With all the deals that we are waiting on at the moment, I think that it is a good time to have a recap on exactly where we are with Zenith Energy.

PRODUCTION ASSETS

We have two producing assets – Tunisia and Italy. Tunisia is producing approximately 450 bopd and at the current oil price of US$85 per barrel this is delivering a gross revenue of $14 million per annum. Assuming that there is an extraction cost of $25 per barrel then this is a net revenue of approx. US$10 million per annum.

The Italian gas to electricity sales have held up fairly steadily at about 990MWh per month and although the huge variations in the Italian electricity prices meant that in 2022 monthly revenue varied from €195,000 in May 2022 right up to €530,000 in August 2022 it seems that these assets will continue to deliver a total net revenue of approx. €3,500,000 per annum. Over the forthcoming year. So in total the existing production assets should deliver a net revenue of almost US$14 million per annum in 2023. This more than justifies the current market capitalisation of the company.

EXPLORATION/DEVELOPMENT ASSETS
On top of this we have the potential for the new assets to deliver company-changing (and more significantly to us share-price changing) news to the company once they are signed off.

CONGO

Firstly, we have Tilapia. We have been waiting on the approval of this acquisition for over two years now but IF it does come in then we will have acquired for £200,000 a 25 year license on an asset that AAOG originally paid almost £7 million for when it only had 5 years left. The license also contains a well (TLP-103C) that has already been drilled at a cost of £9.6 million (£5.4 million net to AAOG with the rest owed by SNPC) and has discovered oil across 56 meters.

We also know that AAOG messed up the original drill and that there is only a short (and cheap) sidetrack to drill with the potential for this to deliver 1,000 bopd if it is successful. Assuming that 50% of this would be net to Zenith and that the cost of production is only $10 per barrel (AAOG publicly estimated $5 per barrel so I am simply doubling that) then this could deliver a net revenue of $13.5 million per annum – instantly doubling the company’s current revenues. There was also talk by AAOG of deeper drilling that may deliver a further 3,000 bopd, so there is significant exploration upside here too. If we can get to this production level then the company would be generating 4,000 bopd (2,000 net to Zenith) and we would be looking at a net revenue of US$55 million per annum - though admittedly this is a long way into the future.

YEMEN

Secondly, we have Yemen. If the deal comes off, and I think that there is at least a 50% chance that it will then it will be massive for Zenith.

The current production rate of OMV’s Yemeni assets is 6,000 bopd with a production cost of $28 per barrel which means that at an US$85 oil price then the fields should deliver a net revenue of $342,000 PER DAY!


The financial interest to Zenith Energy Netherlands is 57.14% which means that their share should be US$195,541 per day and Zenith Energy LTD’s share should be 49% of this which is US$9,815 per day. Over the course of the year this amounts to: USD$35 million per year.


At the historical production rate of 15,000 barrels of oil per day then the financial interest to Zenith Energy Netherlands would increase to US$488,547 per day and Zenith Energy LTD’s share should be 49% of this which is US$239,888 per day. Over the course of the year this amounts to: US$87 million per year.


Assuming that the Yemeni government will take a 50% share of all profits then we are still looking at an initial revenue of US$17 million per annum (at a production rate of 6,000 bopd) and an eventual revenue of US$43.5 million per annum (assuming that we can get production back up to the 15,000 bopd level). This is also all from an initial investment of USD$10,809,500 which looks like it will be earned back in about 8-9 months of production at existing levels.

Obviously, we do not know whether the Yemen deal will come off or not but it is an absolute game-changer for the company if it does.

BENIN


Finally, we also have the potential acquisition of the Benin asset which would also be a total game-changer for the company. We know that the company announced a three month exclusivity deal to negotiate the acquisition back in January and it is a massive, massive license. It covers 551km of shallow water offshore and is already known to contain two discovered oil fields with P2 reserves totalling almost 60 million barrels and 428 BCF of P2 gas reserves.

If the company can get both oil fields producing at 2,000 bopd which is the production figure that has been achieved in the past at the Seme well then even assuming that the Benin government takes 50% of production and that production costs are US$35 per barrel then this would deliver a net revenue of US$44 million to Zenith out of the two fields.

The gas potential in Benin is obviously enormous. It is impossible to put a price on how much this could be worth on an annual basis without knowing what the production numbers could be but the current UK gas price is £1.33 per therm (US$1.62) and the license contains the equivalent of almost 4.5 billion therms so even on small production numbers this could easily be worth US$10-20 million per annum.


OVERALL

Overall, I think that Zenith is in an incredibly good place at the moment. The company is pretty much undervalued even based on existing US$14 million annual net revenues from Italy and Tunisa so there is no downside from where we are now.

Tilapia could be worth US$55 million per annum in annual net revenue.
Yemen could be worth US$43.5 million per annum in annual net revenue.
Benin could be worth US$54-64 million in annual net revenue.

We know that the acquisition of all of these assets is being worked on and if even one of them comes off then we are looking as easily being a company with a market cap (and therefore a share price) of ten to twenty times the current level. If AC can get all of them over the line then Zenith will be massive and it will be a truly extraordinary achievement.