Ecoark completes successful drilling program on inaugural JV project

SAN ANTONIO, Feb. 16, 2021 (GLOBE NEWSWIRE) -- 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”) announced in October 2020.

During the quarter ended December 31, 2020, the JV executed the planning phase for its first major drilling project, while simultaneously acquiring additional mineral lease rights contiguous to the originally acquired leasehold and 3D seismic survey results in Avoyelles Parish, Louisiana. Following its robust planning program, the JV commenced a unique drilling project in January 2021 focused on the drilling of a directional oil well in a targeted portion of the Austin Chalk formation. Based on extensive survey and planning work, combined with the completion techniques employed, the JV anticipates achieving attractive economics at approximately 50% of the cost of a similar-sized traditional hydraulic fracturing program.

The JV commenced active drilling on January 15, 2021 and on January 31, 2021 the drilling reached its targeted location in the Austin Chalk formation. On February 13, 2021, the drilling had reached its first milestone which initiated a contractual vesting of asset assignments with the successful drilling of a minimum lateral distance of 2,500 feet. On February 14, 2021, the JV reached its second milestone, with the conclusion of its drilling of its lateral with a full vertical section distance of 4,046 feet. The JV is currently working towards setting a production packer and production tubing to complete the well as an open hole Austin Chalk producer. The well was drilled successfully using managed pressure drilling techniques, allowing for visibility of the productive intervals throughout the drilling process in the Austin Chalk.

“We are extremely pleased with the results of this project, which reflects the first directional drill that our subsidiary White River Operating LLC has been the operator of record,” said Randy May, Chairman and CEO of Ecoark. “We appreciate and value the highly technical expertise that both of our JV partners brought to the project as well as the hard work and dedication of our internal project team. The strong results of our inaugural drilling project and the increasingly supportive commodity price backdrop have further validated the significant discount at which we acquired our position in this leasehold and the returns we expect to achieve.”

Ecoark intends to separately announce the actual crude oil and natural gas production generated from the initial days of production. 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 in the oil and gas well until the Company has recouped the entirety of its initial capital outlay for the AFE, after which it will own a 70% working interest with the remaining working interests to be owned at an undisclosed ratio by the other JV partners.

With the achievement of the first drilling milestone, and under the terms of the ongoing drilling obligations of the JV agreement, Ecoark expects to earn a 50-70% working interest in the JV including three currently producing Austin Chalk units operated by BlackBrush.

The JV is now expected to commence planning and execution of a second drilling project on the same leasehold within the Austin Chalk formation with an estimated spud date late in the quarter ending June 30, 2021. The geological team has already identified additional leasehold locations with similar 3D seismic survey data results as what was used to underwrite the initial drilling project.

Following the federal government’s recent halting of new drilling permits and the anticipated banning of hydraulic fracturing operations on federal land, mineral leases with deep drilling rights and proven production on private land such as the JV’s current leasehold are attracting significant interest from market participants. While the JV is committed to executing on its already planned future drilling sites, the JV will be looking at opportunities to expand its leasehold position.

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 Fresh^TM 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 our expectations regarding the timing and expenses relate to the current drilling project, including the anticipated cost savings compared to a traditional hydraulic fracturing program, our plans with respect to well completion, the expected benefits of the acquisition of the leasehold position, our future ownership of working interests in the oil and gas well, including working interests in additional acreage and interests for currently producing Austin Chalk units operated by BlackBrush following the achievement of drilling milestones, the planning and execution of the second drilling project and the anticipated spud date, and our future plans with respect to potential expansion of the leasehold position. 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, the risks arising from oil and gas drilling and completion, the impact of the COVID-19 pandemic on our Company and the national and global economy, our ability to realize fully the anticipated benefits of the recent acquisitions, 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 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.

ZEST FRESH™ and Zest Labs™ are trademarks of Zest Labs, Inc.

Contact:

Investor Relations: 

John Mills 
ICR 
646-277-1254 
John.Mills@icrinc.com