Half-year Report

Zephyr Energy PLC

28 September 2026

 

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.

28 September 2026

Zephyr Energy plc

("Zephyr", the "Company", or the "Group")

Interim results for the six months ended 30 June 2026

Zephyr Energy plc (AIM: ZPHR) reports its unaudited interim results for the six months ended 30 June 2026.

Colin Harrington, Chief Executive Officer of Zephyr, said:

“The first half of 2026 was a period of forward momentum, consolidation and progress across both our operated and non-operated asset portfolios.

“At the Company’s operated Paradox project in Utah, highlights included a step-change increase in Zephyr's operated land position, key advancements on the operational and regulatory processes required for first gas export, and continued progress on the project farm-out and gas off-take processes.

“On the non-operated asset portfolio, production exceeded management’s forecasts and the Company continued to actively manage its portfolio, completing further divestments of non-core acreage and contributing additional drilling opportunities to its US$100 million strategic partnership.

“I am both excited and optimistic about the period ahead and believe that there will be many positive developments, with corresponding news flow, over the coming months.”

Contacts

Zephyr Energy plc Colin Harrington (CEO) Chris Eadie (Group Finance Director and Company Secretary)	Tel: [phone]
Allenby Capital Limited - AIM Nominated Adviser Jeremy Porter / Vivek Bhardwaj	Tel: [phone]
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: [phone] Tel: [phone] Tel: [phone]

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) 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 Person’s Report by Sproule International of the Company's White Sands Unit (20,000 acres) confirmed 2P reserves of 35.3 million barrels of oil equivalent ("boe") and total recoverable resources of 74.2 million boe within the White Sands Unit.

Zephyr also holds a portfolio of non-operated production interests across the Williston and other Rocky Mountain basins, supported by a strategic investment partnership designed to accelerate growth and enhance cash flow.

ZEPHYR ENERGY PLC

INTERIM REPORT FOR THE SIX MONTHS TO 30 JUNE 2026

The Company’s board of directors (the “Directors” or the “Board”) is pleased to present Zephyr's unaudited interim report for the six-month period to 30 June 2026 (“H1 2026”).

REVIEW OF ACTIVITIES

OVERVIEW

The first half of 2026 was a period of forward momentum, consolidation and progress as the Company continued its quest to unlock what it believes to be the next prolific onshore oil and gas play in the United States (“U.S.”).

At the Company’s operated Paradox project in Utah, U.S. (the “Paradox project”), H1 2026 highlights included a step-change increase in Zephyr's operated land position, key advancements on the operational and regulatory milestones required for first gas export, and continued progress on the project farm-out and gas off-take processes.

On the non-operated asset portfolio, H1 2026 production exceeded management’s forecasts and the Company continued to actively manage its portfolio, completing further divestments of non-core acreage and contributing additional drilling opportunities to its US$100 million strategic partnership while maintaining a measured hedge position against current oil production.

The Board is optimistic about the period ahead and believes that there will be multiple positive developments, with corresponding news flow, over the coming months.

During H1 2026, 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 Zephyr’s management team will continue to embed these disciplines in our daily activities and in every major decision made by the Company.

PARADOX PROJECT

The Company made sustained progress on the Paradox project in H1 2026.

Infrastructure and progress towards first production

Since the successful completion of the State 36-2R well in late 2025, Zephyr's key operational focus has been on implementing the tie-in of the Company’s previously drilled Paradox project wells to the nearby pipeline infrastructure, in order to deliver first commercial production from the project. 

In December 2025, Zephyr announced that it had reached a framework agreement with Enbridge Inc. (“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 broader 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 of regulatory approvals required to run bi-directional flows on the existing Enbridge pipeline. 

Work with Enbridge progressed throughout H1 2026, and on 9 June 2026, Zephyr announced, amongst other matters, the successful completion of the critical inline-inspection (“ILI”) process, during which a team supervised by Enbridge performed 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.

The 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 (totaling 25 feet in length) were identified for visual inspection. Enbridge views such inspections as routine and does not consider them a risk to achieving first gas export, even if any section should require repair.

The completion of the ILI was 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 for Enbridge to increase pipeline operating pressure and transport gas to the Northwest Pipeline.

By way of background, Enbridge, as a public utility, must secure regulatory approval in order to transport Zephyr’s gas. Zephyr is not a party to these regulatory filings, and much of the background regulatory work is done on a confidential basis. Therefore, Zephyr cannot communicate specific timelines ahead of the completion of the regulatory process, although Zephyr’s stakeholders should note that Enbridge is continuing to actively progress its work in the field (and at their own cost).

The successful completion of the ILI provided the Board with confidence that the uprating of operating pressures required for the pipeline to accept Zephyr's gas volumes will not result in any further operational hurdles. Further the Board also gained confidence that the Enbridge-led regulatory approval process will conclude in a satisfactory manner. 

Based on this, and as announced on 24 August 2026, the Board approved initial funding for additional engineering (related to gas processing) and well work operations, with a goal to increase initial processing capacity up to 15 million square cubic feet per day (“mmscf/d”), a significant increase over earlier base case estimates of 5 mmscf/d. This work is funded from the Company's existing cash resources.

Initial gas volumes from the field will be provided by the State 36-2R and the Federal 28-11 wells, with additional production from new and existing wells to follow as cash flow, planning and regulatory approvals allow.

In parallel with the Enbridge workstreams, the Company is also in the latter stages of selecting a marketing partner for the natural gas and associated hydrocarbon volumes produced from the Paradox project. 

On 27 July 2026, the Company announced that it entered into a non-binding Letter of Intent (the "LOI") with Atlas Oil Company ("Atlas"). The LOI detailed a proposal for a Commodity Purchase Agreement (the "CPA") and sale of hydrocarbon marketing rights at the Paradox project, and the CPA would provide up to US$15 million in non-dilutive pre-production financing to Zephyr (the "proposed funding").

The proposed funding is designed to finance the Paradox project infrastructure build-out, well workovers and upsized gas processing facilities, and is not contingent on the timing of first gas production. It would enable Zephyr to deliver first commercial production on a larger scale, with existing Zephyr resources reallocated for future well planning and drilling.

Repayment of the proposed funding would come from production sales proceeds, aligning funding with project cash generation.

The Company’s negotiations with Atlas are continuing and the Company will make further updates in due course.

Acreage position

Consistent with the Company’s stated goal to expand the asset base of the Paradox project both vertically (via overlying reservoirs) and horizontally (via additional acreage acquisitions), the Company acquired an additional circa 27,000 net acres during the period (the “new acreage”). Inclusive of the new acreage, the Company's total operated land position in the Paradox Basin is approximately 70,000 gross acres, the majority held at a 100% working interest.

As announced on 24 June 2026, approximately 24,000 acres of the new acreage was secured through a competitive lease sale administered by the U.S. Bureau of Land Management, carrying a ten-year primary term, with the remainder secured through direct negotiation with the Utah Trust Lands Administration on a five-year primary term. The new acreage is largely contiguous to the south and west of the Company's White Sands Unit (“WSU”), doubling the acreage footprint around the WSU and providing significantly expanded access to the proven Cane Creek reservoir and the wider Paradox formation oil and gas play, together with further exploration potential for helium below the Paradox formation.

The acquisition cost of the new acreage was funded from existing cash resources.

Farm-out process

The Company’s drilling operations on the Paradox project have clearly demonstrated the large scale and potential value of the project.

To date, the Company has drilled three successful wells, including two one-mile horizontal wells utilising different completion technologies. Both horizontal wells demonstrated strong deliverability and expanded the potential completion design options for greater field development.

During this time, we gathered a substantial amount of data that will help inform the future development plans of the project. Furthermore, we are in the process of finalising the infrastructure solution that will enable us to bring the project into full production.

All of this has been achieved at low development costs, especially when compared with many other new field start-ups of a similar size, and the infrastructure solution should enable accelerated project development when completed.

On the back of this activity, and given the considerable scale of the project, the Company appointed a financial adviser and opened a data room to assist in the identification of prospective partners to assist with the project’s development. The Company believes it is delivering the project to commercialisation at a time when domestic gas demand is rising in the western U.S. markets, and as western seaboard LNG exports begin to ramp up. Furthermore, we believe that the Paradox project will compare favourably on production and economic metrics with existing natural gas basins in the U.S.

Next steps

As outlined above, there is a considerable amount of work currently taking place on the Paradox project, and the Company expects to be able to provide meaningful updates on the following areas over the coming months:

• Resolution of the farm-out process;
• Completion of a CPA with Atlas or other hydrocarbon marketing firm;
• Completion of engineering and regulatory work with Enbridge;
• Commencement of workover on existing wells and permitting of new wells;
• Further leasing of additional nearby acreage; and, most importantly,
• Commencement of commercial production from the Paradox project.

NON-OPERATED PORTFOLIO AND PORTFOLIO MANAGEMENT

Zephyr's non-operated portfolio was established in 2021 and today, following multiple acquisitions, Zephyr continues to deliver on its strategy to compound capital through investment into low-risk working interest positions in high-quality, high-margin production assets with growth potential.

The Group's non-operated portfolio continues to deliver strong returns. Cash flows generated from the portfolio are recycled into the Paradox project development programme and into additional non-operated drilling opportunities, in addition to covering Zephyr's G&A costs.

At 30 June 2026, Zephyr had working interests in 600 wells that were available for production, equivalent to 30 net wells in total, all of which utilised horizontal drilling and modern, hydraulically-stimulated completions. The majority of the wells are operated by leading Rocky Mountain hydrocarbon producers such as Chord, Continental, Devon and EOG.

The Company will continue to develop and grow its non-operated portfolio through drilling activity on existing acreage, and via accretive and opportunistic acquisitions.

The non-operated portfolio continued to perform ahead of management expectations during the period.

H1 2026 performance

• H1 2026 revenue totalled US$10.8 million (H1 2025: US$6.3 million). The increase in revenue compared to H1 2025 was a combination of the following factors:
  • higher commodity prices in H1 2026 compared to H1 2025;
  • impact of the temporary shut-in of the six wells operated by Slawson Exploration (the "Slawson wells") during H1 2025 that came back online; and
  • impact of additional revenue from the Acquisition (defined hereinafter) (which had an effective date of 1 June 2025).
• H1 2026 sales volumes averaged 984 boepd (H1 2025: 684 boepd) for a total of 178,233 boe, during the period (H1 2025: 123,798 boe), an increase of nearly 44%.

Production in H1 2026 averaged 921 boepd versus an average production in H1 2025 of 693 boepd:

• Production in H1 2026 was made up of 69% oil

• H1 2026 gross profit (including operating and transportation expenses, production taxes and realised losses from hedging contracts, and excluding DD&A) was US$6.6 million (H1 2025: US$3.3 million), an increase of 100%.

Divestment programme

In H1 2026, and as part of the ongoing management of the non-operated portfolio, Zephyr continued to divest non-core, non-producing assets that were obtained as part of the Company’s US$7.3 million acquisition of Rocky Mountain producing assets, which completed in August 2025 (the “Acquisition”).

By way of background, the Acquisition was valued by the Company solely on the basis of the producing assets acquired. However, the transaction also included approximately 6,350 undeveloped, non-producing acres in the Williston, Powder River, Denver-Julesburg and other Rocky Mountain basins. The acquisition of these acres was classified as exploration and evaluation assets at 31 December 2025.

Following the completion of the Acquisition, Zephyr’s technical team undertook a detailed evaluation of this undeveloped acreage to determine its current and future value potential. The Company deemed certain of 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 a portion of the undeveloped acreage and utilise the proceeds for reinvestment in 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).

In addition, the producing assets acquired as part of the Acquisition have generated approximately US$4 million in cash flow since completion. Combined with the value realised through the divestment programme, the Acquisition has delivered approximately US$11 million of value to date, compared with the original acquisition cost of US$7.3 million. Importantly, the retained producing assets continue to provide meaningful production and cash flow and are expected to contribute to the Company's performance for a number of years, providing further opportunity for value creation.

The Company is currently evaluating options for the remaining undeveloped acreage acquired and will provide further updates in due course.

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 “Investor”). The arrangement, which combines Zephyr’s regional expertise and the Investor’s financial strength, is designed to accelerate Zephyr’s non-operated growth, enhance consolidated cash flow, and drive attractive returns. The Board views this arrangement as an excellent way to utilise experienced industry capital to further expand the Group’s cash-generating foundation.

Under the terms of the arrangement, the Investor, at its sole discretion, will potentially make available up to US$100 million (subject to the conditions outlined below) to fund 100% of the CAPEX related to the drilling, completing and equipping of newly acquired assets, which are contained within a defined geographical area in the U.S. Rocky Mountains (the "Programme Area").

In October 2025, Zephyr announced the first investment was made in 13 newly drilled wells (the "initial wells"). The Investor funded 100% of the CAPEX in the initial wells. Total CAPEX, net to the Investor, was approximately US$2.5 million, with no further financial commitment from Zephyr. Zephyr expects that the interests will deliver future life of well undiscounted cash flows, net to Zephyr, of circa US$1.8 million.

Since the time of the first investment, Zephyr has continued to evaluate new opportunities for inclusion in the partnership. This includes further working interest investments in 14 recently drilled wells operated by Devon Energy and Murex Petroleum which were acquired by Zephyr as part of the Acquisition. CAPEX, net to the Investor, is expected to be circa US$0.5 million, with no further financial commitment from Zephyr.

Once the Investor has achieved its threshold return on the additional 14 wells, the Company expects that the interests will deliver future undiscounted cashflows, net to Zephyr, of circa US$0.5 million.

The Company continues to source and evaluate further investments for the partnership.

Hedging

In H1 2026 the Company hedged 35,000 barrels of oil at a weighted-average price of US$65.53 per barrel of oil (or roughly 20% of total production). The Company has 35,000 barrels hedged in the second half of 2026 at a weighted average price per barrel of US$67.25, and an additional 8,000 barrels in first half of 2027 at a weighted average price per barrel of US$68.00.

The Company will continue to evaluate its commodity price risk management strategy on a regular basis.

FINANCIAL REVIEW

The unaudited financial information is reported in United States Dollars ("US$").

Income Statement

• The Company reports revenue for H1 2026 of US$10.8 million (H1 2025: US$6.3 million). Revenue relates to the Company's hydrocarbon production from the non-operated portfolio. The increase in revenue from H1 2025 was due to the factors set out above in the paragraph entitled H1 2026 performance.
• H1 2026 gross profit (including operating and transportation expenses, production taxes and realised losses from hedging contracts, and excluding DD&A) was US$6.6 million (H1 2025: US$3.3 million), an increase of 100%.
• H1 2026 net profit after tax was US$1.9 million or profit of 0.09 cents per Ordinary Share (H1 2025: net loss after tax of US$13 million or a loss of 0.74 cents per Ordinary Share). Included in the H1 2025 net loss after tax of US$13 million were US$11.8 million non-cash accounting adjustments.
• Administrative expenses in H1 2026 were US$3.6 million (H1 2025: US$2.9 million). The increase reflects professional and advisory costs incurred in responding to a cyber security incident (referred to below),

together with general inflationary pressure on professional services and vendor costs. Costs continue to be closely controlled and monitored regularly by executive management, and cash management remains a continuing priority of the Board.

Balance Sheet

• Exploration and evaluation assets at 30 June 2026 were US$57.8 million (30 June 2025: US$56.5 million) reflecting the Company's ongoing investment into the Paradox project.
• Property and equipment assets at 30 June 2026 were US$25.6 million (30 June 2025: US$21.3 million) which reflects the Company's ongoing investment in its non-operated portfolio of oil and gas properties offset by non-cash impairment and depletion charges.
• Cash and cash equivalents at 30 June 2026 were US$2.0 million (30 June 2025: US$5.8 million).
• The Company's gross borrowings at 30 June 2026 were US$22.7 million (30 June 2025: US$23.4 million). During H1 2026 the Company met all its funding obligations in respect of the outstanding borrowings.
• In August 2026, the Group's senior lender, First International Bank & Trust ("FIBT"), completed its semi-annual valuation of the Company's non-operated portfolio. FIBT estimated the value of the Group's non-operated production base was US$43 million, thereby reaffirming the level of Zephyr's existing borrowing facilities with the bank.

CORPORATE

In April 2026, Zephyr announced that one of its U.S. subsidiaries was targeted in a cyber security 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 the Company continues to work with the corresponding banks and consultants to attempt to recover the diverted funds.

In the second half of 2026, the Company intends to implement a new share option scheme to incentivise and retain employees. In order to comply with best corporate governance practices, the Company will convene a general meeting of shareholders to approve the implementation of the scheme.

OUTLOOK

The Board looks ahead to the next period with confidence and optimism, underpinned by the tangible progress achieved across the business during H1 2026 and in the period since.

At the Paradox project, the regulatory approval process for the Enbridge-operated pipeline is formally under way, and engineering work for gas processing and infrastructure continues to advance. The Company's operated land position has grown substantially to more than 70,000 gross acres, and the ongoing negotiations with asset-based investors provides a credible path towards non-dilutive, pre-production financing alongside the Company's ongoing farm-out discussions.

On the non-operated side of the business, continued portfolio management and production ahead of forecast have strengthened the balance sheet and provided additional capital to support the Paradox project development, while the Company's hedging position balances downside protection with significant exposure to favorable commodity prices.

Management expects considerable further news flow across the regulatory, financing and farm-out workstreams in the second half of 2026 and remains focused on delivering first commercial production from the Paradox project as soon as possible.

I would like to extend my appreciation to the Zephyr team and our contractors for their ongoing work, and I would also like to extend my gratitude to my fellow Board members, leadership team, advisers and most importantly, our Shareholders for their continued support.

Colin Harrington

Chief Executive Officer

28 September 2026

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2026

	Notes	Unaudited six months ended 30 June 2026 US$’000	Unaudited six months  ended 30 June 2025 US$’000	Audited year ended 31 December 2025 US$’000
Revenue		10,813	6,255	13,911
Operating and transportation expenses		(2,399)	(2,685)	(5,364)
Production taxes		(908)	(477)	(1,068)
Depreciation, depletion and amortisation		(2,835)	(6,016)	(5,201)
(Loss)/gain on derivative contracts	3	(912)	215	269
Gross profit/(loss)		3,759	(2,708)	2,547
Administrative expenses		(3,628)	(2,919)	(5,835)
Profit on disposal of exploration and evaluation assets	5	1,995	-	-
Loss from cyber security incident	9	(946)	-	-
Reversal of allowance for expected credit losses	10	1,000	-	-
Share-based payments		(66)	(243)	(248)
Foreign exchange gains/(losses)		1,152	(5,803)	(4,544)
Finance income		1	3	24
Finance costs		(1,395)	(1,338)	(2,704)
Profit/(loss) on ordinary activities before taxation		1,872	(13,008)	(10,760)
Taxation charge		(4)	-	-
Profit/(loss) for the period attributable to owners of the parent company		1,868	(13,008)	(10,760)
Profit/(loss) per Ordinary Share
Basic, cents per share	4	0.09	(0.74)	(0.58)
Diluted, cents per share	4	0.09	(0.74)	(0.58)

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2026

	Unaudited six months ended 30 June 2026 US$’000	Unaudited six months ended 30 June 2025 US$’000	Audited year ended 31 December 2025 US$’000
Profit/(loss) for the period attributable to owners of the parent company	1,868	(13,008)	(10,760)
Other comprehensive (loss)/income
Items that may be subsequently reclassified to profit or loss
Foreign currency translation differences on foreign operations	(1,095)	5,739	4,381
Total comprehensive income/(loss) for the period attributable to owners of the parent company	773	(7,269)	(6,379)

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2026

	Notes	Unaudited as at 30 June 2026 US$’000	Unaudited as at 30 June 2025 US$’000	Audited as at 31 December 2025 US$’000
Non-current assets
Exploration and evaluation assets	5	57,805	56,538	58,783
Property and equipment	6	25,593	21,306	27,604
		83,398	77,844	86,387
Current assets
Trade and other receivables		5,586	1,860	3,802
Cash and cash equivalents		2,039	5,814	2,986
Derivative contracts		-	97	-
		7,625	7,771	6,788
Total assets		91,023	85,615	93,175
Current liabilities
Trade and other payables		(1,431)	(7,236)	(4,599)
Borrowings	7	(15,648)	(20,357)	(15,235)
Lease liabilities		(4)	(24)	(16)
Derivative contracts		(51)	-	-
Provisions		(2,411)	(562)	(2,170)
		(19,545)	(28,179)	(22,020)
Non-current liabilities
Borrowings	7	(7,099)	(3,054)	(8,383)
Lease liabilities		-	(4)	-
Provisions		(4,883)	(3,511)	(4,115)
		(11,982)	(6,569)	(12,498)
Total liabilities		(31,527)	(34,748)	(34,518)
Net assets		59,496	50,867	58,657
Equity
Share capital	8	43,124	42,889	43,124
Share premium account		86,899	81,308	87,236
Warrant reserve		2,117	1,887	2,117
Share-based payment reserve		6,620	5,710	6,217
Cumulative translation reserves		(10,933)	(8,480)	(9,838)
Accumulated deficit		(68,331)	(72,447)	(70,199)
Equity attributable to owners of the parent company		59,496	50,867	58,657

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2026 (Unaudited)

	Share capital US$’000	Share premium account US$’000	Warrant reserve US$’000	Share-based payment reserve US$’000	Cumulative translation reserve US$’000	Accumulated deficit US$’000	Total US$’000
As at 1 January 2026	43,124	87,236	2,117	6,217	(9,838)	(70,199)	58,657
Transactions with owners in their capacity as owners:
Warrant exercise extension in connection with historical share issuance	-	(337)	-	337	-	-	-
Share-based payments	-	-	-	66	-	-	66
Total transactions with owners in their capacity as owners	-	(337)	-	403	-	-	66
Profit for the period	-	-	-	-	-	1,868	1,868
Other comprehensive loss:
Currency translation differences	-	-	-	-	(1,095)	-	(1,095)
Total other comprehensive loss for the period	-	-	-	-	(1,095)	-	(1,095)
Total comprehensive income for the period	-	-	-	-	(1,095)	1,868	773
As at 30 June 2026	43,124	86,899	2,117	6,620	(10,933)	(68,331)	59,496

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2025 (Audited)

	Share capital US$’000	Share premium account US$’000	Warrant reserve US$’000	Share-based payment reserve US$’000	Cumulative translation reserve US$’000	Accumulated deficit US$’000	Total US$’000
As at 1 January 2025	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

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2025 (Unaudited)

	Share capital US$’000	Share premium account US$’000	Warrant reserve US$’000	Share-based payment reserve US$’000	Cumulative translation reserve US$’000	Accumulated deficit US$’000	Total US$’000
As at 1 January 2025	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	240	6,959	-	-	-	-	7,199
Expenses of issue of equity shares	-	(443)	-	-	-	-	(443)
Share-based payments	-	-	-	243	-	-	243
Transfer to accumulated deficit in respect of expired options	-	-	-	(198)	-	198	-
Total transactions with owners in their capacity as owners	240	6,516	-	45	-	198	6,999
Loss for the period	-	-	-	-	-	(13,008)	(13,008)
Other comprehensive income:
Currency translation differences	-	-	-	-	5,739	-	5,739
Total other comprehensive income for the period	-	-	-	-	5,739	-	5,739
Total comprehensive loss for the period	-	-	-	-	5,739	(13,008)	(7,269)
As at 30 June 2025	42,889	81,308	1,887	5,710	(8,480)	(72,447)	50,867

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2026

	Unaudited six months  ended 30 June 2026 US$’000	Unaudited six months  ended 30 June 2025 US$’000	Audited year ended 31 December 2025 US$’000
Operating activities
Profit/(loss) on ordinary activities before taxation	1,872	(13,008)	(10,760)
Adjustments for:
Finance income	(1)	(3)	(24)
Finance costs	1,395	1,338	2,704
Depreciation, depletion and amortisation of property and equipment	2,845	6,045	5,241
Share-based payments	66	243	248
Profit on disposal of exploration and evaluation assets	(1,995)	-	-
Reversal of allowance for expected credit losses	(1,000)
Unrealised foreign exchange (gains)/losses	(1,122)	5,744	4,544
Operating cash inflow before movements in working capital	2,060	359	1,953
(Increase)/decrease in trade and other receivables	(784)	633	(1,126)
Unrealised loss/(gain) on derivative contracts	51	(180)	(83)
(Decrease)/increase in trade and other payables	(2,682)	1,361	(139)
Cash (used in)/generated from operations	(1,355)	2,173	605
Income tax paid	(4)	-	-
Net cash (used in)/generated from operating activities	(1,359)	2,173	605
Investing activities
Acquisitions of exploration and evaluation assets	(689)	-	(3,040)
Additions to exploration and evaluation assets	(193)	(440)	(3,707)
Acquisitions of oil and gas properties	(121)	-	(3,295)
Additions to oil and gas properties	(111)	(1,552)	(395)
Decrease/increase in capital expenditure related payables	(473)	2	229
Proceeds on disposal of oil and gas properties	36	-	250
Proceeds on disposal of exploration and evaluation assets	4,128	-	1,066
Insurance proceeds received in respect of exploration and evaluation assets	-	182	-
Net use of advance funds from joint operator	-	(7,394)	(7,394)
Grant funds received in respect of exploration and evaluation assets	-	-	20
Interest received	1	3	4
Net cash generated from/used in investing activities	2,578	(9,199)	(16,263)
Financing activities
Net proceeds from issue of shares	-	6,756	13,421
Net proceeds from borrowings	-	-	1,947
Repayment of borrowings	(1,177)	(2,970)	(4,689)
Repayment of lease liabilities	(12)	(19)	(32)
Interest and fees paid on borrowings	(975)	(1,185)	(2,264)
Interest paid on leases	(1)	(3)	(4)
Net cash (used in)/generated from financing activities	(2,165)	2,579	8,379
Net decrease in cash and cash equivalents	(946)	(4,447)	(7,278)
Cash and cash equivalents at beginning of period	2,986	10,267	10,267
Effect of foreign exchange rate changes	(1)	(6)	(3)
Cash and cash equivalents at end of period	2,039	5,814	2,986

ZEPHYR ENERGY PLC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2026

1.  ACCOUNTING POLICIES  

Basis of preparation

This report was approved by the Directors on 28 September 2026.

The financial statements have been prepared in accordance with UK-adopted International Accounting Standard 34 Interim financial reporting and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

The condensed consolidated interim financial statements are presented in United States Dollar (“US$”). All amounts have been rounded to the nearest thousand unless otherwise indicated.

The Company is domiciled and incorporated in England and Wales under the Companies Act 2006. The Company’s shares are admitted to trading on the AIM market of the London Stock Exchange in the UK.

The current and comparative periods to June have been prepared using the accounting policies and practices consistent with those adopted in the annual financial statements for the year ended 31 December 2025, and with those expected to be adopted in the Group’s financial statements for the year ending 31 December 2026.

Comparative figures for the year ended 31 December 2025 have been extracted from the statutory financial statements for that period which carried an unqualified audit report, did not contain a statement under section 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.

The financial information contained in this report is unaudited and does not constitute statutory financial statements as defined by section 434 of the Companies Act 2006, and should be read in conjunction with the Group’s financial statements for the year ended 31 December 2025. This report has not been audited or reviewed by the Group's auditors.

During the first six months of the current financial year there have been no related party transactions that materially affect the financial position or performance of the Group and there have been no changes in the related party transactions described in the last annual financial report.

Having considered the Group's current cash forecast and projections, the Directors have a reasonable expectation that the Company and the Group have, or have access to, sufficient resources to continue operating for at least the next 12 months. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.

The principal risks and uncertainties of the Group have not changed since the publication of the last annual financial report where a detailed explanation of such risks and uncertainties can be found.

2.  DIVIDENDS

The Directors do not recommend the payment of a dividend for the period.

3. (LOSS)/GAIN ON DERIVATIVE CONTRACTS

During the period, the Group entered into hedging transactions to mitigate its exposure to fluctuations in commodity prices. The net change in these contracts resulted in a realised net loss of US$0.86 million (30 June 2025: net gain of US$0.03 million, 31 December 2025: net gain of US$0.2 million) and an unrealised net loss of US$0.05 million (30 June 2025: net gain of US$0.2 million, 31 December 2025: net gain of US$0.08 million) for the period to 30 June 2026.

4.  PROFIT/(LOSS) PER ORDINARY SHARE

Basic profit/(loss) per Ordinary Share is calculated by dividing the net profit/(loss) for the period by the weighted average number of Ordinary Shares in issue during the period. Diluted profit/(loss) per Ordinary Share is calculated by dividing the net profit/(loss) for the period by the weighted average number of Ordinary Shares in issue during the period, 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 profit/(loss) per Ordinary Share is based on the following data:

	Unaudited six months  ended 30 June 2026 US$’000	Unaudited six months ended 30 June 2025 US$’000	Audited year ended 31 December 2025 US$’000
Profits/(losses)
Profits/(losses) for the purpose of basic and diluted profit/(loss) per Ordinary Share being net profit/(loss) for the period	1,868	(13,008)	(10,760)
	Number ‘000	Number ‘000	Number ‘000
Number of shares
Weighted average number of shares for the purpose of basic profit/(loss) per Ordinary Share	2,100,719	1,754,588	1,840,893
Dilutive share options	88,148	-	-
Dilutive warrants	2,928	-	-
Weighted average number of shares for the purpose of diluted profit/(loss) per Ordinary Share	2,191,795	1,754,588	1,840,893
Profit/(loss) per Ordinary Share
Basic, cents per share	0.09	(0.74)	(0.58)
Diluted, cents per share	0.09	(0.74)	(0.58)

5.  EXPLORATION AND EVALUATION ASSETS

			Total US$’000
Cost
At 1 January 2025			53,236
Acquisitions			3,040
Additions			3,707
Disposals			(1,066)
Decommissioning - change in estimates			(134)
At 31 December 2025			58,783
Acquisitions			689
Additions			193
Disposals			(2,133)
Decommissioning - change in estimates			273
At 30 June 2026			57,805
Carrying amount
At 30 June 2026			57,805
At 31 December 2025			58,783

Proceeds from the divestment of undeveloped acreage acquired in the August 2025 acquisition have been applied against the cost allocated to that acreage. Cumulative proceeds have exceeded the allocated cost and the resulting excess of US$2.0 million has been recognised as a profit on disposal of exploration and evaluation assets in the condensed consolidated income statement.

6.  PROPERTY AND EQUIPMENT

	Oil and gas properties US$’000	Office equipment US$’000	Right-of-use assets US$’000	Total US$’000
Cost
At 1 January 2025	74,368	25	119	74,512
Acquisitions	5,629	-	-	5,629
Additions	395	-	-	395
Disposals	(250)	-	-	(250)
Decommissioning - change in estimates	(222)	-	-	(222)
Exchange differences	-	2	6	8
At 31 December 2025	79,920	27	125	80,072
Acquisitions	121	-	-	121
Additions	111	-	-	111
Disposals	(36)	-	-	(36)
Decommissioning - change in estimates	638	-	-	638
At 30 June 2026	80,754	27	125	80,906
Accumulated depreciation, depletion and amortisation
At 1 January 2025	32,587	23	69	32,679
Charge for the period	5,201	2	38	5,241
Exchange differences	-	2	5	7
At 31 December 2025	37,788	27	112	37,927
Charge for the period	2,835	-	10	2,845
At 30 June 2026	40,623	27	122	40,772
Impairment
At 1 January 2025 and 31 December 2025 and 30 June 2026	14,541	-	-	14,541
Carrying amount
At 30 June 2026	25,590	-	3	25,593
At 31 December 2025	27,591	-	13	27,604

7.  BORROWINGS

	Unaudited six months ended 30 June 2026 US$’000	Unaudited six months ended 30 June 2025 US$’000	Audited year ended 31 December 2025 US$’000
FIBT facility
Term loans	9,632	8,509	10,808
Revolving credit	11,133	15,000	11,133
	20,765	23,509	21,941
Capitalised debt issue costs	(42)	(98)	(77)
	20,723	23,411	21,864
Strategic Industry Lender
Convertible loan – host liability	2,103	-	2,133
Capitalised debt issue costs – host liability	(267)	-	(567)
	1,836	-	1,566
Convertible loan – embedded derivative	188	-	188
	2,024	-	1,754
Total borrowings	22,747	23,411	23,618
Maturity analysis
Less than 6 months	15,167	19,160	2,152
6 months to 1 year	1,646	2,550	15,167
1 year to 2 years	3,292	1,709	3,292
2 years to 5 years	4,663	1,709	6,309
	24,768	25,128	26,920

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

On 10 November 2025, the Group refinanced its existing FIBT term loan facilities. The two outstanding term loans along with US$4.0 million of the revolving credit facility was 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 of US$15 million is provided for a one-year term and has a standard asset-value redetermination every six months.

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. On or before December 2026, the Company expects FIBT to extend the maturity date for one year consistent with the bank’s past practices.

At 30 June 2026, the Group had drawn US$11.1 million in respect of the facility.

In August 2026, FIBT completed its valuation of the Group’s non-operated portfolio which reaffirmed the Group’s current borrowing base.

Covenants

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, which represented a premium of 56% to the closing mid-market price of the Company's Ordinary Shares on the day preceding the date of the loan agreement. At 30 June 2026 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 fair value measured at 31 December 2025 was 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 at 31 December 2025.

8.  SHARE CAPITAL

	Unaudited as at 30 June 2026 Number ’000	Unaudited as at 30 June 2025 Number ’000	Audited as at 31 December 2025 Number  ’000
Authorised
Ordinary Shares of 0.1 pence each	7,779,297	7,779,297	7,779,297
Deferred Shares of 9.9 pence each	227,753	227,753	227,753
	8,007,050	8,007,050	8,007,050
	Unaudited as at 30 June 2026 US$’000	Unaudited as at 30 June 2025 US$’000	Audited as at 31 December 2025 US$’000
Allotted, issued and fully paid
2,100,719,019 Ordinary Shares of 0.1 pence each (30 June 2025: 1,925,790,921: 31 December 2025: 2,100,719,019)	2,819	2,584	2,819
227,752,817 Deferred Shares of 9.9 pence each	40,305	40,305	40,305
	43,124	42,889	43,124

The Deferred Shares are not listed on the AIM Market, do not give the holders any right to receive notice of, or to attend or vote at, any General Meetings, have no entitlement to receive a dividend or other distribution or any entitlement to receive a repayment of nominal amount paid up on a return of assets on winding up nor to receive or participate in any property or assets of the Company. The Company may, at its option, at any time redeem all of the Deferred Shares then in issue at a price not exceeding £0.01 from all Shareholders upon giving not less than 28 days’ notice in writing.

ISSUED ORDINARY SHARE CAPITAL

On 27 June 2025, the Company issued 175,071,902 Ordinary Shares of 0.1 pence each at a price of 3 pence per Ordinary Share, raising gross proceeds of US$7.2 million (£5.3 million).

On 15 July 2025, the Company issued 151,594,765 Ordinary Shares of 0.1 pence each at a price of 3 pence per Ordinary Share, raising gross proceeds of US$6.1 million (£4.5 million).

On 15 July 2025, the Company issued 23,333,333 Ordinary Shares of 0.1 pence each at a price of 3 pence per Ordinary Share in respect of certain Director and employee subscriptions, raising gross proceeds of US$0.9 million (£0.7 million).

No shares were issued in the six months ended 30 June 2026.

	Ordinary Shares Number ’000	Deferred Shares Number ’000
At 1 January 2025	1,750,719	227,753
Allotment of shares	350,000	-
At 31 December 2025 and 30 June 2026	2,100,719	227,753

9.  CYBER SECURITY INCIDENT

In April 2026, one of the Group's U.S. subsidiaries was targeted in a cyber security incident which resulted in the diversion of a single contractor payment of circa US$0.95 million to a third-party account. The Company continues to work with law enforcement, the corresponding banks and its consultants but to date has not recovered the funds. The loss is presented separately in the condensed consolidated income statement and the related cash outflow within operating activities.

10.  REVERSAL OF ALLOWANCE FOR EXPECTED CREDIT LOSSES (“ECL”)

During the period, the Company reached a settlement with a working interest owner recovering US$1.0 million in respect of joint interest billing receivables, for which a charge in respect of ECL had been made in the year ended 31 December 2024. In accordance with IFRS 9, a reversal ECL credit for the some recovered has been made during the period to 30 June 2026 and is presented on a separate line within the condensed consolidated income statement.

11.  POST BALANCE SHEET EVENTS

All matters relating to events occurring since the period end are reported in the review of activities.

 

END