Ecoark successfully executes first project within its joint drilling venture
SAN ANTONIO, Texas – March 16, 2021 – Ecoark Holdings, Inc. (“Ecoark” or the “Company”) (OTC: ZEST), is providing the following updates regarding the Company’s joint drilling venture (the “JV”) with BlackBrush Oil & Gas, L.P. (“Blackbrush”) and GeoTerre, LLC (“GeoTerre”).
The JV previously announced that it concluded the drilling of the Deshotels 24 No.1-H, a horizontal Austin Chalk well located in Avoyelles Parish, LA. The well has a total vertical section length of 4,046 feet with a lateral length of 3,799 feet positioned in the most prolific interval of the naturally fractured Austin Chalk formation. Once the lateral target was achieved, the JV successfully set a production packer and tubing and began flowing the well through existing facilities as a conventional open hole oil and gas well. On March 11, 2021, the JV began flowback to the well through a temporarily well test setup and immediately realized strong oil and gas production. After 3 days of flowing back through the test setup, the well was turned to the permanent production facility.
The well is exhibiting significant downhole pressure, and the Company has recorded initial production test rates as high as 1,000 to 1,250 BOPD. The well is also expected to produce a significant volume of natural gas of good composition, so the JV has already engaged a midstream carrier to connect to an existing gas pipeline near the well site. Ecoark will continue to analyze the initial production of this well and will provide an update in future disclosures of the forecasted timing and rate of future decline.
“We are extremely pleased with the initial results of this project and are excited that our expected investment returns greatly exceed our initial estimates,” said Randy May, Chairman and CEO of Ecoark. “This project evidences the significant value associated with our joint drilling venture, and we look forward to partnering on additional projects in the near future.”
“We are extremely proud of the collective team for their ongoing efforts in making the JV’s inaugural project a success and achieving production levels of greater than 1,000 BOPD,” said Julia Olguin, Chief Executive Officer of White River Holdings Corp. “We are continuing to monitor the flowback results of this well as we explore future potential projects within the area. Since no fracture stimulation was required with this initial well, we are positioned to add reserves in this play with a well cost 25-30% below our competitors, or approximately $5 million per well.”
“Ecoark’s Board of Directors and Executive Team continue to execute on a strategy forged in early 2020 with the acquisition of Banner Midstream and accelerated throughout the last year with significant and well-timed acquisitions of oil wells and mineral leases,” continued Mr. May. “We are encouraged by a recent recovery in oil prices and are advancing to the next phase of our strategic plan focused on maximizing the resources and value of our growing portfolio.”
Per the terms of the JV agreement, Ecoark will operate the well through its subsidiary, White River Operating LLC (“WRO”). Furthermore, Ecoark through its subsidiary, White River SPV 3 LLC (“WR3”) will own 90% of the working interests until payout, after which, it will own a 70% working interest with the remaining working interests to be owned by the other JV partners. The JV is also expected to qualify for and receive a state tax credit for directionally drilled wells in the State of Louisiana, where no severance taxes will be incurred and will not be required to be remitted on future production until the initial well investment is recouped.
About Ecoark Holdings, Inc.
Founded in 2011, Ecoark is a diversified holding company. The company has three wholly owned subsidiaries: Zest Labs, Inc. (“Zest Labs”), Banner Midstream Corp (“Banner Midstream”) and Trend Discovery Holdings (“Trend Discovery”). Zest Labs, offers the Zest FreshTM solution, a breakthrough approach to quality management of fresh food, is specifically designed to help substantially reduce the amount of food loss the U.S. experiences each year. Banner Midstream is engaged in oil and gas exploration, production, and drilling operations on over 30,000 cumulative acres of active mineral leases in Texas, Louisiana, and Mississippi. Banner Midstream also provides transportation and logistics services and procures and finances equipment to oilfield transportation services contractors. Trend Discovery invests in a select number of early-stage startups each year as part of the fund’s Venture Capital strategy; we are open-minded investors with a founder-first mentality. Trend Discovery LP has an audited track record of uncorrelated outperformance of the S&P 500 since inception.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected oil and natural gas production from the Deshotels 24 No.1-H well, the Louisiana state taxes on future production, the investment returns related to the JV, potential additional joint drilling projects with the JV partners, and estimated cost of acquiring reserves. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside management’s control. Important factors that could cause actual results to differ from those in the forward-looking statements include, but are not limited to, future declines in production from the well, economic viability of natural gas production, the risks arising from oil and gas extraction, the impact of the COVID-19 pandemic on our Company and the national and global economy, the ability of the JV to qualify and receive the Louisiana state tax credit for directionally drilled wells, changes in applicable laws, regulations, or executive and administrative orders, fluctuations in oil and gas prices, and the possibility of adverse economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in Ecoark’s filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended March 31, 2020, as updated and supplemented by the Quarterly Reports on Form 10-Q for the fiscal quarter ended June 30, 2020, as amended, the fiscal quarter ended September 30, 2020, and the fiscal quarter ended December 31, 2020, and the registration statement on Form S-3 filed on October 16, 2020, as amended by Amendment No. 1 filed on December 22, 2020, and Amendment No. 2 filed on December 28, 2020. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Additional factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
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