Zephyr strikes deal to buy North Dakota wells

London-registered Zephyr Energy announced a $36mn deal on November 22 to buy additional non-operated interests in wells in the Williston basin in North Dakota.

Zephyr has reached a binding agreement with Kaiser Acquisition and Development – Sanish Non-op, a private US producer, to buy interests in 163 wells already in production, netting it 871 barrels of oil equivalent/day, as well as 18 proved not producing and drilled but uncompleted wells, all of which are due online in the coming months and should yield a further 1,100 boe/d. It is also acquiring 47 proved but undeveloped sites for future drilling.

The assets are spread across 22 drilling pads in Mountrail county, located in the same basin as Zephyr's existing core assets. They are estimated to hold 2.765mn barrels of oil equivalent in proven net reserves, according to an assessment by Sproule, of which 16% is natural gas and the rest oil and natural gas liquids. Zephyr expects to close the deal on December 22.

"The acquisition announced today is another landmark deal for Zephyr and will further transform the company by adding a significant, low-decline, low-risk, high margin production base - with both near and long-term upside exposure into a further 65 wells, 13 of which have already been drilled and are expected to be online soon."

Zephyr's production in the Williston basin averaged 148 boe/d in the second quarter, and was sold at an average price of $52.90/boe.  The company is also developing the Paradox project in Utah.