Zephyr Energy has announced the signing of a non-binding Letter of Intent (the “LOI”) with Atlas Oil Company. The LOI details a proposal for a Prepaid Commodity Purchase Agreement (the “CPA”) and sale of hydrocarbon marketing rights at Zephyr’s project in the Paradox Basin, Utah, U.S. The CPA will provide up to US$15 million in non-dilutive pre-production financing to Zephyr (the “proposed funding”).

Highlights

• Up to US$15 million of non-dilutive pre-production financing for the Paradox project;
  • No issue of new Zephyr equity and no sale of asset-level working interests.
• Provides funding to support the Paradox project infrastructure build-out, well workovers and potentially upsized gas processing facilities.
• Proposed funding is not contingent on the timing of first gas production.
• Atlas and its team have detailed knowledge of the Paradox project, having supported prior oil marketing and logistics activities on site since 2021.
• The proposed funding provides benefits and flexibility to the ongoing farm-out process, while also allowing for a standalone Paradox project development operated by Zephyr.  The proposed funding would allow Zephyr to get to first commercial production at a larger scale, while existing Zephyr resources can be reallocated for future well planning and drilling.
• Repayment of the proposed funding would come from future production sales proceeds, aligning funding with future project cash generation.

KeyFacts Energy Industry Directory: Zephyr Energy