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Signing of SPA for acquisition of OMV Yemen

January 3, 2023

ZENITH ENERGY LTD.

("Zenith" or the "Company")

Signing of SPA for acquisition of OMV Yemen

Zenith Energy Ltd. (LSE: ZEN; OSE: ZENA), the energy company with proven revenue generating production, exploration and development assets in Africa and Europe, is pleased to announce that a company in which it holds a 49% interest, Zenith Energy Netherlands B.V. (“Zenith Netherlands”) has entered into a share purchase agreement (“SPA”) with OMV Exploration and Production GmbH (“OMV” or the “Seller”) to acquire 100% of the outstanding share capital of OMV (Yemen Block S 2) Exploration GmbH, OMV Jardan Block 3 Upstream GmbH and OMV Block 70 Upstream GmbH (collectively “OMV Yemen”), which are all companies incorporated and existing under the laws of Austria.

About OMV Yemen

Production Assets

Block S-2

OMV Yemen is one of the largest oil producers in the country with a highly prospective portfolio including a balance of immediate production, as well as a balance of short and long-term growth opportunities.

Block S-2 was discovered in 1992 by Oxy and declared commercial in 2005 by OMV following its acquisition of Preussag Energie International in 2003.

OMV (Yemen Block S 2) Exploration GmbH operates and holds a 44% working interest, with partners including SINOPEC (37.5% working interest), YOGC (12.5% working interest) and YRL (6% working interest).

OMV Yemen holds a financial interest of 57.14% in production from Block S-2.

Gross production during 2021 averaged approximately 7,400 barrels of oil per day (“BOPD”) and the field remains in the ‘primary depletion’ stage with highly material unexploited potential.

Historical production from S-2 was maintained at approximately 15,000 BOPD through sustained drilling activity until 2015.

No new wells have been drilled since 2015 when force majeure was declared due to regional instability and production was temporarily suspended.

Production activities were resumed in 2018 at an average gross rate of 17,500 barrels of oil per day and have declined, in view of no new drilling activities, to a gross average of approximately 6,000 barrels of oil per day as of January 1, 2022.

Production costs of approximately US$28 per barrel.

Gross 1P Reserves (Proved) have been estimated as 13.15 million barrels of oil using the independent DeGolyer & McNaughton reserves evaluation dated December 31, 2017, as reference and subtracting confirmed oil production during the period 2018-2021.

Gross 2P Reserves (Proved + Probable) have been estimated as 30.74 million barrels of oil using the independent DeGolyer & McNaughton reserves evaluation dated December 31, 2017, as reference and subtracting confirmed oil production during the period 2018-2021.

Crude oil production is transported by truck 80km to Block 4, then 200km by pipeline for export at the Al Nushaima port. Construction of a new central processing facility (“CPF”) has been largely completed with a storage capacity of approx. 100,000 barrels of crude oil.

Strong management team and highly competent personnel with over 300 staff.

A number of ready to execute near-term growth opportunities are available, by way of an already formulated workover and a phased infill drilling and sidetrack programme for six new wells, to enable production to potentially return to 15,000 BOPD.

Exploration Assets

OMV Yemen holds a balanced exploration portfolio comprising Block 3 (34% working interest) and Block 70 (19.24% working interest).

Prospects range from easily monetised low-risk exploration to high-risk, high-reward exploration.

Current exploration activities have identified significant potential near-term development opportunities.

Block 3

OMV Jardan Block 3 Upstream GmbH holds a financial interest of 36.17% in Block 3.
Gross oil resources have been estimated at about 60 million barrels unrisked by OMV.
1035 km2 3D and 2,100 km 2D seismic is held in respect of Block 3.
No remaining work commitments for Block 3.



Block 70

OMV Block 70 Upstream GmbH holds a financial interest of 20.25% in Block 70.
Gross oil resources have been estimated at about 70 million barrels unrisked by OMV.
1,200 km 2D seismic (410 km reprocessed) is held in respect of Block 70.
No remaining work commitments for Block 70.

Natural Gas Production Potential

Significant associated gas volumes have been recorded with oil production across OMV Yemen’s portfolio giving evidence of substantial natural gas production potential from S-2, Block 3, and Block 70.

A gas discovery has been made in Block 3, representing a major opportunity for the monetisation of OMV’s Yemen natural gas production, all of which is currently flared.

Several gas production offtake options are already under discussion including the possibility of a connection being made to a local power station or to Yemen LNG.

Zenith may also explore the construction of a ‘Gas-to-Power’(“GTP”) plant, as successfully carried out in Italy, to commercialize gas production and provide additional electricity supply to the local economy.

Gross total recoverable gas volumes have been estimated by OMV, across the OMV Yemen portfolio, to be approximately 571 BSCF.

Andrea Cattaneo, Chief Executive of Zenith, commented:

“The acquisition of OMV Yemen represents a very significant milestone for Zenith Energy.

The existing production from the asset and, more importantly, the near-term future oil and natural gas production indicated by the size of the reserves, position Zenith on an extremely exciting organic growth trajectory.

I take the chance to thank OMV and its management for its cooperation in this transaction. Our technical teams shall continue to work closely together as we enter the handover phase and welcome our new colleagues in Yemen to the Zenith family.

Finally, we look forward with enthusiasm to establishing ourselves in Yemen and contributing to the prosperity of the local economy. It is our belief that the country has extraordinary economic potential, especially in respect of its oil and gas industry, and we shall seek to maximise our relationship with the local authorities to achieve our development objectives.”


Terms of the SPA

Under the terms of the SPA, Zenith Netherlands will, subject to the conditions set forth in the SPA, acquire 100% of OMV’s shares in OMV Yemen at completion for a total consideration of US$ 21,619,000 (the “Base Purchase Price”).
Zenith Netherlands has paid a deposit of US$4,323,800 which shall be credited by the Seller to Zenith Netherlands as part of the Purchase Price upon completion.

The obligations set out in the SPA of the Seller and Zenith Netherlands to consummate the sale and purchase of the shares in OMV Yemen at completion are subject to, inter alia, the approval of the authorities in Yemen, and the approval by the Federal Ministry of the Republic of Austria for Labour and Economy in respect of the transfer of shares from OMV to Zenith Netherlands (“Completion”). The SPA has a longstop date of nine months from the date of signing.

A Transitional Services Agreement (“TSA”) may be signed between OMV and Zenith Netherlands at or around completion to govern certain services to be provided by OMV or its affiliates to Zenith Netherlands after completion if OMV and Zenith Netherlands determine that such agreement shall be required to optimise the handover of OMV Yemen.
About Yemen

• Yemen is located on the southern end of the Arabian Peninsula, sharing a border with Saudi Arabia and Oman.

• The country has significant oil and natural gas reserves sufficient for both domestic demand and international exports, however, it is not currently a major hydrocarbon producer relative to several other Middle Eastern countries.

• Yemen sits on proved hydrocarbon reserves of c. 3 billion barrels of crude oil and 17 trillion cubic feet of gas (US Energy Information Administration). Its main crude export grade is light sweet Masila, with an API gravity of 34.10.

• Until 2009, Yemen reinjected most of its gas production to aid in oil recovery, but has since become an LNG exporter, with the government aiming to increase the use of natural gas in many sectors, including in electricity generation.

-ENDS-


Further Information:

Zenith Energy Ltd

Andrea Cattaneo, Chief Executive Officer
Tel: +1 (587) 315 9031
E: info@zenithenergy.ca

Wow looking big!!!

Gross production during 2021 averaged approximately 7,400 barrels of oil per day ("BOPD") and the field remains in the 'primary depletion' stage with highly material unexploited potential.

" Historical production from S-2 was maintained at approximately 15,000 BOPD through sustained drilling activity until 2015.

15000 bopd!!!!

Betyder det så vi (Zenith) ejer 49% af den handel da vi kun har 49% af aktierne i zenith Netherlands eller hvordan hænger hele den struktur sammen ?

This asset looks twice the size of Tilapia, 60 million barrels of oil.

buys flooding in

+0.008 (+7.84%)

The stock should be re-rated by the end of this week to at least 50% more than the current share price.

Økte med 2 mill til. ouf. Hadde bestemt meg for ikke å øke, men klarte ikke fristelsen:-)

dette er fantastiske nyheter 60 million!

Det betyr at Zenith netherlands eier 100% av OMV Yemen, som igjen eier 57.14 av block s-2. Block S-2 produserer slik jeg forstår det idag 6000 fat, det vil si at zenith netherlands eier 3428 av disse, av fatene som tilfaller Zenith netherlands eier Zenith Energy 49 prosent, dvs. rundt 1700 bopd netto til Zenith.

Tak. Tænkte nok det var sådan det var skruet sammen.

BLOCK 3 60 Million barrels + BLOCK 70 Million barrels both Unrisked.

+0.0148 (+14.51%)

farvel 10øres aksje. :-)

aksjekursen bør nå 3 års høyeste

Merkelig at enkelte finner seg i med å gi fra seg aksjer på dette nivået😅😅

Jeg ser bare mange kjøp

+0.016 (+15.69%)

Ja. Å de kjøpene betyr at noen har gitt fra seg litt for billig😅

Noen er vel redd for hvordan AC skal hente sin del av kjøpesummen. Blir det ny emi? Eller finnes det andre muligheter?

Må vel bare vaske ut daytraderene

Ble jo solgt olje i 2022 samt hentet nermere 10mill usd i lån, var jo lenge et spørsmål om hva de pengene skulle gå til. Selv tror jeg de går i denne dealen!🙌👍

Calebs hvor er du? Vi savner oppgulpene dine allerede ;)

Wait until next 3 week 2 more things are adding. 6 week before new IC.
It's 3 times bigger than Tilapia II in 2P reserve and current production 1700bopd to Zenith, now zenith producing more than 2000bpod now. With Tunisia and drilling in Yemen will reach 5000 bood within year. Congo and Benin is Bonus

selgerne blir ryddet ut av kjøperne. Jeg forventer en stigning på 25 % ved slutten av handelsdagen.

18 million shares traded

With 2p reserve it is crossesd valuation kr1.

bevares nå er det snart tilbake i minus....hva er dette?? short algoen som krysser nedover? Denne må bort asap.

Er jo opp 10 prosent. Mange som sikkert har ventet på å selge seg ut. Når de er vekke starter oppturen. Blir spennende å følge med her. Dette kan virkelig være det store for Zenith. Prisen var meget hyggelig. Selg ikke nå da. Er jo her det starter!!!!!

Hvilke oppgulp? Var jo direkte translated det der.

Tydelig att ikke alle er like excited att Zenith får olje i yemen.

Er jo ganske sprø disse folka ser borte 🙈

Lukter emisjon her nå, spent å se om alle får en bit av kaka.

Er du inne Calebs? Ser lyst ut for Zenith nå. Var en veldig fin avtale som gjør risken kraftig redusert. Smart trekk av AC. Dette blir jo nesten umiddelbart inntekter også,!kortsiktig lån fremfor emisjon eller?

Verken inne eller short.

Håper for din del att dene avtalen blir en gamechanger.

Blir spennende å følge med i yemen de neste mnd 👍

Game changing news over the coming days and weeks the price will follow suit and keep rising

Dette oppgulpet. Velkommen tilbake ;) Ingen tror på aksjer uten noen gode baissere

Det var en ny investeringsstrategi. Er sikker på du kan finne flere caser der det er baissere. Du var vel en av de som investete i lavo? Var en del baissere der også 😆

Just under 30 million traded, the interest is back and I expect the price to continuously rise to deserved levels.

Ja interessen har tatt seg opp ett hakk, slik som den alltid gjør på news.

Er vel en del papirarbeid her også 👍
Regner med denne også tar litt tid, men forhåpentligvis ikke tlp2 v2.

Traders being cleared out before the next leg up, I am expecting another big run into the week.

I alle typer oljemygger er det slike meldinger som gjør at investorer bør posisjonere seg.
Når fuglene på taket begynner å komme ned en etter en så er mye oppgang alt tatt ut før en RNS da det i zenith som alle andre selskaper alltid er noen som vet mer enn andre samt det blir trangt inn døra når RNS foreligger.

Its the thin line between love and hates so lat just be little bit cushioned and not gat overoptimistic. Its great news company has don great work but now we are depending on the others to gat things done. So now is out of our (Zeniths) hands on the mercy of bureaucracy.

Bare smårusk som har ramla ut i dag, skal du inn med volum så blir det en heftig rekyl opp mot 0.20

Agreed there should be a strong recoil into close we the stock is clearing out the traders and weak investors.

Det er bare å gjørse seg klar for en 100:1 spleis nå. Da blir det ikke like morro for short algoen å trille på aksjer. Spleis kommer folkens. dette blir meget positivt. Jeg husker at det ble gull i Borr.

Har de noen gang antydet at det er aktuelt med spleis?
Det burde vært utført forlengst.

Twitter video zenith

https://twitter.com/zenithenergyltd/status/1610613260893491202?s=46&t=vVJIMj6h0ajNzeP4hhfv0A

Har sendt AC mail i dag om akkurat det, antar han er litt mer positiv til og besvare mail nå etter yemen RNS👍

Er det lov å si at AC burde få litt fri nå fra alle aksjonerene som er så utålmodige hele tiden?

Nå skal ikke jeg hause opp noe som helst, men tenkte jeg skulle dele et lite regnestykke. Ser flere her er litt bekymret for finansiering med mer. Fra børsmeldingen ser vi at Zenith Netherlands hvor et hong kong basert selskap nylig spyttet inn penger har gått inn med et depositum på 4 323 800 dollar. Dette trekkes fra kjøpesummen på 21 619 000 dollar, da sitter vi igjen med 17 295 200 dollar. Av dette er Zenith ansvarlig for 8 474 648 dollar.

Tidligere kom vi frem til at om OMV sitter med en bruttoproduksjon på 6000 bopd så er nettoen til Zenith på rundt regnet 1700 fat. Fra børsmeldingen får vi også nyttig informasjon, produksjonskostnaden ligger på 28 dollar. Det er mange varierende anslag for oljeprisen fremover, helt umulig for meg å spå. Men jeg ser konsensus ligger på en 80-85 dollar de neste 2-3 årene.

Tar vi utgangspunkt i 80 dollar og vi har en produksjonskostnad på 28 dollar sitter vi igjen med 52 dollar før skatt. Mange her var ganske bekymret for finansieringen, men om man ser på dagens produksjon

1700 bopd * 365dager * 52 dollar = 32 000 000 Dollar.

Så får man sikkert skrive av noe av investeringen for å betale mindre skatt. Nå er ikke jeg den som er mest bevandret i bedriftslångivning men jeg tror ikke en investering som genererer 32 million dollar før skatt vil være vanskelig å finansiere om kjøpesummen er 8.5 million dollar.

Når det er sagt er det snart dags for nytt oljesalg i Tunisia så akkurat finansieringen av dette tar jeg med knusende ro.

Hvis du henter ut aksjonærlister fra 2018 og frem til i dag, så vil jeg tro du skylder meg en unnskyldning dersom du kaster meg inn i utålmodig båsen!!

Lidt skuffende dag selvom det var forventet at der ville blive solgt ud og taget gevinst for dem som købte under 10 øre.
Det sker desværre hvergang og derfor blive al opgang stoppet, desværre.
Kunne godt forvente at det fortsætter i morgen så vi kommer under 10 øre igen.
Hvis bare folk kunne holde igen med at sælge for det er ikke andet end småbeløb der får kursen ned.
Som sagt før skal der en splejs til for at stoppe dette eller opkøb af egne aktier.