Zenith shares rise on revised terms for Tilapia acquisition

(Sharecast News) - Zenith Energy has successfully renegotiated the terms for the acquisition of Anglo African Oil & Gas Congo from AIM-listed Anglo African Oil & Gas, it announced on Friday.
The London-listed firm said AAOG Congo has a 56% majority interest in, and is the operator of, the Tilapia oilfield in the Republic of the Congo.

It said it had entered into a new conditional deed of variation, which now included the acquisition of a 100% interest in AAOG Congo and related intercompany loans, for a revised total consideration of ?0.2m.

The variation to the terms of the acquisition meant that completion would occur after the passing of a resolution, to be put to shareholders of Anglo African at a general meeting.

Completion was thus no longer conditional on certain regulatory approvals being obtained in the Republic of the Congo.

Under the terms of the deed of variation, payment of the revised consideration would solely depend on the passing of the resolution, Zenith's board explained, with payment expected on the next business day following the date of the resolution being passed.

In addition, Anglo African would novate 100% of the intercompany loans with AAOG Congo to Zenith as of the date of completion, equivalent to around ?12.5m.

As it had previously announced, AAOG Congo was owed around $5.3m by Soci?t? Nationale des P?troles du Congo (SNPC), as a result of past work performed on the licence.

Following completion, Zenith said it would assume responsibility for all ongoing costs and liabilities in relation to AAOG Congo.

It was expecting to implement a series of cost-cutting measures at AAOG Congo in a bid to improve profitability, especially in reaction to the significant recent decline in oil prices.

"Acquiring a 56% interest in the potentially transformational Tilapia oilfield, as well as 100% of the approximately $5.3m in receivables, for a consideration of ?0.2m is a fantastic result made possible by the exceptional circumstances brought about by the Covid-19 pandemic, as well as the current low oil price environment," said chief executive officer Andrea Cattaneo.

"We are fully confident that the necessary regulatory approval process in the Republic of the Congo for the transfer of ownership, as well as negotiations for a 25-year renewal of the Tilapia licence, will conclude positively, having been delayed due to the difficulties caused by Covid-19.

"I believe we have obtained significant value for Zenith shareholders by concluding the transaction under the revised terms and I look forward to delivering further good news in due course."

At 1214 BST, shares in Zenith Energy were up 17.07% at 0.88p.