We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Ajmalkhuram. I owe you and others an apology here. I have no idea why but for some reason I never read the rns relating to the acquisition in full. I must have read the first couple of paragraphs which are somewhat confusing and never got past the reference to a deep well of 6000mtres plus and never scrolled down to the end- which makes my last post on here somewhat irrelevant. ATB
Do we know if the drill has arrived, hopefully we get some pics on twitter of proceedings
Ezhik, I appreciate the insightful points you've raised in your last post. However, I would like to express some minor differences of opinion regarding certain aspects of your comments.
Upon careful examination of the RNS concerning the acquisition, it is evident that the existing licenses extend until July 2025, precisely 18 months from the present date. However, I believe the drilling of the well within the current year, as you suggest, is a prudent approach.
The RNS explicitly outlines that drilling a well and reprocessing seismic data are the last two criteria mandated by the Kazakhstani government for the license transition from a six-year exploration license to a 25-year production license. It appears that successfully completing this well fulfills the remaining requirement, positioning the company to secure the 25-year license.
Contrary to your observation about drilling a deep well, I find no indication in the RNS that suggests Zenith would be drilling such a well. While the document mentions a deep well, AK-1P, drilled in Soviet times down to 6,290m, the document also makes clear that this was intended to drill to 7,000m but encountered difficulties with high gas pressure. I cannot see any circumstance whereby the company would drill to this depth for the first well.
To me, the RNS clearly suggests that the next well will be an appraisal well, signaling a transition from exploration as the license development advances toward a production permit. This leaves the choice between the AK-20 well, which recovered oil at 2,660m and gas at 1,913m, and the KM-1 well, encountering 30m of oil-bearing sands between 1,680 to 1,720. My inclination is toward the KM-1 well, given the additional details provided in the RNS and the known oil deposits. However, I defer to your expertise in the oil-field domain for correction or guidance on my assumptions.
Considering the relatively shallow depth of a well drilled to approximately 1,700m, as indicated in the RNS, and drawing on the example of the BD-260 rig's successful drilling to a total depth of 4,350 meters in the C37 drill in Azerbaijan, the rig demonstrates the capability to drill more than twice the required depth for the KM-1 well in Kazakhstan.
In my opinion, Zenith appears to possess the necessary equipment capable of drilling the anticipated shallow well, and finding a competent team to operate it should be feasible. The primary remaining question, as you rightly pointed out, is the duration required to recondition the BD-260 rig for drilling readiness. While I tentatively estimate 2-3 months as sufficient, I defer to your superior knowledge in this domain. However, I am strongly inclined to believe that the well will be drilled within the current year, hopefully early H2,, and I find no compelling reason to incur additional expenses on an external rig for this purpose.
@Ajmalkhuram. I prepared a fairly comprehensive reply to you yesterday and then just before posting it, my internet connection failed and the message was lost--very annoying.
I won't try and replicate it entirely but if the proposed acquisition comes to a conclusion, the way the rns reads is that the license area is a deep structure, the conditions of the production licence which follows the current exploration is dependant upon a new well to be drilled and the current licence has about 12m before expiry. Which, if I'm reading it correctly means that if Zen obtain it, they have a year to drill a deep well. Currently Zen have no 'oil-men', no crew(s) and the rig will need recommissioning, and testing. They could obtain folk and try to build the necessary crews but they would likely be individual contractors as opposed to a cohesive and experienced crew. Deep wells are not for the feint hearted and often experience high pressures and sometimes high temperatures which a cobbled together inexperienced drill crew may well struggle to manage. If they contract out the whole thing to a drilling contractor, the crews are more likely to be familiar with each other and there is more likely to be a culture of good safety and quality amongst them..not forgetting that the drilling contractor takes responsibility for a successful drill---as opposed to Zenith directly, i.e. someone else to sue for damages. Once they get this first drill out of the way then by all means start putting together their own teams to carry out development wells using the knowledge gained on the first well. I'm not a 'finance' or 'international tax savvy chappie' so there may be financial advantages to use their own people, but from a pragmatic and expedient perspective with the time limitations from the license conditions I would contract it out. Anyhow--in reality it's none of my business tbh, just voicing an opinion.
If I get my 50p I’ll put up an Italian stallion statue in the middle of my driveway. Not unrealistic if we get our arbitration payout with good production from Kazakhstan and USA.
One day tyb you will get your tasty Italian fayre accompanied by a bottle of Chateau Cattaneo from his personal vineyard---it's the least he can do in return for your support. maybe even 2 bottles.
Re the bond exchange - Though it says 'up to' re all 3 bonds, I think it's about $10.2m outstanding looking at the recent account notes.
If exchanged then this will add a further $500k/yr interest on top of what they are already paying.
They said they were working on a $25m bond ? what interest rate price will that be with those 3 just under 15% ?
Will they use part of the $25m bond if successfully issued to repay other bonds in the portfolio ?
It's strange but imo not surprising they completely ended the three seperate US transactions which i said at the time was extreme folly and nonsensical re diversification over a wider US area and so small.
The 5% royalty interest is another folly and just what is the point of Leopard rather than Zenith ? It's so small and insignificant they can't even say what it's worth or cost or how much actual monthly revenue they'd get. The number of wells in total versus actual producers and the Texas Oil and Gas activity data for Lavaca County imho shows why.
Ezhik a tasty spaghetti dinner will be finally served by zenith in 2024 and we have been waiting very patiently.
@deano. There are some tasty dishes that come out of a slow cooker-- the proof will be in the pudding though.
I have just has a read through the RNS's and it is cuisine in a slow cooker, we will know better come Sept / Oct.
In the mean time we can wonder if Florida is still doing his 50p coin trick or if MGSlingerie is going to write us some more fantastic oil porn, you can really get off on that script!
20th feb is the deadline if I remember right? Once Kazakhstan is ours the fireworks shall begin.
Things don'e always go smoothly if you do contract the drilling out. AAOG a case in point.
Ezhik, thanks you for your sensible points. Your detailed knowledge of the Azerbaijan drills is certainly useful to me and I appreciate it.
I find it interesting that the significance of the rig acquisition becomes context-dependent, influenced by the temporal perspective from which it is observed. Initially, the decision to procure the rig aligned with strategic plans for extensive well drilling, presenting a cost-effective measure for long-term savings. However, with the subsequent utilization limited to a single well in Azerbaijan, the expenditure appeared imprudent and fiscally inefficient
.
Presently, as the organization strategises to undertake multiple well drilling projects in Kazakhstan utilizing their proprietary equipment, the earlier acquisition is reevaluated as a judicious investment. The dynamic nature of the oil drilling industry often renders judgments on such acquisitions subject to the evolving circumstances and outcomes.
In reflecting on this variability, an apt analogy is drawn from the words of Ian Fleming: "The distance between insanity and genius is measured only by success." This sentiment underscores the volatile nature of success in the oil drilling sector, where decisions may oscillate between brilliance and folly based on the realized outcomes and prevailing conditions.
We can only hope for a successful outcome in the drilling of the Kazakhstan license. However, to me it seems like a sensible commercial decision at this point in that the potential rewards of Kazakhstan considerably outweigh the potential risks, which are essentially the same as in any other drill. The program is neither genius nor insanity but it will inevitably be re-evaluated as one or the other when we look back at events with the benefit of hindsight.
That top drive should be available too!!!
Don't forget that!
Yep. Well, most of my posts here get deleted, when you post the truth, someone doesnt like it. The excuse about the well data applied mainly to the work attempted by the small mobile workover rig (s) that they had on loan from SOCAR. These were supposed to be low cost/low reward but aimed at building from the 350 or bbls a day up to 1000 over a 12-24month period. Maybe there were inaccuracies, maybe not, but also it shouldnt have been a surprise to find that early casings were corroded and the cement behind them had deteriorated, so when they went into the wells, they pretty nuch disintegrated. Some pre-entry logging/measuring and testing may have identified the issues before attempting the workovers - in hindsight. At the time, whilst each hurdle or failure came about- being an ex drilling person I understood the issues and supported Zen with comments on the bb and never criticised. There were others that wanted AC's head on a pole but that wasn't me as I took the view that wasn't the one operating the rig. I also agree with your post that the 'deal' with employing Azer labour also caused some difficulties--whatever the issues were we really dont know for sure, but at one time there were about 200 employees mentioned in the company reports which if accurate was completely bonkers -- imposed by Socar as you say.
I just wanted to put you right on the BD 260 which ended up not being utilised and its purchase was not such a good move- in the end. The motivation and rationale for buying it at the time appeared to make sense and if they had actually used it to any degree may have proven to be positive but it only came out of its box once, it did operate well and despite it being alien to the drill crew, they, together with representation from the supplier managed to get to where they wanted. How they managed to make a complete mess at C37 will remain a mystery.
There was a package of drill equipment bought to support the rig operation therefore in theory, all of that should still be available and it won't need to be bought again, but will need re-commissioning as it has been sat idle for several years
Kazakhstan-- on the face of it, less constricted as you say. If they manage to bag a decent lump of dirt there I would contract out the drilling process-at least at the start and then bring in their own after any success.
ATB
Ezhik not sure what happened to your post it disappeared as I was responding. In the Azerbaijan drilling project, it's important to clarify that Zenith's rig demonstrated no issues with drilling capacity when employed for a deeper and more modern well. The failure in the cement job, as acknowledged, was attributed to the contractor and not the rig itself.
The absence of modern data for drilling operations in Azerbaijan clearly posed a significant challenge during the project and to claim otherwise is simply to engage in a historical reinterpretation that, from my perspective, lacks accuracy.
A notable hurdle in Azerbaijan was clearly the mandatory use of local Azerbaijani teams for all project-related work by Zenith. The inability to leverage international expertise became a central challenge in the drilling operations in the country and was a major contribution to the project’s failure.
Contrastingly, the upcoming project in Kazakhstan presents a different operational landscape for Zenith. The government's apparent openness to international collaboration, a proactive stance toward learning from international partners, and a more favorable approach to workforce utilization make Kazakhstan a more promising venture. Additionally, the availability of newer 3D seismic data in Kazakhstan distinguishes it significantly from the situation in Azerbaijan. Drawing direct comparisons between the two countries is erroneous given their distinct operational contexts as the one has no relationship with the other.
seems like the civil war brewing up in usa is going to start in texas.
**** joe biden.
Kazakhstan’s decision to concentrate attention and resources on domestic oil and gas capacity fits within a larger pattern, as the fall-out from Russia’s invasion of Ukraine in February 2022 has led to a rethink of energy policy in Astana.
Export plans
Most oil exports today travel via the CPC pipeline through Russia, or Russia’s national pipeline system, Transneft, to Novorossiysk and on to the Black Sea. This route however has suffered a number of weather-related outages and, more recently, Ukrainian attacks on Russian warships, tankers and refineries.
In response, Kazakhstan launched a new export grade to distinguish its crude from sanctioned Russian oil, and has begun buying tankers to shuttle exports across the Caspian Sea to the Baku-Tbilisi-Ceyhan (BTC) pipeline.
Exports to China could rise from just 1 million tonnes this year (about 20,000 bpd) to 130,000 bpd. Along with the expansion of Shymkent, that would be enough to handle most of the increased output by 2027.
These initiatives make Kazakhstan one of relatively few countries in the world able to attract strong investment interest both from international oil companies and local players.
To maintain that attractiveness, improving environmental performance is imperative, and the government has worked with industry to make the necessary adjustments. Levels of gas flaring have dropped sharply from 3.8 billion cubic metres in 2014 to 1 bcm last year.
At the just-concluded COP28 climate conference in Dubai, KMG was one of 30 national oil companies to sign up to the Oil and Gas Decarbonisation Charter (OGDC), which commits them to reach net-zero operational emissions by 2050, and eliminate routine flaring and nearly all methane emissions by 2030.
Two Kazakh companies, KMG and the aforementioned Kazpetrol, have endorsed the World Bank’s initiative for zero routine flaring by 2030. Kazpetrol already uses 97-98% of its associated gas, according to technical director Talgat Abibullaev.
As the country prepares to undergo a historic expansion, aligning technology, investment and environmental principles will further boost its profile on a global scale and within the OPEC+ alliance – helpful as a reshuffling of quotas looms.
Kazakhstan, the second-largest active member of the Opec+ group after Russia, has just announced an ambitious five-year expansion plan for its petroleum sector.
The Central Asian nation’s strategy has the potential to raise its prominence in the exporters’ group and strengthen its domestic energy security, all while challenging other producers to meet new standards of excellence.
To succeed, key players within the industry, including both oil majors and mid-sized regional companies, must bolster investment in advanced technologies, with a determined focus on maximising existing resources and mitigating environmental impacts.
Kazakhstan sits at the nexus of global oil and gas pipelines, including tanker routes that unite the region – north and west through Russia, across the Caspian Sea to Europe, and east to China. On balance, it has an unusually diverse petroleum sector, which features a large state-owned oil company, KazMunayGas (KMG). There are also numerous smaller private Kazakh companies such as Kazpetrol Group, an innovative enterprise owned by Yerkin Tatishev. Foreign international corporations are also well represented, notably Shell, Eni, Chevron, ExxonMobil, CNPC, Lukoil and others.
The new strategy, unveiled on December 6, aims to further transform the country’s position in the energy landscape, and calls for $37.3 billion in spending to cover 20 major projects in oil and gas production, refining and petrochemicals.
Under the plan, the three leading fields, Kashagan, Tengiz and Karachaganak, operated by international consortia featuring KMG and others, will be expanded. This is expected to take national production from 1.769 million bpd in 2022 and a projected 1.85mn bpd this year to 105.5 million tonnes in 2027 (about 2.11mn bpd).
Refinery capacity is also expected to increase by about a quarter, or 120,000 bpd, with the enlargement of the Shymkent facility. Moreover, the important Kenkiyak-Atyrau and Kenkiyak-Kumkol oil pipelines will be expanded, helping to supply oil from western Kazakhstan to domestic refineries and via pipeline to China.
However, without new discoveries, Kazakh production is projected to peak around 2030. Therefore, the strategy places significant emphasis on new developments and exploration. Most notably, the Lukoil-operated Kalamkas More and Khazar fields in the Caspian Sea will be further developed.
Exploration will be intensified, including in deep subsalt formations in the Caspian and South Turgai basins. Added to that, the latest auctions for new fields in October and December 2023 attracted strong interest from local players. Within this, the increasing maturity of older Soviet-era fields, such as the Mangistau and Kyzylorda regions, demand improved recovery rates and reduced operating costs, which can be best achieved through the efforts of focused, smaller companies.
Responding to the previous poster however the post got deleted. either way shall still post the reply intended
A comparison between Azerbaijan and Kazakhstan is not warranted unless one harbors a bias related to events that transpired almost a decade ago. The challenges encountered in Azerbaijan stemmed from inaccuracies in Soviet-era well data. It became evident only during drilling that the provided information was significantly flawed. In such circumstances, success was unattainable, irrespective of the entity conducting the drilling. Notably, there were no issues with the rig itself in Azerbaijan; it successfully drilled all wells, but the erroneous data impeded oil flow.
Conversely, the situation in Kazakhstan is more promising. Updated 3D seismic data, acquired within the past decade, covers 70% of the license area. This stands in stark contrast to the reliance on 50-year-old data in Azerbaijan. Additionally, a comprehensive Petroleum Resource Assessment (CPR) indicates P50 resources totaling 120 million barrels of oil. Armed with a proven rig and benefiting from the region's historical success in producing significant oil fields, Zenith is presented with a substantial opportunity. The apparent support from the Kazakhstani government further reinforces the prospect of success.
Rugs good luck to you either way have lot of respect for investors who keep it transparent and no games. Personally agree with deano the action is just about to begin. Less than a month before Kazakhstan is in our hands.
'rugs. There is nothing to stop you buying back in once there is a sustainable upwards trend in price and volume.
Seems a strange time to sell out when the cuisine is about to be heated up.
· 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").
I believe 60 days from December 20th we have 60 days to finalise the Kaz deal.........imo that's when the market will enter this stock with very large volume...........dyor
No worries rugs at least you’re transparent about it. Personally think this year is the year the price will finally break 1.5p (15p now with consolidation) especially if we sign the Kazakhstan deal in the coming weeks. Moves are already being made in the USA with cyap and the big payout won’t be far off from the arbitration. Has tested lots of patience here but this will come good when everyone least expects it as that’s how usually it plays out.