Investor Conference Call Write-up
Hi everybody I had spent some of the morning re-listening to and writing up the content of the investor conference call from Friday which was put up on Zenith's youtube channel earlier today. It is amazing how much more information that you get from reading than listening so I hope that this helps.
We are an African focused company. Our only non-African asset is in Italy and we will explain later why this remains in our portfolio. Our refocus on Africa has only happened in 2020 so we have been working very hard in our new focus despite covid. During Covid when most people were not travelling and were in lockdown Zenth has made extensive trips to Africa and has achieved much because of this.
The first page is our financial structure. We have two listings – one in the main market in London and the other in the high-growth Euronext in Oslo. The market cap is approx. £14 million and there are 1,377,000,000 shares in issue (approx.). The shares listed in Oslo are all of the shares and a reduced number are listed in Lodnon but we are creating a prospectus to bring all the shares into London too so you can move them between stock exchanges.
Our philosophy is to concentrate on production assets in Africa –(North Africa and Sub-Shahara Africa). The first part, North Africa, is represented at the moment solely by Tunisia where we have made 4 acquisitions: Ezzaoiua, Robanna (which are onshore and producing oil). The third one is El Bibane which produces mainly gas and condensate and is offshore. At the same time more than a year ago we have acquired 45% of Sidi El Kilani which is an important license that originally produced 20,000 barrels of oil per day and has reduced over the years mainly due to lack of investment by the partners. The partners that have sold to us are two mega companies -CNPC the third largest oil company in the world and KUFPEC which is a subsidiary of the Kuwaiti National oil company. These two companies are so big that they did not have the time to spend their technical resources on what is for them a small field.
Although the deal has not been finished yet, the economic date is from when the deal was first signed and we are progressing steadily in a very bureaucratic environment to secure this acquisition. The great part about our host country, Tunisia is that it permits oil companies to sell their oil directly to any refineries in the Mediterranean. This allows us to auction the oil for the best price. We announced yesterday morning we sold our first lot of oil, which has gone to Italy and this oil has obtained a very good price which is a combination of the high oil price and also that our oil is recognised as a good blend that can be sold to various refineries in the Mediterranean region.
Passing through to the sub-Saharan region we made the acquisition of AAOG in December 2019 which was the only asset of the oil company AAOG PLC in London. This asset is extremely attractive and there is a very prospective field called Tilapia which is very sought after. We produced from this field for a few months until the license expired and since then we have been in the process of signing a new license. The election period has taken away a lot of ministerial management resources and time because they were all caught up in the election but there is now a new oil minister and we have met him and his management team thanks to the very good reputation of our new country manager – who is somebody who has worked in both government and private oil companies in Tunisia for the last 7 years. He joined us in March and thanks to him things are moving quickly; there is mutual respect between us and the government and we are doing everything that the ministry wants us to do in order to be awarded the license. I expect the timescale (of the license granting) to be reasonably short but the timescale reasonably short in Africa has various meanings.
We are also spending our time while we are waiting for the license to be granted in identifying other oil license opportunities in Africa. We have already identified two other opportunities in Congo of which one is fairly advanced in progress. Shareholders may remember in December and January of our updates on the assessment of our technical capabilities that the Congolese government wanted to perform including sending a delegation to Europe to make a thorough investigation of our financial and technical capabilities at our site in Italy.
Another area we are looking at in Nigeria where there are an enormous amount of fields which are often managed in a very dormant way by their historical owners. There is also the marginal fields bid round from 2020. I should point out that everything that involves bureaucracy in Sub-Saharan Africa typically takes a very long time so the bid round contrary to what has been mentioned in the press round is not actually finished There is still an allocation of fields to be made as 50% of the fields signing bonus has not been received by the state and as a consequence if these bonuses are not paid then the allocation is not completed and there is still space for negotiation with other parties. However, as I have already commented in previous conference calls, the fields that have been put in last years bid round do have larger complications and lower quality than other options that are already available in the country. Also, despite the fact that the fields are producing, there are various entities and individuals that the govt want to partner with international companies. This is because there is a complete lack of capital in the region despite the fact that there are 200 million people and banks and an important stock exchange. However for oil and gas which require a certain amount of long-term funding there is no potential funding in country. Therefor the majority of the owners of Nigerian fields are in search of an international partner with whom they can JV the development of the fields.
These kind of negotiations can only happen in person due to the complexity of the discussions and so we are spending a lot of time there. At the moment we have 12 negotiations in Nigeria and we are confident that one of them at least will be completed in the not too distant future.
I want to note that we were discussing in other countries marginal fields producing 200-400 bopd with some potential upside but in Nigeria the minimum negotiation that we are having at the moment is for 3,000 barrels. In Niigeria the definition of marginal fields starts at anything below 17,000 barrels. So there is marginal and marginal – a field producing 8-10,000 barrels is called marginal in Nigeria due to the amount of oil they have but this would not be called marginal in other parts of the world.
Italy – in Italy we will continue our activities where we make electricity out of gas, in our case sub-standard gas. This model is very attractive for our ministerial contacts in Africa as in Africa there are tremendous quantities of gas reserves, some completely untouched but below commercial definition because the infrastructure for transporting gas in Africa is very expensive so fields that would be considered commercial in Italy or France of Poland are not considered commercial in Africa. Our strategy for small and medium gas fields is to install a gas to power facility and produce electricity which is in great demand for the whole of sub-Sahaaran Africa where it is not possible to have a steady electricity supply at home. In this continent, regardless of what is happening in the West, there is still a long-term demand for oil and gas. While there is a political focus on green energy in Africa the core of the continent still needs fossil fuels – and as the majors are leaving this activity it represents a great opportunity for us.
We are an African focused company. Our only non-African asset is in Italy and we will explain later why this remains in our portfolio. Our refocus on Africa has only happened in 2020 so we have been working very hard in our new focus despite covid. During Covid when most people were not travelling and were in lockdown Zenth has made extensive trips to Africa and has achieved much because of this.
The first page is our financial structure. We have two listings – one in the main market in London and the other in the high-growth Euronext in Oslo. The market cap is approx. £14 million and there are 1,377,000,000 shares in issue (approx.). The shares listed in Oslo are all of the shares and a reduced number are listed in Lodnon but we are creating a prospectus to bring all the shares into London too so you can move them between stock exchanges.
Our philosophy is to concentrate on production assets in Africa –(North Africa and Sub-Shahara Africa). The first part, North Africa, is represented at the moment solely by Tunisia where we have made 4 acquisitions: Ezzaoiua, Robanna (which are onshore and producing oil). The third one is El Bibane which produces mainly gas and condensate and is offshore. At the same time more than a year ago we have acquired 45% of Sidi El Kilani which is an important license that originally produced 20,000 barrels of oil per day and has reduced over the years mainly due to lack of investment by the partners. The partners that have sold to us are two mega companies -CNPC the third largest oil company in the world and KUFPEC which is a subsidiary of the Kuwaiti National oil company. These two companies are so big that they did not have the time to spend their technical resources on what is for them a small field.
Although the deal has not been finished yet, the economic date is from when the deal was first signed and we are progressing steadily in a very bureaucratic environment to secure this acquisition. The great part about our host country, Tunisia is that it permits oil companies to sell their oil directly to any refineries in the Mediterranean. This allows us to auction the oil for the best price. We announced yesterday morning we sold our first lot of oil, which has gone to Italy and this oil has obtained a very good price which is a combination of the high oil price and also that our oil is recognised as a good blend that can be sold to various refineries in the Mediterranean region.
Passing through to the sub-Saharan region we made the acquisition of AAOG in December 2019 which was the only asset of the oil company AAOG PLC in London. This asset is extremely attractive and there is a very prospective field called Tilapia which is very sought after. We produced from this field for a few months until the license expired and since then we have been in the process of signing a new license. The election period has taken away a lot of ministerial management resources and time because they were all caught up in the election but there is now a new oil minister and we have met him and his management team thanks to the very good reputation of our new country manager – who is somebody who has worked in both government and private oil companies in Tunisia for the last 7 years. He joined us in March and thanks to him things are moving quickly; there is mutual respect between us and the government and we are doing everything that the ministry wants us to do in order to be awarded the license. I expect the timescale (of the license granting) to be reasonably short but the timescale reasonably short in Africa has various meanings.
We are also spending our time while we are waiting for the license to be granted in identifying other oil license opportunities in Africa. We have already identified two other opportunities in Congo of which one is fairly advanced in progress. Shareholders may remember in December and January of our updates on the assessment of our technical capabilities that the Congolese government wanted to perform including sending a delegation to Europe to make a thorough investigation of our financial and technical capabilities at our site in Italy.
Another area we are looking at in Nigeria where there are an enormous amount of fields which are often managed in a very dormant way by their historical owners. There is also the marginal fields bid round from 2020. I should point out that everything that involves bureaucracy in Sub-Saharan Africa typically takes a very long time so the bid round contrary to what has been mentioned in the press round is not actually finished There is still an allocation of fields to be made as 50% of the fields signing bonus has not been received by the state and as a consequence if these bonuses are not paid then the allocation is not completed and there is still space for negotiation with other parties. However, as I have already commented in previous conference calls, the fields that have been put in last years bid round do have larger complications and lower quality than other options that are already available in the country. Also, despite the fact that the fields are producing, there are various entities and individuals that the govt want to partner with international companies. This is because there is a complete lack of capital in the region despite the fact that there are 200 million people and banks and an important stock exchange. However for oil and gas which require a certain amount of long-term funding there is no potential funding in country. Therefor the majority of the owners of Nigerian fields are in search of an international partner with whom they can JV the development of the fields.
These kind of negotiations can only happen in person due to the complexity of the discussions and so we are spending a lot of time there. At the moment we have 12 negotiations in Nigeria and we are confident that one of them at least will be completed in the not too distant future.
I want to note that we were discussing in other countries marginal fields producing 200-400 bopd with some potential upside but in Nigeria the minimum negotiation that we are having at the moment is for 3,000 barrels. In Niigeria the definition of marginal fields starts at anything below 17,000 barrels. So there is marginal and marginal – a field producing 8-10,000 barrels is called marginal in Nigeria due to the amount of oil they have but this would not be called marginal in other parts of the world.
Italy – in Italy we will continue our activities where we make electricity out of gas, in our case sub-standard gas. This model is very attractive for our ministerial contacts in Africa as in Africa there are tremendous quantities of gas reserves, some completely untouched but below commercial definition because the infrastructure for transporting gas in Africa is very expensive so fields that would be considered commercial in Italy or France of Poland are not considered commercial in Africa. Our strategy for small and medium gas fields is to install a gas to power facility and produce electricity which is in great demand for the whole of sub-Sahaaran Africa where it is not possible to have a steady electricity supply at home. In this continent, regardless of what is happening in the West, there is still a long-term demand for oil and gas. While there is a political focus on green energy in Africa the core of the continent still needs fossil fuels – and as the majors are leaving this activity it represents a great opportunity for us.
Redigert 12.07.2021 kl 17:30
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MarketGunsling
12.07.2021 kl 16:54
1681
1. With the major companies leaving the O&G space Is there are opportunity for Zenith to increase exponentially in size. Zenith has stated a target of producing 23,000 bopd by 2023 and so how do you see that playing out?
Strategically, in European capitals such as Paris, Amsterdam and London there is a frenzy to exit oil and gas activities by the majors – trying to improve their image and move from fossil fuels to green energy by divesting assets. In this strategy they have to find a buyer for these assets. If the assets are very complex and large (100,000 bopd) then they will not engage in discussions with Zenith as we do not have the financial resources to take over the field but all of the rest of the portfolio especially in certain large countries like Nigeria are made from a compendium of medium producing fields of 20/25/30,000 bopd. These are the target of our acquisitions as these fields can be sold not as part of a portfolio but individually so that will permit us to participate (sometime alone and sometimes with local partners) in the acquisition of these fields. The target that we have set ourselves of 20,000 barrels can therefor be met and surpassed in one go if the right field is purchased.
There are a lot of these types of opportunities available but we do have to create a perception that Zenith are able to run this type of field so the first time that we get a field that is between 6-10,000 barrels then it will be a very strong proof of concept and abilities that will permit us to enter other negotiations.
Sometimes shareholders alert us when a major is leaving a country and wants to divest it’s entire portfolio there but it is not credible that we can take a full portfolio in a full country. However, what we are presenting to you here are not dreams but things that we are negotiating and that could close at any moment. So I repeat – there are a lot of majors leaving Africa and putting fields for sale or even returning them to the government. We have a prudent approach not to engage in mega-deals where the discussions may last 2-3 years and then fail. Instead we are negotiating multiple deals between 3-10,000 barrels which can be completed to contract signing within weeks.
2. How will Zenith finance these acquisitions as we are talking about big numbers?
Often the easiest way to do this is to issue shares but more and more we are trying other products. The bond activities are doing well (pure debt without any equity component) and we are developing it by seeking ratings which will be renewed in the next 6 weeks. At the moment we have a B- rating but we expect that this will be changed upwards especially with the new oil price.
We also have pre-financing activities – for the sale of future production. This is quite complex to do but we are progressing with it. Also there is general financial products of innovation such as Islamic finance which we are looking into. So we are always looking for different options to mean that we do not have to issue equity. Although we do have to sometimes print shares we are trying to do this less often and we believe that the new financial instruments that we are developing, especially in light of the money received from oil sales can replace equity issues.
3. Gas to power – could you give more information as to your vision of gas-to-power activities in Africa?
In Africa there is still a lot of gas being flared despite the rulings of governments. However when an oil company has nothing to do with gas then the only thing to do is to flare it. This is the situation in most countries in Africa. Our plan is to set up small gas to electricity plants like the ones that we have in Italy. The government are tremendously interested and positive. The realisation of this has been slow because it does not make a lot of money for local interests but it is in demand from the local communities and we do think that over time this will start to take off in the 2-3 countries that we are visiting regularly.
Strategically, in European capitals such as Paris, Amsterdam and London there is a frenzy to exit oil and gas activities by the majors – trying to improve their image and move from fossil fuels to green energy by divesting assets. In this strategy they have to find a buyer for these assets. If the assets are very complex and large (100,000 bopd) then they will not engage in discussions with Zenith as we do not have the financial resources to take over the field but all of the rest of the portfolio especially in certain large countries like Nigeria are made from a compendium of medium producing fields of 20/25/30,000 bopd. These are the target of our acquisitions as these fields can be sold not as part of a portfolio but individually so that will permit us to participate (sometime alone and sometimes with local partners) in the acquisition of these fields. The target that we have set ourselves of 20,000 barrels can therefor be met and surpassed in one go if the right field is purchased.
There are a lot of these types of opportunities available but we do have to create a perception that Zenith are able to run this type of field so the first time that we get a field that is between 6-10,000 barrels then it will be a very strong proof of concept and abilities that will permit us to enter other negotiations.
Sometimes shareholders alert us when a major is leaving a country and wants to divest it’s entire portfolio there but it is not credible that we can take a full portfolio in a full country. However, what we are presenting to you here are not dreams but things that we are negotiating and that could close at any moment. So I repeat – there are a lot of majors leaving Africa and putting fields for sale or even returning them to the government. We have a prudent approach not to engage in mega-deals where the discussions may last 2-3 years and then fail. Instead we are negotiating multiple deals between 3-10,000 barrels which can be completed to contract signing within weeks.
2. How will Zenith finance these acquisitions as we are talking about big numbers?
Often the easiest way to do this is to issue shares but more and more we are trying other products. The bond activities are doing well (pure debt without any equity component) and we are developing it by seeking ratings which will be renewed in the next 6 weeks. At the moment we have a B- rating but we expect that this will be changed upwards especially with the new oil price.
We also have pre-financing activities – for the sale of future production. This is quite complex to do but we are progressing with it. Also there is general financial products of innovation such as Islamic finance which we are looking into. So we are always looking for different options to mean that we do not have to issue equity. Although we do have to sometimes print shares we are trying to do this less often and we believe that the new financial instruments that we are developing, especially in light of the money received from oil sales can replace equity issues.
3. Gas to power – could you give more information as to your vision of gas-to-power activities in Africa?
In Africa there is still a lot of gas being flared despite the rulings of governments. However when an oil company has nothing to do with gas then the only thing to do is to flare it. This is the situation in most countries in Africa. Our plan is to set up small gas to electricity plants like the ones that we have in Italy. The government are tremendously interested and positive. The realisation of this has been slow because it does not make a lot of money for local interests but it is in demand from the local communities and we do think that over time this will start to take off in the 2-3 countries that we are visiting regularly.
MarketGunsling
12.07.2021 kl 16:55
1674
4. Tunisia – The plans to drill Robana 3. When can shareholders expect operations to begin and what expectatiosn they should have?
It is the first capex activity we are doing in Tunisia. It is a 100% owned field without any partners which means that we can go quickly. We have just appointed a new production and technical director and we only acquired the field on May 22nd so we are going very quickly. We can expect to start any time between 15th August and 15th September.
The Robana field is of small dimension but a steady reservoir with minimal decline and although it is an island it has good transportation links and we have no difficulties to produce and then export the oil. Our three fields (Ezzaouia, Robbana and El Bibane) are located very close to each other and the blend that results from the mix of oil and condensates produces a blend called Ezzaoiua on the international markets which has an API of between 42-43 so it is very attractive for Mediterranean refineries.
Sidi El Kilani will produce a light sweet oil which is the most common and well known oil in Tunisai and is in demand. So with all four of our fields we have the ability to make quick interventions when we control them (ie the SLK deal goes through) and then develop production quite easily as there is infrastructure and the country is not too big.
5. Could you give more information of the El Bibane development program as that appears to have huge potential for 500-600bopd. In near term production?
El Bibane Is a very critical field for us as will be the first field where we are the full 100% operator of an offshore field and this will make us almost unique in the London and Oslo markets for a company of our size. So let us have the time to get used to operating the field first and only then will we look at re-entering one of the shut-in wells which are meant to produce 600 bopd minimum. We have to walk before we can run when it comes to offshore so we need a little bit more time before announcing the start of an offshore operation. I would add that this will be done in parallel with the Tilapia drilling as soon as we crystalise the license in Congo.
6. Shareholders have pointed out that the company lacks analyst coverage. Is there any progress on changing this?
We have made a lot of effort to do this. We have made attempts in Norway but without any success as the majority of the research houses are part of top brokers who are only interested in covering companies wit a 700-800million NOK market cap. The market in London is more varied and we are discussing with high quality brokers in London to cover us with research.
This research is very important for three reasons: It illustrates in an independent way that the company is undervalued; the fact we have very important reserves; the fact that we have the possibility to acquire additional assets in the short term. We hope to be able to announce an English analyst soon and we are also in discussions with a French-speaking research house about Zenith.
These will help reset the target value of the company. When I see the blogs in England and Norway I see people talking about a share price of 2-3p and 20-25 NOK but I would say that the true value of Zenith is much higher and can only be assessed by an independent analyst who will be able to make a peer-comparison. Zenith is not only undervalued in absolute terms but also in comparison terms. There are companies who have much higher prices than us who represent less potential than us in Africa.
We will communicate our reserves report soon as it is nearly ready and when it is public this will allow the research houses to comment on the size and the value of these reserves.
It is the first capex activity we are doing in Tunisia. It is a 100% owned field without any partners which means that we can go quickly. We have just appointed a new production and technical director and we only acquired the field on May 22nd so we are going very quickly. We can expect to start any time between 15th August and 15th September.
The Robana field is of small dimension but a steady reservoir with minimal decline and although it is an island it has good transportation links and we have no difficulties to produce and then export the oil. Our three fields (Ezzaouia, Robbana and El Bibane) are located very close to each other and the blend that results from the mix of oil and condensates produces a blend called Ezzaoiua on the international markets which has an API of between 42-43 so it is very attractive for Mediterranean refineries.
Sidi El Kilani will produce a light sweet oil which is the most common and well known oil in Tunisai and is in demand. So with all four of our fields we have the ability to make quick interventions when we control them (ie the SLK deal goes through) and then develop production quite easily as there is infrastructure and the country is not too big.
5. Could you give more information of the El Bibane development program as that appears to have huge potential for 500-600bopd. In near term production?
El Bibane Is a very critical field for us as will be the first field where we are the full 100% operator of an offshore field and this will make us almost unique in the London and Oslo markets for a company of our size. So let us have the time to get used to operating the field first and only then will we look at re-entering one of the shut-in wells which are meant to produce 600 bopd minimum. We have to walk before we can run when it comes to offshore so we need a little bit more time before announcing the start of an offshore operation. I would add that this will be done in parallel with the Tilapia drilling as soon as we crystalise the license in Congo.
6. Shareholders have pointed out that the company lacks analyst coverage. Is there any progress on changing this?
We have made a lot of effort to do this. We have made attempts in Norway but without any success as the majority of the research houses are part of top brokers who are only interested in covering companies wit a 700-800million NOK market cap. The market in London is more varied and we are discussing with high quality brokers in London to cover us with research.
This research is very important for three reasons: It illustrates in an independent way that the company is undervalued; the fact we have very important reserves; the fact that we have the possibility to acquire additional assets in the short term. We hope to be able to announce an English analyst soon and we are also in discussions with a French-speaking research house about Zenith.
These will help reset the target value of the company. When I see the blogs in England and Norway I see people talking about a share price of 2-3p and 20-25 NOK but I would say that the true value of Zenith is much higher and can only be assessed by an independent analyst who will be able to make a peer-comparison. Zenith is not only undervalued in absolute terms but also in comparison terms. There are companies who have much higher prices than us who represent less potential than us in Africa.
We will communicate our reserves report soon as it is nearly ready and when it is public this will allow the research houses to comment on the size and the value of these reserves.
MarketGunsling
12.07.2021 kl 16:56
1673
7. What is the reasons for the fact that Zenith is so undervalued?
There are many companies that have fractional or no production that have values much higher than Zenith and in the Norwegian market there are very few listed oil and gas companies but those that are listed are many multiples of Zeniths size and have productions which are much larger – but the gap between Zenith and these companies is still too large. How do you see Zenith fulfilling its potential in terms of valuation?
Firstly we have to look at the history of our company. We arrived in Oslo which is generally our most liquid market only in 2018. Since then, our stock has been in limbo for a bit when we started to become unhappy with the geology of our assets in Azerbaijan. After this, Covid came and the oil price collapsed down to $14 for Brnet in April 2020. This had a tremendous affect on companies in Lodnon and Oslo. Then we had the delays in Tilapia and misinformation distributed by company enemies which have held the stock back and prevented focus on our success eventually in Congo. Some of these people have already been brought to court and condemned and the others will follow the same path. There is also the fact that people bought at a low price and then sold out for a profit of 350%. So we have to avoid the fact that people leave Zenith because they do not see the imminent results of all our work. I have not spent a lot of time analysing competitors behaviours in Africa but I cannot believe that they have achieved things there quicker than us. Also with many of our competitors they are not the operators and so they are just passengers in the train whereas Zenith is actually the driver. This is much harder and slower to achieve than just being a farm-in partner. So there is an underestimate of our value which can only be rectified by 2-3 research houses covering the value properly. But when this is done I hope that the share price will rise up to a level that represents its real value.
As soon as Zenith gives proof of concept and fully completes its acquisitions as well as showing operational success in Robana then the gap between what the share price should be and the share price is will narrow dramatically. Zenith needs to prove itself to the market in order to reach its true potential.
8. Why does Zenith not publish a list of shareholders on its website?
Not by choice but through history we are a Canadian company with a listing in London and Oslo. Because we have these three markets of shareholders and we have been advised by our lawyers that just to present a list of holders in Norway would be misleading as the largest Norwegian shareholder may not be the largest global shareholder. So we cannot do this. It is not us not trying to be transparent but we are advised by our advisors not to do this.
The company has an obligation to issue a news release if anybody owns more than 5%. However, expecting that zenith gives the normal Norwegian VPS list on the website like other Norwegian companies would be wrong as there are shareholdings in other markets which would not appear on that list.
9. What can shareholders expect in terms if key highlights and flash points of value creation in the next month or two before we do the next conference call?
1. Zentih is engaged in a variety of negotiations with the intention and the ability to close in the near future. This is both for known deals like Tilapia and Tunisia and also for new deals. We are very active in making negotiations to close, announce and grow the company. All of these deals can happen and we are just waiting on the speed of the counterparties as these are big organisations and governments that move at a slower speed than we do.
2. Part of these deals are already known to our shareholders (presumably he is talking here about Tilapia and Sidi El Kilani) and these deals are going to happen.
3. In the new portion of deals (which we cannot talk about in detail due to rules on market confidentiality) we are allowed to say that we are going for bigger fish. We have demonstrated our technical abilities to produce and finance production in Tunisia and we are now able to discuss bigger deals. On top of this in Nigeria specifically small 200bopd deals do not exist and in Nigeria we are looking for deals of a dimension that, if realised, would bring our stock something like 10-15 times the current price. Timing however, is at the leisure of the vendors and the regulators but we are very persistent and we hope that the counterparties will close the deal if only from their own exhaustion.
There are many companies that have fractional or no production that have values much higher than Zenith and in the Norwegian market there are very few listed oil and gas companies but those that are listed are many multiples of Zeniths size and have productions which are much larger – but the gap between Zenith and these companies is still too large. How do you see Zenith fulfilling its potential in terms of valuation?
Firstly we have to look at the history of our company. We arrived in Oslo which is generally our most liquid market only in 2018. Since then, our stock has been in limbo for a bit when we started to become unhappy with the geology of our assets in Azerbaijan. After this, Covid came and the oil price collapsed down to $14 for Brnet in April 2020. This had a tremendous affect on companies in Lodnon and Oslo. Then we had the delays in Tilapia and misinformation distributed by company enemies which have held the stock back and prevented focus on our success eventually in Congo. Some of these people have already been brought to court and condemned and the others will follow the same path. There is also the fact that people bought at a low price and then sold out for a profit of 350%. So we have to avoid the fact that people leave Zenith because they do not see the imminent results of all our work. I have not spent a lot of time analysing competitors behaviours in Africa but I cannot believe that they have achieved things there quicker than us. Also with many of our competitors they are not the operators and so they are just passengers in the train whereas Zenith is actually the driver. This is much harder and slower to achieve than just being a farm-in partner. So there is an underestimate of our value which can only be rectified by 2-3 research houses covering the value properly. But when this is done I hope that the share price will rise up to a level that represents its real value.
As soon as Zenith gives proof of concept and fully completes its acquisitions as well as showing operational success in Robana then the gap between what the share price should be and the share price is will narrow dramatically. Zenith needs to prove itself to the market in order to reach its true potential.
8. Why does Zenith not publish a list of shareholders on its website?
Not by choice but through history we are a Canadian company with a listing in London and Oslo. Because we have these three markets of shareholders and we have been advised by our lawyers that just to present a list of holders in Norway would be misleading as the largest Norwegian shareholder may not be the largest global shareholder. So we cannot do this. It is not us not trying to be transparent but we are advised by our advisors not to do this.
The company has an obligation to issue a news release if anybody owns more than 5%. However, expecting that zenith gives the normal Norwegian VPS list on the website like other Norwegian companies would be wrong as there are shareholdings in other markets which would not appear on that list.
9. What can shareholders expect in terms if key highlights and flash points of value creation in the next month or two before we do the next conference call?
1. Zentih is engaged in a variety of negotiations with the intention and the ability to close in the near future. This is both for known deals like Tilapia and Tunisia and also for new deals. We are very active in making negotiations to close, announce and grow the company. All of these deals can happen and we are just waiting on the speed of the counterparties as these are big organisations and governments that move at a slower speed than we do.
2. Part of these deals are already known to our shareholders (presumably he is talking here about Tilapia and Sidi El Kilani) and these deals are going to happen.
3. In the new portion of deals (which we cannot talk about in detail due to rules on market confidentiality) we are allowed to say that we are going for bigger fish. We have demonstrated our technical abilities to produce and finance production in Tunisia and we are now able to discuss bigger deals. On top of this in Nigeria specifically small 200bopd deals do not exist and in Nigeria we are looking for deals of a dimension that, if realised, would bring our stock something like 10-15 times the current price. Timing however, is at the leisure of the vendors and the regulators but we are very persistent and we hope that the counterparties will close the deal if only from their own exhaustion.
Gullhaugen
12.07.2021 kl 18:01
1569
Hva ble informert om Tilapia ?? Virker som denne dysses ned/ tåkelegges....hmmmm i alt annet nå. Kursen i Zena handler kun om Tilapia. Kommer denne eller kommer denne ikke
Redigert 12.07.2021 kl 18:26
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Barneskirenn
12.07.2021 kl 19:06
1496
Gullhaugen. Kan du ikke spørre regjeringen i Congo? Gjerne send meg svaret.
Redigert 12.07.2021 kl 19:06
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Herman*
12.07.2021 kl 19:29
1439
Great work!!
Words matter, and AC is putting himself and the company in a very difficult situation if he does not deliver in the not too distant future. I understand that he has to show a level of optimism in periods where there is not much of a newsflow, but going this far either shows that he has balls of steel or that he will stop at nothing in order deflect the attention away from the lack of progress in Congo.
I think we should chew on this for a while:
"However, what we are presenting to you here are not dreams but things that we are negotiating and that could close at any moment. So I repeat – there are a lot of majors leaving Africa and putting fields for sale or even returning them to the government. We have a prudent approach not to engage in mega-deals where the discussions may last 2-3 years and then fail. Instead we are negotiating multiple deals between 3-10,000 barrels which can be completed to contract signing within weeks".
Words matter, and AC is putting himself and the company in a very difficult situation if he does not deliver in the not too distant future. I understand that he has to show a level of optimism in periods where there is not much of a newsflow, but going this far either shows that he has balls of steel or that he will stop at nothing in order deflect the attention away from the lack of progress in Congo.
I think we should chew on this for a while:
"However, what we are presenting to you here are not dreams but things that we are negotiating and that could close at any moment. So I repeat – there are a lot of majors leaving Africa and putting fields for sale or even returning them to the government. We have a prudent approach not to engage in mega-deals where the discussions may last 2-3 years and then fail. Instead we are negotiating multiple deals between 3-10,000 barrels which can be completed to contract signing within weeks".
Redigert 12.07.2021 kl 19:30
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MarketGunsling
13.07.2021 kl 11:23
1181
The bit on Tilapia was here:
"The election period has taken away a lot of ministerial management resources and time because they were all caught up in the election but there is now a new oil minister and we have met him and his management team thanks to the very good reputation of our new country manager – who is somebody who has worked in both government and private oil companies in Tunisia for the last 7 years. He joined us in March and thanks to him things are moving quickly; there is mutual respect between us and the government and we are doing everything that the ministry wants us to do in order to be awarded the license. I expect the timescale (of the license granting) to be reasonably short but the timescale reasonably short in Africa has various meanings."
He then confirmed in his roundup that "Part of these deals are already known to our shareholders (presumably he is talking here about Tilapia and Sidi El Kilani) and these deals are going to happen."
So in short - he has said that he is 100% certain that the Tilapia license is going to be granted and granted reasonably shortly, but it is just exactly how shortly.
"The election period has taken away a lot of ministerial management resources and time because they were all caught up in the election but there is now a new oil minister and we have met him and his management team thanks to the very good reputation of our new country manager – who is somebody who has worked in both government and private oil companies in Tunisia for the last 7 years. He joined us in March and thanks to him things are moving quickly; there is mutual respect between us and the government and we are doing everything that the ministry wants us to do in order to be awarded the license. I expect the timescale (of the license granting) to be reasonably short but the timescale reasonably short in Africa has various meanings."
He then confirmed in his roundup that "Part of these deals are already known to our shareholders (presumably he is talking here about Tilapia and Sidi El Kilani) and these deals are going to happen."
So in short - he has said that he is 100% certain that the Tilapia license is going to be granted and granted reasonably shortly, but it is just exactly how shortly.