A Million-Dollar Legacy Problem
A century and a half of oil and gas production has left its mark on North America. The US Environmental Protection Agency (EPA) counts approximately 1.6 million unplugged, inactive oil wells and about 400,000 abandoned gas wells. Where cement seals are porous, or pipes have corroded, methane escapes. Over a 20-year period, this gas has about 80 times the climate impact of CO₂. Particularly problematic are orphaned wells without a solvent operator, known in industry terminology as “Orphan wells”. In these cases, the cost of remediation falls on the government. No one knows exactly how big the problem really is. Luke Plants, the third-generation head of the US company Plants & Goodwin (P&G), describes it this way: “On the way to every known well we plug, we discover ten more that nobody knew about.”
Since 2023, Plants & Goodwin has been majority-owned by the Canadian corporate group Zefiro Methane, and has been fully owned by it since September 2024. Luke Plants remained on board even after the acquisition. In addition to his role as CEO of P&G, he drives the group’s strategic development as Senior Vice President. The business model is based on a chain of steps that other service providers usually cover only partially. By contrast, Zefiro can act as a full-service provider. The market is enormous. The nonprofit organization Carbon Tracker Initiative estimates the cost of plugging documented wells alone at around USD 280 billion. The Infrastructure Investment and Jobs Act (IIJA) of 2021 has so far provided only USD 4.7 billion—a fraction of what is needed. For service providers like Zefiro, this means that demand does not end when a funding program expires. Investors who want an accurate picture of the situation should watch the documentary, “The Hazard Below.”
https://www.youtube.com/watch?v=3MrjCUk5_QU
In May of this year, Zefiro reached a decisive milestone with the purchase of the machinery fleet from Viking Well Service. According to the company, five additional drilling rigs and supplementary equipment increased annual revenue capacity by approximately USD 10 million. Since then, the company has expanded its operations to 13 US states. Alongside its physical remediation work, the company performs advanced methane emissions testing. Here, the acquisition of Appalachian Well Surveys, completed at the end of 2023, is paying off for Zefiro and its subsidiary P&G. Although Plants & Goodwin, a family-owned business founded in 1970, had the drilling rigs, cementing technology, heavy-haul transportation, and job-site logistics needed to permanently plug the oil industry’s climate-damaging legacy, it lacked capabilities in so-called wireline services. In this process, operators lower measuring devices or tools into the wellbore on a steel cable to assess its condition. Thanks to Appalachian Well Surveys’ technology, P&G recently inspected 849 wells in West Virginia for methane leaks as part of the nationwide MERP (Methane Emissions Reduction Program). The contract generated approximately USD 850,000 in revenue and is highly profitable.
The Order Book Is Filling Up Rapidly
A recent state-funded contract worth over USD 11.5 million to plug wells was awarded in early September by the environmental protection agency of a state in the Great Lakes region. Approximately USD 3 million of this must be completed between November 2026 and the end of June 2027, with the remaining USD 8.5 million due by June 2029. “The three-year contract complements our growing order backlog and reflects our market position in many regions where we operate,” explains Zefiro CEO Catherine Flax, while also highlighting the planning benefits: “Multi-year contracts create a more predictable revenue base and allow us to strategically schedule equipment and crews, optimize capacity utilization, and increase margins.” The largest single contract comes from Ohio. The state’s Department of Natural Resources awarded a three-year contract worth USD 19.6 million for approximately 200 priority wells. Operational implementation began in June of this year and will continue through 2029.
In addition, the company announced a partnership with the Well Done Foundation in July. The foundation was established in 2019 by former oil executive Curtis Shuck, who has made it his mission to tackle America’s methane problem. The organization is active in 18 US states and has selected P&G as its preferred service provider. The project will begin with 10 wells at the Deep Fork National Wildlife Refuge in Oklahoma, with 20 more planned for 2027. A third source of demand is emerging outside of foundations and government programs: operators of data centres and energy infrastructure need secure sites free of methane leaks before they are allowed to build. These industries are willing to pay a premium because every delay costs time and time is money.
Strong Growth and Profitability Ahead
Catherine Flax, who previously worked in the commodities and foreign exchange divisions at JPMorgan and BNP Paribas, took over as CEO of Zefiro in June 2025. Correne Loeffler, a manager with extensive experience in the energy sector and the stock market, oversees the company’s finances. The new leadership focused on the core business and cut costs in strategically less significant peripheral areas. The effect is visible in the financial statements. In the first nine months of fiscal year 2025/26, revenue rose by 35.8% to USD 33.2 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) turned positive at USD 3.1 million, compared to a loss of USD 5.5 million in the same period the previous year. The gross margin climbed to 32.1%, up from 23.0% for the full year 2024/25. Operating cash flow for the first nine months of fiscal year 2025/26 was USD 4.1 million. According to the company, this was the seventh consecutive quarter with positive cash flow from operating activities.
The figures for the full 2025/26 fiscal year, which ended on June 30, are expected by the end of September, or October at the latest. Management’s revenue forecast is “more than USD 40 million.” Experts at the Augsburg-based analyst firm GBC Research consider this forecast too conservative and believe the company can generate revenue of just over USD 45 million and EBITDA of USD 3.7 million. Due to the Viking acquisition, GBC anticipates revenue growth to USD 57.9 million for the new 2026/27 fiscal year and expects the company to remain profitable even after interest and taxes, specifically with earnings of USD 0.04 per share. Given a share price of USD 0.48 (currently EUR 0.43 in Germany), this translates to a low P/E ratio of 12—far too low, according to the analysts, considering the growing order backlog and the outlook for the coming years. They set a price target of CAD 2.12 or USD 1.50, implying upside potential of more than 200%.
New Report Boosts the Share Price
ATB Cormark Capital Markets is a touch more cautious. The Canadian research firm has just initiated coverage of the stock, with analyst Nicholas Boychuk assigning an “Outperform” rating. He expects revenue of USD 41.6 million for the past fiscal year and USD 53.3 million for the current one. Although his price target is lower, the release of his latest report still provided a boost. That is because even his fair value estimate of CAD 1.00, based on the current price of CAD 0.68, leaves nearly 50% upside potential. One reason for the financial experts’ optimism is an additional revenue stream. The collaboration between Zefiro and P&G could yield a second product that promises additional revenue with minimal effort. If a leaking well is plugged, the amount of methane avoided can be converted into tradable credits according to the standards of the American Carbon Registry (ACR). In a project in Oklahoma, this amounted to 92,956 metric tons of CO₂ equivalent. Buyers of the credits included Mercuria Energy America and EDF Trading, among others.
ACR is currently revising its methodology for abandoned wells. CEO Flax expects the new version to be released this fall. Here, too, analysts are more cautious than management itself: GBC does not anticipate revenue from the credit business until the second half of fiscal year 2026/27 and projects prices of USD 5.25 to USD 5.50 per metric ton of CO₂ equivalent. This corresponds to the level achieved to date but is significantly below the USD 14 paid on average for high-quality nature-based credits. Realistically speaking, the segment therefore falls somewhere between a nice side income and a second pillar of revenue that could deliver above-average margins depending on price trends. CEO Flax has her sights set primarily on the latter, as evidenced by the fact that she has already brought in experts from the CO₂ credit trading division of her former employer, JPMorgan, to Zefiro.
The End of the Consolidation Phase is Here
With the new major contract and the recently published study by ATB Cormark Capital Markets, the share price has recently regained momentum. The consolidation phase that has persisted since May is therefore over—and Zefiro’s days as a penny stock are, in all likelihood, coming to an end. Whether the upside potential is 50% or 200%: investors who want to profit from this explosive methane story should secure a few shares before the global public takes notice.
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