State 36-2R well drilling operations update

Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development and carbon-neutral operations, is pleased to provide an operational update on the State 36-2 LNW-CC-R well (the "new well") at its flagship project in the Paradox Basin, Utah, U.S. (the "Paradox project").

Further to the Company's announcement on 22 March 2024, the Helmerich & Payne Rig 257 has begun rigging up operations to spud the initial, surface section of the new well in the coming days. All necessary ancillary service providers have also arrived on site to support the Company's drilling operations.

The new well, for which the Company expects to recover substantially all the drilling costs incurred through the well control insurance policy that it had in place for the State 36-2 LNW-CC well (the "original well"), will target the same Cane Creek reservoir and the over pressured, gas bearing natural fracture system that was proven during the drilling of the original well. Drilling at the new well is planned to reach a total depth ("TD") at 10,362 feet measured depth (9,600 feet true vertical depth) incorporating a 270-foot horizontal reservoir section (see Figure 1 below). The new well has also been designed to allow the drilling of a longer, 10,000-foot horizontal section later, should that be required.

The key objectives of the new well are:

o To successfully complete drilling operations to TD safely and without harm to people, the environment or equipment.

o To successfully twin the original well and intersect the same Cane Creek reservoir natural fracture system identified by it.

o To confirm the presence of hydrocarbons as found by the original well, and further appraise the Cane Creek reservoir at Zephyr's federal White Sands Unit.

o Should the original well result be replicated, to assess the reservoir productivity by flow testing the new well.

Drilling operations are expected to take approximately 30 days from the date of spud. After reaching TD, a completion and well test crew will be mobilised to complete the short horizontal section and test any productive natural fracture system intersected by the new well.

Colin Harrington, Zephyr's CEO commented: "We are excited about the commencement of drilling operations with a goal to deliver a safe and timely drilling operation followed by a successful well test."

"We look forward to keeping our stakeholders updated as drilling progresses and believe that these operations will be the catalyst to further unlock the significant potential of the Paradox project."

Figure 1. Map of the top Cane Creek reservoir illustrating the well design and targeting of the new well relative to the original well which found productive hydrocarbon-bearing natural fractures. The trajectories of the original well and new well are shown in red and blue respectively.

The new well's key objective is to target the natural fracture productivity intersected (see Figure 2 below) by the original well by entering the Cane Creek reservoir close to the original well bore. This will be achieved by using all offset geological and geophysical information to help steer the well and then to perform two phases of electromagnetic ranging to locate the steel casing of the original well bore. This will allow the Company to attempt to closely replicate the original well trajectory and target the reservoir conditions found there as best as possible. Should that goal be achieved then the new well will be tested to assess reservoir productivity and its implications for the greater field development.

Figure 2. Geological cross section of the Cane Creek reservoir, illustrating the structural form of the reservoir at this well location and the location of the gas bearing natural fractures targeted by the well along the fold hinge (see section A - A' in Figure 1).

Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD, Chief Operating Officer 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.