CEO STATEMENT
Zenith Energy Ltd. (“Zenith” or “the Group”) is an international oil and gas production Group, incorporated in Canada, listed on the Main Market for listed securities of the London Stock Exchange under the ticker symbol “ZEN” and on the Merkur Market of the Oslo Stock Exchange under the ticker “ZENA:ME”.
Zenith’s strategic objective is to become a mid-tier, Africa focused hydrocarbon production and exploration company. Specific attention is directed towards assets with proven development potential via development drilling, field rehabilitation, and low-risk exploration activities.
In view of the recent decline in oil prices, as well as macroeconomic developments caused by the COVID-19 pandemic, a singular time of opportunity has come about for companies such as Zenith to acquire, at highly commercially advantageous terms, oil and gas production and exploration assets being divested by many oil majors and leading oil and gas companies. As a leadership team, we are seeking to maximize this opportunity in order to ensure Zenith emerges from the current low oil price environment a much stronger and larger entity with significant future development potential.
We are very pleased to have recently concluded two separate transactions with CNPC, one of the largest oil and gas corporations in the world, and KUFPEC, a subsidiary of the State of Kuwait’s national oil company, to acquire their respective working interests of 22.5% in the Sidi El Kilani Concession and the North Kairouan permit in Tunisia, which contain the producing Sidi El Kilani oilfield. We look forward with confidence to receiving regulatory approval from the Comité Consultatif des Hydrocarbures of the Republic of Tunisia in respect of the transfer of ownership for both acquisitions in due course.
Similarly, we are delighted to have established a presence in the Republic of the Congo following our acquisition of Anglo African Oil & Gas Congo S.A.U (“AAOG Congo”), the former Congolese subsidiary of Anglo African Oil & Gas plc (a company listed on the AIM of the London Stock Exchange) in May 2020. The decline in oil prices brought about by the COVID-19 pandemic, as well as renegotiations with the seller, enabled Zenith to acquire, at highly advantageous terms, an interest, albeit brief, in the now expired Tilapia I license (expired on July 18, 2020), as well as receivables of approximately US$5.3 million dollars owed by SNPC (
We are aware that the Company’s operational track record in Azerbaijan, and the handover of the Contract Rehabilitation Area (“CRA”) to SOCAR announced to the market on March 2, 2020, disappointed market expectations. However, in view of the significant resources deployed to date and the future obligations
Société
Nationale des Pétroles du Congo) and the full novation to Zenith of intercompany loans between AAOG plc
and AAOG Congo equivalent to US$16 million.
As publicly announced, the Company has presented a comprehensive commercial and technical offer (the “Offer”) to the Ministry of Hydrocarbons of the Republic of the Congo in order to be awarded a new 25-year license for the Tilapia oilfield (to be named Tilapia II). We are confident that we shall be successful in obtaining a new 25-year license. In the event our Offer is accepted, the Company will look to begin drilling activities in
well TLP-103C at the earliest opportunity.
required for future development, as well as the underwhelming operational results, the Board of Directors is firmly of the view that this outcome was in the best interests of shareholders and the future commercial success of the Company. The operational challenges, as publicly communicated on a number of occasions, was due, inter alia, to the severely dilapidated condition of the wells from the Soviet era, the unreliability of historical data, and the highly challenging geology of the field.
The results for the year ended March 31, 2020, (“2020 FY”) reflect the significant changes the Group has undergone during the course of the 2020 Financial Year, specifically in result of the impairment resulting from the handover of the CRA in Azerbaijan and its associated reserves. However, it should be underlined, on a positive note, that we have been able to achieve a significant reduction in our General and Administrative Expenses during the 2020 FY to CAD$3,361k, compared to CAD$5,251k incurred in the preceding financial year ended March 31, 2019.
We are very excited about our countercyclical acquisition campaign in Africa in the current low oil price environment, especially the highly prospective development production potential of the Tilapia oilfield in the event we are successful in being awarded a new 25-year license and the material daily production revenue to be obtained from completion of our acquisitions in Tunisia. Indeed, we are hopeful to conclude further acquisitions of a similar kind in due course.
I thank shareholders for their loyal support. As is clear, my confidence in Zenith, as well as that of the team, remains unchanged. We fully believe that our new geographic concentration in Africa, in less geologically challenging assets acquired at highly advantageous commercial terms, will enable the Company to achieve its operational objectives and deliver value to our investors.
The Board is committed to sustained growth and exploiting any value accretive opportunities that may present themselves. We shall continue to evaluate the acquisition of additional energy production opportunities building on the momentum of our recent progress to further support the Group’s expansion.
Andrea Cattaneo
President, CEO and Director
September 30, 2020