Here’s why UK shares Zephyr Energy and i3 Energy are volatile today!

The Zephyr Energy and i3 Energy share prices are moving sharply in midweek trade. Here’s why they’ve set UK share investors chattering.

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The i3 Energy (LSE: I3E) share price has soared on Wednesday after the company released a statement concerning future dividends. At 13.75p per share, the UK oil share is now trading 12% higher on Wednesday. It had hit its most expensive since January 2020 at 13.94p earlier in the session, taking total gains over the past 12 months to around 90%.

i3 confirmed that the High Court approved the company’s plan to cancel its share premium account on Tuesday. This was the green light for the energy play to pay out a maiden dividend. The ex-dividend date for this is expected to fall during the week beginning 12 July.

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In other news i3 has now executed a binding sales and purchase agreement for production from Canada’s Wapiti Elmworth acreage. The business announced plans to acquire 230 barrels of oil equivalent per day in mid-June with a view to boosting output to 310,000 barrels a day in the next year.

The total acquisition and capital cost will be $410,000, which equates to 0.56 times expected net operating income over the next 12 months. i3 predicts that the acquisition will complete during the third quarter.

Silhouette of an oil rig

A sinking UK oil share

Like that of i3 Energy, the Zephyr Energy (LSE: ZPHR) share price has also surged during the last 12 months. This UK oil share has increased 1,100% in value since this point last June. And it visited its highest since autumn 2017 at 7.85p per share this week.

Zephyr’s share price has plunged 14% on Wednesday to 6p, however, following the release of fresh drilling analysis. Zephyr — which invests in oil and gas projects in the Rocky Mountain area of the US — provided an update on its flagship project in the Paradox Basin, Utah. It said that analysis following the State 16-2 dual-use stratigraphic test well drilled earlier this year revealed that all 20 overlying reservoirs “are likely to be hydrocarbon filled to some degree”. Petrophysical analysis of several offset wells were also used to form this conclusion.

The company “has high-graded eight reservoirs which have adequate thickness for potential future development,” it said. And it added that the region could contain some 200 well locations across the eight overlying reservoirs. This depends on whether Paradox can be developed by way of a hydraulically stimulated resource play (HSRP). It’s a process that would allow broader project development across more than one reservoir.

“Cautiously optimistic and excited”

Zephyr chief executive Colin Harrington said that he was “cautiously optimistic and excited” about the findings. They indicate a risked contingent resource potential (net to Zephyr) of up to an additional 125m barrels of oil equivalent. This is based on an P50 midway estimate of around 1bn oil barrels on Zepher’s currently held acreage.

The UK oil share cautioned that “this estimate of the HSRP potential is preliminary and highly dependent upon developing better understanding of each zone’s reservoir pressure, fluid phase, geomechanical properties, permeability and a successful proof of concept hydraulic stimulation and production well.”

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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