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Ah, Thanks. That makes sense I don't remember having seen any sales RNS'd. I guess it's all in the semantics.
It's encouraging that in 2020 the amount of gas went up to 17,666 mcf from 10,868 mcf.
It then fell back to 12,713 mcf in 2021.
So if we have all the same gas concessions, and fingers crossed they could maybe increase production back up with a bit of stimulus to take advantage of if higher prices arrive over winter.
"ZEN has nine gas production concessions in Italy (6 onshore, and 3 offshore)."
Please note another amendment, with apologies.
All 9 of the concession are onshore: the 6/ 3 split is that ZEN operates 6, and 3 are operated by someone else.
https://www.zenithenergy.ca/operations/italy/
"Canoel Italia S.r.l. (in which
the Company has a 98.64% shareholding), which holds various working interests in 13 onshore exploration and
production properties in Italy."
Callit,
I suspect that the difference of 4 is down to ZEN's 4 electricity generation units, which can be defined as production properties, but are not gas production concessions:-
"Torrente Cigno (45% working interest in natural gas production; 100% ownership of 4 gas powered electricity generation units onsite)"
https://www.zenithenergy.ca/operations/italy/
Thanks @Hedgehog100. It seems it might have been a better question than I had anticipated.
What happened to the other Italian gas 4 concessions?
Your figure of 9 is what is shown on the website, 6 operated and 3 non-operated, but;
From the company reports there were 13:
2020:
"Production activities
During the financial year ended March 31, 2020, the Group:
a) Produced 74,290 bbls of oil from its assets in Azerbaijan, as compared to 85,524 bbls of oil
produced in the 2019 similar period.
b) Sold 70,005 bbls of oil from its assets in Azerbaijan, as compared to 75,913 bbls of oil sold in the
2019 similar period. As of March 31, 2020, inventory consists of CAD $14k (2019 – CAD $nil) of
crude oil that has been produced but not yet sold, and CAD $785k of materials (2019 – CAD $156k).
c) Sold 17,666 mcf of natural gas from its Italian assets, as compared to 10,868 mcf of natural gas in
the 2019 similar period.
d) Sold 10,500 MWh of electricity from its Italian electricity production assets, as compared to 9,433
MWh for the corresponding period of 2019.
e) Sold 214 bbls of condensate from its Italian assets, as compared 628 bbls of condensate in the
2019 similar period.
"
"Canoel Italia S.r.l. (in which
the Company has a 98.64% shareholding), which holds various working interests in 13 onshore exploration and
production properties in Italy."
2021:
"The company sold 12,713 mcf of natural gas from it's Italian assets, as compared to 17,666 mcf of natural gas in the 2020 similar period."
"Canoel Italia S.r.l. (in which
the Company has a 98.64% shareholding), which holds various working interests in 13 onshore exploration and
production properties in Italy."
So do we still have the other 4 but they are deactivated? Have they run out of gas? Have we sold them? Have the licences expired?
GLA DYOR
That's a good question, Callit. (Another good question for Tuesday, perhaps?)
ZEN has nine gas production concessions in Italy (6 onshore, and 3 offshore).
Only one of these (Torrente Cigno) is generating all of ZEN's electricity.
https://www.zenithenergy.ca/operations/italy/
So that leaves the other 8 where the gas (the price of which has been soaring) is being sold or could be sold.
Parts of this portfolio have apparently remained dormant for some time (which should mean that they should last longer), and ZEN is now looking at reactivating them.
Initially with the reactivation of the Sant'Andrea concession, with production expected to commence in Q4 2022 - see ZEN's 13th. July RNS:-
" ... Monthly fixed production costs are expected to be approximately EUR 3,000 with estimated net revenues of approximately EUR 40,000 to EUR 50,000 per month.
Zenith, via its Italian subsidiary, holds a 40% interest in the Concession. The Company's partners in Sant'Andrea have communicated that they do not intend to fund the reactivation of the Concession. Zenith will therefore receive full entitlement to the production revenue to be received from Sant'Andrea, as well as bearing the full costs associated with reactivation of the Concession (approximately EUR 20,000). ..."
https://www.lse.co.uk/rns/ZEN/reactivation-of-sant8217andrea-concession-in-italy-fq4scsj5oyo49kt.html
So the reactivation can be undertaken very quickly and cheaply, followed by a monthly contribution to ZEN's profits of about EUR 37,000 to 47,000 per month - though that could rise significantly as gas prices rise.
How much do they make from the gas and condensate sales in Italy?
Assume prices of those commodities are also on the up?
The 'disaster' does of course just hit one side in a 'zero sum game'.
For those generating and selling gas and electricity, such as ZEN, it is rather a bonanza.
And it's interesting to speculate how much 'worse' (or rather better, for ZEN) things could get.
Another 50% increase in gas and electricity prices doesn't look implausible.
So if ZEN is able to add, say, another 50% to its Italian electricity production, then its monthly Italian electricity revenues could rise c. 2.25-fold from July levels.
And with fixed costs, that could mean that its monthly Italian electricity profits increase even more: to say c. EUR 900,000 p.c.m.
I.e. about £750K. p.c.m.: an annualised profit of c. £9 million.
Which is more than half of ZEN's current market cap.
"Drought Is Driving European Energy Markets Toward Disaster
By Irina Slav - Aug 17, 2022, 5:00 PM CD
• A combination of record-breaking natural gas prices, rising coal prices, and droughts across Europe are putting the EU electricity market under massive pressure.
• French utility EDF has had to significantly reduce the capacity utilization rate of its nuclear power plants due to reduced water availability for cooling.
• Hydropower capacity has also fallen due to drought, while low water levels in the Rhine mean shipping volumes are falling too.
... have combined to push electricity contracts in the EU to record highs as uncertainty about the coming winter deepens.
Reuters reported earlier this week that a number of power forward contracts traded in the EU hit highs because of what increasingly looks like a perfect energy storm, affecting every energy source in one way or another.
... Meanwhile, in Germany, wind output is low, and so is the water level of the Rhine—a key transport route for things like coal, for example. Germany's economy is quite dependent on this crucial shipping corridor, but when the water level is critically low, shippers simply cannot load the usual volume of cargo, meaning that coal and other commodities are reaching their destinations in smaller mounts and more slowly.
The drought is also affecting hydropower output, adding to worries about future supply. Because of the drought, Norway, which generates more than two-thirds of its electricity from hydropower, announced it would curb electricity exports, threatening supply for other European countries at the worst possible time.
... Meanwhile, Gazprom's gas flows to Europe remain much lower than usual, with the Russian state major warning this week that gas prices on the spot European market could top $4,000 per 1,000 cubic meters. Recently, spot prices broke the $2,500 barrier.
"European spot gas prices have reached $2,500 (per 1,000 cubic meters). According to conservative estimates, if such a tendency persists, prices will exceed $4,000 per 1,000 cubic meters this winter," Gazprom said.
The European Union has been quick in switching from Russian gas to U.S. LNG amid the Ukraine crisis, but speed has not been enough: U.S. LNG export capacity is not limitless, and producers also have other clients, in Asia. As the winter season approaches, Asian buyers have become more willing to pay hefty premiums for any LNG, which has intensified competition for a limited number of LNG tankers.
... And it could yet get worse as the oil embargo against Russia kicks in at the end of the year.
Analysts have warned that this could lead to higher prices for oil. This will, in turn, add to upward electricity price pressure due to the switch from gas to oil some utilities in Europe have implemented to shield themselves from prohibitive gas prices."
https://oilprice.com/Energy/Energy-General/Drought-Is-Driving-European-Energy-Markets-Toward-Disaste
Blue again profit takers gone
good update..........however we need an update on Tunisia or Tilapia to get the big rises........dyor
Agreed hedge I am sure zenith will continue to add to its portfolio
1 Euro equals 0.84 Pound sterling, so c. EUR 382,000 of monthly profit equates to c. £321K.
I.e. c.£3.85M. on an annualised basis, and rising strongly.
So with ZEN's Italian electricity operations are now generating millions of pounds of annualised profit p.a., you would think that these alone more than justify ZEN's market cap.
But of course ZEN also has significant revenue-generating operations in Tunisia, and a potentially billion dollar p.a. project in Republic of the Congo.
Plus of course any acquisitions that the company may unveil.
Yup Norway up 5.05%
This isn’t even the big news we are after but a nice starter positive update which will be on of many
14th Jun 2022 1:14 pm RNS Update on Electricity Production
"... During the month of May 2022, the Company produced a total of approximately 875.6 megawatt hours ("MWh").
Electricity prices during the month of May 2022 averaged approximately EUR 223 per MWh, resulting in net revenues of approximately EUR 195,000. Zenith's current net production costs remain fixed at approximately EUR 35,000 per month. ..."
https://www.lse.co.uk/rns/ZEN/update-on-electricity-production-794pz9s5dhnzrxe.html
18th Aug 2022 12:04 pm RNS New record profitability of Italian production
" ... During the month of July 2022, the Company produced a total of approximately 996.5 megawatt hours ("MWh").
Electricity prices during the month of July 2022 averaged approximately EUR 419 per MWh, resulting in net revenues of approximately EUR 417,000. Zenith's current net production costs remain fixed at approximately EUR 35,000 per month. ..."
https://www.lse.co.uk/rns/ZEN/new-record-profitability-of-italian-production-6t9wgfzolsbttw9.html
Since ZEN's previous update on Italian electricity production, in June, net monthly revenues have more than doubled: a rise of about 114%.
And with net production costs unchanged, the increase in net monthly profit is even larger: rising from c. EUR 160,000, to c. EUR 382,000: an increase of about 139%.
In just two months that is a quite stunning performance, so well done and thanks to ZEN on this.
Moreover, big increases in production and prices are expected going forward, so we should have plenty of further big profit increases to look forward to.
NOK 0.0999
18/08/2022 - 14:10 CET
Since Open
+0.0039 (+4.06%)
Since Previous Close
+0.0049 (+5.16%)
Zenith Energy in Oslo is currently up 5.16%.
Appropriately enough at '999', since buying ZEN should now be seen as an emergency!
The price always rectified once small profit takers are out. The Norway market is key regardless.
Lots of positive news as you state yet the share price after an initial rise has now dropped. So frustrating.
Great news, and the pattern should continue.
Both through ZEN boosting its production, and through even higher electricity prices to come.
The record profitability also illustrates what an efficient and effective operator ZEN is, who both governments and other partners should wish to do business with.
With plenty of other good newsflow in the pipeline, the outlook here is looking extremely bullish indeed.
+3% buys coming soon