TIDMZEN
RNS Number : 8045T
Zenith Energy Ltd
29 November 2021
November 29, 2021
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Option Agreement for OML 141 RSC in Nigeria
Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; OSE:
ZENA), the Africa focused production and development energy
company, is pleased to announce that it has entered into an Option
Agreement (the "Option") with Noble Hill-Network Limited ("NHNL"),
a private Nigerian oil and gas company.
NHNL is the sole, 100% holder of a Risk Service Contract ("RSC")
for the development of the North-West Corner of OML 141 in Nigeria,
defined as the Risk Service Contract Area ("RSCA"), which covers
105 square kilometres of the Niger Delta region and contains the
potentially highly productive Barracuda and Elepa South oilfields,
as well one prospective field with an estimated 232.7 million
barrels of discovered oil (Degeconek 2019 CPR).
Terms of the Option
The object of the Option is to provide Zenith with the
opportunity to jointly develop the RSCA of OML 141 with NHNL.
Plans have already been finalised to drill, test, and complete
the Barracuda 5 well ("B-5"), which is situated between two
previously drilled wells that have both encountered significant
hydrocarbons. In the event of a successful outcome, production will
commence immediately using a barge-mounted Early Production
Facility to initially transport the produced oil to a nearby
floating storage and offloading vessel for subsequent
monetisation.
The Option gives Zenith the ability to purchase 42,000,000
(forty-two million) ordinary shares of Naira 1.00 in NHNL that are
available and unincumbered for issue to Zenith, representing an
interest of 42% (forty-two percent) in the outstanding share
capital of NHNL.
The consideration to exercise the Option and thereby acquire a
42% interest in NHNL has been agreed as US$20,000,000 (twenty
million United States Dollars) (the "Consideration"), payable in 7
instalments over 270 days each of US$3,000,000, except for the
first and the last which will satisfy the remaining Consideration
payable.
NHNL will use the Consideration to fund the drilling of B-5. The
Company has been informed that the drilling location for B-5 has
already been acquired by NHNL and all necessary civil works
(including dredging and clearing of the designated well location)
have been performed in preparation for the mobilisation of a
barge-mounted drilling rig.
A suitable and fully inspected drilling rig has been identified
and a site visit is planned in mid-December 2021, with the
expectation of signing a drilling contract in January 2022 to begin
operations during the first quarter of 2022. Production from the
Barracuda oilfield is expected to begin during the second quarter
of 2022 at a rate of approximately 4,000 barrels of oil per
day.
Further development and drilling activities are planned to
follow the drilling of B-5, with the locations for Barracuda wells
6,7 and 8 having already been identified. In the event the Option
was exercised, and Zenith thereby held 42% of NHNL, it would only
be required to fund its share of future development work.
The Option will expire on January 15, 2022.
Andrea Cattaneo, Chief Executive Officer of Zenith,
commented:
"We are delighted to have signed an Option to acquire an
exclusive material interest in NHNL, the sole holder of the RSC for
OML 141, containing the Barracuda and Elepa South Oilfields,
following our ongoing due diligence exercise.
The near-term drilling of B-5 is an opportunity for Zenith to
rapidly achieve a material progression in its development by
exploiting the considerable production potential of the Barracuda
oilfield. We view the risk profile of drilling B-5 as low to medium
primarily, amongst other factors, due to the strongly confirmed
presence of hydrocarbons in nearby wells accessing the same
formations.
Further, it should be noted that the Option, and its potential
exercise, are not subject to external approvals or other
bureaucratic procedures resulting in delays, meaning that Zenith
and NHNL can speedily progress in executing operational
activities.
We are confident in our ability to finance the Option by using
multiple sources of funding, specifically funding from pan-African
financial institutions .
Finally, while this transaction would represent the largest
single investment in Zenith's history, it will in no way divert
attention away from our development in Tunisia, and especially in
the Republic of the Congo, where we expect to finally achieve
significant progress in due course ."
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.
Further Information:
Zenith Energy Ltd Tel: +1 (587) 315 9031
Andrea Cattaneo, Chief Executive E: info@zenithenergy.ca
Officer
Allenby Capital Limited - Financial Tel: + 44 (0) 203 328 5656
Adviser & Broker
Nick Harriss
Nick Athanas
------------------------------
Celicourt Communications (Financial Tel: +44 (0) 208 434 2643
PR) E: zenithenergy@celicourt.uk
Mark Antelme
Jimmy Lea
------------------------------
Notes to Editors :
Zenith Energy Ltd. is an international oil and gas production
company, listed on the London Stock Exchange (LSE:ZEN) and the
Euronext Growth Market of the Oslo Stock Exchange (OSE:ZENA).
Zenith's development strategy is to identify and rapidly
complete value-accretive hydrocarbon production opportunities in
the oil & gas sector, specifically in Africa.
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