WTI (Nov) $60.88 +40c, Brent (Dec) $64.53 +42c, Diff -$3.65 +2c.

USNG (Nov) $3.32 -12c, UKNG (Nov) 82.35 +2.38, TTF (Nov) €32.58 +€1.41.

Oil price

The Opec+ meeting ended with the increase in crude kept to 137/- b/d which might have been worse, I understand that the Saudis initially called for a bigger rise but Russia, under pressure from sanctions didn’t want to cede market share to them. Accordingly oil has rallied today but way less than the 5 buck fall last week.

The Baker Hughes rig count was unchanged overall but in oil it fell by 2 units to 422.

Zephyr Energy

Zephyr has announced the results from an updated Competent Person’s Report on its assets in the Paradox Basin, Utah, U.S.

The CPR was compiled by Sproule-ERCE International Limited (“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 is transitioning the Paradox project from appraisal to development, and the Sproule report reaffirms this transformation. The combined basis of evaluation including the recent well test on the State 36-2 LNW-CC-R well has contributed to significant increases in recoverable reserves across all reserve categories reflecting considerable well productivity, driven by high reservoir pressure, reservoir quality and liquid yields.

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 MMBTU of gas.

Highlights

·    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 barrels of oil equivalent (“boe”) proved recoverable reserves, an increase from 0.16 million net boe in the 2022 CPR

o  Forecast to generate undiscounted free cash flows, net to Zephyr, in excess of US$115 million, with a current NPV-10 of circa US$36 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 cash flows, net to Zephyr, of circa US$400 million, with a current NPV-10 of circa US$101 million (an increase from US$10.8 million in the 2022 CPR)

o  Twelve well locations classified as Proved + Probable Recoverable Reserves

·    A 3.5-fold increase in Total Recoverable Resources, representing full field development of the Cane Creek reservoir within the WSU (see Table 2 below), 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 cash flows, net to Zephyr, in excess of US$880 million, with a current NPV-10 of circa US$158 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 have not been 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.

Additional details and the estimates by Sproule are summarised further below.

Colin Harrington, Chief Executive of Zephyr, said: 

“We are delighted with the results of the CPR which clearly demonstrate the excellent progress made at the Paradox project through our successful operations.

“I am 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 further validates the considerable scale of the Paradox project, which is why we have launched a process to identify partners to accelerate drilling and the delivery of value from the asset. 

“On that note, I am pleased to report that we have opened a data room with multiple potential partners currently reviewing the project data. The completion of the CPR will now enable more substantive discussions to take place. I 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 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. 

“To date, we have drilled two successful, one-mile horizontal wells utilising different completion technologies and both demonstrated strong deliverability and expanded our completion design options for the greater field development. We have also gathered a substantial amount of data that will help inform future development plans. 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 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 cash flow totals, they would enhance the current NPV-10 value of the project by bringing forward future cashflows.

“I should also point out that the CPR only assesses the 20,000 acres covered by our 3D seismic in the WSU. Our goal is to continually expand the value of our acreage position, both vertically (through the overlying reservoirs) and horizontally (through the leasing of significant new acreage around our unit and infrastructure).  Leased and open acreage without 3D seismic coverage has not been assessed in the CPR and Zephyr’s internal analysis indicates considerable potential immediately surrounding the WSU. To that end, we have nominated a significant amount of contiguous acreage with the Bureau of Land Management for inclusion in future Federal lease sales. On top of the proven Cane Creek reservoir potential, the eight overlying prospective reservoirs could all deliver similar recoverable volumes as the Cane Creek within the 3D coverage of the WSU and surrounding acreage nominated for lease sale inclusion, should they prove successful on drilling and testing. 

Zephyr today announces an updated CPR from Sproule and as the Paradox Basin is transforming from appraisal to development this report has reaffirmed ‘a significant increase in recoverable reserves across all categories’.

This has come about as a reflection of the considerable well productivity which has been driven by high reservoir pressure, reservoir quality and liquid yields and only covers the Cane Creek reservoir on 20,000 acres held within the Company’s White Sands Unit and that covered by the 3D seismic coverage.

This is a really great report shifting as it does significant value from the resources bucket to the reserves bucket and gives Zephyr huge increases in 1P and 2P reserves. My take on this is that even after a modest 10% rise today the shares are trading well below proved NAV looking at the Williston and Paradox together. 

With the data room now open, the CPR  brings added interest and obviously greatly de-risks the project and gives serious upside not including the ability for ‘more substantive discussions to take place’. Management believe that the Paradox is ‘as good as anything in the US’ and who am I to argue especially as they see plenty of upside in the WSU and surrounding acreage.

Accordingly I continue to believe that there is a significant upside for Zephyr which remains a favoured Bucket List stock for its great management and a fantastic portfolio. 

Europa Oil & Gas

Europa has announced that, in accordance with the exploration periods and their extensions set out in Article 2 of the EG-08 production sharing contract (“PSC”), as well as with the PSC amendments recognised in Articles 29.1 and 9 of the Hydrocarbons Law the Minister of Hydrocarbons and Mining Development for Equatorial Guinea (“EG”) has granted a 12-month extension to the initial 2-year period of the PSC. Europa has a 42.9% equity interest in Antler Global Limited (“Antler”), which holds an 80% working interest in the EG-08 PSC, with the remaining 20% held by GEPetrol (Guinea Equatorial de Petróleos), the national oil and gas company of Equatorial Guinea, representing the State’s interest. The formalities to finalise the extension are ongoing and are expected to be completed in the coming days. As a result of the extension, the first sub-period of Phase 1 of the PSC will expire on 4 October 2026.

As announced on 15 September 2025, the EG-08 block contains 2.196 TCF (Pmean), with the primary prospect being Barracuda which is estimated to be 878 BCF (Pmean).

William Holland, Chief Executive Officer of Europa, said:

“I am pleased to have secured the Ministers approval for this extension which will provide plenty of time to finalise the farm out process for EG-08, where we continue to make good progress. Concurrently, the technical team are working on detailed engineering plans for drilling the Barracuda prospect, which we hope to spud in 2026.”

This takes the pressure off the farm-out process and with such confidence in the EG-08 block, as noted by the numbers above will hopefully mean that a partner can be found before long. The Barracuda prospect certainly would make a serious difference if they can get to drill it next year. 

And finally…

The Arc was won by Daryz just holding off the Aidan O Brian charge.

George Russell won the Singapore GP with max behind and the squabbling McLaren boys behind, Piastri threw his toys out of the pram big time.

In the Prem wins for Spurs, the Gooners and Chelsea over high flying Liverpool. The Red Devils also won as did the Toffees, the Villa, the Magpies and the Noisy Neighbours. And Russell Martin gets the Spanish Elbow after a troubled time at the Gers.

And I’m very sad to hear the news that Lewis Moody has Motor Neurone Disease, we wish him and his family the very best at this time.