox project.
A summary of the key conclusions from the CPR were as follows:
· A 93-fold increase in Proved Recoverable Reserves (1P Reserves) from the 2022 CPR, demonstrating the scale and immediate production potential of the Cane Creek reservoir:
o 14.8 million net boe proved recoverable reserves, an increase from 0.16 million net boe in the 2022 CPR
o Forecast to generate undiscounted free cashflows, net to Zephyr, in excess of US$115.0 million, with a current NPV-10 of circa US$36.0 million (an increase from US$2.1 million in the 2022 CPR)
o Seven well locations granted classification as Proved Recoverable Reserves
· A 25-fold increase in Proved & Probable Reserves (2P Reserves) from the 2022 CPR, highlighting the Paradox project's maturation from appraisal towards production and wider Cane Creek reservoir field development:
o 35.3 million net boe, an increase from 1.4 million net boe in the 2022 CPR
o Forecast to generate undiscounted free cashflows, net to Zephyr, of circa US$400.0 million, with a current NPV-10 of circa US$101.0 million (an increase from US$10.8 million in the 2022 CPR)
o 12 well locations classified as Proved + Probable Recoverable Reserves
· A 3.5-fold increase in Total Resources (combined Net Recoverable Reserves and 2C Contingent Resources), representing full field development of the Cane Creek reservoir within the WSU, a significant increase in the total net resource estimate:
o 74.2 million net boe, compared with 21.4 million net boe in the 2022 CPR
o Forecast to generate undiscounted free cashflows, net to Zephyr, in excess of US$880 million, with a current NPV-10 of circa US$158.0 million (an increase from circa US$88 million in the 2022 CPR)
· Net Prospective Resources (2U Resources) (unrisked)
o 270 million net boe, compared with 203 million net boe in the 2022 CPR, encompassing the as-yet-untested overlying reservoirs. The WSU prospective resources were not reassessed as part of the CPR, and the increase in 2U resources since the 2022 CPR reflects Zephyr's increased ownership in the Paradox project since the 2022 CPR was completed.
In summary, we were delighted with the results of the CPR which clearly demonstrate the excellent progress made at the Paradox project through our successful operations.
Commencement of farm-out process
Our drilling operations on the Paradox project have clearly demonstrated the large scale and potential value of the project.
To date we have drilled three successful wells, including two one-mile horizontal wells utilising different completion technologies and both demonstrated strong deliverability and expanded our completion design options for the greater field development.
During this time, we also gathered a substantial amount of data that will help inform the future development plans of the project. Furthermore, we have acquired significant infrastructure that will enable us to bring the project into full production, including gas gathering lines, plant infrastructure, permits and future water disposal wells, and we are close to securing gas export capacity.
All of this has been achieved at low development costs, especially when compared with many other new field startups of a similar size, and this infrastructure should enable accelerated project development once a suitable partner is secured. It should be noted that while acceleration of drilling activity and increased gas processing capacity won't change undiscounted free cashflow totals, it would enhance the current NPV-10 value of the project by bringing forward future cashflows.
On the back of all of this activity, and given the considerable scale of the project, we appointed a financial adviser and opened a data room to assist in the identification of prospective partners to assist with the project's development. We feel fortunate that we are bringing the project to development and commercialisation at a time when interest and domestic gas demand is rising in the western U.S. markets, and as western seaboard LNG exports begin to ramp up. We believe that the Paradox project compares favourably on production and economic metrics with all of the current crude and natural gas basins in the U.S.
The farm-out process is progressing, and we look forward to providing further updates in due course.
Infrastructure and move to first production
Following the completion of the State 36-2R well, Zephyr's key operational focus has been on the farm-out process and on designing the tie-in of the three previously drilled Paradox project wells to nearby pipeline infrastructure, in order to deliver hydrocarbon production.
In December 2025 we announced that Zephyr had reached a framework agreement with Enbridge, the owner of the pipeline positioned to provide interconnect services from Zephyr's Powerline Road Gas Plant to the Northwest Pipeline operated by Williams Companies, Inc for sales to the U.S. gas market.
As detailed by the framework agreement, Enbridge will construct, own, operate, and maintain the interconnect facilities. The operations being conducted by Enbridge include survey, engineering, environmental, land and right-of-way work, as well as the design, inspection and obtaining regulatory approvals required to run bi-directional flows on the existing Enbridge pipeline.
Work with Enbridge is progressing well and on 9 June 2026 we announced the successful completion of the critical ILI process. As part of this, a team supervised by Enbridge completed a detailed technical evaluation of the results from the ILI on the 20.9 miles of pipeline running from the Powerline Road Gas Plant to the Northwest Pipeline.
Analysis of the ILI results confirmed that the pipeline is structurally sound at the current system operating pressure, with no repairs required and no immediate integrity concerns. To ensure integrity at the uprated operating pressure required to export Zephyr's gas to the Northwest Pipeline, four short sections of pipeline (totalling 25 feet in length) have been identified for visual inspection. Enbridge views such inspections as routine and are not considered a risk to achieving first gas export, even if any section should require a repair.
The completion of the ILI is a vital step and a key milestone in the process of delivering first gas from the Paradox project and has enabled the commencement of the regulatory approval process required to increase pipeline operating pressure and transport gas to the Northwest Pipeline.
In addition to the initiation of the regulatory process, Enbridge has continued other operational activities, including the piping and mechanical upgrades required to transport Zephyr's gas to market. Over the coming weeks, Zephyr and its third-party infrastructure consultants will finalise the design and initial capacity of its gas processing solution.
In parallel with this we are also in the latter stages of selecting a marketing partner for the Paradox project natural gas and associated hydrocarbon volumes. Given the increasing demand for natural gas in the western U.S. markets, Zephyr has seen growing levels of interest for natural gas volumes located in the Paradox Basin region.
Potential expansion of the Paradox project
Consistent with our stated goal to expand the asset base of the Paradox project both vertically (via overlying reservoirs) and horizontally (via additional acreage acquisitions), we were pleased to announce (on 24 June 2026), that the Company has acquired an additional circa 24,000 net acres. This acquisition has increased Zephyr's total Paradox leasehold position from approximately 46,000 net acres to approximately 70,000 net acres, representing providing a material expansion to our operated acreage. We anticipate that this will be the first of several such acquisition opportunities as we continue to grow the scale and resource potential of the project.
Next steps
As outlined above, there is a considerable amount of work taking place on the Paradox project and the key next steps are as follows:
· Completion of the farm-out process to help fund and accelerate a larger scale Paradox project drilling programme;
· Completion of gas marketing agreements and improvements to the gas processing plant infrastructure;
· Completion of work with Enbridge, owner of the operational 16-inch pipeline which runs adjacent to our gas plant, to enable the transportation of gas produced from the Paradox project;
· Continued leasing of additional nearby acreage; and
· Testing of overlying reservoirs (potentially using an existing vertical wellbore).
Non-operated asset portfolio
Overview
Zephyr continues to develop a portfolio of working interest positions in accretive, high-quality, high-margin production assets with significant near-term growth potential.
Following multiple acquisitions, the non-operated portfolio has generated strong cashflows for the Group, moving from zero production to circa 1.8 million boe produced from 2021 to 2025.
During this time, we built a highly experienced operations team to appraise, acquire and manage high-return non-operated assets in core Rocky Mountain basins, resulting in a growing and diverse base of assets with low maintenance CAPEX, significant free cashflow and plenty of potential future drilling upside.
The 2025 financial year was another solid year for the non-operated portfolio, with operational performance in line with management expectations, and during the year we took a number of steps to consolidate and grow our non-operated portfolio.
At 31 December 2025, Zephyr's portfolio consisted of interests in over 600 gross wells (or approximately 30 net wells) available for production, versus 229 gross wells (or 16 net wells) at 31 December 2024. Zephyr's portfolio now consists of well and acreage interests in Utah, Colorado, Wyoming, Montana and North Dakota, providing strong diversity across multiple operators and basins.
2025 sales volumes and production summary
FY 2025 sales volumes averaged 829 boepd or 302,585 boe for the year, a decrease over FY 2024 sales volumes of 1,149 boepd or 420,724 boe for the year.
FY 2025 revenue was comprised of 84% crude oil sales, 7% natural gas sales and 9% natural gas liquid sales.
FY 2025 revenues from the portfolio were US$13.9 million (2024: US$24.3 million). The performance of the portfolio was in line with management expectations and the year-on-year decline in revenues was primarily the result of lower commodity prices in FY 2025 compared to the prior year, standard decline in the portfolio and the fact that the six wells operated by Slawson were shut-in for a large part of the year.
The Board is confident that revenues will be higher in FY 2026 based on higher commodity prices, the full year impact of the production acquired as part of the Acquisition, and the Slawson wells being back online.
2025 production from the non-operated portfolio averaged 864 boepd (2024: 1,052 boepd). The decrease in production year-on-year was the result of the Group's wells operated by Slawson being offline for much of FY 2025 combined with the natural decline of the portfolio.
Hedging
In FY 2025 the Group hedged 88,000 barrels of oil (FY 2024: 103,000 barrels of oil).
· 82,000 barrels of oil were hedged at a weighted-average price of US$66.79 per barrel of oil.
· 6,000 barrels of oil were hedged by way of financial collar options. These collar options gave the Group a weighted average price of US$69.92 per barrel of oil.
· In March 2026, Zephyr hedged a further 75,000 barrels of oil over the next 12 months at a weighted average price of US$67 per barrel (equivalent to approximately 33% of forecasted non-operated oil production over the same period). The remainder of Zephyr's forecast non-operated production for FY 2026 is currently unhedged.
The Group continues to evaluate its commodity price risk management strategy on a regular basis.
Business development
During the 2025 financial year there were a number of developments that will potentially provide significant upside to the non-operated portfolio.
Completed acquisition
In August 2025, the Company completed the US$7.3 million acquisition of working interests in accretive production assets located across core Rocky Mountain basins. Under the terms of the Acquisition, Zephyr acquired circa 400 boepd of existing production, 600,000 boe of PDP reserves, and significant further drilling opportunities to be potentially funded through our joint venture (as outlined below).
The Acquisition had an effective completion date of 1 June 2025 and is forecast to add operating income of US$4.0 million over the first year of Zephyr's ownership (based on strip prices at 29 May 2025).
Overall, the Acquisition is accretive on both an earnings and reserve basis, strengthens the Group's balance sheet, offers the Group strategic entry into key areas of interest and enhances our competitive position within core Rocky Mountain basins.
Strategic partnership
In May 2025, Zephyr announced a new US$100 million strategic partnership with a major U.S.-based capital provider focused on the energy sector. The partnership, which utilises a combination of Zephyr's regional expertise and the investor's financial strength, is designed to accelerate Zephyr's non-operated growth, enhance consolidated cashflow, and drive attractive returns. The Board view this partnership as an excellent way to utilise experienced industry capital to further grow the Group's cash generating foundation.
Under the terms of the partnership, the investor, at its sole discretion, will potentially make available up to US$100 million (subject to the conditions outlined below) to be used to fund 100% of the CAPEX related to the drilling, completing and equipping of newly acquired assets, which will be contained within a defined geographical area (the "Programme Area").
The Programme Area consists of counties located in the Williston basin, although both parties may consider opportunities in other Rocky Mountain basins upon mutual consent. The investor may elect to participate in opportunities at its discretion, on a case-by-case basis, after conducting its own financial and technical verification. Zephyr retains the right (but not the obligation) to fund up to 33% of pro rata CAPEX. The investor will earn a majority of the cashflows generated by its pro rata working interest in each well until an agreed upon initial hurdle rate is met.
In October 2025, we announced the first investment by the strategic partnership which is made up of 13 newly drilled wells (the "initial wells") located in the U.S. Rocky Mountains. The Investor will fund 100% of the CAPEX in the initial wells. Total CAPEX, net to the Investor, is expected to be approximately US$2.5 million, with no further financial commitment from Zephyr.
Once the investor has achieved its threshold return on the initial wells, the Company expects that the interests will deliver future life of well undiscounted cashflows, net to Zephyr, of circa US$1.8 million. The Company has used its 100% owned acquisition vehicle, Zephyr Hawk LLC, to complete this transaction.
The strategic partnership with the investor was formed to enable Zephyr to capitalise on a robust pipeline of non-operated investment opportunities across the Rocky Mountains, and the Company expects this to be the first of many such investments. The combination of Zephyr's deep regional expertise with the investor's financial strength was designed to accelerate the Company's non‑operated growth, enhance consolidated cashflow, and drive attractive returns for all stakeholders.
We continue to evaluate new opportunities that will potentially be rolled into this strategic partnership.
Disposals of undeveloped acreage
By way of background, the US$7.3 million purchase price of the Acquisition was valued by the Company solely on the basis of the producing assets acquired. However, the transaction also included approximately 6,350 of undeveloped, non-producing acres in the Williston, Powder River, Denver-Julesburg and other Rocky Mountain basins.
Following the completion of the Acquisition, our technical team undertook a detailed evaluation of this undeveloped acreage in order to determine its current and future value potential. The Company deemed the acreage to be non-core, with the potential for significant future capital expenditure and/or long lead times for development.
A decision was made to divest of a portion of the undeveloped acreage and utilise the proceeds for reinvestment back into the Paradox project. A number of discrete divestments have taken place to date which have generated total asset sales of circa US$7.0 million (comprised of US$5.8 million in cash proceeds and the release from circa US$1.2 million in near-term plugging, abandonment and capital liabilities).
The Company is currently evaluating options for the remaining undeveloped acreage acquired and will provide further updates in due course.
Corporate
On 25 June 2025, the Company announced that it had raised approximately US$13.3 million (£9.8 million) (before expenses) through the placing of 326,666,667 new Ordinary Shares to new and existing institutional and professional investors at an issue price of 3 pence per new Ordinary Share (the "issue price"). In addition, certain Directors, management and their affiliates subscribed for 23,333,333 new Ordinary Shares at the issue price raising a further approximately US$0.9 million (£0.7 million) for the Company.
· On 27 June 2025, the Company issued 175,071,902 new Ordinary Shares at a price of 3 pence per new Ordinary Share, raising gross proceeds of approximately US$7.2 million (£5.3 million).
· The remaining 174,928,098 new Ordinary Shares (including those subscribed for by Directors, management and their affiliates) were issued by the Company on 15 July 2025 at a price of 3 pence per new Ordinary Share, raising gross proceeds of approximately US$7.0 million (£5.2 million).
In April 2026, Zephyr announced that one of its U.S. subsidiary companies has been targeted in a cybersecurity incident. The highly sophisticated incident involved the diversion of a single payment to a contractor and resulted in funds of circa US$0.95 million being transferred to a third-party account. Upon discovery of the incident, the Company immediately notified the relevant law enforcement authorities and continues to work with the corresponding banks and consultants to attempt to recover the diverted funds.
Outlook
2025 was another year of strong progress for the Group, and we continue to build on this momentum in 2026.
In recent months we have continued to deliver on both components of our stated dual strategy with continued operational progress on the Paradox project, and through our exciting strategic partnership and acreage disposals on non-operated portfolio. We look forward to the year ahead with excitement and confidence.
The Directors' statement in respect of going concern can be found in the Directors' Report and note 3 to the consolidated financial statements.
JC Harrington
Chief Executive Officer
29 June 2026
FINANCIAL REVIEW
The 2025 financial year was characterised by further investment in the Paradox project, and particularly operations on the State 36-2R well.
The non-operated portfolio continued to deliver in line with expectations albeit against a backdrop of lower commodity prices in 2025 compared to the prior year.
INCOME STATEMENT
During the year ended 31 December 2025, the Group generated revenue of US$13.9 million (2024: US$24.3 million) and reported a gross profit of US$2.5 million (2024: US$7.2 million). The decline in revenues year-on-year was the result of lower commodity prices in 2025, the natural decline of the non-operated portfolio and as a result of the Slawson wells being offline for a large part of the year.
Administrative expenses for the year were US$5.8 million, in line with the prior year (2024: US$6.0 million).
At 31 December 2025, the Directors did not identify any indicators of impairment on its oil and gas properties. At 31 December 2024, the Directors identified indicators of impairment in its proved oil and gas properties and carried out an impairment test in accordance with IAS 36 Impairment of assets. The results of the test indicated that a non-cash, accounting impairment charge of US$14.5 million should be recognised.
The Group reports a foreign exchange loss of US$4.5 million for the year (2024: gain of US$1.0 million). This non-cash item is predominantly in respect of unrealised losses on the restatement of intercompany loans between the Company and its subsidiaries. These losses arise due to the strengthening of sterling against the U.S. dollar at the end of 2025.
Finance charges of US$2.7 million (2024: US$3.3 million) have been charged in respect of interest and associated costs relating to the Group's borrowings.
The Group reports a net loss after tax of US$10.8 million or a loss of 0.58 cents per Ordinary Share for the year ended 31 December 2025 (2024: net loss US$19.6 million or a loss of 1.13 cents per Ordinary Share). The decrease in the loss from the prior year is largely the result of the US$14.5 million impairment charge in 2024 offset by the reduction in revenues in 2025.
BALANCE SHEET
Total investment in the Group's exploration and evaluation assets as at 31 December 2025 was US$58.8 million (2024: US$53.2 million) reflecting the ongoing investment in the Paradox project.
The carrying value of the Group's property and equipment, at 31 December 2025 was US$27.6 million (2024: US$27.3 million).
Cash and cash equivalents as at 31 December 2025 were US$3.0 million (2024: US$10.3 million). Included within cash and cash equivalents for 2024 was the sum of US$7.4 million received in exchange for a 50% non-operated working-interest in the State 36-2R well. These funds were fully utilised to develop the well.
The Group's borrowings as at 31 December 2025 were US$23.6 million (2024: US$26.3 million).
In May 2025, the Group announced that it had entered into an agreement with a U.S.-based capital provider focused on the energy sector to fund growth in the non-operated portfolio. Under the terms of the agreement, Zephyr will be responsible for acquiring non-operated assets and the investor will make available up to US$100 million to fund 100% of CAPEX related to the drilling, completing and equipping of those non-operated assets, which will be contained within a defined geographical area.
On 25 June 2025, the Company announced that it had raised approximately US$13.3 million (£9.8 million) (before expenses) through the placing of 326,666,667 new Ordinary Shares to new and existing institutional and professional investors at an issue price of 3 pence per new Ordinary Share (the "issue price"). In addition, certain Directors, management and their affiliates subscribed for 23,333,333 new Ordinary Shares at the issue price raising a further approximately US$0.9 million (£0.7 million) for the Company.
· On 27 June 2025, the Company issued 175,071,902 new Ordinary Shares at a price of 3 pence per new Ordinary Share, raising gross proceeds of approximately US$7.2 million (£5.3 million).
· The remaining 174,928,098 new Ordinary Shares (including those subscribed for by Directors, management and their affiliates) were issued by the Company on 15 July 2025 at a price of 3 pence per new Ordinary Share, raising gross proceeds of approximately US$7.0 million (£5.2 million).
In August 2025, the Group announced the completion of the Acquisition, a US$7.3 million purchase of mature non-operated production assets located across core Rocky Mountain basins.
In November 2025, the Company announced that it had secured US$2.0 million in loan financing from a strategic industry lender.
GOING CONCERN
The Directors' statement in respect of going concern can be found in the Directors' Report and note 3 to the consolidated financial statements.
SUBSEQUENT DEVELOPMENTS
In April 2026, Zephyr announced that one of its U.S. subsidiary companies has been targeted in a cybersecurity incident. The highly sophisticated incident involved the diversion of a single payment to a contractor and resulted in funds of circa US$0.95 million being transferred to a third-party account. Upon discovery of the incident, the Company immediately notified the relevant law enforcement authorities and continues to work with the corresponding banks and consultants to attempt to recover the diverted funds.
In May 2026, and as part of the Company's ongoing portfolio management, the Company announced that it had completed multiple cash generative divestments of non-core, non-producing acreage that was obtained in conjunction with the Acquisition. Since the completion of the US$7.3 million Acquisition, Zephyr announced that it had generated circa US$7.0 million in total consideration from the divestment of non-core assets (comprised of US$5.8 million in cash proceeds and the divestment of US$1.2 million in near-term plugging, abandonment and capital liabilities).
KEY PERFORMANCE INDICATORS
As part of Zephyr's ongoing development of the Paradox project and the build-out of the non-operated portfolio, the Board tracks its performance against indicators that reflect the strategic, operational and financial progress, as well as our impact on society and the environment. These indicators allow the Board, management and stakeholders to compare Zephyr's performance to its goals.
|
Safety performance
|
Why we measure · The Group has a zero-harm safety culture focused on continuous improvement to achieve an injury-free and safe work environment · We require employees and contractors to work in a safe and responsible manner and provide them with the training and equipment to do so
|
Performance · There were no reported LTIs during the 2025 financial year (2024: nil)
|
|
Adjusted EBITDA Loss before tax adjusted for DD&A, ECL, impairments, share-based payments, unrealised foreign exchange gains / losses, net finance costs and unrealised losses on derivative contracts |
Why we measure · Indicator of the Group's cash generation to fund expenditures and/or return capital to Shareholders |
Performance · 2025 Adjusted EBITDA was US$1.7 million · 2024 Adjusted EBITDA was US$10.9 million · The difference between the Adjusted EBITDA for 2025 and the prior year was primarily the result of lower commodity prices in 2025, the standard decline of the non-operated portfolio and the shut-in of the Slawson wells during the year. Following the completion of the Acquisition, and given current high commodity prices, Adjusted EBITDA is expected to increase in 2026. |
|
Net sales volumes |
Why we measure · Indicator of revenue generation potential · Measure of progress towards achieving production forecasts and driving profitable production growth |
Performance · FY 2025 sales volumes of 302,585 boe · FY 2024 sales volumes of 420,724 boe · Decrease primarily the result of lower commodity prices in the year, Slawson wells being offline during the year and standard production decline of the non-operated asset portfolio
|
|
Growth of Paradox project reserves / resources |
Why we measure · Indicator of economic viability and long-term production potential of projects |
Performance · At 31 December 2025, the Group had Paradox Basin 2P reserves of 35.3 mmboe (2024: 2.6 mmboe) and 2C resources of circa 74.2 mmboe (2024:34 mmboe). · The increase in reserves and resources was the result of the updated CPR completed following the successful production test of the State 36-2R well
|
|
Carrying value of asset portfolio |
Why we measure · An indication of Zephyr's investment into, and potential value in, Zephyr's asset portfolio as well as an indication of activity level during the period |
Performance · At 31 December 2025 the carrying value was US$86.4 million (2024: US$80.5 million). |
CJ Eadie
Group Finance Director
29 June 2026
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2025
|
|
Notes |
2025 US$'000 |
2024 US$'000 |
|
|
|
|
|
|
|
|
Revenue |
6 |
13,911 |
24,279 |
|
|
Operating and transportation expenses |
|
(5,364) |
(5,809) |
|
|
Production taxes |
|
(1,068) |
(2,046) |
|
|
Depreciation, depletion and amortisation |
15 |
(5,201) |
(9,241) |
|
|
Gain on derivative contracts |
20 |
269 |
14 |
|
|
Gross profit |
|
2,547 |
7,197 |
|
|
|
|
|
|
|
|
Administrative expenses |
|
(5,835) |
(5,976) |
|
|
Allowance for expected credit losses |
18 |
- |
(1,226) |
|
|
Impairment of property and equipment |
15 |
- |
(14,541) |
|
|
Share-based payments |
29 |
(248) |
(3,129) |
|
|
Foreign exchange (losses)/gains |
12 |
(4,544) |
1,007 |
|
|
Finance income |
|
24 |
2 |
|
|
Finance costs |
7 |
(2,704) |
(3,303) |
|
|
Loss on ordinary activities before taxation |
8 |
(10,760) |
(19,969) |
|
|
|
|
|
|
|
|
Taxation credit |
11 |
- |
395 |
|
|
Loss for the year attributable to owners of the parent company |
|
(10,760) |
(19,574) |
|
|
|
|
|
|
|
|
Loss per Ordinary Share |
|
|
|
|
|
Basic and diluted, cents per share |
13 |
(0.58) |
(1.13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2025
|
|
|
2025 US$'000 |
2024 US$'000 |
|
|
|
|
|
|
Loss for the year attributable to owners of the parent company |
|
(10,760) |
(19,574) |
|
|
|
|
|
|
Other comprehensive income/(loss) |
|
|
|
|
Items that may be subsequently reclassified to profit or loss |
|
|
|
|
Foreign currency translation differences on foreign operations |
|
4,381 |
(1,007) |
|
Total comprehensive loss for the year attributable to owners of the parent company |
|
(6,379) |
(20,581) |
|
|
|
|
|
CONSOLIDATED BALANCE SHEET
As at 31 December 2025
|
|
|
Notes |
2025 US$'000 |
2024 US$'000 |
|||
|
|
|
|
|
||||
|
Non-current assets |
|
|
|
||||
|
Exploration and evaluation assets |
14 |
58,783 |
53,236 |
||||
|
Property and equipment |
15 |
27,604 |
27,292 |
||||
|
|
|
86,387 |
80,528 |
||||
|
Current assets |
|
|
|
||||
|
Trade and other receivables |
18 |
3,802 |
2,676 |
||||
|
Cash and cash equivalents |
19 |
2,986 |
10,267 |
||||
|
Derivative contracts |
20 |
- |
3 |
||||
|
|
|
6,788 |
12,946 |
||||
|
Total assets |
|
93,175 |
93,474 |
||||
|
|
|
|
|
||||
|
Current liabilities |
|
|
|
||||
|
Trade and other payables |
21 |
(4,599) |
(4,383) |
||||
|
Advance from joint operator |
22 |
- |
(7,394) |
||||
|
Borrowings |
23 |
(15,235) |
(20,933) |
||||
|
Lease liabilities |
|
(16) |
(31) |
||||
|
Derivative contracts |
20 |
- |
(86) |
||||
|
Provisions |
25 |
(2,170) |
(549) |
||||
|
|
|
(22,020) |
(33,376) |
||||
|
|
|
|
|
||||
|
Non-current liabilities |
|
|
|
||||
|
Borrowings |
23 |
(8,383) |
(5,384) |
||||
|
Lease liabilities |
|
- |
(17) |
||||
|
Provisions |
25 |
(4,115) |
(3,560) |
||||
|
|
|
(12,498) |
(8,961) |
||||
|
|
|
|
|
||||
|
Total liabilities |
|
(34,518) |
(42,337) |
||||
|
Net assets |
|
58,657 |
51,137 |
||||
|
|
|
|
|
||||
|
Equity |
|
|
|
||||
|
Share capital |
26 |
43,124 |
42,649 |
||||
|
Share premium account |
28 |
87,236 |
74,792 |
||||
|
Warrant reserve |
27 |
2,117 |
1,887 |
||||
|
Share-based payment reserve |
28 |
6,217 |
5,665 |
||||
|
Cumulative translation reserve |
28 |
(9,838) |
(14,219) |
||||
|
Accumulated deficit |
28 |
(70,199) |
(59,637) |
||||
|
Equity attributable to owners of the parent company |
|
58,657 |
51,137 |
||||
|
|
|
|
|
||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2025
|
|
Share capital |
Share premium account |
Warrant reserve |
Share-based payment reserve |
Cumulative translation reserve |
Accumulated |
Total |
|
|||
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
As at 1 January 2024 |
42,568 |
71,735 |
1,557 |
3,270 |
(13,212) |
(41,217) |
64,701 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
|||
|
Issue of equity shares |
81 |
3,816 |
- |
- |
- |
- |
3,897 |
|
|||
|
Grants of warrants |
- |
(49) |
- |
49 |
- |
- |
- |
|
|||
|
Exercise of warrants |
- |
- |
- |
(3) |
- |
3 |
- |
|
|||
|
Expenses of issue of equity shares |
- |
(380) |
- |
371 |
- |
- |
(9) |
|
|||
|
Warrant exercise extension |
- |
(330) |
330 |
- |
- |
- |
- |
|
|||
|
Share-based payments |
- |
- |
- |
3,129 |
- |
- |
3,129 |
|
|||
|
Transfer to accumulated deficit in respect of expired and lapsed options |
- |
- |
- |
(1,151) |
- |
1,151 |
- |
|
|||
|
Total transactions with owners in their capacity as owners |
81 |
3,057 |
330 |
2,395 |
- |
1,154 |
7,017 |
|
|||
|
Loss for the year |
|
- |
- |
- |
- |
- |
(19,574) |
(19,574) |
|||
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|||
|
Currency translation differences |
- |
- |
- |
- |
(1,007) |
- |
(1,007) |
|
|||
|
Total other comprehensive loss for the year |
- |
- |
- |
- |
(1,007) |
- |
(1,007) |
|
|||
|
Total comprehensive loss for the year |
- |
- |
- |
- |
(1,007) |
(19,574) |
(20,581) |
|
|||
|
As at 31 December 2024 |
42,649 |
74,792 |
1,887 |
5,665 |
(14,219) |
(59,637) |
51,137 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
|||
|
Issue of equity shares |
475 |
13,777 |
- |
- |
- |
- |
14,252 |
|
|||
|
Fair value of warrants issued for placing services |
- |
(502) |
- |
502 |
- |
- |
- |
|
|||
|
Expenses of issue of equity shares |
- |
(831) |
- |
- |
- |
- |
(831) |
|
|||
|
Warrants issued in connection with convertible loan notes |
- |
- |
230 |
- |
- |
- |
230 |
|
|||
|
Share-based payments |
- |
- |
- |
248 |
- |
- |
248 |
|
|||
|
Transfer to accumulated deficit in respect of expired, lapsed and forfeit options |
- |
- |
- |
(198) |
- |
198 |
- |
|
|||
|
Total transactions with owners in their capacity as owners |
475 |
12,444 |
230 |
552 |
- |
198 |
13,899 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Loss for the year |
- |
- |
- |
- |
- |
(10,760) |
(10,760) |
|
|||
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|||
|
Currency translation differences |
- |
- |
- |
- |
4,381 |
- |
4,381 |
|
|||
|
Total other comprehensive income for the year |
- |
- |
- |
- |
4,381 |
- |
4,381 |
|
|||
|
Total comprehensive loss for the year |
- |
- |
- |
- |
4,381 |
(10,760) |
(6,379) |
|
|||
|
As at 31 December 2025 |
43,124 |
87,236 |
2,117 |
6,217 |
(9,838) |
(70,199) |
58,657 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2025
|
|
Notes |
2025 US$'000 |
2024 US$'000 |
|
|
|
Operating activities |
|
|
|
|
|
|
Loss on ordinary activities before taxation |
|
(10,760) |
(19,969) |
|
|
|
Adjustments for: |
|
|
|
|
|
|
Allowance for expected credit losses |
|
- |
1,226 |
|
|
|
Impairment of property and equipment |
|
- |
14,541 |
|
|
|
Finance income |
|
(24) |
(2) |
|
|
|
Finance costs |
|
2,704 |
3,303 |
|
|
|
Depreciation and depletion of property and equipment |
|
5,241 |
9,292 |
|
|
|
Share-based payments |
|
248 |
3,129 |
|
|
|
Unrealised foreign exchange losses/(gains) |
|
4,544 |
(1,006) |
|
|
|
Operating cash inflow before movements in working capital |
|
1,953 |
10,514 |
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease in trade and other receivables |
|
(1,126) |
1,315 |
|
|
|
Unrealised (gain)/ loss on derivative contracts |
|
(83) |
362 |
|
|
|
(Decrease)/increase in trade and other payables |
|
(139) |
788 |
|
|
|
Cash generated from operations |
|
605 |
12,979 |
|
|
|
Income tax paid |
|
- |
- |
|
|
|
Net cash generated from operating activities |
|
605 |
12,979 |
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Acquisitions of exploration and evaluation assets |
|
(3,040) |
- |
|
|
|
Additions to exploration and evaluations assets |
|
(3,707) |
(12,768) |
|
|
|
Acquisition of oil and gas properties |
|
(3,295) |
- |
|
|
|
Additions to oil and gas properties |
|
(395) |
(962) |
|
|
|
Increase/(decrease) in capital expenditures related payables |
|
229 |
(3,367) |
|
|
|
Proceeds on disposal of oil and gas properties |
|
250 |
- |
|
|
|
Proceeds on disposal of exploration and evaluation assets |
|
1,066 |
- |
|
|
|
Insurance proceeds received in respect of exploration and evaluation assets |
|
- |
11,420 |
|
|
|
Net use of advance funds from joint operator |
|
(7,394) |
- |
|
|
|
Grant funds received in respect of exploration and evaluation assets |
|
20 |
250 |
|
|
|
Interest received |
|
4 |
2 |
|
|
|
Net cash used in investing activities |
|
(16,263) |
(5,425) |
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Net proceeds from issue of shares |
|
13,421 |
1 |
||
|
Net advance from joint operator |
|
- |
7,394 |
||
|
Net proceeds from borrowings |
|
1,947 |
5,600 |
||
|
Repayment of borrowings |
|
(4,689) |
(9,958) |
||
|
Repayment of lease liabilities |
|
(32) |
(65) |
||
|
Interest and fees paid on borrowings |
|
(2,264) |
(3,868) |
||
|
Interest paid on leases |
|
(4) |
(2) |
||
|
Net cash generated from/(used in) financing activities |
|
8,379 |
(898) |
||
|
|
|
|
|
||
|
Net (decrease)/increase in cash and cash equivalents |
|
(7,278) |
6,656 |
||
|
|
|
|
|
||
|
Cash and cash equivalents at beginning of year |
|
10,267 |
3,611 |
||
|
Effect of foreign exchange rate changes |
|
(3) |
- |
||
|
Cash and cash equivalents at end of year |
19 |
2,986 |
10,267 |
||
SELECTED NOTES TO THE FINANCIAL STATEMENTS (the full set of notes are available in the annual report and accounts)
For the year ended 31 December 2025
2. ADOPTION OF NEW AND REVISED STANDARDS
STANDARDS ADOPTED DURING THE YEAR
The Group has adopted all of the new or amended Accounting Standards and interpretations issued by the International Accounting Standards Board ("IASB") that are mandatory and relevant to the Group's activities for the current reporting period.
The following new and revised Standards have been adopted but have not had any material impact on the amounts reported in these financial statements:
Amendments to IAS 21 - Lack of exchangeability
Amendments to the SASB standards to enhance their international applicability
STANDARDS ISSUED BUT NOT YET EFFECTIVE
Any new or amended Accounting Standards or interpretations that are not yet mandatory (and in some cases, had not yet been endorsed by the UK Endorsement Board) have not been early adopted by the Group for the year ended 31 December 2025. They are as follows:
Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets between an investor and its associate or joint venture
· IFRS 18 - Presentation and disclosures in financial statements
· IFRS 19 - Subsidiaries without public accountability: disclosures
· Amendments to IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments
· Annual improvements to IFRS accounting standards - Volume 11
· IFRS S1 - General requirements for disclosure of sustainability - related financial information
· IFRS S2 - Climate-related disclosures
· Third edition of the IFRS for SMEs
· Amendments to IFRS S2 - Amendments to greenhouse gas emissions disclosures
The Directors do not expect that the adoption of these Standards or Interpretations in future periods will have a material impact on the financial statements of the Company or the Group.
3. MATERIAL ACCOUNTING POLICIES
BASIS OF PREPARATION
This financial information contained in this news release does not constitute the full financial statements. The auditor has reported on the full financial statements and their audit report is not qualified but includes a material uncertainty relating to going concern.
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared on the historical cost basis, other than certain financial assets and liabilities, which are stated at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
The consolidated and the Company financial statements are presented in United States dollars ("US$"). All amounts have been rounded to the nearest thousand unless otherwise indicated.
The functional currency of the Company is pounds sterling ("£") and that of the U.S. subsidiaries is US$.
As described below, the Directors continue to adopt the going concern basis in preparing the consolidated and the Company financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
The preparation of the financial statements in compliance with UK-adopted international accounting standards requires management to make estimates and the Directors to exercise judgement in applying the Group's accounting policies. The significant judgments made by the Directors in the application of these accounting policies that have significant impact on the financial statements and the key sources of estimation uncertainty are disclosed in note 4.
GOING CONCERN
The Directors have prepared cashflow forecasts for the Group and Company for the period to 31 December 2027 based on their assessment of both the discretionary and the non-discretionary cash requirements of the Group during this period. The Company's going concern assessment has been performed as part of the Group's going concern assessment. The Directors have also considered the impact of certain sensitivity scenarios on the cashflow forecasts.
These cashflow forecasts include the forecast revenues from, and the operating costs of, the Group's operations, together with all financing costs, committed development expenditure and operational cashflows. The Directors also considered downside sensitivities on both production volumes and realised commodity prices and concluded that under each scenario modelled the Group would retain sufficient liquidity to meet its obligations throughout the going concern assessment period.
The Group and the Company have existing borrowings, as disclosed in note 23, including a revolving credit facility with FIBT that is due for renewal in December 2026. To meet this obligation, the Group and the Company will require debt refinancing of these borrowings, asset sales, or raising of new funding to repay the obligation. The facility has been renewed in each of the previous four years, and the Directors are confident that this will be the case in 2026.
As such, the Group and the Company's ability to continue as a going concern is dependent on debt refinancing of existing borrowings, or alternatively through asset sales or raising new funding, which is not guaranteed. This indicates the existence of a material uncertainty which may cast significant doubt over the Group and the Company's ability to continue as going concerns, and therefore, the Group and the Company may be unable to realise their assets and discharge their liabilities in the normal course of business.
The Directors have a high degree of confidence that the Group and the Company will be able to refinance their existing borrowings and will have sufficient funds, or be able to raise sufficient funds, to enable the Group and the Company to continue in operation for at least the next 12 months from the date of approval of the financial statements.
The Directors have extensive experience in raising capital for projects and ventures and remain confident in the Group and the Company's ability to raise the capital necessary to maintain and deliver on its commitments and continue as a going concern.
The Directors continue to adopt the going concern basis in preparing the consolidated financial statements. The financial statements do not include any adjustments that would be required should the going concern basis of preparation no longer be appropriate.
5. SEGMENTAL INFORMATION
When considering the requirements of IFRS 8 Operating segments, the Board of Directors have determined that the Group has one main operating segment, the exploration, development and production of oil and gas resources based in the U.S. As a result, no segmental information is presented.
6. REVENUE
Petroleum and natural gas revenue earned by the Group in the U.S. is disaggregated by commodity, as follows:
|
|
|
|
2025 US$'000 |
2024 US$'000 |
|
Crude oil |
|
|
11,620 |
21,782 |
|
Natural gas liquids |
|
|
1,324 |
1,594 |
|
Natural gas |
|
|
967 |
903 |
|
|
|
|
13,911 |
24,279 |
7. FINANCE COSTS
|
|
|
|
2025 US$'000 |
2024 US$'000 |
|
Loan interest and fees |
|
|
2,272 |
2,916 |
|
Lease interest |
|
|
3 |
2 |
|
Other interest charges |
|
|
1 |
21 |
|
Amortisation of debt costs |
|
|
230 |
130 |
|
Unwinding of discount on decommissioning |
|
|
198 |
234 |
|
|
|
|
2,704 |
3,303 |
8. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
The loss before taxation for the year has been arrived at after (crediting)/charging:
|
|
|
|
|
2025 US$'000 |
2024 US$'000 |
|
Gains on derivative contracts |
|
|
(269) |
(14) |
|
|
Depreciation and depletion of property and equipment |
|
|
5,241 |
9,292 |
|
|
Staff costs excluding share-based payments |
|
|
3,339 |
3,113 |
|
|
Allowance for expected credit losses |
|
|
- |
1,226 |
|
|
Impairment of property and equipment |
|
|
- |
14,541 |
|
|
Share-based payments |
|
|
248 |
3,129 |
|
|
Foreign exchange losses/(gains)1 |
|
|
4,544 |
(1,007) |
|
|
|
|
|
|
|
|
1 Foreign exchange (losses)/gains) include a loss of US$4.5 million (2024: gain US$1.0 million) in respect of the translation of GBP designated loans between the Company and its U.S. subsidiary entities at 31 December 2025.
12. FOREIGN EXCHANGE LOSSES/(GAINS)
|
|
|
2025 US$'000 |
2024 US$'000 |
||
|
Unrealised foreign exchange losses/(gains) |
|
4,544 |
(1,007) |
||
The Group has GBP-denominated intercompany loans that are recognised by certain U.S. subsidiaries in U.S. dollars. As these loans are monetary items under IAS 21, they are retranslated at each reporting date, with the resulting unrealised foreign exchange gains and losses recognised in profit or loss.
This volatility reflects movements in the GBP/USD exchange rate and does not result in cash flows unless and until the loans are settled.
13. LOSS PER ORDINARY SHARE
Basic loss per Ordinary Share is calculated by dividing the net loss for the year by the weighted average number of Ordinary Shares in issue during the year. Diluted loss per Ordinary Share is calculated by dividing the net loss for the year by the weighted average number of Ordinary Shares in issue during the year adjusted for the dilutive effect of potential Ordinary Shares arising from the Company's share options and warrants.
The calculation of the basic and diluted loss per Ordinary Share is based on the following data:
|
|
|
2025 US$'000 |
2024 US$'000 |
|
|
Losses |
|
|
||
|
Losses for the purpose of basic and diluted loss per Ordinary Share being net loss for the year |
(10,760) |
(19,574) |
||
|
|
|
|
||
|
|
2025 Number '000 |
2024 Number '000 |
||
|
Number of shares |
|
|
||
|
Weighted average number of shares for the purpose of basic and diluted loss per Ordinary Share |
1,840,893 |
1,728,196 |
||
|
|
|
|
||
|
|
2025 US$'000 |
2024 US$'000 |
||
|
Loss per Ordinary Share |
|
|
||
|
Basic and diluted, cents per share |
(0.58) |
(1.13) |
||
|
|
|
|
||
The Company has options issued over 102,138,428 (2024: 102,238,428) Ordinary Shares, and warrants issued over 173,912,770 (2024: 134,730,952) Ordinary Shares that are potentially dilutive. See notes 27 and 29.
Due to the losses incurred from continuing operations in the years presented, there is no dilutive effect from the existing share options or warrants.
14. EXPLORATION AND EVALUATION ASSETS
|
|
|
Paradox project |
Undeveloped land |
Total |
|
Cost |
US$'000 |
US$'000 |
US$'000 |
|
|
|
At 1 January 2024 |
49,941 |
- |
49,941 |
|
|
Additions |
12,768 |
- |
12,768 |
|
|
Decommissioning - additions and change in estimates |
(472) |
- |
(472) |
|
|
Insurance proceeds |
(8,751) |
- |
(8,751) |
|
|
Funds received in lieu of grants |
(250) |
- |
(250) |
|
|
At 1 January 2025 |
53,236 |
- |
53,236 |
|
|
Acquisitions |
- |
3,040 |
3,040 |
|
|
Additions |
3,707 |
- |
3,707 |
|
|
Disposals |
- |
(1,066) |
(1,066) |
|
|
Decommissioning - additions and change in estimates |
(134) |
- |
(134) |
|
|
At 31 December 2025 |
56,809 |
1,974 |
58,783 |
STATE 36-2R WELL JOINT OPERATION
During the year ended 31 December 2025, the Group drilled an extended lateral section on the State 36-2 LNW-CC-R well (the "State 36-2R well"). The extended lateral was drilled pursuant to a Joint Development Agreement ("JDA") and Joint Operating Agreement ("JOA") entered into with a U.S.-based industry partner during the prior year. Under the terms of the JDA, the partner acquired a 50% non-operated working interest in the State 36-2R well in exchange for funding US$7.5 million of the drilling costs associated with the extended lateral. The amount received was recorded as an advance and applied against qualifying exploration and evaluation expenditures as costs were incurred. The advance was fully utilised and all subsequent costs were borne by the parties in proportion to their respective working interest shares.
E&E ACQUISITIONS AND DISPOSALS
The Group acquired approximately 6,350 undeveloped, non-producing acres as part of the Acquisition, which are separate from the Group's Paradox Project asset. During the year, the Group divested of a portion of this acreage, as it was determined that the acres had potential for long lead times for development and/or significant future capital expenditure. The acquisitions and disposals presented in the table above relate to these non-Paradox acres. See note 16.
In accordance with the Group's purchase price allocation and due to the short period of time between the acquisition and the disposals, no gain or loss has been recognised on any of the transactions described in this note.
IMPAIRMENT
The Directors assessed for indicators of impairment as set out in IFRS 6 and none were identified. On this basis the Directors have satisfied themselves that there was no requirement to perform an impairment test at 31 December 2025 and, as a result, no provision for impairment has been made in respect of these assets at 31 December 2025 (2024: nil).
The Group depreciation and depletion charge has been allocated to the income statement as follows:
|
|
|
|
|
2025 US$'000 |
2024 US$'000 |
|
Depreciation, depletion and amortisation |
|
|
5,201 |
9,241 |
|
|
Administrative expenses |
|
|
40 |
51 |
|
|
|
|
|
5,241 |
9,292 |
|
IMPAIRMENT
At 31 December 2025, the Directors considered the requirements of IAS 36 Impairment of assets in respect of its oil & gas properties. They have satisfied themselves that there were no indicators of impairment and, therefore, there was no requirement to perform an impairment test. As a result, no provision for impairment has been made in respect of these assets at 31 December 2025 (2024: US$14.5 million).
15. PROPERTY AND EQUIPMENT
|
|
|
Group |
Company |
||||||||||||
|
Cost |
|
Oil and gas properties US$'000 |
Office equipment US$'000 |
Right-of-use assets US$'000 |
Total US$'000 |
Office equipment US$'000 |
Right-of-use assets US$'000 |
Total US$'000 |
|
||||||
|
|
At 1 January 2024 |
74,359 |
25 |
77 |
74,461 |
25 |
77 |
102 |
|
||||||
|
|
Additions |
1,336 |
- |
43 |
1,379 |
- |
- |
- |
|
||||||
|
|
Disposals |
(612) |
- |
- |
(612) |
- |
- |
- |
|
||||||
|
|
Decommissioning -additions and change |
(715) |
- |
- |
(715) |
- |
- |
- |
|
||||||
|
|
Exchange differences |
- |
- |
(1) |
(1) |
- |
(1) |
(1) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 1 January 2025 |
74,368 |
25 |
119 |
74,512 |
25 |
76 |
101 |
|
||||||
|
|
Acquisitions |
5,629 |
- |
- |
5,629 |
- |
- |
- |
|
||||||
|
|
Additions |
395 |
- |
- |
395 |
- |
- |
- |
|
||||||
|
|
Disposals |
(250) |
- |
- |
(250) |
- |
- |
- |
|
||||||
|
|
Decommissioning -additions and change |
(222) |
- |
- |
(222) |
- |
- |
- |
|
||||||
|
|
Exchange differences |
- |
2 |
6 |
8 |
2 |
6 |
8 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 31 December 2025 |
79,920 |
27 |
125 |
80,072 |
27 |
82 |
109 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Accumulated depreciation |
|
|
|
|
|
|
|
||||||||
|
|
At 1 January 2024 |
23,579 |
21 |
21 |
23,621 |
21 |
21 |
42 |
|
||||||
|
|
Charge for the year |
9,241 |
2 |
49 |
9,292 |
2 |
39 |
41 |
|
||||||
|
|
Disposals |
(233) |
- |
- |
(233) |
- |
- |
- |
|
||||||
|
|
Exchange differences |
- |
- |
(1) |
(1) |
- |
(1) |
(1) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 1 January 2025 |
32,587 |
23 |
69 |
32,679 |
23 |
59 |
82 |
|
||||||
|
|
Charge for the year |
5,201 |
2 |
38 |
5,241 |
2 |
18 |
20 |
|
||||||
|
|
Exchange differences |
- |
2 |
5 |
7 |
2 |
5 |
7 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 31 December 2025 |
37,788 |
27 |
112 |
37,927 |
27 |
82 |
109 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Impairment |
|
|
|
|
|
|
|
||||||||
|
|
At 1 January 2024 |
|
|
|
|
|
|
|
|
||||||
|
|
Charge for the year |
14,541 |
- |
- |
14,541 |
- |
- |
- |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 1 January 2025 and 31 December 2025 |
14,541 |
- |
- |
14,541 |
- |
- |
- |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Carrying amount |
|
|
|
|
|
|
|
||||||||
|
|
At 31 December 2025 |
27,591 |
- |
13 |
27,604 |
- |
- |
- |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 31 December 2024 |
27,240 |
2 |
50 |
27,292 |
2 |
17 |
19 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
At 1 January 2024 |
50,780 |
4 |
56 |
50,840 |
4 |
56 |
60 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
16. ASSET ACQUISITIONS AND DISPOSALS
ROCKY MOUNTAIN ASSET ACQUISITION
On 21 August 2025, the Group completed the Acquisition of a portfolio of oil and gas interests, comprising operated working interests, non-operated working interests, overriding royalty interests and undeveloped land acreage located in the Rocky Mountain region, including the Williston Basin (North Dakota), the Powder River Basin (Wyoming), and Colorado.
The effective date of the acquisition was 1 June 2025, with a closing date of 21 August 2025 when legal title and possession of the assets transferred to the Group. Accordingly, the Group determined that control of the acquired assets passed on the closing date. Revenue and operating expenses attributable to the assets between the effective date and the closing date have been treated as purchase price adjustments rather than recognised in the consolidated income statement.
The Group applied the requirements of IFRS 3 Business combinations to the acquisition and concluded that it meets the requirements to be classified as an asset acquisition. See note 4.
The cost of the acquisition was US$7.3 million, payable in cash, and revenue and operating expenses attributable to the assets between the effective date and the closing date have been treated as purchase price adjustments rather than recognised in the consolidated income statement.
The fair value of the assets/(liabilities) acquired were:
|
|
2025 US$'000 |
|
Assets |
|
|
Proved developing producing |
5,269 |
|
Proved undeveloped |
359 |
|
|
5,628 |
|
|
|
|
Exploration and evaluation assets |
3,040 |
|
|
8,668 |
|
Liabilities |
|
|
Decommissioning liabilities |
(2,333) |
|
Identifiable net assets at fair value |
6,335 |
|
|
|
|
Cash paid at date of completion |
7,291 |
|
Post-closing settlement adjustments received prior to year end |
(468) |
|
Post-closing settlement adjustments accrued at year end; cash received post year end |
(488) |
|
|
6,335 |
|
|
|
DISPOSAL OF OIL & GAS PROPERTIES
During the year ended 31 December 2025, the Group completed a series of disposals and assignments of oil and gas interests and land acreage in connection with the Acquisition, as described below. In accordance with the Group's purchase price allocation, no gain or loss has been recognised on any of the transactions described in this note.
Operated Well Disposals
The Group received cash proceeds of approximately US$0.68 million from one party in respect of a North Dakota well and associated interests.
In a separate transaction, the Group paid approximately US$0.45 million (net of US$33,392 closing adjustments) to a second party to transfer certain Colorado well interests and associated decommissioning obligations.
No gain or loss has been recognised in respect of these transactions.
Leasehold and other interests
On 29 December 2025, the Group completed the sale of certain leasehold interests acquired as part of the Acquisition, in Wyoming for gross consideration of approximately US$1.1 million. Following a title review process, amounts of approximately US$0.1 million were refunded to the counterparty in early 2026, resulting in net proceeds of approximately US$1.0 million. In accordance with the Group's purchase price allocation and due to the short period of time between the acquisition and the disposals, no gain or loss has been recognised. See note 15.
In addition, the Group completed a number of smaller assignments of working interests and wellbore participations during the year and shortly thereafter, with aggregate proceeds of approximately US$0.1 million. No gain or loss has been recognised on these transactions. These amounts have also been reflected as reductions to the total cost of assets acquired. See note 15.
18. TRADE AND OTHER RECEIVABLES
|
|
Group |
Company |
|||
|
|
2025 US$'000 |
2024 US$'000 |
2025 US$'000 |
2024 US$'000 |
|
|
|
|
|
|
|
|
|
Trade receivables |
2,875 |
2,203 |
- |
- |
|
|
VAT recoverable |
54 |
37 |
54 |
37 |
|
|
Other receivables |
592 |
271 |
- |
- |
|
|
Prepayments |
281 |
165 |
64 |
71 |
|
|
|
3,802 |
2,676 |
118 |
108 |
|
|
|
|
|
|
|
|
Trade receivables are due from third-party working interest operators. The Group consistently assesses the collectability of these receivables and, at 31 December 2025, do not consider that any additional allowance for ECL is required. The US$1.2 million allowance recognised at 31 December 2024 remained outstanding and was not reversed at the reporting date. Approximately US$1.0 million was recovered subsequent to the year end; this recovery was not known at the reporting date and has not been recognised in the current period. The ECL will be reversed in the year ended 31 December 2026.
At 31 December 2025, other receivables include the sum of US$58,512 (2024: US$44,391) in respect of amounts due in respect of settled derivative contracts.
At 31 December 2025, other receivables include the sum of US$0.5 million (2024: nil) in respect of settlement funds relating to the Acquisition. See note 16.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value, and represents the Group's maximum exposure to credit risk.
TRADE RECEIVABLES
|
|
|
|
Group |
||
|
|
|
|
|
2025 US$'000 |
2024 US$'000 |
|
Trade receivables |
|
|
4,101 |
3,429 |
|
|
Less: allowance for expected credit losses |
|
|
(1,226) |
(1,226) |
|
|
|
|
|
2,875 |
2,203 |
|
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents held by the Group and the Company as at 31 December 2025 were US$3.0 million and US$0.1 million respectively (2024: US$10.3 million, US$68,000). The Directors consider that the carrying amount of these assets approximate to their fair value and do not believe that the Group is exposed to any significant credit risk on its cash.
Included within cash and cash equivalents at 31 December 2024 was the sum of US$7.4 million the use of which was restricted to the funding of drilling, completion and production testing costs for the State 36-2R well. The funds have now been fully utilised. See note 14.
20. DERIVATIVE CONTRACTS
The Group faces volatility in market prices affecting the predictability of its cashflows from commodity sales. To manage this risk, the Group utilises derivative financial instruments, including collars (put and call options) and swaps linked to commodity prices. These instruments are accounted for as derivative financial instruments measured at fair value through profit or loss. The Group has not applied hedge accounting.
This note includes only standalone derivative contracts used for commodity price risk management. Embedded derivatives arising from financing arrangements, including those associated with convertible loan notes, are accounted for separately and are disclosed within note 23.
At 31 December 2024, the Group's stand-alone derivative financial instruments included collars (put and call options) and swaps:
· Collars - Arrangements that include a fixed floor price (purchased put option) and a fixed ceiling price (sold call option) based on an index price have no net costs overall. At the contract settlement date, (i) when the index price is higher than the ceiling price, the Group pays the counterparty the difference between the index price and ceiling price, (ii) when the index price is between the floor and ceiling prices, no payments are due from either party ;and (iii) when the index price is below the floor price, the Group will receive the difference between the floor price and the index price.
· Swaps - When the Group sells a swap, it agrees to receive a fixed price for the contract while paying a floating market price to the counterparty.
At 31 December 2025, all positions were settled and accordingly there were no derivative or hedging relationships outstanding.
|
|
|
2025 US$'000 |
2024 US$'000 |
||
|
Current assets |
|
- |
3 |
||
|
Current liabilities |
|
- |
(86) |
||
|
|
|
- |
(83) |
||
|
|
|
|
|
|
|
The fair value measurement of derivative contracts has been categorised as Level 2 in the fair value hierarchy as they are valued using inputs and outputs other than quoted prices that are observable for the assets and liabilities.
The recognised gain on derivative contracts was as follows:
|
|
|
2025 US$'000 |
2024 US$'000 |
|
|
Realised gain |
|
186 |
376 |
|
|
Change in fair value |
|
83 |
(362) |
|
|
|
|
269 |
14 |
|
23. BORROWINGS
|
|
Group |
Company |
||
|
|
2025 US$'000 |
2024 US$'000 |
2025 US$'000 |
2024 US$'000 |
|
FIBT facility |
|
|
|
|
|
First term loan |
- |
6,467 |
- |
- |
|
Second term loan |
- |
5,013 |
- |
- |
|
Third term loan |
10,808 |
- |
- |
- |
|
Revolving credit |
11,133 |
15,000 |
- |
- |
|
|
21,941 |
26,480 |
- |
- |
|
Capitalised debt issue costs |
(77) |
(163) |
- |
- |
|
|
21,864 |
26,317 |
- |
- |
|
|
|
|
|
|
|
Strategic Industry Lender |
|
|
|
|
|
Convertible loan - host liability |
2,133 |
- |
2,133 |
- |
|
Capitalised debt issue costs - host liability |
(567) |
- |
(567) |
- |
|
|
1,566 |
- |
1,566 |
- |
|
Convertible loan - embedded derivative |
188 |
- |
188 |
- |
|
|
1,754 |
- |
1,754 |
- |
|
Total borrowings |
23,618 |
- |
1,754 |
- |
|
|
|
|
|
|
|
Current borrowings |
15,235 |
20,933 |
1,754 |
- |
|
Non-current borrowings |
8,383 |
5,384 |
- |
- |
|
|
23,618 |
26,317 |
1,754 |
- |
Remaining contractual maturity analysis
The following table details the Group's remaining maturity for its borrowings. The table has been drawn up based on the undiscounted cashflows based on the earliest date on which the borrowings are required to be paid. The table includes both principal and interest cashflows.
|
|
Group |
Company |
||
|
|
2025 US$'000 |
2024 US$'000 |
2025 US$'000 |
2024 US$'000 |
|
Maturity analysis |
|
|
|
|
|
Less than 6 months |
2,152 |
4,151 |
- |
- |
|
6 months to 1 year |
15,167 |
19,148 |
1,880 |
- |
|
1 year to 2 years |
3,292 |
3,403 |
- |
- |
|
2 years to 5 years |
6,309 |
2,563 |
- |
- |
|
|
26,920 |
29,265 |
1,880 |
- |
|
|
|
|
|
|
FIRST INTERNATIONAL BANK & TRUST ("FIBT")
On 16 February 2022, the Group entered into credit facility agreements with FIBT through its U.S. subsidiaries, Zephyr Bakken LLC and Rose Petroleum (Utah) LLC. FIBT has a lien on the assets of those U.S. subsidiaries.
Term loans
The first term loan of US$18.0 million was repayable by 48 monthly instalments and carried interest at a rate of 6.74% per annum.
On 19 June 2024, the Group entered into a new facility agreement with FIBT. Under the terms of the agreement, the Group received a second term loan of US$5.6 million, repayable by 48 monthly instalments and carried interest at a fixed rate of 10% per annum.
On 10 November 2025, the Group refinanced its existing FIBT term loan facilities. The two outstanding term loans were consolidated into a single facility, with US$4.0 million of the revolving credit facility also rolled into the new term loan. The resulting term loan of US$11.1 million is repayable by 48 monthly instalments commencing December 2025 and carries interest at a fixed rate of 8.99% per annum.
Revolving credit facility
The revolving credit facility has a standard redetermination every six months. In October 2024, the repayment term of the revolving credit facility was extended to 16 December 2025, and the interest charge was adjusted to a fixed rate of 10% per annum. At 31 December 2024, the Group had drawn US$15.0 million in respect of the facility.
On 10 November 2025, US$4.0 million of the drawn revolving credit facility balance was rolled into the new term loan as described above. On 16 December 2025, following the redetermination, the repayment term of the revolving credit facility was extended to 16 December 2026, and the interest charge was adjusted to a fixed rate of 8.99% per annum. At 31 December 2025, the Group had drawn US$11.1 million in respect of the facility.
Under the terms of the FIBT agreements, the credit facilities are subject to a financial covenant which is a debt service coverage ("DSC") ratio, measured annually as of 31 December. The Group has always been compliant with the DSC covenant.
STRATEGIC INDUSTRY LENDER ("THE LENDER")
On 19 November 2025, the Company secured US$2.0 million in loan financing from the Lender. The facility is secured over the intercompany loan balances due to the Company.
The loan has an initial term of 12 months and carries an implied interest rate of 12% per annum, payable in cash at the end of the term. An implementation fee equivalent to 6% of the principal is payable for each 12-month period.
The Company may elect to extend the original maturity date by a further 12 months, subject to certain conditions including market capitalisation thresholds and lender consent.
The Lender has the right to convert all outstanding amounts into new Ordinary Shares of 0.1 pence each in the share capital of the Company at a price of 3.75 pence per Ordinary Share, representing a premium of 56% to the closing mid-market price of the Company's Ordinary Shares on the day preceding the announcement. At 31 December 2025 no conversions have taken place.
The conversion feature has been assessed in accordance with IAS 32 and IFRS 9 and has been determined not to meet the criteria for equity classification, as it does not satisfy the 'fixed‑for‑fixed' requirement. The fair value of the embedded derivative has been calculated using the Black-Scholes model. The significant inputs into the model were as follows:
|
Spot price (pence) |
2.55 |
|
Strike price (pence) |
3.75 |
|
Expected volatility (%) |
64 |
|
Expected life (years) |
1 |
|
Risk free rate (%) |
3.73 |
|
Performance condition |
None |
The fair value measured at 31 December 2025 is US$0.2 million. The fair value is classified within Level 3 of the fair value hierarchy as it incorporates significant unobservable inputs, primarily expected share price volatility.
Under the terms of the agreement, the Lender was also granted warrants to subscribe for 18,181,818 Ordinary Shares of 0.1 pence each. The fair value of the warrants was US$0.2 million and has been treated as a cost of debt. See note 27.
The movement in total borrowings during the year was:
|
|
Group |
Company |
||
|
|
2025 US$'000 |
2024 US$'000 |
2025 US$'000 |
2024 US$'000 |
|
|
|
|
|
|
|
At 1 January |
26,317 |
35,351 |
- |
- |
|
Net cashflows - financing activities - repayment of borrowings |
(4,689) |
(9,958) |
- |
- |
|
Net cashflows - financing activities - additions to borrowings |
1,947 |
5,600 |
1,880 |
- |
|
Non-cash movements - movement in capitalised interest and loan costs |
241 |
(789) |
72 |
- |
|
Non-cash movements - share-based payments |
(230) |
(3,887) |
(230) |
- |
|
Non-cash movements - movement due to foreign exchange rate changes |
32 |
- |
32 |
- |
|
At 31 December |
23,618 |
26,317 |
1,754 |
- |
|
|
|
|
|
|
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