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(Alliance News) - Shares in Zenith Energy Ltd rose on Monday, as it said it would handover the contract rehabilitation area in Muradkhanli-Jafarli-Zardab block of oil fields in Azerbaijan to state oil firm SOCAR.
Shares in the Canadian oil & gas company were 11% higher at 1.00 pence on Monday in London.
The contract rehabilitation area is part of the rehabilitation, exploration, development and production sharing agreement signed over the block, and features areas where existing production needs to be improved.
Zenith will continue to operate the CRA and maintain oil production activities in Azerbaijan until the handover is completed. Afterwards, the company expects to achieve a near total reduction in operating expenses from the country.
In addition, Zenith is owed USD700,000 from sales of produced oil through a local subsidiary, which it is expected to collect in the near future.
The CRA's current production stands at around 180 barrels of oil per day.
Looking ahead, Zenith said once the CRA handover is completed, its sole operational focus in Azerbaijan will be to perform exploration activities.
"The transformational development oil production and revenue generation opportunities we are currently completing in Africa require a strategic review of our focus to optimise the deployment of our financial resources and management attention," said Chief Executive Officer Andrea Cattaneo.
"Zenith has deployed significant financial and technical resources since the beginning of the Azerbaijan project in order to achieve material increases in oil production. Results have underwhelmed management and market expectations for a number of reasons including the complexity of the geological formations and oil reservoirs, the poor condition of many existing wells, as well the inaccuracy of historical well records," Cattaneo added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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