TIDMZEN
RNS Number : 0974Y
Zenith Energy Ltd
27 December 2019
December 27, 2019
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")
First Acquisition in Africa
Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN;
TSX.V: ZEE; OSE: ZENA-ME), the international oil & gas
production company, is delighted to announce that it has signed a
conditional share purchase agreement ("SPA") with AIM quoted Anglo
African Oil & Gas plc ("AAOG") for the acquisition of an 80
percent interest in AAOG's fully owned subsidiary in the Republic
of the Congo, Anglo African Oil & Gas Congo S.A.U ("AAOG
Congo") ("Acquisition").
The SPA is conditional, inter alia, on the passing of an
ordinary resolution of shareholders in AAOG in a General Meeting
approving the Acquisition and certain regulatory requirements in
the Republic of the Congo including consent of the Minister of
Hydrocarbons ("Completion").
Acquisition Highlights
-- Zenith will enrich, as well as diversify, its asset portfolio
by completing its first African acquisition in the form of a highly
prospective oil production and development asset. This is in line
with the Company's strategy of identifying and acquiring assets
with significant untapped production potential.
-- Following Completion of the Acquisition, Zenith will own 80
percent of AAOG Congo which has a 56 percent majority interest in,
and is operator of, the Tilapia oilfield in the Republic of the
Congo (the "License"). The remaining 44 percent is held by the
national oil company, Société Nationale des Pétroles du Congo
("SNPC").
-- The License is located in the Lower Republic of the Congo
Basin, West African Atlantic Margin, which extends from Gabon down
to Angola, a prolific hydrocarbon region in which certain
individual wells have recorded production rates of up to 5,000
barrels of oil per day. It is situated 1.8km offshore and entered
into production in 2008. Having been drilled from onshore, there is
no requirement for offshore drilling equipment. Oil storage and
processing facilities are a 45-minute drive from Point Noire and
17km from the nearest refinery.
-- Major operators including Eni, SOCO International and Oryx
operate in neighbouring fields producing from the Djeno horizon
with production rates of between 1,000 to 5,000 barrels of oil per
day from individual wells.
-- Successful recent drilling undertaken during 2018 and 2019
has identified multiple potential productive reservoirs within the
License across a number of formations including the regionally
proven Mengo and Djeno reservoirs. This has confirmed the
transformational potential productivity to be obtained from the
License. Recent expert wireline log analysis commissioned by AAOG
Congo after drilling activities in the Djeno formation has
indicated that reservoir quality is "between good and
excellent".
-- AAOG Congo currently produces approximately 30 barrels of oil per day.
-- SNPC owes AAOG Congo approximately US$5.3 million as a result
of the work conducted to date on the License. Zenith has met with
SNPC and expects to obtain the full repayment of the aforementioned
amount. Upon completion of the Acquisition and repayment of the
credit by SNPC, Zenith will retain 80 percent of the aforementioned
amount.
-- Zenith plans to commission a new Competent Person's Report in
compliance with Canadian securities laws, specifically the COGE
Handbook and National Instrument 51-101 - Standards of Disclosure
for Oil and Gas Activities.
-- Zenith intends to begin preparations for drilling activities
in well TLP-103C as soon as it assumes operational control of the
License.
-- The Company intends to complete negotiations with the
Congolese Ministry of Hydrocarbons to obtain a new 25-year license
for the Tilapia oilfield once the SPA is effective.
Pursuant to the terms of the SPA, Zenith has agreed to acquire
80% of the issued share capital of AAOG Congo for a consideration
of GBP1 million, of which GBP500,000 is to be satisfied in cash to
be paid in six equal monthly instalments with the first instalment
due on completion and the last being six months later, and
GBP500,000 to be satisfied by the issue of ordinary shares in the
share capital of Zenith to be issued at the volume weighted average
price of a Zenith common share for a period of 14 trading days
prior to Completion ("Consideration Shares").
AAOG has agreed that it will not dispose of the Consideration
Shares for a period of six months from completion and thereafter
will dispose of the Consideration Shares in an orderly manner.
In addition, Zenith will fund AAOG's share of an up to US$5.5
million work programme to be agreed post-Completion, and the amount
of any signature bonus required for the renewal of the License as
agreed with the Congolese Ministry of Hydrocarbons, subject to a
cap of US$2 million if the signature bonus is payable in a single
instalment and otherwise at an amount to be agreed between the AAOG
and Zenith if the signature bonus is payable in multiple
instalments.
As at June 30, 2019, the unaudited balance of the intercompany
debt owing to the Company by AAOG Congo was approximately GBP12.47
million at the GBP/USD exchange rate on that date. Under the terms
agreed for the Acquisition, at completion AAOG will novate 80% of
this debt to Zenith and will retain 20% on its balance sheet.
The SPA contains commercial warranties being given by AAOG which
are commensurate for a transaction in the nature and size of the
Acquisition. Zenith is also making warranties concerning itself and
its shares to AAOG which are commensurate for a transaction of this
nature and size. AAOG will also be required to sign up to a tax
covenant upon Completion, pursuant to which AAOG shall indemnify
Zenith for certain pre-Completion tax liabilities which are not
fully provided for in the accounts of AAOG Congo.
The Company has also agreed to standard provisions which govern
the day-to-day and usual operations of AAOG Congo in the period
from signing to Completion and the SPA contains a standard
provision that allows Zenith to not complete if there is a material
adverse change in the net asset value of AAOG Congo before
Completion.
In addition, the Company and AAOG will sign up to a
shareholders' agreement upon Completion which will govern their
future relationship as shareholders of AAOG Congo.
The Acquisition is also subject to final regulatory approval
from the TSX Venture Exchange.
Andrea Cattaneo, Chief Executive Officer, commented:
"We are delighted to have signed this exciting SPA to acquire
AAOG Congo which represents our first African acquisition and our
entry into the attractive jurisdiction of the Republic of the
Congo.
The Acquisition enriches, as well as diversifies, our asset
portfolio by adding significant reserves and prospective production
potential. This is line with our company strategy of acquiring
assets with significant untapped production potential.
The License has excellent production upside, specifically from
the Mengo and Djeno horizons. This has been confirmed by wireline
investigations performed following recent drilling activities,
thereby materially de-risking the asset.
Upon assumption of operational control, we shall look to begin
preparations for deepening activities in well TLP-103C, obtain full
repayment of the funds owed by SNPC, as well as successfully
complete negotiations for a new 25-year license."
Further Information:
Zenith Energy Ltd
Andrea Cattaneo, Chief Executive Tel: +1 (587) 315
Officer 9031
-----------------------------
E-mail: info@zenithenergy.ca
-----------------------------
Peterhouse Capital - Joint Broker Tel: + 44 (0) 207
469 0930
-----------------------------
Lucy Williams
-----------------------------
Charles Goodfellow
-----------------------------
Novum Securities Limited - Joint Tel: + 44 (0) 207
Broker 399 9400
-----------------------------
Charlie Brook-Partridge
-----------------------------
Hugh McAlister
-----------------------------
IFC Advisory Limited - Financial Tel: + 44 (0) 203
PR & IR 934 6630
-----------------------------
Graham Herring
-----------------------------
Zach Cohen
-----------------------------
Notes to Editors:
Zenith Energy Ltd. is an international oil and gas production
company, listed on the TSX Venture Exchange (TSX.V:ZEE) and London
Stock Exchange (LSE:ZEN). In addition, the Company's common share
capital was admitted to trading on the Merkur Market of the Oslo
Børs (ZENA:ME) on November 8, 2018. The Merkur Market is a
multilateral trading facility owned and operated by the Oslo
Børs.
The Company was assigned a medium to long-term issuer credit
rating of "B+ with Positive Outlook" on October 9, 2019 by Arc
Ratings, S.A. On November 18, 2019, the Company was assigned a "B+"
with Stable Outlook debt issuer credit rating by Rating-Agentur
Expert RA.
The Company operates the largest onshore oilfield in Azerbaijan
by cumulative acreage following the signing of a 25-year REDPSA,
(Rehabilitation, Exploration, Development and Production Sharing
Agreement), with SOCAR, State Oil Company of the Republic of
Azerbaijan, 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, condensate and
electricity.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQLIFFRFRLDFIA
(END) Dow Jones Newswires
December 27, 2019 02:01 ET (07:01 GMT)
Zenith Energy (LSE:ZEN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Zenith Energy (LSE:ZEN)
Historical Stock Chart
From Jul 2023 to Jul 2024