Zenith Energy Ltd Zenith Divests Argentine Operations (2762X)
20 February 2017 - 6:45PM
UK Regulatory
TIDMZEN
RNS Number : 2762X
Zenith Energy Ltd
20 February 2017
ZENITH DIVESTS ARGENTINE OPERATIONS
Calgary, Alberta, February 20, 2017, Zenith Energy Ltd.
("Zenith" or the "Company")
(LSE: ZEN: TSX.V: ZEE) the dual listed international oil &
gas production company is pleased to announce the sale of its
operations in Argentina to a group of local energy investors.
The Company acquired the Don Ernesto and Don Alberto fields in
July 2010 and, following a systematic programme of operational
improvements and cost reductions, was successful in achieving
substantial increases in oil production and profitability. Zenith
also demonstrated that there was significant potential for further
field development.
Unfortunately in August 2015, due to a series of circumstances
beyond the Company's control, production at Zenith's Argentine
operations was suspended. This was caused by the collapse of a
major storage tank owned by Yacimientos Petrolíferos Fiscales
("YPF"), Argentina's national oil company. This meant that Zenith's
production of oil could no longer be transported through YPF
pipelines, resulting in the suspension of production in the
Comodoro Rivadavia area where these fields are located.
To date, the issues affecting the transportation of oil have not
been fully resolved and a persisting uncertainty on the
recommencement of operations has led Zenith to reconsider its
operational involvement in Argentina.
The sale of the Company's Argentina subsidiary has been fixed at
a nominal sum in recognition of the costs the new owner is expected
to incur to return these fields to production. In addition, Zenith
will no longer be liable for any environmental responsibilities or
future well abandonment obligations for the Don Alberto and Don
Ernesto fields.
Termination of activities in Argentina will enable Zenith's
management to more effectively direct its focus on its Italian
operations and especially towards Azerbaijan, where the Company's
most important assets are located, and where a systematic programme
of field rehabilitation has begun. This re-alignment reflects the
Board's aversion to operational overstretch and the Company's
preference for a strong, concentrated focus towards the achievement
of its production objectives in Azerbaijan.
Andrea Cattaneo, Zenith CEO, commented:
"The disposal of our activities in Argentina is a strategic
move. This will enable the Company to positively recalibrate its
operational footprint in a way that coherently reaffirms our
Italian energy production interests and specifically the primary
importance of our transformational opportunity in Azerbaijan. The
risk of overstretching where the management team is active on too
many fronts is now reduced.
The Board of Directors and the management team will now be in a
position to direct undistracted attention to the Company's primary
objectives of achieving incremental production increases in
Azerbaijan and continuing stable energy production activities in
Italy.
Zenith will also be able to evaluate the acquisition of
additional production opportunities in the European and Caspian
region, building on the momentum of its recent progress to further
support the Company's continued expansion."
For further information, please contact:
José Ramón López-Portillo Chairman
Andrea Cattaneo CEO & President
Email: info@zenithenergy.ca
Telephone: +1 (587) 315-9031
Telefax: +1 (403) 775-4474
This information is provided by RNS
The company news service from the London Stock Exchange
END
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