(Alliance News) - Zenith Energy Ltd on Friday said that Olive Energy E&P has been awarded a licence to operation the Tilapia oilfield in the Republic of the Congo.
The Calgary, Canada-based energy company with production, exploration and development assets in Africa and Europe said it is disappointed at the award, which it said contradicts milestones in its bid for the licence.
The company said it submitted a successful bid for a 25-year licence to operate the oilfield in 2020, before completing an Inquiry of Public Utility - as required by local law - to determine its suitability to operate the licence.
Zenith said this included an in-depth technical and financial review of the company by the Ministry of Hydrocarbons of the Republic of the Congo.
The company said it is negotiating with Societe Nationale des Petroles du Congo, the national oil company, for the repayment of USD5.3 million, plus interest, for past work performed during the Tilapia 1 licence by Zenith's subsidiary Anglo African Oil & Gas Congo SAU.
It said Anglo African is also claiming USD9 million from drilling rig contractor Societe de Maintenance Petroliere, in consideration of commercial damages suffered due to the impossibility of beginning production activities.
Chief Financial Officer Luca Benedetto said: "This represents disappointing news. However, the Company's opportunity to recover an amount of approximately USD15 million due to past activities in connection with the Republic of the Congo remains unchanged.
"This will now become our primary focus, whilst we continue to work towards completing our acquisitions in other jurisdictions for large, revenue-generating energy production and development assets with transformational potential."
Zenith shares were down 16% trading at 0.61 pence per share on Friday afternoon in London.
By Harvey Dorset, Alliance News reporter
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Zenith Energy (ZEN)