TIDMZEN
RNS Number : 1626J
Zenith Energy Ltd
28 March 2018
March 28, 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")
Signing of Exclusivity and Option Agreement to purchase an oil
production asset in Indonesia
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
announce that it has entered into a binding exclusivity and an
option to purchase agreement (the "Agreement") for the possible
acquisition of an oil production asset located in Indonesia (the
"Proposed Acquisition").
Highlights
-- The Proposed Acquisition envisages Zenith acquiring a 100% working interest in an oil
production licence comprising two onshore blocks, with a
combined total acreage
covering approximately 65 sq. kilometres.
-- Existing production in excess of 1,000 barrels of oil per day
transported by pipeline directly into the national oil sales system
with a reported all-in average production cost of US$18 per
barrel.
-- The oilfields are located in a prolific oil and gas basin
with a proven petroleum system. At present, only one of the two
oilfields is producing. The second oilfield is expected to be
capable of significant production by drilling new wells and
performing workovers on existing wells.
-- Drilling activities can be performed at relatively low-cost
and without significant delay. The average total depth of
production wells in the licence area of the Proposed Acquisition is
between 350 to 750 metres.
-- The approved development programme for the licence area,
involving the drilling of new wells and the introduction of new oil
production technology, is expected to double current production
from the Proposed Acquisition by 2020.
-- 2D seismic dataset covering key oil production locations.
Agreement Summary
The Agreement includes the following key elements:
-- The Company has until April 30, 2018 to undertake its due diligence on the Proposed
Acquisition (the "Due Diligence").
-- After completing the Due Diligence, the Company has a period
of 15 days to choose to exercise an option to complete the Proposed
Acquisition (the "Option") for a total consideration of
US$6,600,000 (the "Consideration"). The Consideration shall be
payable as to 50 per cent., (US$3,300,000), within 7 working days
of exercising the Option (the "First Payment"), and the balance,
(US$3,300,000), payable within 3 months of the First Payment.
-- The Company has exclusive rights to complete the Proposed
Acquisition for a period of 90 days from March 23, 2018, whether or
not it decides to exercise the Option to allow for the terms of the
Proposed Acquisition to be renegotiated following the Due
Diligence.
-- Andrea Cattaneo, the Chief Executive Officer and President of
the Company, has agreed to make a down payment of US$100,000 by
April 15, 2018 (the "Deposit"). If the Company exercises the
Option, then the Deposit will be offset against the First Payment
and the Company will reimburse Mr Cattaneo the US$100,000. In the
event that the during the Due Diligence the Company finds negative
discrepancies greater than 5% of the book values stated in the
Proposed Acquisition's financial statements dated February 28, 2018
(the "Discrepancies"), then the Deposit shall be refunded to Mr
Cattaneo. If the Company decides not to exercise the Option for any
other reason during the Due Diligence, then Mr Cattaneo will
forfeit the Deposit.
The Due Diligence encompasses the legal, accounting, petroleum
and fiscal aspects of the Proposed Acquisition.
The Company will provide an update regarding the progress of the
Proposed Acquisition once the Due Diligence has been completed. The
Proposed Acquisition remains at an early stage and there can be no
guarantee that it will be successfully completed. Completion of the
Proposed Acquisition remains conditional on, inter alia,
satisfactory completion of the Due-Diligence, the entering into a
share purchase agreement and financing of the Consideration.
Zenith is considering a number of funding options for the
Consideration including debt and equity. The Company has commenced
work on a prospectus with a view to undertaking an issue of new
common shares of no par value ("Common Shares"). This process
remains at an early stage and the amount to be raised, use of
proceeds and the price at which any Common Shares may be issued is
not concluded at this stage.
Completion of the Proposed Acquisition may be subject to
regulatory approval from the TSXV.
Andrea Cattaneo, Chief Executive Officer of Zenith,
commented:
"The Company has clearly stated its intention to identify value
accretive acquisitions that will enable Zenith to enrich its
portfolio and rapidly accelerate its development. Like our existing
asset in Azerbaijan, the proposed acquisition has very strong
growth potential and generates profit from its sizeable existing
low-cost oil production. In addition, the geology is less
challenging, and the average well depth is much reduced compared to
what we have in other assets, meaning that our operational
expenditure for workovers and drilling new wells will be
significantly smaller. The Proposed Acquisition will complement our
long-term field development programme underway in Azerbaijan, where
our large reserves will require more time and investment to be
produced, and which remains our primary operational focus.
I look forward to updating the market on our progress with this
exciting opportunity."
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
Daniel Stewart & Company Plc - (Joint Broker)
Robert Emmet- Corporate Broking
Nikhil Varghese- Corporate Finance
Tel: + 44 (0) 207 776 6550
Optiva Securities - (Joint Broker)
Christian Dennis
Tel: + 44 (0) 203 137 1903
Allenby Capital Limited - (Financial Adviser)
Nick Harriss
Nick Athanas
Tel: + 44 (0) 203 328 5656
Notes to Editors:
Zenith Energy Ltd. is an international oil and gas production
company, dual listed on the Toronto Stock Exchange and London Stock
Exchange.
The Company operates the largest onshore oilfield in Azerbaijan
following the signing of a 25-year REDPSA, (Rehabilitation,
Exploration, Development and Production Sharing Agreement), with
SOCAR, State Oil Company of the Azerbaijan Republic, in 2016.
The Company's primary focus is the development of its Azerbaijan
operations by leveraging its technical expertise and financial
resources to maximise low-cost oil production via a systematic
field rehabilitation programme intended to achieve significantly
increased revenue. Zenith also operates, or has working interests
in, a number of natural gas production concessions in Italy. The
Company's Italian operations produce natural gas, natural gas
condensate and electricity.
Zenith's development strategy is to identify and rapidly seize
value-accretive hydrocarbon production opportunities in the onshore
oil & gas sector. The Company's Board of Directors and senior
management team have the experience and technical expertise to
develop the Company successfully.
To find out more, visit www.zenithenergy.ca or follow Zenith on
Twitter @zenithenergyltd
This information is provided by RNS
The company news service from the London Stock Exchange
END
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