TIDMZEN
RNS Number : 4912X
Zenith Energy Ltd
20 December 2023
December 20, 2023
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Acquisition of Devonian Petroleum Limited
Zenith Energy Ltd. (LSE: ZEN; OSE: ZENA; OTCQB : ZENAF ) ,the
listed international energy production and development company with
a focus on opportunities in Central Asia and the USA, is pleased to
announce the conditional acquisition of an initial 50% of the
shares and voting rights in Devonian Petroleum Limited
("Devonian"), a private oil company registered in the United
Kingdom, for a total investment in cash and in kind presently
assessed at approximately 5 million USD (the "Conditional
Acquisition").
Conditional Acquisition Highlights
-- In 2019, Devonian was awarded the Akkudukski exploration
block (the "Akkudukski Block") of approximately 1,094 km(2) in the
Precaspian Basin, Kazakhstan, in a competitive bid round. Devonian
has the hydrocarbon exploration rights to the basement, with the
exception of the 2.9 km(2) Akkuduk Jurassic oilfield, owned and
operated by EmbaMinaGas, a subsidiary of KazMuniGaz, the Kazakh
national oil company.
-- 3-D seismic presently covers approximately 70% of the Akkudukski Block.
-- The current Akkudukski Block Competent Person's Report
("CPR") assigns P50 resources of 120 million barrels above the salt
and 400 million barrels below the salt.
-- The Akkudukski Block is located in the Embinsky district of
the Atyrau Region in the North Caspian Basin, on the eastern coast
of the Caspian Sea, about 250 kilometres southeast of Atyrau the
regional oil capital.
-- In supra-salt reservoirs above the Kungurian Evaporate
regional seal, an undeveloped Middle Triassic oilfield in
sandstones underlies the Akkuduk Jurassic oilfield. This was
identified in the AK-20 well, drilled in 2016, which recovered low
sulphur light oil at 2,660m in an MDT test on Wireline in addition
to seeing gas in the Jurassic at 1,913m. There are, additionally,
at least 6 mid-Triassic seismic prospects and at least 1 more
Jurassic seismic lead. Jurassic well KM-1 encountered more than 30m
of oil-bearing sands in 2008 from 1,680 to 1,720m. In sub-salt
reservoirs, a potential super-giant gas-condensate seismic prospect
named 'Zholdaskali', geologically analogous to both the super-giant
Tengiz oilfield operated by Chevron with approximately 25 billion
barrels recoverable oil, located circa 60 km to the southwest, and
to the adjoining Ansagan field, with approximately 400 million
barrels of oil equivalent recoverable reserves, has been
identified. The Akkudukski Block also contains potential reservoirs
in 4-way closures, identified on seismic, in Lower Permian and
Carboniferous sands.
-- The Akkuduk producing Jurassic oilfield was discovered in
1981 with production in two Callovian sandstone horizons in a fault
block with 4-way closure over a Kungurian evaporite diapir. The
Jurassic oilfield has produced just over 6 MM bbls light oil on
primary recovery to date. The Zholdaskali lead has been mapped on
seismic in 2019 with 2-D and 3D seismic covering most of the lead.
Devonian has subsequently identified Jurassic and deeper
Permo-carboniferous sandstone seismic prospects. A deep parametric
well, AKK-1P, was drilled in Soviet times to investigate a 45x10 km
seismic feature seen (in low resolution 2D seismic) in the Devonian
at circa 7,000m but drilling was suspended at 6,290m because of
high pressure gas being encountered and tested.
-- Devonian was the first UK company to be awarded a block of
oilfields following a competitive government bid round, in
accordance with the new code of the Republic of Kazakhstan 'On
Subsoil and Subsoil Use' ("SSU Code"), by way of its local
subsidiary, DP Energy LLP ("DP Energy") in which Devonian has a 99%
interest.
-- DP Energy holds a joint exploration and production contract
for a term of six years from July 2019, to be followed by a
production licence for a duration of 25 years subject to certain
conditions being satisfied, primarily seismic reprocessing and the
drilling of one new well.
-- Under the terms of the Conditional Acquisition, Zenith has
paid Devonian an initial deposit in the amount of US$200,000 (the
"Deposit").
-- A second tranche in the amount of US$1.8 million will be
payable on the completion of a satisfactory legal and technical due
diligence by Zenith 60 days from the date of signing the
Conditional Acquisition (the "Exclusivity"), and the receipt of all
necessary regulatory approvals in the Republic of Kazakhstan
("Completion").
-- The Exclusivity will govern the commercial finalisation of
the final terms and deal structure for the acquisition of the
remaining 50% of DP to be paid in Zenith equity (the "Final
Contract").
-- If the Conditional Acquisition is not completed, Devonian
will repay Zenith by set-off and will issue Zenith ordinary shares
in the capital of DP representing 3% of its fully diluted share
capital.
-- The total amount of US$2 million, having been paid upon
Completion, will be complemented by an additional consideration
estimated in the amount of approximately US$3 million to cover the
costs for the drilling and testing of a new well, to a maximum
depth of 3,000 metres, in the Akkudukski Block (the "First Well").
This First Well will target either Triassic sandstone reservoirs at
Akkuduk or Jurassic sandstone reservoirs at Kamen. The selection of
the drilling location for the First Well will be mutually
agreed.
-- The Company has agreed to transport its drilling rig, a
1,200hp 260-ton onshore drilling rig ("ZEN-260"), to the Republic
of Kazakhstan from Georgia, where it has been stored in recent
years, for the purpose of drilling the First Well. Zenith will
initiate the necessary importation formalities and obtain the
required approvals and certifications for mobilisation of the
ZEN-260 and ancillary drilling equipment to the chosen well
location.
Zenith confirms that following the signing of the Conditional
Acquisition, it has now discontinued all other negotiations in
respect of potential acquisitions in the Republic of Kazakhstan.
The Conditional Acquisition will be its sole focus.
Andrea Cattaneo, Chief Executive Officer of Zenith Energy,
commented:
"We are delighted to have agreed terms for the acquisition of
Devonian Petroleum, representing our first acquisition in the
Republic of Kazakhstan.
The Company's management has been able to appreciate the
significant development potential of the Akkudukski Block,
specifically the highly material recoverable reserves contained
therein.
The ownership of our drilling equipment, when viewed in
consideration of the size and range of geological opportunities to
be found within the Akkudukski Block, presents an attractive
opportunity to drill "in succession" with the objective of
maximising production revenue and profitability during a time of
favourable energy prices.
We look forward to benefitting from the technical knowledge and
geological expertise of the Devonian Petroleum team in respect of
the Akkudukski Block and to commencing our operational journey in
Kazakhstan ."
Alastair Murray, Chief Executive Officer of Devonian Petroleum,
commented:
" The deal with Zenith Energy is of great importance because it
should enable the successful migration through to production of the
potentially transformational reserves contained within the
Akkudukski Block.
We identified the unexploited value potential of the Akkudukski
Block from as early as 2017, following significant geological
investigation, and we were successfully awarded our current licence
following a highly competitive bid round involving more than ten
other companies in 2018/19.
Our first phase of technical work will be the selection of a
low-risk drilling location in one of the already discovered
structures, as well as remapping the Jurassic discovery in the
south of the Akkudukski Block, targeting approximately 40-80
million barrels in recoverable oil reserves.
We expect this technical work will be completed by summer 2024,
creating an exciting 'drilling pipeline' for the ZEN-260 rig being
mobilised from Georgia as part of what we expect to be a long-term
and mutually successful partnership between Zenith Energy and
Devonian Petroleum."
Joint comment by Andrea Cattaneo and Alastair Murray :
"Andrea and I are fully aligned in our belief that this
acquisition will prove beneficial, not only to the respective
stakeholders of Zenith and Devonian, but also, more broadly, to the
Republic of Kazakhstan. This is because it will demonstrate that
successful Foreign Direct Investment (FDI) in the Kazakh SME (small
and medium sized enterprise) oil and gas sector can be successfully
delivered, in this case by a listed international energy company,
and that new jobs and a range of positive commercial opportunities
will be brought about."
Notes to Editors :
Zenith Energy Ltd. is a revenue generating, independent energy
company with production, exploration and development assets in
North Africa and Europe, including electricity generation in Italy.
The Company is listed on the London Stock Exchange Main Market
(LSE: ZEN), the Euronext Growth of the Oslo Stock Exchange (OSE:
ZENA)
and the Venture Market of the OTCQB (OTCQB: ZENAF).
Zenith's strategic focus is on pursuing development
opportunities through the development of proven revenue generating
energy production assets, as well as low-risk exploration
activities in assets with existing production.
For more information, please visit: www.zenithenergy.ca
Twitter: @zenithenergyltd
LinkedIn: https://bit.ly/3A5PRJb
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ("MAR"). Upon the publication of this announcement via a
Regulatory Information Service ("RIS"), this inside information is
now considered to be in the public domain.
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
ACQEAFAEALPDFFA
(END) Dow Jones Newswires
December 20, 2023 06:50 ET (11:50 GMT)
Zenith Energy (LSE:ZEN)
Historical Stock Chart
From Oct 2024 to Nov 2024
Zenith Energy (LSE:ZEN)
Historical Stock Chart
From Nov 2023 to Nov 2024
