Zenith Energy - Analysis June 2021

I have spent the last few evenings going over my workings and putting together a list of what we should all expect from Zenith over the next few months. I apologise in advance because this is going to be a very long set of posts.

For those who cannot be bothered to read through 5 or 6 pages of text the main points to take note of are the many different things that are expected to happen in the near future. These are as follows:

1. Zenith should carry out a Tunisian work/development program that is aiming to deliver an extra 1,000 bopd (approx) to the company once all is complete (and assuming that everything is successful). This work programme should be starting very soon.

2. The company should finalise its ownership of SLK by the end of this month and once this is done will have access to $3.7 million (net) worth of oil (as well as the additional $1.7 million from oil stored at Essaouia) – total $5.4 million.

3. The company should receive approval on the Tilapia2 license by the end of next month. At the same time, I would expect them to receive a repayment plan on the $5.7 million owed by the SNPC (less the signing fee for Tilapia 2).

4. The company should hear something about the Nigeria marginal field bid as well as potentially acquiring other Nigerian asset(s) that are unconnected to this.

5. The company should also hear something on the additional Congo licenses that they were talking about.

6. The reserves report should be issued over the next quarter an certainly as part of the annual report in August.

7. Once the Tunisian workover program is under way the company should prove that they can finally deliver on the long-term promise of funding development through debt.

For those who want more detail – enjoy the following essay!

Best wishes,

Redigert 10.06.2021 kl 14:32 Du må logge inn for å svare


1. Current assets owned (and in process of owning in Tunisia):

a. 45% of Sidi El Kilani - gross current production approx. 600 bopd (albeit we have not formally approved our purchase of this yet.
b. 45% Ezzaouia concession – gross current production approx. 465 bopd
c. 100% Robbanna concession – gross current production 25bopd
d. 100% El Bibane concession – gross current production 100bopd

2. Current oil production in Tunisia net to Zenith is 573 bopd.

a. 245bopd SLK
b. 203 bopd Ezzaouia
c. 25 bopd Robbanna
d. 100 bopd El Bibane

3. Anticipated production after workover programs in Tunisia would be an additional 890bopd meaning that total production in Tunisia would increase to 1463bopd (net to Zenith).

a. Sidi El Kilani – No workovers planned. Production to remain the same at 245bopd.
b. Ezzaouia – Three workovers planned at a budget of $1.2 million and with the aim to increase production by 500 bopd (gross) – 240bopd net to Zenith
c. Robbana – well intervention to increase production by 25 bopd and also an infill well planned to produce an additional 100-150 bopd (for a cost of $1.5 million)
d. El Bibane – Well intervention at the (currently shut-in) EBB-3 to produce an additional 500bopd (approximate cost $3.5 million)

4. Additional assets owned in Tunisia are the oil stored (and not yet sold) from Sidi El Kilani and from Ezzaouia which comes to approximately 128,000 barrels of oil currently valued at approximately $5.4 million (after production costs) when it is ultimately sold.

a. Sidi El Kilani – the company announced that there were approx. 65,000 barrels in storage on Feb 28th 2021 and since then they should have received around an additional 23,000 bopd by the end of May. We should have a total here of approx. 88,000 bopd. With production costs assumed at $30 per barrel and the current Brent price at $72 this should deliver a revenue of $42 per barrel or $3.7 million to Zenith once the SLK purchase is concluded and the stock sold.

b. The oil stored from Ezzaouia – as of March 15th this year the company announced that there were 25,000 barrels of oil held in storage and they should have received another 15,000 giving a total of 40,000 barrels. With production costs assumed at $30 per barrel and the current Brent price at $72 this should deliver a revenue of $42 per barrel or $1.7 million to Zenith once the Ezzaouia stock is sold.
Redigert 10.06.2021 kl 13:53 Du må logge inn for å svare


1. We are currently owed $5.7 million (plus additional interest). The company has repeatedly said that relations between ourselves and the SNPC are “excellent” and they are confident about the recovery of 100% of the money owed. Obviously there is no “expected” deadline for the return of this money but it is likely to come at the same time as the Tilapia license renewal - not least because I fully expect some of this money to have to be allocated to the signature bonus when the license renewal is granted.

2. In terms of when the Tilapia license will be renewed and when the well will be drilled – the company have stated that they are confident that we will get the license renewed and will drill the Tilapia well at the end of Q3 of the beginning of Q4 2021. Personally, I have always said that there were 6 steps that needed to be completed in order for us to get the license renewed. The first three have now been completed and I imagine that we are currently in the middle of step 4.

a. The President Denis Sassou Nguesso needs to win the election (Done)
b. Once DSN has won the election he will need to be inaugurated before he can appoint ministers and begin the process of running the country (Done)
c. Denis Sassou Nguesso then needs to appoint a cabinet of ministers to run the country. The relevant appointment that relates to Zenith is the appointment of the Minister for Hydrocarbons (Done)
d. Once the new Minister for Hydrocarbons is appointed (and JMTT and Teresa Goma are kicked out) then we can expect that we will proceed with the next stage of the license renewal which is getting the Production Sharing Agreement sorted out. (Presumably this is in progress now).
e. After the PSA is sorted then it goes to the cabinet of ministers to be ratified.
f. Finally, it goes to parliament for final ratification into law.

My guess would be that it will now be the end of July by the time that we formally receive the license but it is worth noting that AC implied in his interview with Stig Myrseth that we could be expecting this much sooner.

3. Additional Congolese asset acquisitions – we are also waiting to see about acquiring a number of additional licenses in the Congo. This was first mentioned by Andrea in his “Financial Fox” interview on February 21st 2021 where he said that the company were already in discussion about their second and (possibly) third and fourth assets. We have not heard anything more about these recently but it is important not to forget that the discussions are already under way.


We know from the investors conference call in April 2021 that Zenith are very keen to work in Nigeria. Even though the company applied to the marginal fields bid round we know that this is not all that they are interested in within the country. AC explained there that the company has been offered other opportunities that are unrelated to the marginal fields and he also hinted that any concession that we did get access to there would be producing on the order of between 5,000-12,000 bopd. This fits in with the strategy of aiming to get production to 20,000 bopd by 2023.

Court claim against the SMP

We know that the company is proceeding with AAOG’s court claim against the SMP rig operator/supplier for negligence in the original Tilapia drill and that the claim is for $3.1 million or even higher. AC has said that he has 100% confidence that the court will rule in Zenith’s favour and that the amount received could be higher than the $3.1 million. Judgement expected in April 2022

Money Raising – with and without issuing equity

So far in 2021 Zenith have managed to raise a massive £5.6 million (NOK66 million) with £1.5 million (NOK18.2million) raised by issuing equity and £3.5 million (NOK 48 million) issued by way of loans.

It is interesting that the loans have started featuring so heavily now. Every Zenith investor has at times had cause to moan about the amount of shares that have been issued to raise equity and investors in both London and Oslo have made this clear to Andrea on many occasions. He has always said that the company would raise money by debt as soon as it was possible to do so and it looks like he is being good to his word. We know that Zenith have always had the long-term ambition to pay for all of their development costs via the bond market when possible – but most of us also know that this is not going to be possible in any serious way until the company is generating significant cash flow and profits from operations. It seems to me that Zenith have now found an interesting middle ground on this whereby they can use Winance to fund development over the short term until the company matures enough to use the bond market.

From the money that had been raised so far this year (pre-Winance) it has occurred to me that Zenith did not necessarily need the Winance cash in order to carry out the Tunisan operations (assuming that the SLK and Ezzaouia reserves are sold) but instead they have borrowed the money in order to build up a credit history so that more is borrowable later on when it comes to carrying out work in the Congo and potentially Nigeria.
Redigert 10.06.2021 kl 13:55 Du må logge inn for å svare

Issuing of the Reserves Base Report

As per the interview that AC carried out with Stig Myrseth on May 6th that we are waiting for Zenith’s Canadian engineering company to produce a reserves report on their global assets including the new acquisitions in Tunisia. I believe that these will come out when the annual report is issued in August so I am hopeful for this to help new investors realise how different a proposition Zenith Energy is in June 2021 to what it was in June 2020.

Development going forwards

One of the big issues that I have had with Zenith’s acquisition strategy in the past is the worry that it might be stretching the company’s cash position too thin. After all, it is one thing to acquire a license for exploration/production but it is another thing altogether to then properly fund it so that the company is not constantly (a) diluting its own shareholders by issuing equity to fund development or (b) farming out assets and diluting their own holdings to fund development.

I have long been an admirer of the strategic change in direction that the company made in Q2 last year when they started acquiring production assets in Tunisia as I could see the benefits that having cash coming into the company would make to operations. What I am now very happy about is that this change in strategy is paying off in delivering the cash that I was talking about. This change has not manifested itself in an improvement in the company share price yet but IMO it is only a matter of time for this to filter through as the market recognises what is happening.

The material change to the way the company is operating is that it now owns assets that enable it to generate money by selling oil and this in turn allows it to borrow money to increase production rates. We can already see this by what is happening with the Winance deal. The company is able to borrow money in order to increase production rates in Tunisia from the current 573bopd up to a figure of 1,463bopd if all is successful with the announced drill programs. The company is able to borrow the money to do this because the lender can see that the existing oil production can service the debt.

Once the Tunisian work program is completed then the company will be generating approx. 1,500bops and a net revenue of $63,000 per day or $23 million per annum. This is enough to service a new $10 million loan to carry out the drilling at Tilapia (and any additional Congolese license acquired) while also allowing a similar amount to be borrowed to carry out a work program in Nigeria should we acquire a new asset there. If these are successful then the whole process can be repeated again at even higher amounts and very quickly the company bonds will become a very viable funding mechanism.

Thee point is that the company has made a major push forward in credibility since the Tunisian assets have been acquired. Whereas in the past we all hoped that the SNPC money would be paid in order that Tilapia 2 could be drilled without having to issue too much equity but now it looks very much like Tilapia and other future acquisitions can be funded without the issue of any equity by the company.

Risks that things could go wrong

There is always a risk that things can go wrong in any company (and especially any oil and gas exploration and development company). The following are what I see are the key risks to Zenith just now:

1. The Tunisian work program is unsuccessful – this is a fairly serious risk as it means that we will have spent $5 million for nothing and we are not in a position to service future drilling campaigns out of increased revenue. However, this is mitigated by the fact that the campaign is made up of six or seven different drills/workover and so it is not a heads or tails process.

2. The company does not get approval for ownership of SLK – this would be a bit of a body blow for the company as it would mean a significant reduction in production revenues from Tunisia and (more importantly in the short-term) a loss of the $3.5 million worth of oil which we are currently expecting to receive. If this does not go ahead it would be damaging but at least a bright side for the company is that the sellers that it is dealing with are so huge that $3.5 million is nothing for them. I will definitely be much happier once this deal is fully completed though.

3. The company does not get granted the Tilapia 2 license – this is always a risk in a country like Congo but given the close relationship that AC has with the President and the fact that the new Minister of Hydrocarbons is the President’s long-term ally I think that this is minimal. AC is already talking about acquiring additional assets in Congo and he would be unlikely to do this if he thought that there was doubt about Tilapia.

4. The company do not get paid the SNPC money – not receiving $5.7 million would of course be painful for Zenith but whereas twelve months ago it would have pretty much destroyed the company by leaving them unable to drill Tilapia without a crippling equity dilution, now it is far less of a big deal. With the Tunisian production assets able to service debt borrowings then Tilapia can be drilled with or without the SNPC money. That said, I am absolutely convinced that it will come in.

5. The company gets nothing from the Nigeria Marginal fields bid – this is totally insignificant in my opinion. AC has already made it clear that we have plenty of other options in Nigeria and with the amount of different license opportunities AC has mentioned in Tunisa, Congo, Nigeria and West Africa I do not think that the acquisition of assets is going to be a problem for Zenith.

6. Losing the SMP court case – this is also insignificant. It was not our money when it was lost (it was AAOGs) so if we get nothing then we have lost nothing and if we do win it is simply free money.

Overall, while there are individual risks to Zenith in every action that they are carrying out, because of the sheer quantity of different events that Zenith is involved in the risks of one thing going wrong is mitigated by the possibilities of the others. Not everything is going to go wrong and unlike when they were in Azerbaijan Zenth’s eggs are now in many different baskets instead of just one.


This is an incredibly exciting time for Zenith’s development and if things go well it should not be much longer before the company is genuinely moving towards becoming the sort of mid-tier production company that AC has always claimed that it could be – with a market cap and share price to match.
We are waiting for:

Oil Production and License Acquisition

1. The beginning of a workover program in Tunisia that is aiming to increase production by nearly 1,000 bopd over the course of this year.
2. The delivering of the Tilapia2 license which I believe should come by the end of July (but the company have hinted in interviews could be sooner than this).
3. The acquisition of additional license concessions in the Congo where the company has already said that they are in discussions with up to three more assets.
4. The acquisition of one of more licenses in Nigeria/West Africa where the company would expect production to be somewhere between 5,000-12,000 bopd.

Money coming into the company

1. Production revenues from the current Tunisian oil production of 573bopd and then 1,500 per day should the Tunisian work program be successful.
2. Additional revenues from the sale of stored oil at Sidi El Kilani and Ezzaouia which should total 128,000 barrels and deliver a revenue of $5.4 million to Zenith.
3. Repayment of the SNPC money which currently stands at $5.7 million and AC has said that he is 100% certain that we will receive.
4. A $3.1 million court case against the SMP which the company is confident of getting a favourable judgement for in Q1 2022.

But more than anything else, the most exciting thing about Zenith at the moment is that the company appears to be about to move into a position whereby it can fund the development of any assets it acquires through debt only. I cannot emphasise enough what a big deal that this will be for us shareholders if the company can carry out the Tunisian work program successfully. It will be a total game-changer for the company and should see a massive re-rate with the share price rocketing up to where it really deserves to be.
10.06.2021 kl 14:14 5225

Super Work MG 👍👍💰💰💰
10.06.2021 kl 15:10 5117

Excellent work. My only comment is that at this stage, its all about the ability to execute. The strategy seems brilliant, but as you say in the UK: The proof is in the pudding.

Thanks MG, superb work!!💰💰💰👍👍👍

"The proof of the pudding is in the tasting"
-The art must be viewed to be appreciated.
10.06.2021 kl 16:35 4993

Ja, det er nærmere den originale versjonen av uttrykket, men nå (pga latskap antar jeg) er det kortversjonen som gjelder. Uansett vil vi (som andre har påpekt) bli rikelig belønnet-hvis og når de kan vise til gode resultater på disse utfordrende lisensene, eller klarer å juridisk sikre seg verdifulle lisenser.

Brilliant work MG 💪 Thank you -

Aqualight 🇩🇰🇳🇴🇬🇧
10.06.2021 kl 19:45 4770

Thanks alot MarketGunsling for a valuable summary of information. And just as a reminder to all of us, all of these possibilities are created over the last year or so.
10.06.2021 kl 21:19 4651

Meget bra! Har du noe kursmål?
11.06.2021 kl 01:21 4427

Vell, skal si vi får en fin stigning når det bygges stein på stein. Det er så mye positive triggere. Dette skader vell heller ikke på sikt:

Thank you for a FANTASTIC analysis. It is also great to see that it has not been «polluted» by nonsens. One aspect I miss is gas to electricity and the importance of continuing a small scale production merely for demonstrative purposes. In Aqualight’s thread I have earlier referred to the interview with Mr Myrseth where this was stressed:

« I siste intervju med Myrseth forklarer AC fra ca 35. min. betydningen av å være operatør. Han sier at når de går til «ministry» ikke får spørsmål om hvor de har vært deltaker, men om hvor de har vært operatør. Dette er også grunnen til at de har valgt å fortsette som operatør i Italia. Selv om de har liten produksjon kan de likevel bevise at de har teknisk kompetanse. Gjennom operatørskapet i Italia kan Zenith bevise at de også har kompetanse på elektrifisering av gass.

Senere i intervjuet gir AC et eksempel på dette hvor han sier at det var viktig for den kongolesiske delegasjonen å komme til Italia for å se at Zenith har kontroll på deres operasjoner der, hvor blant annet HMS her som ellers i oljeindustrien er viktig. I Kongo vurderer de å bruke Zeniths kompetanse til å lage elektrisitet av flaring (norsk.: fakling) for å utnytte energien fra etterforbrenningen.»

That a congolese delegation goes to Italy indicates to me a strong interest in Zenith.

The U.S. Energy Information Administration provides a descpription of the country’s current energy status.


«The Congolese government wants to attract new investment and to develop its hydrocarbon resources by making changes to its legal and regulatory framework that would create more favorable terms for operators and investors. We assess these efforts to be insufficient in attracting investor interest in exploiting the Congo’s resources in the short term.»

Which fields would in this context be more attractive?

Stockdance - your comments have prompted me to write my own piece on the Italian assets in order to complete the overview of everything else. Please excuse me for repeating some of what you said - everything you have mentioned is absolutely correct and I am merely putting it in my own words for the sake of completeness.

Italian Assets

There is no cash value to the Italian assets. According to the 2020 accounts (page 82) the value of property and equipment and the liabilities pretty much cancel themselves out and the revenue is only NOK6 million (£500k) and this is in itself cancelled out by expenses. The Italian assets basically either break even or lose a small amount of money each year and so on a purely balance-sheet basis it would make sense to get rid of them.

However, as has been mentioned, in the Stig Myrseth interview on 6th may 2021 Andrea Cattaneo made it very clear that the value of the Italian assets is not in their financial side but more as a marketing side for Zenith when it comes to acquiring operatorship of future assets.

He pointed out that the fact that we were: (a) operating gas fields there (b) working with condensate (c) successfully delivering gas to electricity in the real world and this all gave us operatorship experience in different areas. This is important because when the company is negotiating with oil ministers in Congo / Tunisia / Nigeria etc they only want to grant license concessions to companies that can operate them themselves and they only want to be dealing with operators who already have experience in the areas that they are pitching for. He said explicitly that when you visit an oil minister they do not ask you “where have you been a participant?” they ask you “where have you been operator?” because the concessions are often mandated to only go to companies who are operators.

This was already proved when the Congolese delegation came to visit these assets in Italy as part of the Inquiry of Public Utility process and they saw that the company was operating gas fields and that they were already working with the technology for generating electricity from flared gas. This is a process that AC has stated that Zenith is keen to carry out in the Congo and it fits into the country’s own electricity requirements.

It is for this reason that in the interview AC specifically stated that operatorship of the Italian assets have a significant value to the company that cannot be put on the balance sheet and this is one of the reasons that the company keeps the Italian assets even though outsiders always claim that they have negligible value.

You do not have to excuse yourself. I am just pleased to see you could make good use of it.
17.06.2021 kl 16:31 3121

Aksjen fra Helvete!
Kursen skuffer hele tiden! 24-7!

Buhu.. Dette er aksjemarkedet, ikke en veldedighet.
17.06.2021 kl 16:51 3065

When the hell are they going to report something meaningful

Folk tror jo zena skal opp i skyene bare pga høy oljepris.

Selger de i det hele tatt olje per dags dato??

Tror de gikk i pluss på munnbind da
17.06.2021 kl 18:22 2920

From last one year they haven't report sell of single barrel of oil. I think management is not interested to notify in future too.
18.06.2021 kl 10:53 2576

look like someone sold around 3 million share from yesterday and try to buy with open volume at 0.1070
18.06.2021 kl 11:13 2522

how would you know that if the volume is hidden? the answer is that you don't know,and that you are only speculating. guessing that you feel the need to justify your investment following the previous day's drop.
18.06.2021 kl 11:26 2482

it is simple most of the time, if open volume is having set value 98000 will appear after same after completing order of 98000 and shows flat line graph, second is if open volume is appearing in order (for me on E24) before 9 am or after 16.20 if it is first value in sale or buy. most of them set around 100T for Zenith. I am not afraid of my investment as my average is around 0.07 and Tunisian one field sufficient to defend that value for next few years.
Redigert 18.06.2021 kl 11:31 Du må logge inn for å svare
18.06.2021 kl 11:30 2471

Yes, the Baltic Viking is wrong. The player that sold a few million shares is not trying to buy at 10.7 øre. How do I know this for a fact? I know the person who sold-nothing dramatic there. As a big shareholder, Viking should be in touch with AC directly-expressing the need for material news. ( as opposed to hopes, plans and dreams)
18.06.2021 kl 11:51 2416

do you know why the person lost faith? or did the person simply require cash?

viking: not my intention to be rude. but this forum is riddled with speculations presented as facts and i don't like it. and as herman just wrote, that seems to be the case here also :o)
Redigert 18.06.2021 kl 11:59 Du må logge inn for å svare
18.06.2021 kl 12:04 2386

Thanks viking
Today i learned something new about hiden volum
18.06.2021 kl 12:06 2376

I have my data to guessing that 17.06 9:57PM 1Million, 2:52 PM - 1Million, 18.06- 9:13 to 9:21 1 Million , and 10:39 -1Million.
18.06.2021 kl 12:09 2362

yes, but it is fact there is trading system which allows hidden volume or robot trading which make small investor irritate. Many just buy and sell on signal from investment firms on technical analysis many, use norskbull. Here technical signal kills rise in share price for 3 new field bought in April and May.
Redigert 18.06.2021 kl 12:14 Du må logge inn for å svare
18.06.2021 kl 12:28 2322

Needed cash. I think there is no point to analyze these low volume trades. People are hesitant to buy because they want more proof that the company knows what they are doing. Tilapia and SLK do not formally belong to Zenith, and the Tunisian assets require intervention/work over. At any time (theoretically) we can get Tilapia and SLK confirmed, and the share price should move towards 30 øre and still be discounted. Then we gave progress in Tunisia and well 103c during 2h that can boost the share significantly. Then there is the chance of 1-2 new l arge licenses. The company has to deliver and improve their visibility, then the share price will «rock our world)
Redigert 18.06.2021 kl 12:28 Du må logge inn for å svare

Excactly! We need these confirmations before Mr. Myrseth & co even want to consider ZENA.
This is Africa. Things can turn quick. It looks positive now, but its still huge risk waiting for these approvals.
18.06.2021 kl 13:00 2307

i don't think it mention Zenith there as it was "soft sale" last Friday around 0.1150.
18.06.2021 kl 13:00 2317

... Ser vell ikke på Zenith som noe lottoaksje akkurat.
18.06.2021 kl 14:12 2224

Lotto listen er slik

Vow: -1,5 prosent
poLight: 5,5 prosent
Zaptec: -8,1 prosent
Lifecare -19,7 prosent
SoftOx Solutions: -13,8 prosent
Seadrill: 4,4 prosent
Norwegian: -72,5 prosent

Zenith er definitivt ein lotto aksje.

Alt avhenger på lisensavtaler i korrupte land.