TIDMZEN
RNS Number : 0111H
Zenith Energy Ltd
30 November 2020
November 30, 2020
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Filing of Half-Year Results
Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; OSE:
ZENA-ME), the listed international oil & gas production company
focused on pursuing African development opportunities, is pleased
to announce the filing of its consolidated interim results for the
six months ended September 30, 2020 (the "Interim Results") on
SEDAR ( www.sedar.com ).
A copy of the Interim Results will shortly be made available for
review on the Company's website ( www.zenithenergy.ca ).
Highlights:
-- The Company generated revenues from oil and natural gas of
CAD$145k (2019 - CAD$2,651k) in the six months ended September 30,
2019.
-- During the six months ended September 30, 2020, the Company
sold 8,544 mcf of natural gas from its Italian assets, as compared
to 5,499 mcf of natural gas in the 2019 similar period.
-- On April 20, 2020, the Company announced that its newly
created wholly owned subsidiary Zenith Energy Netherlands B.V. had
signed a conditional sale and purchase agreement with KUFPEC
(Tunisia) Limited, a subsidiary of the State of Kuwait's national
oil company, for the acquisition of a working interest in, inter
alia, the North Kairouan permit and the Sidi El Kilani Concession,
which contains the Sidi El Kilani oilfield.
-- On April 22, 2020, the Company confirmed the full repayment
of its largest outstanding liability.
-- On May 5, 2020, the Company announced the successful
completion of the acquisition from AIM listed Anglo African Oil
& Gas plc ("AAOG") of a 100 percent interest in its fully owned
subsidiary in the Republic of the Congo, Anglo African Oil &
Gas Congo S.A.U ("AAOG Congo"), which at the time had a 56 percent
majority interest in, and was the operator of, the Tilapia
oilfield.
-- On May 28, 2020, the Company announced that the TSX Venture
Exchange ("TSX-V") had confirmed that effective at the close of
business Friday, May 29, 2020, the common shares of the Company
would be delisted from the TSX-V at Zenith's request.
-- On June 11, 2020, the Company announced that it had made
payment for a total of US$250,000 (approximately CAD$350k) to
Kuwait Foreign Petroleum Exploration Company K.S.C.C ("KUFPEC"), a
subsidiary of the State of Kuwait's national oil company, in
relation to the acquisition of a 22.5% working interest in the
North Kairouan permit and the Sidi El Kilani Concession, which
contains the Sidi El Kilani oilfield.
-- On June 25, 2020, the Company announced it had completed the
handover process (the "Handover") of the Contract Rehabilitation
Area to SOCAR in the Republic of Azerbaijan. As a result of the
Handover, Zenith has ceased all oil production operations in
Azerbaijan and all field production personnel, approximately 170
employees, have been transferred to a division of SOCAR.
-- On June 30, 2020, the Company announced that it had fully
paid the semi-annual interest in relation to the following debt
instrument: "ZENITH ENERGY LTD 8% NOTES - 2021". The payment in
relation to the Notes is the third such payment, with previous
interest payments having taken place during the months of June 2019
and December 2019 respectively.
-- On August 10, 2020, the Company announced that it had
incorporated Zenith Energy Congo SA ("Zenith Congo"), a fully owned
subsidiary of the Company, created under the laws of the Republic
of Congo. Zenith Congo was established for the purpose of
submitting a comprehensive commercial and technical offer to the
Ministry of Hydrocarbons of the Republic of the Congo for the award
of a new 25-year licence for the Tilapia oilfield to be named
"Tilapia II".
-- On August 26, 2020, the Company announced that BCRA Credit
Rating Agency AD ("BCRA") had assigned Zenith a "B-" with Stable
Outlook long-term debt issuer credit rating.
-- On September 8, 2020, the Company announced that its wholly
owned subsidiary, Zenith Energy Netherlands B.V. had signed a
conditional sale and purchase agreement with CNPC International
(Tunisia) Ltd., a 100% subsidiary of CNPCI, China National
Petroleum Corporation International Ltd., for the acquisition of a
working interest in, inter alia, the North Kairouan permit and the
Sidi El Kilani Concession, which contains the Sidi El Kilani
oilfield.
Further Information:
Zenith Energy Ltd
Andrea Cattaneo, Chief Executive Tel: +1 (587) 315 9031
Officer
-----------------------------
E-mail: info@zenithenergy.ca
-----------------------------
Allenby Capital Limited - Financial
Adviser & Broker
-----------------------------
Nick Harriss Tel: + 44 (0) 203 328
Nick Athanas 5656
-----------------------------
Notes to Editors:
Zenith Energy Ltd. is an international oil and gas production
company, listed on the London Stock Exchange (LSE:ZEN) and the
Merkur Market of the Oslo Stock Exchange (ZENA:ME).
Zenith's development strategy is to identify and rapidly seize
value-accretive hydrocarbon production opportunities in the onshore
oil & gas sector, specifically in Africa. The Company's board
of directors and senior management team have the experience and
technical expertise to develop the Company successfully.
CEO Statement
Zenith Energy Ltd. ("Zenith" or "the Group") is an international
oil and gas production Group, incorporated in Canada, listed on the
Main Market for listed securities of the London Stock Exchange
under the ticker symbol "ZEN" and on the Merkur Market of the Oslo
Børs under the ticker "ZENA:ME". The Company has also issued two
series of EMTN, that are listed on the third Vienna Stock Exchange
Market.
Zenith's strategic objective is to become a mid-tier, Africa
focused hydrocarbon production and exploration Group. Specific
attention is directed towards assets with proven development
potential via development drilling, field rehabilitation, and
low-risk exploration activities.
In view of the recent decline in oil prices, as well as
macroeconomic developments caused by the COVID-19 pandemic,
opportunities have arisen for companies such as Zenith to acquire,
at commercially advantageous terms, oil and gas production and
exploration assets being divested by many oil majors and leading
oil and gas companies. As a leadership team, we are seeking to
maximize this opportunity in order to ensure Zenith emerges from
the current low oil price environment a stronger and more
attractive entity with significant future development
potential.
We are very pleased to have entered into two separate
conditional transactions in relation to working interests in an
onshore oil production asset in Tunisia. The first with KUFPEC, a
subsidiary of Kuwait Petroleum Corporation, and the second with
China National Petroleum Corporation, to acquire their respective
working interests of 22.5% in the Sidi El Kilani Concession and the
North Kairouan permit, which contain the producing Sidi El Kilani
oilfield. It is our expectation to receive regulatory approval from
the Comité Consultatif des Hydrocarbures of the Republic of Tunisia
in respect of the transfer of ownership for both acquisitions in
due course.
Further, we are delighted to have established a presence in the
Republic of the Congo following our acquisition of Anglo African
Oil & Gas Congo S.A.U ("AAOG Congo"), the former Congolese
subsidiary of Anglo African Oil & Gas plc (a company listed on
the AIM of the London Stock Exchange) in May 2020. The decline in
oil prices brought about by the COVID-19 pandemic, as well as
renegotiations with the seller, enabled Zenith to acquire, at
advantageous terms, an interest, albeit brief, in the now expired
Tilapia I license (expired on July 18, 2020), as well as
receivables, now amounting to approximately US$5.7 million dollars
owed by SNPC ( Société Nationale des Pétroles du Congo), the
National Oil Company.
As publicly announced, the Company has presented a comprehensive
commercial and technical offer (the "Offer") to the Ministry of
Hydrocarbons of the Republic of the Congo in order to be awarded a
new 25-year license for the Tilapia oilfield (to be named Tilapia
II). We are confident that we shall be successful in obtaining a
new 25-year license.
The results for the six months ended September 30, 2020, reflect
the significant changes the Group has undergone during the course
of this period, specifically in result of the impairment resulting
from the handover of the CRA in Azerbaijan and its associated
reserves.
We are very excited about our countercyclical acquisition
campaign in Africa in the current low oil price environment,
especially the highly prospective development production potential
of the Tilapia oilfield and the material daily production revenue
to be obtained from completion of our acquisitions in Tunisia.
Indeed, we are hopeful to conclude further acquisitions of a
similar kind in due course.
I thank shareholders for their loyal support. As is clear, my
confidence in Zenith, as well as that of the team, remains
unchanged. We fully believe that our new geographic concentration
in Africa, in less geologically challenging assets acquired at
highly advantageous commercial terms, will enable the Group to
achieve its operational objectives and deliver value to our
investors.
We shall continue to evaluate the acquisition of additional
energy production opportunities building on the momentum of our
recent progress to further support the Group's expansion.
Andrea Cattaneo
President, CEO and Director
Brazzaville, Republic of the Congo
November 30, 2020
Consolidated Statement of Comprehensive Income
Six month ended
September 30, 2020 September 30, 2019
Continuing operations Note CAD $'000 CAD $'000
Revenue 145 344
Cost of sales
Production costs (656) (1,158)
Depletion and depreciation 8 (198) (203)
Gross loss (709) (1,017)
---------------------------------------------------- -------- ----------------------- -----------------------
Administrative expenses 5 (3,548) (1,989)
Operating loss (4,257) (3,006)
---------------------------------------------------- -------- ----------------------- -----------------------
Finance expense 6 (284) 1,038
Loss for the period before taxation (4,541) (1,968)
---------------------------------------------------- -------- ----------------------- -----------------------
Taxation 7 (3) -
Gain/(loss) for the period from continuing
operations attributable to owners of the parent (4,544) (1,968)
---------------------------------------------------- -------- ----------------------- -----------------------
Profit/(loss) from discontinued operations
(attributable to owners of the parent) 18 563 (5)
Loss for the period attributable to owners of the
parent (3,981) (1,973)
---------------------------------------------------- -------- ----------------------- -----------------------
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss:
Exchange differences on translating foreign
operations, net of tax 314 (65)
---------------------------------------------------- -------- ----------------------- -----------------------
Other comprehensive income for the period, net of
tax 314 (65)
---------------------------------------------------- -------- ----------------------- -----------------------
Total comprehensive loss for the period
attributable to owners of the parent (3,667) (2,038)
---------------------------------------------------- -------- ----------------------- -----------------------
Earnings per share 20 CAD $ CAD $
Loss for the period - basic (0.01) (0.01)
Loss for the period - diluted (0.01) (0.01)
From continuing operations - basic (0.01) (0.01)
From continuing operations - diluted (0.01) (0.01)
From discontinued operations - basic and diluted 0.001 (0.00)
Consolidated Statement of Financial Position
Six month ended
September 30, 2020 September 30, 2019
ASSETS Note CAD $'000 CAD $'000
Non-current assets
Property, plant and equipment 8 33,230 1,080,311
Financial assets at amortised cost 9 12 408
----------------------- -----------------------
33,242 1,080,719
----------------------- -----------------------
Current assets
Inventory 10 682 161
Trade and other receivables 11 15,258 3,889
Director's loan account 11 136 (50)
Cash and cash equivalents 1,453 1,681
17,529 5,681
----------------------- -----------------------
TOTAL ASSETS 50,771 1,086,400
======================= =======================
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 13 45,706 33,557
Share warrants & option reserve 14 947 1,142
Contributed surplus 4,431 4,125
Retained earnings (42,361) 533,021
----------------------- -----------------------
Total equity 8,723 571,845
----------------------- -----------------------
Non-current liabilities
Loans 16 1,903 2,299
Non-convertible bonds 17 4,456 4,759
Deferred consideration payable 18 - 482,839
Deferred tax liabilities 7 2,398 2,398
Decommissioning provision 19 13,307 8,807
Retirement provision 48 -
----------------------- -----------------------
Total non-current liabilities 22,112 501,102
----------------------- -----------------------
Current Liabilities
Trade and other payables 15 17,739 10,731
Loans 16 1,903 1,762
Non-convertible bonds 17 294 104
Deferred consideration payable 18 - 857
----------------------- -----------------------
Total current liabilities 19,936 13,454
TOTAL EQUITY AND LIABILITIES 50,771 1,086,400
======================= =======================
Attributable to owners of the parent
Consolidated Share capital Share warrants & Contributed Retained earnings Total
Statement of option reserve surplus
Changes in Equity
CAD $'000 CAD $'000 CAD $'000 CAD$'000 CAD $'000
Balance as at
April 1, 2019 28,866 1,147 4,125 534,943 569,081
------------------- -------------- ------------------- ------------------- ------------------ -------------
Loss for the
period - - - (1,973) (1,973)
Other
comprehensive
income - - - (65) (65)
------------------- -------------- ------------------- ------------------- ------------------ -------------
Total
comprehensive
income - - - (2,038) (2,038)
------------------- -------------- ------------------- ------------------- ------------------ -------------
Share issue net of
costs - debt
settlement 303 - - - 303
Share issue net of
costs - private
placement 4,230 - - - 4,230
Fair value of
warrants issued - 111 - - 111
Options exercised 158 (116) - 116 158
Total transactions
with owners
recognized
directly in
equity 4,691 (5) - 116 4,802
------------------- -------------- ------------------- ------------------- ------------------ -------------
Balance as at
September 30,
2019 33,557 1,142 4,125 533,021 571,845
------------------- -------------- ------------------- ------------------- ------------------ -------------
Balance as at
April 1, 2020 40,400 1,010 4,320 (35,901) 9,829
------------------- -------------- ------------------- ------------------- ------------------ -------------
Prior year
adjustment - - - (2,793) (2,793)
------------------- -------------- ------------------- ------------------- ------------------ -------------
Balance as at
April 1, 2020
restated 40,400 1,010 4,320 (38,694) 7,036
------------------- -------------- ------------------- ------------------- ------------------ -------------
Loss for the
period - - - (3,981) (3,981)
Other
comprehensive
income - - - 314 314
------------------- -------------- ------------------- ------------------- ------------------ -------------
Total
comprehensive
income - - - (3,667) (3,667)
------------------- -------------- ------------------- ------------------- ------------------ -------------
Share issue net of
costs - debt
settlement - - - - -
Share issue net of
costs - private
placement 5,306 - - - 5,306
Value of warrants
issued - 48 - - 48
Warrants expired - (111) 111 - -
Total transactions
with owners
recognised
directly in
equity 5,306 (63) 111 - 5,354
Balance as at
September 30,
2020 45,706 947 4,431 (42,361) 8,723
------------------- -------------- ------------------- ------------------- ------------------ -------------
Reserve Description and purpose
Share capital Amount subscribed for share capital
Share warrants & Relates to increase in equity for services
received - equity settled
option reserve share transactions
Contributed surplus Expired share options and warrants issued in
previous years
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income.
Consolidated statement of cash flows Six months ended
September 30, 2020 September 30, 2019
OPERATING ACTIVITIES Note CAD $'000 CAD $'000
Loss for the period before taxation (3,978) (1,973)
Options/warrants charge 17 48 111
Foreign exchange (3,318) (9,660)
Depletion and depreciation 11 198 913
Reversal of impairment (1,128) -
Other gains and losses 8 - (1,376)
Finance expense 9 284 372
Change in working capital 15 (4,623) 548
--------------------------------------------------------- ----- -------------------- -------------------
Net cash used in operating activities (12,517) (11,065)
INVESTING ACTIVITIES
Purchase of property, plant and equipment 11 (8) (1,951)
Proceeds from disposal of property, plant and equipment 11 - -
--------------------------------------------------------- ----- -------------------- -------------------
Net cash used in investing activities (8) (1,951)
--------------------------------------------------------- ----- -------------------- -------------------
FINANCING ACTIVITIES
Proceeds from issue of shares, net of transaction costs 11,739 6,617
Proceeds from exercise of options - 333
Repayments of loans 19 (1,889) (2,382)
Proceeds from loans 19 1,091 1,453
Proceeds from issue of bonds 1,442 3,143
Repayment of bonds 20 (86) (385)
Proceeds from bonds in treasury 20 - 1,720
Net cash generated from financing activities 12,297 10,500
--------------------------------------------------------- ----- -------------------- -------------------
Net (decrease)/increase in cash and cash equivalents (228) (2,516)
Cash and cash equivalents at beginning of period 1,681 4,197
--------------------------------------------------------- ----- -------------------- -------------------
Cash and cash equivalents at end of period 1,453 1,681
--------------------------------------------------------- ----- -------------------- -------------------
The cash transactions from discontinued operations included
above are as follows:
Operating activities 424 4,787
Investing activities - (1,014)
Net cash generated in discontinued operations 424 3,773
------------------------------------------------- ---- --------
Notes to the condensed financial statements
1. Corporate and Group information
The consolidated financial statements of Zenith Energy Ltd. and
its subsidiaries (collectively, the "Group") have been prepared on
the basis set out below. The Group is exempt from preparing
separate parent company financial statements for the period ended
September 30, 2020, in accordance with the Canada Business
Corporations Act.
Zenith Energy Ltd. ("Zenith" or the "Group") was incorporated
pursuant to the provisions of the British Columbia Business
Corporations Act on September 20, 2007 and is domiciled in Canada.
The address of the Group's registered office is 20(th) Floor, 250
Howe Street, Vancouver, BC. VC6 3R8, Canada and its business
address is 15th Floor, 850 - 2nd Street S.W., Calgary, Alberta T2P
0R8, Canada. The Group's primary business activity is the
international development of oil and gas production and development
assets. As publicly reported, the Group is currently in the process
of seeking to complete a number of acquisitions in Africa.
The Company's website is www.zenithenergy.ca.
Zenith is a public company listed on the Main Market of the
London Stock Exchange under the ticker "ZEN", as well as being
listed on the Merkur Market of the Oslo Børs under the ticker
"ZENA-ME".
2. Basis of preparation
The consolidated financial statements presented in this document
have been prepared in accordance with International Financial
Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB").
The financial statements have been prepared under the historical
cost convention except for financial instruments which are measured
at fair value through profit or loss. The financial statements are
presented in Canadian Dollars (CAD$) and have been rounded to the
nearest thousand (CAD$'000) except where otherwise indicated.
The Board has reviewed the accounting policies set out below,
which have been applied consistently, and considers them to be the
most appropriate to the Group's business activities.
Presentation and functional currency
The presentation currency of the Group is the Canadian dollar
("CAD$").
Functional currency is the currency of the primary economic
environment in which a company operates. The functional currency of
the Group's subsidiaries are; United States dollar ("US$") for the
subsidiaries in Dubai, British Virgin Islands (including Azerbaijan
operations) and Democratic Republic of Congo, Euros ("EUR") for the
subsidiary in Italy, Sterling ("GBP") for the subsidiary in the
United Kingdom, Swiss Francs ("CHF") for the subsidiary in
Switzerland and Norwegian Krone ("NOK") for the subsidiary in
Norway.
The functional currency is determined by the Directors by
looking at a number of relevant factors including the currency in
which Group entities usually generate and spend cash and in which
business transactions are normally denominated.
All of the transactions that are not in the functional currency
are treated as foreign and indicate currency transactions.
The factors that have determined the adoption of the CAD$ as
presentation currency include:
-- mainly affects the prices at which the goods or services are consolidated;
-- Canada is the country whose regulations, market conditions
and competitive forces mainly affect the pricing policy of the
entity;
-- influences the costs and expenses of the entity;
-- the funds are usually generated in that currency; and
-- the receipts from operating activities are retained in that currency.
3. Significant accounting policies
Consolidation
The following entities have been consolidated within the Group's
financial statements:
Name Country of incorporation Proportion of Principal activity
and place of business ownership interest
Canoel Italia Genova, Italy 98.6% Gas, electricity
S.r.l. (1) and condensate
production
------------------------- --------------------- ---------------------
Ingenieria Petrolera Argentina 100% Not trading
del Rio de la
Plata S.r.l.
------------------------- --------------------- ---------------------
Zenith Aran Oil British Virgin 100% Oil production
Company Limited Islands
------------------------- --------------------- ---------------------
Aran Oil Operating British Virgin 80% owned subsidiary Oil production
Company Limited Islands of Zenith Aran
Oil Company Limited
------------------------- --------------------- ---------------------
Zenith Energy United Kingdom 100% Administrative
(O&G) Ltd services
------------------------- --------------------- ---------------------
Zena Drilling Incorporated in 100% Oil and gas drilling
Limited UAE
------------------------- --------------------- ---------------------
Altasol SA Switzerland 100% Oil trading
------------------------- --------------------- ---------------------
Zenith Norway Norway 100% Holding Company
AS (2)
------------------------- --------------------- ---------------------
Anglo African Republic of the 100% Oil production
Oil & Gas Congo Congo
S.A.U. (3)
------------------------- --------------------- ---------------------
Zenith Energy Netherlands 100% Holding Company
Netherlands BV
------------------------- --------------------- ---------------------
(1) Zenith Energy Ltd. has 100% control over Canoel Italia
S.r.l. The Group granted 1.4% to the Director managing the Italian
subsidiary in order to limit the risk of any liability to that
entity. Therefore, no non-controlling interest arises from the
consolidation of this subsidiary.
(2) On January 30, 2020, the Company announced the establishment
of its fully owned Norwegian subsidiary, Zenith Energy AS ("Zenith
Norway"), to be used as a vehicle for intended participation in
future licensing bids to be organized by the Norwegian Ministry of
Petroleum and Energy, as well as to actively pursue the potential
acquisition of working interests in mature energy production assets
across Northern Europe.
(3) On January 13, 2020, the Company announced the passing of a
resolution by the shareholders of Anglo African Oil & Gas plc
to approve the share purchase agreement, signed between the parties
on December 27, 2019, for the acquisition of its fully owned
subsidiary in the Republic of the Congo, Anglo African Oil &
Gas Congo S.A.U.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases. Adjustments are
made to the results of subsidiaries to bring the accounting
policies used by them, with those used by the Group.
Intercompany balances and transactions are eliminated on
consolidation, and any unrealized income and expenses arising from
intercompany transactions are eliminated in preparing the
consolidated financial statements.
The following entities have not been consolidated within the
Group's financial statements because they are considered to be
immaterial to the Group:
Name Country of incorporation Proportion of Principal activity
and place of business ownership interest
Leonardo Energy Genova, Italy 48% Dormant
Consulting S.r.l.
------------------------- -------------------- -------------------
5. Administrative expenses
During the six months ended September 30, 2020, the Group
incurred CAD$ 3,548k (2019 - CAD$ 1,989k) of administrative
expenses. Furthermore, during the same period the Group incurred
CAD$ 703k (2019 - CAD$ 345k) of non-recurring expenses which relate
to the cost of raising funds, negotiation costs for the potential
acquisition of producing assets and share based payments costs,
which is a non-cash item.
Six months ended September
30,
2020 2019
------------------------------------
CAD$'000 CAD$'000
------------------------------------ -------------------------- -------------------------
Auditors remuneration - audit - -
fees Group
Accounting and bookkeeping 19 16
Legal 39 28
Other professional fees 320 269
Office 365 222
Administrative expenses 178 43
Foreign exchange loss 645 274
Other administrative expenses 271 59
Salaries 669 579
Travel 339 154
General and administrative
expenses 2,845 1,644
------------------------------------ -------------------------- -------------------------
Non-recurring expenses
Listing costs 524 182
Negotiation costs for acquisitions 131 50
Transaction Costs - 2
Share based payments 48 111
Total non-recurring expenses 703 345
------------------------------------ -------------------------- -------------------------
Total general and administrative
expenses 3,548 1,989
------------------------------------ -------------------------- -------------------------
6. Finance expense
Six months ended September 30,
2020 2019
CAD $'000 CAD $'000
Debt reduction on settlement of loan - 643
Interest reduction on settlement of loan - 733
Effective interest on financial liabilities held at amortised cost (284) (316)
Interest expense - (22)
Net finance (expense)/income (284) 1,038
--------------------------------------------------------------------- ---------- ----------
7. Taxation
Six months ended September 30,
2020 2019
CAD $'000 CAD $'000
Current tax 3 -
Deferred tax - -
-------------------------------- ---------- ----------
Total tax charge for the period 3 -
-------------------------------- ---------- ----------
8. Property, plant and equipment
D&P Assets
CAD$'000
Carrying amount at April 1, 2019 1,079,639
--------------------------------------- -----------
Additions 1,951
Disposals -
Depletion and depreciation (913)
Compensatory oil delivered (159)
Foreign exchange differences (207)
--------------------------------------- -----------
Carrying amount at September 30, 2019 1,080,311
--------------------------------------- -----------
Carrying amount at April 1, 2020 34,305
--------------------------------------- -----------
Additions 8
Depletion and depreciation (198)
Foreign exchange differences (885)
--------------------------------------- -----------
Carrying amount at September 30, 2020 33,230
--------------------------------------- -----------
9. Non-current financial assets held at amortised cost
September 30, 2020 September 30, 2019
CAD $'000 CAD $'000
Italian prepaid insurance - 408
Other assets 12 -
12 408
-------------------------------- ------------------------ ------------------------
10. Inventory
As of September 30, 2020, inventory consists of CAD $nil (2019 -
CAD $nil) of crude oil that has been produced but not yet sold, and
CAD $682k of materials (2019 - CAD $161k ) . The amount of
inventory recognised in the statement of comprehensive income is
CAD $ nil (2019 - CAD $ 8k ).
September 30, 2020 September 30, 2020
CAD $'000 CAD $'000
Congo - materials 674 -
Azerbaijan - materials - 155
Italy - materials 8 6
------------------------------ ------------------------ ------------------------
682 161
----------------------------- ------------------------ ------------------------
11. Trade and other receivables
September 30, September
2020 30, 2019
CAD $'000 CAD $'000
Trade receivables 1,255 1,512
Other receivables 14,003 2,377
Directors loan account 136 (50)
------------------------------------ -------------- ----------
Total trade and other receivables 15,394 3,839
------------------------------------ -------------- ----------
12. Change in working capital
September 30, September 30,
2020 2019
CAD $'000 CAD $'000
Trade and other receivables 11,595 623
Inventory 520 (2)
Prepaid expenses (40) (14)
Prepaid property and equipment
insurance (396) (8)
Trade and other payables (7,056) (1,147)
Total change in working capital 4,623 (548)
---------------------------------- -------------- --------------
13. Share Capital
Zenith is authorised to issue an unlimited number of Common
Shares, of which 465,000,000 were issued at no par value and fully
paid during the six months ended September 30, 2020 (2019 -
107,695,043).
Following the issue of the new Ordinary Shares, the Company had
1,042,072,921 common shares in issue and admitted to trading on the
Mekur Market of the Oslo Bors, as of September 30, 2020. As of the
same date, Zenith had 313,400,824 common shares in issue and
admitted to trading on the Main Market of the London Stock
Exchange.
Issued Number of Amount
Description common shares CAD $'000
Balance - 30 September 2019 368,122,107 33,557
Settlement of debts 11,421,402 445
Non-brokered unit private placement 37,000,000 1,857
Finder's fee - 97
Non-brokered unit private placement 35,000,000 1,124
Balance - 31 December 2019 451,543,509 36,886
Non-brokered unit private placement 55,529,412 1,610
Non-brokered unit private placement 9,000,000 232
Equity sharing agreement (vi) 50,000,000 1,389
Non-brokered unit private placement 11,000,000 283
Balance - 31 March 2020 577,072,921 40,400
Non-brokered unit private placement 75,000,000 907
Finder's fee (4)
Non-brokered unit private placement 60,000,000 900
Non-brokered unit private placement 80,000,000 1,339
Balance - 30 June 2020 792,072,921 43,542
Non-brokered unit private placement 60,000,000 467
Non-brokered unit private placement 90,000,000 1,060
Non-brokered unit private placement 100,000,000 637
Balance - 30 September 2020 1,042,072,921 45,706
14. Warrants and options
Number of options Number of warrants Weighted average Amount CAD$'000
exercise price
------------------------- ------------------ ------------------- ------------------------ ----------------
Balance - April 1, 2019 11,100,000 19,796,378 0.12 1,147
------------------------- ------------------ ------------------- ------------------------ ----------------
Option exercised (1,311,204) 0.12 (116)
Warrants issued - 47,812,500 0.10 111
Balance - September 30,
2019 9,788,796 67,608,878 0.12 1,142
------------------------- ------------------ ------------------- ------------------------ ----------------
Balance - April 1, 2020 9,085,225 55,663,984 0.12 1,010
------------------------- ------------------ ------------------- ------------------------ ----------------
Warrants issued - 45,000,000 0.10 (111)
Warrants expired - (47,812,500) 0.02 48
Balance - September 30,
2020 9,085,225 52,851,484 0.03 947
------------------------- ------------------ ------------------- ------------------------ ----------------
Options
Grant Date September 30, 2020 September 30, 2019
Exercise Exercise
Number of price per Number of price per
options unit CAD$ options unit CAD$ Expiry Date
---------- ----------- ---------- -----------
November November
2016 1,100,000 0.10 1,100,000 0.10 2021
---------- ----------- ---------- ----------- ------------
November November
2017 500,000 0.18 500,000 0.18 2022
---------- ----------- ---------- ----------- ------------
April 2018 7,485,225 0.12 8,188,796 0.12 April 2023
---------- ----------- ---------- ----------- ------------
9,085,225 0.12 9,788,796 0.12
---------- ----------- ---------- ----------- ------------
Warrants
Type Grant Date Number of Warrants Price per unit CAD$ Expiry Date
--------------------- ------------------------- ------------
Warrants January-18 180,000 0.16 January-20
Warrants April-18 93,750 0.40 May-21
Warrants June-18 1,280,000 0.07 June-21
Warrants Septeber-18 6,977,988 0.10 February-20
Warrants February-19 10,364,640 0.10 February-20
Warrants February 19 900,000 0.10 February 20
Warrants August 19 47,812,500 0.10 August 20
---------------------
Total warrants at 30 September 2019 67,608,878
Warrants April-18 93,750 0.40 May-21
Warrants June-19 1,280,000 0.07 June-21
Warrants October-19 6,477,734 0.06 October-22
Warrants August 20 45,000,000 0.022 August 21
Total warrants at 30 September 2020 52,851,484
15. Trade and other payables
September 30, September 30,
2020 2019
CAD $'000 CAD $'000
Trade payables 16,458 10,174
Other payables 1,281 557
Total trade and other payables 17,739 10,731
--------------------------------- -------------- --------------
16. Loans
Six months ended September 30
2020 2019
CAD$'000 CAD$'000
---------------------------- --------- ---------
Loan payable - current 1,903 1,762
Loan payable - non-current 1,903 2,299
----------------------------- --------- ---------
Total 3,806 4,061
----------------------------- --------- ---------
2020 2019
--------------------------------------
Loans - current CAD $'000 CAD $'000
-------------------------------------- ---------- ----------
As at 1 April 2,210 3,776
Transfer from non-current 73 1,246
Repayments (408) (2,298)
Debt reduction on settlement of loan - (643)
Interest - 7
Foreign exchange 28 (326)
--------------------------------------- ---------- ----------
As at September 30 1,903 1,762
--------------------------------------- ---------- ----------
2020 2019
--------------------------------------
Loans - non current CAD $'000 CAD $'000
-------------------------------------- ---------- ----------
As at 1 April 2,260 3,417
Loan receipt (252) 177
Conersion into shares (19) -
Transfer to current (73) (1,246)
Foreign exchange (13) (49)
--------------------------------------- ---------- ----------
As at September 30 1,903 2,299
--------------------------------------- ---------- ----------
17. Non-convertible bonds
Non-convertible bonds September 30, 2020 September 30, 2019
CAD $'000 CAD $'000
----------------------- ------------------- -------------------
Current 294 104
Non-current 4,456 4,759
------------------------ ------------------- -------------------
Total 4,750 4,863
------------------------ ------------------- -------------------
Non-convertible bonds
CAD $'000
Balance - April 1, 2019 4,958
------------------------------- ----------
Interest 63
Repayment of bonds (158)
Balance - September 30, 2019 4,863
------------------------------- ----------
Balance - April 1, 2020 4,359
------------------------------- ----------
Issue of bonds 477
Payment of interest (86)
Balance - September 30, 2020 4,750
------------------------------- ----------
18. Loss from discontinued operations
The Group has re-focused the geographic area of its activities.
On March 2, 2020, the Company announced that, in view of Zenith's
strategic focus on pursuing large-scale oil production and
development opportunities in Africa, it would return the Contract
Rehabilitation Area to SOCAR.
As a result of this decision, the results of the subsidiary in
Azerbaijan have been included in the loss from discontinued
operations in the statement of comprehensive income and they are
comprised as follows:
September 30, 2020 September 30, 2019
CAD$'000 CAD$000
---------------------------------------------- -------------------- -------------------
Revenue - 2,325
Operating expenses (579) (1,078)
Depletion and depreciation (68) (710)
Administrative expenses (97) (508)
Reversal of impairment from previous period 1,326 -
Finance expenses (19) (34)
-------------------- -------------------
Profit/(loss) from operations in the period 563 (5)
-------------------- -------------------
19. Decommissioning provision
The following table presents the reconciliation of the carrying
amount of the obligation associated with the reclamation and
abandonment of the Group's oil and gas properties:
September 30,
September
30, 2020 2019
CAD $'000 CAD $'000
Balance - April 1 13,543 9,089
Accretion 41 (31)
Foreign currency translation (277) (251)
------------------------------------ ---------- --------------
Balance - September 30 13,307 8,807
------------------------------------ ---------- --------------
The provision has been made by estimating the decommissioning
cost at current prices using existing technology.
20. Earnings per share
2020 2019
CAD $'000 CAD $'000
------------------------------------------------ ---------- --- ----------
Net loss for the period (3,981) (1,973)
Net loss from continuing operations (4,544) (1,968)
Net profit/(loss) from discontinued operations 563 (5)
------------------------------------------------ ---------- --- ----------
Basic weighted average number of shares 519,319 296,866
Potential dilutive effect on shares issuable n/a n/a
under warrants
Potential diluted weighted average number n/a n/a
of shares
------------------------------------------------ ---------- --- ----------
Net earnings per share - basic and diluted
(1) $ (0.01) $ (0.01)
From continuing operations - basic and
diluted $ (0.01) $ (0.01)
From discontinued operations - basic
and diluted $ 0.001 $ (0.00)
------------------------------------------------ ---------- --- ----------
(1) The Group did not have any in-the-money convertible notes,
warrants and stock options during the six months ended September
30, 2020 and 2019.
21. Commitments and contingencies
Asset Purchase commitments
The Company acquired the Congolese asset for a consideration of
GBP 200,000, that was fully paid in May 2020.
On April 20, 2020, and on September 8, 2020, Zenith entered into
two separate conditional acquisitions in Tunisia from KUFPEC and
CNPC, two world-renowned oil companies, for their respective
working interests in the Sidi El Kilani Concession. Upon
completion, conditional upon regulatory approval being granted by
the Comité Consultatif des Hydrocarbures ("CCH") of the Republic of
Tunisia, it is expected that Zenith will have a daily production
ranging between 250-300 barrels of oil per day.
The acquisition from KUFPEC was agreed for a consideration of
US$500,000, of which US$250,000 was paid in June 2020, as per the
terms of the conditional share purchase agreement in relation to
this transaction. The balance of the purchase price is due upon
completion of the acquisition, which is expected to be obtained
within December 31, 2020.
The acquisition from CNPC was agreed for a consideration of
US$300,000, as per the terms of the conditional share purchase
agreement in relation to this transaction. The payment of the
purchase price is due upon completion of the acquisition.
22. Financial risk management and financial instruments
September 30, September 30,
2020 2019
Financial assets at amortised
cost CAD $'000 CAD $'000
Non-current financial assets
at amortised cost 12 408
Trade and other receivables 15,258 3,839
Director's loan account 136 -
Cash and cash equivalents 1,453 1,681
-------------------------------- -------------- --------------
Total financial assets 16,859 5,928
-------------------------------- -------------- --------------
September 30,
September 30, 2020 2019
Financial liabilities at amortised
cost CAD $'000 CAD $'000
Trade and other payables 17,739 10,731
Loans 3,806 4,061
Non-convertible bond and notes 4,750 4,863
Deferred consideration - 483,696
------------------------------------ ------------------- --------------
Total financial liabilities 26,295 503,351
------------------------------------ ------------------- --------------
Zenith's main financial risks are foreign currency risk,
liquidity risk, interest rate risk, commodity price risk and credit
risks. Set out below are policies that are used to manage such
risks:
a) Credit risk
Credit risk is the risk of an unexpected loss if a customer or
counter party to a financial instrument fails to meet its
commercial obligations. The Group's maximum credit risk exposure is
limited to the carrying amount cash of CAD$1,453k (2019 -
CAD$1,681k) and trade and other receivables of CAD$15,258k (2019 -
CAD$3,839k).
Deposits are, as a general rule, placed with banks and financial
institutions that have credit rating of not less than AA or
equivalent which are verified before placing the deposits.
The composition of trade and other receivables is summarized in
the following table:
September September
30, 2020 30, 2019
CAD $'000 CAD $'000
--------------------------- ---------- ----------
Oil and natural gas sales 1,255 1,512
Other 14,003 2,327
15,258 3,839
--------------------------- ---------- ----------
The Group's receivables are aged as follows:
September September
30, 2020 30, 2019
CAD $'000 CAD $'000
----------- ---------- ----------
Current 15,258 3,839
90 + days - -
15,258 3,839
----------- ---------- ----------
b) Liquidity risk
As of September 30, 2020, the contractual cash flows, including
estimated future interest, of current and non-current financial
assets mature as follows:
Due on Due on
or before or before Due after
Carrying Contractual 30 September 30 September 30 September
Amount cash flow 2021 2022 2022
CAD $'000 CAD $'000 CAD $'000 CAD $'000 CAD $'000
Non-current financial
assets at amortised
cost 12 12 12 - -
Trade and other receivables 15,258 15,258 15,258 - -
Director's loan account 136 136 136
Cash and cash equivalents 1,453 1,453 1,453
16,859 16,859 16,859 - -
----------------------------- ---------- ------------ -------------- -------------- --------------
As of September 30, 2020, the contractual cash flows, including
estimated future interest, of current and non-current financial
liabilities mature as follows:
Due on Due on
or before or before Due after
Carrying Contractual 30 September 30 September 30 September
Amount cash flow 2021 2022 2022
CAD $'000 CAD $'000 CAD $'000 CAD $'000 CAD $'000
Trade and other payables 17,739 17,739 17,739 - -
Loans 3,806 3,887 3,036 851 -
Non-convertible bond 4,750 4,750 294 3,099 357
26,295 26,376 21,069 3,950 357
-------------------------- ---------- ------------ -------------- -------------- --------------
c) Foreign currency risk
Foreign currency exchange risk is the risk that the fair value
of future cash flows will fluctuate as a result of changes in
foreign exchange rates. Foreign exchange rates to Canadian dollars
for the noted dates and periods are as follows:
Closing rate Average rate
2020 2019 2020 2019
US dollars 1.3363 1.3240 1.3592 1.3200
Euro 1.5667 1.4453 1.5413 1.4674
Swiss Franc 1.4505 1.3306 1.4429 1.3391
British Pound 1.7199 1.6282 1.7199 1.6269
Norwegian Crown 0.1420 - 0.1421 -
d) Commodity price risk
Commodity price risk is the risk that the fair value of future
cash flows will fluctuate as a result of changes in commodity
prices.
As of September 30, 2020, a 5% change in the price of natural
gas produced in Italy would represent a change in net loss for the
six-month ended September 30, 2020 of approximately CAD $ nil (2019
- CAD $2k) and a 5% change in the price of electricity produced in
Italy would represent a change in net loss for the six month ended
September 30, 2020 of approximately CAD $nil (2019 - CAD $15k).
e) Interest rate risk
Interest rate risk is the risk that future cash flows will
fluctuate as a result of changes in market interest rates. The
Group has fixed interest on notes payable, loans payable and
convertible notes and therefore is not currently exposed to
interest rate risk.
23. Capital management
The Group's objective when managing capital is to safeguard the
Group's ability to continue as a going concern, so that it can
continue to explore and develop its projects to provide returns for
shareholders and benefits for other stakeholders. The Group manages
its working capital deficiency, long--term debt, and shareholders'
equity as capital.
September 30,
September
30, 2020 2019
CAD $'000 CAD $'000
---------------------- ---- ------------------- ---------------------
Working capital (2,407) (7,772)
Long--term debt 1,903 2,299
Shareholders' equity 8,723 571,845
---------------------------- ------------------- ---------------------
24. Operating segments
The Group's operations are conducted in one business sector, the
oil and natural gas industry. Geographical areas are used to
identify Group's reportable segments. A geographic segment is
considered a reportable segment once its activities are regularly
reviewed by the Board of the Directors.
The Group has three reportable segments which are as
follows:
-- Italy, which commenced gas operations following the acquisition of assets in June 2013
-- The Republic of the Congo, which was acquired during the 2020 FY
-- Other, which includes corporate assets and the operations in
the Canadian, Swiss, Argentinian and Norwegian entities.
Azerbaijan, which was acquired during the FY 2017 and divested
during FY 2020, is mentioned only for comparative purposes with the
past financial year. The results for Azerbaijan as of September 30,
2019 are included in the " Discontinued Operations" (note 18).
PERIOD 2019 Azerbaijan Italy Other Total
CAD $000 CAD $000 CAD $000 CAD $000
Property and equipment 1,065,259 8,101 6,951 1,080,311
Other assets 1,139 1,072 3,879 6,090
Total liabilities 492,575 8,187 13,794 514,556
Capital Expenditures 1,014 60 877 1,951
----------- --------- --------- ----------
Revenue - 344 - 344
Operating and transportation - (182) (976) (1,158)
General and Administrative - (122) (1,867) (1,989)
Depletion and depreciation - (38) (165) (203)
Loss on discontinued operations (5) - - (5)
Finance and other expenses - (4) 1,042 1,038
Taxation - - - -
----------- --------- --------- ----------
Segment loss (5) (2) (1,966) (1,973)
----------- --------- --------- ----------
PERIOD 2020 Azerbaijan Congo Italy Other Total
CAD $000 CAD $000 CAD $000 CAD $000 CAD $000
---------------- ------------------ ------------------- -------------------
Property and
equipment - 19,023 8,093 6,114 33,230
Other assets 275 10,172 898 6,195 17,540
Total
liabilities 4,580 11,146 12,093 14,228 42,047
Capital
Expenditures - - 8 - 8
---------------- ------------------ ------------------- -------------------
Revenue 144 1 - 145
Operating and
transportation (93) (200) (363) (656)
General and
Administrative (525) (55) (2,968) (3,548)
Depletion and
depreciation - - (198) (198)
Loss on
discontinued
operations 563 563
Finance and
other expenses 8 (292) (284)
Taxation (3) - (3)
Segment loss 563 (477) (246) (3,821) (3,981)
-------------------
Further Information:
Zenith Energy Ltd
Andrea Cattaneo, Chief Executive Officer Tel: +1 (587) 315 9031
-----------------------------
E-mail: info@zenithenergy.ca
-----------------------------
Allenby Capital Limited - Financial
Adviser & Broker
-----------------------------
Nick Harriss Tel: + 44 (0) 203 328
Nick Athanas 5656
-----------------------------
Notes to Editors:
Zenith Energy Ltd. is an international oil and gas production
company, listed on the London Stock Exchange (LSE:ZEN) and the
Merkur Market of the Oslo Stock Exchange (ZENA:ME).
Zenith's development strategy is to identify and rapidly seize
value-accretive hydrocarbon production opportunities in the onshore
oil & gas sector, specifically in Africa. The Company's board
of directors and senior management team have the experience and
technical expertise to develop the Company successfully.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR VBLFXBFLLFBV
(END) Dow Jones Newswires
November 30, 2020 13:31 ET (18:31 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
