Result of Oversubscribed Bookbuild & Notice of GM
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN (TOGETHER THIS "ANNOUNCEMENT"), IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION, AS PERMITTED BY UK MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
25 June 2025
Zephyr Energy plc
("Zephyr" or the "Company")
Result of oversubscribed Bookbuild
and
Posting of notice of General Meeting
£10.5 million fundraise comprising a £9.8 million Placing and £0.7 million proposed Director Subscription
On 24 June 2025 the Company announced a proposed equity fundraising by way of an accelerated bookbuild (the "Fundraising Announcement"). The Board of Zephyr is pleased to announce that the Bookbuild has concluded and that it has conditionally raised gross proceeds of approximately £9.8 million at the Issue Price of 3.0 pence through the Placing of 326,666,667 Placing Shares to new and existing investors.
In addition, certain Directors, management and their affiliates intend to subscribe for 23,333,333 new Ordinary Shares at the Issue Price to raise a further £0.7 million for the Company after publication of the Company's audited results for the year ended 31 December 2024 by 30 June 2025, subject to the passing of the Resolutions.
The Placing was undertaken on the back of three key recent catalysts for the Company:
1. The Company delivered a highly successful production test on the State 36-2R well. The test achieved a notable, choked-back peak flow rate of 2,848 boe per day with no material drop in bottom hole pressure, and without the use of any fracture stimulation. Detailed test results indicate that the one-mile well's productivity will rank in the top 6% of all gas wells across the United States' 'Lower 48'. The well also demonstrated elevated liquid yields, and economic estimates appear to be competitive with longer lateral wells in core U.S. basins. Additional management analysis suggests that future, two-mile laterals on the Paradox project will have an estimated P50 individual well performance of 3.6 million boe per well and internal rates of return in excess of 280% (based on 29 May 2025 prices), significantly higher figures than exist today in core U.S. basins;
2. A US$100 million commitment from a major U.S.-based oil sector investor (the 'Investor') to accelerate growth through the drilling activity in Zephyr's Williston Basin non-operated asset portfolio. Pairing Zephyr's proven track record and deep regional expertise with the Investor's financial strength, the partnership is designed to increase consolidated cash flow rapidly and deliver attractive returns for all stakeholders; and
3. A proposed accretive, off-market acquisition that will add an initial 400 boepd net to Zephyr and 600,000 boe of proved developed producing (PDP) reserves to the portfolio. In addition, the Proposed Acquisition offers attractive near-term drilling upside potential suitable for the Investor and accretive to Zephyr.
Colin Harrington, Chief Executive of Zephyr, said: "I am delighted to announce the results of the oversubscribed Placing and believe that the Company has now passed an exciting inflection point in its growth and development trajectory.
"Net proceeds from the fundraise will generate immediate accretive production while also providing a path to first cash flow at the Paradox project. The result, following the highly successful State 36-2R well drilling and production testing operations, puts Zephyr in a position of real strength as we move to formalise dialogue with potential Paradox project infrastructure and industry partners. Further, it comes at a time when we believe we have "cracked the code" for a highly commercial future development of the Paradox project.
"It is anticipated that there will be considerable news flow as we progress through this exciting period. Updates are expected to include an updated independent Competent Person's Report ("CPR") on the Paradox project, deployment of initial funds from our strategic partnership, updates regarding discussions with industry and financial partners related to the acceleration of future development of the Paradox project, and the finalisation of infrastructure to enable us to secure sustainable production from our Paradox project wells.
"It should be noted that the Company's primary goal is to deliver production and returns from the Paradox project as quickly as possible. In addition to ongoing discussions with local pipeline and gas processing infrastructure partners, the Company has been approached by multiple parties, including compressed natural gas service companies and data centre / cryptocurrency mining operators, expressing an interest in securing direct, near-term offtake agreements for gas produced by the project. The Company first considered these early production concepts in 2022 and, cognisant of today's backdrop, has seen significant renewed interest from third parties related to this approach. These gas sales alternatives would not require any CAPEX contribution from Zephyr, but could provide for rapid deployment of a near-term gas sales solution - albeit for a portion of gas produced with the remainder ultimately sold via pipeline. Should a data centre / cryptocurrency mining venture come to fruition, the Board would consider the merits of the Company being paid in, and keeping in treasury, Bitcoin and, potentially, other mainstream cryptocurrencies.
"In summary, we are ready to capitalise on the recent progress made across our asset portfolio, and, as always, our Company's management and Board remains fully aligned with our shareholders. To date, management and affiliates have purchased circa 10% of the Company's issued share capital, and it is our intention to have meaningful participation in the fundraising. In light of recent catalysts and particularly given the excellent progress made delivering top-tier well results, management believes that Zephyr offers substantial future upside. We look forward to participating in this growth alongside all other shareholders.
"I would like to thank our adviser team for the successful execution of the Placing in challenging market conditions, and I speak for the entire Zephyr team in welcoming our new shareholders on board."
Notice of General Meeting and admission to AIM
Due to the limited existing share authorities available to issue new Ordinary Shares, the Placing will be conducted in two tranches, as follows:
· the First Placing: a placing of the 175,071,902 First Placing Shares at the Issue Price to be issued pursuant to the Company's existing authorities to issue and allot equity securities on a non-pre-emptive basis, granted at the annual general meeting of the Company on 31 July 2024, to raise approximately £5.3 million gross; and
· the Second Placing: a conditional placing of 151,594,765 Second Placing Shares at the Issue Price to be issued conditional on the passing of the Resolutions at the General Meeting to raise approximately £4.5 million gross.
The First Placing is conditional upon, inter alia, First Admission becoming effective on or around 27 June 2025 or such later time and/or date as the Bookrunners and the Company may otherwise agree (being in any event no later than 8.00 a.m. on 11 July 2025). Application has been made to London Stock Exchange for First Admission to occur on or around 27 June 2025.
The Second Placing is conditional upon, inter alia, the passing of the Resolutions to be proposed at the General Meeting to be held at the offices of Haynes Boone, 1 New Fetter Lane London, EC4A 1AN, United Kingdom at 10.00 a.m. on 14 July 2025 and Second Admission becoming effective on or around 15 July 2025.
A circular containing further details of the Placing and the notice of General Meeting is expected to be despatched to Shareholders later today. A copy of the Circular will be available on the Company's website later today at https://www.zephyrplc.com/.
Application will be made to London Stock Exchange for admission of the Second Placing Shares to trading on AIM ("Second Admission"), subject to, amongst other things, completion of the First Placing and the passing of the Resolutions. Second Admission is expected to occur on or around 15 July 2025 or such later time and/or date as the Bookrunners and the Company may agree (being in any event no later than 8.00 a.m. on 29 July 2025).
Change to significant shareholdings in the Company
As a result of the issue of the First Placing Shares, the shareholding of Origin Creek Energy LLC ("OCE") will be diluted on First Admission to approximately 8.25 per cent. (the number of Ordinary Shares that OCE holds will remain the same at 158,954,546). Rick Grant, the Chairman of Zephyr, and Colin Harrington, the Chief Executive Officer of Zephyr, are both shareholders and directors of OCE, and Colin Harrington is indirectly the controlling shareholder of OCE. Colin Harrington also has an interest in a further 1,453,936 Ordinary Shares and therefore his total interest in the Company including OCE will also be diluted on First Admission to approximately 8.33 per cent. (the number of Ordinary Shares that he holds in total will remain the same at 160,408,482).
Colin Harington intends to take part in the Director Subscription, which is expected to complete alongside the Second Placing subject to the passing of the Resolutions. A further announcement confirming the final details of the Director Subscription will be made following the announcement of the Results.
Total voting rights
Immediately following First Admission, the Company will have 1,925,790,922 ordinary shares of 0.1p each in issue, each with one voting right. There are no shares held in treasury. Therefore, the Company's total number of ordinary shares in issue and voting rights will be 1,925,790,922 and this figure may be used by shareholders from First Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.
Unless otherwise defined, definitions contained in this Announcement have the same meaning as set out in the Fundraising Announcement.
Contacts:
|
Zephyr Energy plc Colin Harrington (CEO) Chris Eadie (Group Finance Director and Company Secretary)
|
Tel: +44 (0)20 7225 4590 |
|
Allenby Capital Limited - AIM Nominated Adviser Jeremy Porter / Vivek Bhardwaj
|
Tel: +44 (0)20 3328 5656
|
|
Turner Pope Investments - Joint Broker James Pope / Andy Thacker
Canaccord Genuity Limited - Joint Broker Henry Fitzgerald-O'Connor / Charlie Hammond
Celicourt Communications - PR Mark Antelme / Ali AlQahtani |
Tel: +44 (0)20 3657 0050
Tel: +44 (0)20 7523 8000
Tel: +44 (0) 20 7770 6424 |
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. The Company's mission is rooted in two core values: to be responsible stewards of its investors' capital, and to be responsible stewards of the environment in which it works.
Zephyr's flagship asset is an operated 46,000-acre leaseholding located in the Paradox Basin, Utah. In addition to its operated assets, the Company owns working interests in a broad portfolio of non-operated producing wells across the Williston Basin in North Dakota and Montana. Cash flow from the Williston production will be used to fund the planned Paradox Basin development. In addition, the Board will consider further opportunistic value-accretive acquisitions.
This Announcement is made in accordance with the Company's obligations under Article 17 of UK MAR and the person responsible for arranging for the release of this Announcement on behalf of Zephyr is Colin Harrington, Chief Executive Officer.
IMPORTANT NOTICES
Notice to Distributors
This Announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This Announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.
UK Product Governance Requirements
Solely for the purposes of the product governance requirements contained within chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK Product Governance Requirements") and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in chapter 3 of the FCA Handbook Conduct of Business Sourcebook ("COBS"); and (ii) eligible for distribution through all permitted distribution channels (the "UK Target Market Assessment"). Notwithstanding the UK Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The UK Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the UK Target Market Assessment, the Bookrunners will only procure investors who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the UK Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of chapters 9A or 10A respectively of the COBS; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the shares and determining appropriate distribution channels.
EU Product Governance Requirements
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended and as this is applied in the United Kingdom ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors who do not need a guaranteed income or capital protection and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "EU Target Market Assessment"). The Placing Shares are not appropriate for a target market of investors whose objectives include no capital loss. Notwithstanding the EU Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital projection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The EU Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the EU Target Market Assessment, the Bookrunners will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the EU Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the shares and determining appropriate distribution channels.
Forward Looking Statements
This Announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this Announcement and include statements regarding the Directors' beliefs or current expectations. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement.
Notice to overseas persons
This Announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company.
This Announcement is not for release, publication or distribution, in whole or in part, directly or indirectly, in or into the United States of America, Canada, Australia, Japan or the Republic of South Africa or any jurisdiction into which the publication or distribution would be unlawful. This Announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire shares in the capital of the Company in the United States of America, Canada, Australia, Japan, the Republic of South Africa or any jurisdiction in which such offer or solicitation would be unlawful or require preparation of any prospectus or other offer documentation or would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. Persons into whose possession this Announcement comes are required by the Company to inform themselves about, and to observe, such restrictions.
Timetable
The times and dates set out throughout this Announcement may be adjusted by the Company in which event the Company will make an appropriate announcement to a Regulatory Information Service giving details of any revised times and dates which will also be notified to the London Stock Exchange and, where appropriate, shareholders of the Company. Shareholders of the Company may not receive any further written communication.
References to times in this Announcement are to the time in London, UK unless otherwise stated.
General
Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) or any previous announcement made by the Company is incorporated into, or forms part of, this Announcement.
This Announcement has been issued by, and is the sole responsibility of, the Company.
Allenby Capital, which is authorised and regulated by the FCA in the United Kingdom, is acting as Nominated Adviser to the Company. Allenby Capital will not be responsible to any person other than the Company for providing the protections afforded to clients of Allenby Capital or for providing advice to any other person in connection with the Placing or any acquisition of shares in the Company. Allenby Capital has not authorised the contents of, or any part of, this Announcement, no representation or warranty, express or implied, is made by Allenby Capital in respect of such contents, and no liability whatsoever is accepted by Allenby Capital for the accuracy of any information or opinions contained in this Announcement or for the omission of any material information, save that nothing shall limit the liability of Allenby Capital for its own fraud. Allenby Capital's responsibilities as the Company's Nominated Adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any other person.
Canaccord, which is authorised and regulated by the FCA in the United Kingdom, is acting as Joint Broker and Bookrunner to the Company in connection with the Placing. Canaccord will not be responsible to any person other than the Company for providing the protections afforded to clients of Canaccord or for providing advice to any other person in connection with the Placing or any acquisition of shares in the Company. Canaccord is not making any representation or warranty, express or implied, as to the contents of this Announcement. Canaccord has not authorised the contents of, or any part of, this Announcement, and no liability whatsoever is accepted by Canaccord for the accuracy of any information, or opinions contained in this Announcement or for the omission of any material information, save that nothing shall limit the liability of Canaccord for its own fraud.
Turner Pope, which is authorised and regulated by the FCA in the United Kingdom, is acting as Joint Broker and Bookrunner to the Company in connection with the Placing. Turner Pope will not be responsible to any person other than the Company for providing the protections afforded to clients of Turner Pope or for providing advice to any other person in connection with the Placing or any acquisition of shares in the Company. Turner Pope is not making any representation or warranty, express or implied, as to the contents of this Announcement. Turner Pope has not authorised the contents of, or any part of, this Announcement, and no liability whatsoever is accepted by Turner Pope for the accuracy of any information, or opinions contained in this Announcement or for the omission of any material information, save that nothing shall limit the liability of Turner Pope for its own fraud.
No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that the earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
This Announcement does not constitute a recommendation concerning any investor's investment decision with respect to the Placing. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this Announcement and publicly available information.
The new Ordinary Shares will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.
The price and value of securities can go down as well as up. Past performance is not a guide to future performance.
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