Zefiro Methane Corp has filed a prospectus with British Columbia, Alberta and Ontario securities regulators for an IPO of 2m shares at CAD 1.50 per share. PI Financial Corp is the lead underwriter, leading a syndicate that includes Raymond James and Echelon Private Wealth.
Zefiro Methane is a climate tech business that provides solutions for the upstream energy sector, helping companies progress towards net zero. It specialises in decommissioning orphaned oil and gas wells, generating carbon offsets in the process.
The company’s key areas of expertise include methane testing, quantification and monitoring, assert retirement, and carbon offset generation. It is tackling a major issue in the US, where unremediated oil and gas wells continue to discharge methane into the air.
According to latest estimates, there are more than 4m orphaned oil and gas wells spread across 26 states. The methane they are emitting is 25-84 times more potent than carbon dioxide as a greenhouse gas.
Last year, the US government set aside $4.7bn to help states permanently plug orphaned wells.
Zefiro has granted the underwriters an over-allotment option, exercisable in whole or in part, at the sole discretion of the underwriters, at any time on and for a period of 30 days following the closing date, to sell up to 300,000 additional common shares of the company, representing 15% of the aggregate number of shares sold pursuant to the offering at the offering price, for additional gross proceeds to the Zefiro of CAD 450,000 if the over-allotment option is exercised in full.
Zefiro is expecting to close the offering on or about 23 April, the company said yesterday. Listing remains subject to Zefio fulfilling all of the listing requirements of Cboe Canada.
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The Zefiro approach to orphaned wells: how it makes money
Zefiro has developed systems and expertise to detect and quantify methane leaks at the wellhead. This is a proven system, which is being used in the field right now. Last year the company bought Plants & Goodwin, a Pennsylvania company which is already working to plug oil and gas wells, and has been doing so since the 1970s. Plants & Goodwin has specialised in working on orphaned wells in the Appalachian Basin, working on wells in shale and sandstone formations.
“Zefiro’s strategy is to integrate real innovation with new forms of capital, through the ‘environmental’ credit markets; the result will be a new kind of enterprise. By enlisting veteran operators like Plants & Goodwin, we are taking the first big step to making our unique vision a reality,” said Talal Debs, Founder and Chairman of Zefiro Methane.
Zefiro will originate the methane offsets from plugging wells. It has an executive leadership that includes members of the former carbon market team at JP Morgan. They are seeing what they call “unprecedented global demand” for carbon offsets as corporations and institutions work towards net zero targets.
After a well has been decommissioned, Zefiro will claim the carbon offsets corresponding to the emissions that have been prevented. Corporate commitments to reduce emissions – e.g. from the energy sector – combined with new legislation requiring climate impact disclosures, are creating significant and growing demand for carbon offsets.
