TIDMZEN
RNS Number : 2345F
Zenith Energy Ltd
19 February 2018
February 19, 2018
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this announcement via a regulatory information
service ("RIS"), the inside information contained in this document
is now considered to be in the public domain.
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Operational Update
Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN;
TSX.V: ZEE), the international oil & gas production company
operating the largest onshore oilfield in Azerbaijan, is pleased to
provide an update on its field rehabilitation operations in
Azerbaijan.
High-impact workover of well Z-21, Zardab field
The Company confirms that the coiled tubing intervention,
announced on January 17, 2018, has successfully cleaned out the
entirety of the tubing string in well Z-21 to the depth of 3670
meters, circulating and drilling out mud and debris that had
accumulated since the well was last produced in 1988.
In addition, the coiled tubing intervention also cleaned out 18
metres of casing from 3670 metres to 3688 metres. However, due to
the small coiled tubing bit (1.875 inches) and the restricted
diameter of the tubing, the casing could not be cleaned out
further.
The Company is now preparing its A-80 workover rig to pull the
tubing string from the well. Once this is completed, it will run in
hole with a drill bit and clean out the casing to total depth, 3982
metres. The well will subsequently be put on production.
The Company expects to complete the workover of Z-21 in April
2018. Zenith will use its own resources, where possible, such as a
complete set of well control equipment including a blow-out
preventer, expected to arrive in March 2018. The use of the
Company's equipment is expected to significantly decrease the time
needed for the workovers, increase efficiency, and improve
operational safety.
High-impact workover of well Z-28, Zardab field
The Company can confirm that the wellhead leaks, announced on
December 19, 2017, have been successfully sealed. The subsequent
coiled tubing intervention to clean out the well was successful,
having cleaned out the well to a depth of 3583 meters. However, it
has been determined that the Company will have to mill out 63
metres of tubing inside the liner and then clean out an additional
298 metres of the liner to a TD of 3944 to complete the
workover.
The Company is confident that production can successfully be
achieved from well Z-28 once these operations are completed and is
formulating a plan, in consideration of the equipment to be
required for the intervention and its likely timing, starting
immediately after the completion of the Z-21 workover.
Equipment Upgrades
Zenith's A-80 workover rig, inherited from SOCAR, has recently
undergone further upgrades to increase its capabilities and enable
it to be utilised more extensively in the Company's workover
operations. The Company is in the process of fitting hydraulic
tongs to increase the pulling efficiency and speed of the rig, a
new rig floor, and installing other ancillary equipment.
The aforementioned upgrades are in addition to the comprehensive
modernisation Zenith's A-80 rig underwent in 2017 when field
rehabilitation began in Azerbaijan.
The Company received delivery of the first consignment of oil
production equipment from China in late December 2017. The order of
the equipment was announced by Zenith on August 21, 2017. The
equipment quickly cleared customs and is now being deployed in the
field.
Zenith has been advised that the second and final consignment of
Chinese oil production equipment will arrive on March 16, 2018. The
shipment will include the Company's new set of blow-out preventers
and drill pipe, as well as ancillary workover equipment.
As was announced on January 25, 2018, the Company has signed a
purchase agreement for an A-100 truck-mounted workover rig. This
was purchased using the funds raised from Zenith's UK placing
announced on January 24, 2018. The factory where the A-100 rig is
under construction is located approximately 2 hours from the
Company's field locations, enabling Zenith's operational team to
inspect progress twice a week. Delivery of the rig is expected in
late April 2018.
Electrical Submersible Pump ("ESP") Upgrade Programme
As announced by Zenith on August 22, 2017, the Company's ESP
upgrade programme involves the installation of latest-generation
electrical submersible pumps across the Muradkhanli and Jafarli
oilfields. The original programme had envisaged the ESP replacement
across 11 wells, however, this has now been increased to include at
least 13 wells. The purpose of the programme is to stabilise
existing production from the selected wells and lessen the
likelihood of production outages resulting from earlier generation
ESP technology.
The Company confirms that to date it has successfully installed
seven electrical submersible pumps. While this has resulted in an
uplift in production, it has also reduced production downtime that
had been observed as a recurrent problem with the previous
generation ESPs. Zenith is awaiting arrival of the remaining six
ESPs to complete the ESP programme. As announced previously,
difficulties have been encountered in the procurement of new
electrical submersible pumps from suppliers. In order to resolve
these difficulties, the Company has signed a procurement contract
with a third supplier, Novomet, a leading international supplier of
ESP technology. It is expected that all 13 ESPs will be installed
by the end of May, 2018. Zenith is continuously monitoring
production and it is likely that the number of wells included in
the ESP upgrade programme will be increased further.
Current Production Update & Production Target
The Company's current average production from its Azerbaijan
operation is approximately 350 bopd. The Company has experienced a
higher than expected natural depletion rate, in addition to the
loss of wells that had been generating significant production.
Zenith's workover programme has also been hampered by the loss of
wellbores due to uncemented casing that has collapsed in historic
wells that were primary targets of its workover programme. The
Company expects that the field rehabilitation operations in
progress, or due to begin in the near future, will result in
significant upside in daily production levels.
Despite the delays and difficulties encountered in Zenith's
field rehabilitation activities, the Company still has an initial
target of 1000 bopd. The revised timeline for reaching this
milestone is December 31, 2018.
Mike Palmer, Chief Operating Officer, Zenith Aran, the Company's
Azerbaijan-based fully owned subsidiary, commented:
"We have learned a lot about the Zardab field in our well
interventions. Almost every historical piece of information
regarding the characteristics of wells Z-21 and Z-28 did not
coincide with what we discovered in our operations. The
unreliability of the information was suspected from the outset, but
the only way of gathering information was entering each well and
learning as we went ahead. We now have a significantly improved
understanding of the potential of the Zardab field that will be
highly valuable for when we begin drilling activities. The lack of
information coupled with the fact that these wells had not been
touched for the past thirty years has certainly made our operations
more challenging. However, our view of the quality of the geology
and the opportunity presented by these wells remains unchanged. We
have the team and, increasingly, our own much better equipment to
get the job done to put these wells on production. The delays
incurred at Z-21 and Z-28 are a source of short-term disappointment
but are of little material consequence when considering the longer
term, very significant, prize at hand, and the broader picture of
our profitable oil production activities in a field with vast,
untapped oil reserves. The rest of 2018 is going to be extremely
busy and challenging. I am confident we will succeed."
For further information please contact:
Zenith Energy Ltd.
Andrea Cattaneo
Chief Executive Officer
E-mail: info@zenithenergy.ca
Tel: +1 (587) 315 9031
Vigo Communications - PR
Adviser
Patrick d'Ancona
Chris McMahon
Kate Rogucheva
Tel: +44 (0) 20 7830 9700
Beaufort Securities Limited - (Joint Broker)
Jon Belliss
Telephone: +44 (0) 207 382 8300
Daniel Stewart & Company Plc - (Joint Broker)
Robert Emmet- Corporate Broking
Nikhil Varghese- Corporate Finance
Telephone: + 44 (0) 207 776 6550
Optiva Securities - (Joint Broker)
Christian Dennis
Telephone: + 44 (0) 203 137 1903
Allenby Capital Limited - (Financial Adviser)
Nick Harriss
Nick Athanas
Telephone: + 44 (0) 203 328 5656
This information is provided by RNS
The company news service from the London Stock Exchange
END
UPDQKLBFVLFZBBE
(END) Dow Jones Newswires
February 19, 2018 02:00 ET (07:00 GMT)
Zenith Energy (LSE:ZEN)
Historical Stock Chart
From Apr 2024 to May 2024
Zenith Energy (LSE:ZEN)
Historical Stock Chart
From May 2023 to May 2024