Zephyr Energy (AIM:ZPHR), the AIM-listed oil and gas company focused on the US Rocky Mountain region, said second-quarter production from its non-operated asset portfolio averaged 914 barrels of oil equivalent per day (boepd) net to the company, ahead of management's forecast.
That compares with 918 boepd in the first quarter and 632 boepd a year earlier, with oil making up 69% of the volume.
The portfolio, spanning interests in more than 600 gross wells across Utah, Colorado, Wyoming, Montana and North Dakota, delivered stronger cash flow than expected due to higher production and commodity prices.
Senior lender First International Bank & Trust completed its semi-annual redetermination in September, valuing the non-operated production base at $43 million and reaffirming Zephyr's existing facilities.
Current borrowings stand at approximately $19.9 million, down from $35.3 million in January 2024 and $22.1 million at the last redetermination in November 2025.
The bank lends up to 50% of its independent valuation of Zephyr's proved developing producing assets, all held within the non-operated portfolio.
Chief executive Colin Harrington said the non-operated cash flows "provide an excellent foundation for growth, generating excess capital capable of supporting our operated project in the Paradox Basin, Utah."
In the quarter, Zephyr used existing cash to participate in four new Powder River wells drilled by Chord Energy on acreage acquired in 2025 as part of a $7.3 million deal.
The board also extended the expiry of outstanding warrants by twelve months to 30 September 2027, unchanged in all other terms; full exercise would generate £6.7 million for the company.
Interim results for the six months to 30 June are expected by 30 September.
News Intelligence what this means for the company
Zephyr Energy's non-operated portfolio delivered 914 boepd in Q2, beating forecast, while lender FIBT reaffirmed its $43 million borrowing base facility—keeping debt capacity intact despite borrowings falling to $19.9 million from $35.3 million a year ago. The cash generation from this portfolio now funds participation in new Powder River wells and supports the company's operated Paradox Basin project, which the board approved for modular gas processing expansion to 15 mmscf/d.
The reaffirmed borrowing base and debt reduction signal lender confidence in the non-operated asset base's stability and cash generation, removing a near-term refinancing risk. This frees capital for growth in the operated Paradox project, where the company is building processing infrastructure and acreage position.
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