Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
Continuation:
Since the ZEN 07.07.2020 RNS announced a “Joint Venture Agreement for acquisition of a second oil production asset” with a “local oil and gas company” , this latest news regarding the MKB Fields does raise the, admittedly highly speculative possibility, of ZEN involvement. If it proves otherwise, and the MKB Concession is acquired by a rival, it will at least suggest that Bruno Itoua, the Minister of Hydrocarbons, is carrying out his threat to strip Maixent Ominga, the CEO of SNPC, of his control of the MKB Fields, and simultaneously and consequently likewise for Tilapia. AC's recent reference to “the potential near-term award of the Tilapia II licence” [RNS 26.01.2022] might then assume a more significant meaning.
AGEOS
Those who are aware of ZEN's potential interests in the Congo [Brazzaville] will know that the Tilapia Field is the first of several possible acquisitions under negotiation. An RNS on 07.07.2020 was the first to mention a second, though unnamed, target, and in a Feb 2021 Financial Fox interview AC referred to “discussions regarding second and possible third and fourth assets.”
In considering possible targets I detailed, in posts on 10.07.2020 & 12.02.2021, the merits of the MKB Fields [Mengo, Kundji, Bindi & Tchiniambi Fields] as the most likely candidates, with that of the Kundji Field conforming most closely with the characteristics of the target acquisition as described in the 07.07.2020 RNS. By that time [ie 2020] the MKB Fields were fully under the control of SONAREP, the Research and Production subsidiary of SNPC [National Oil Company] having progressively reverted to the state during the previous two decades due to falling production.
It now appears, from articles published on www.africaintelligence.com on 14.& 31. 01.2022 that operational control, in part or whole, of the “MKB Concession” or “MKB Block” may have been acquired by an entity described as an American company called “Trident OGX” I quote from “Africa Intelligence” in a qualified manner since its previous reportage on Congo matters has at best been inaccurate and at worst the object of litigation. Without going into detail on the merits or otherwise of this particular claim, it is sufficient to state that although there is no official corroboration of which I am aware; and the transfer of operational control from SONAREP does not appear to have been ratified by the Council of Ministers, there is circumstantial evidence to confirm involvement of a company named “Trident OGX International Pte Ltd” based in Singapore, in a study of the Mengo Reservoir mineralogy [see link below]
www.tridentogx.com [click on “experience”, then on “Congo Public Data”
This company is part of the Trident OGX Group, and appears to specialise in O & G Upstream Project Management. The document entitled “Reservoir Observations Related to Clay Content” Aug 2021 was probably prepared for a client/prospective JV evaluating the Mengo Reservoir production potential within the MKB group of Fields. Trident OGX is not itself directly involved in O & G Field Operations so the 'Africa Intelligence' claim that it has acquired operational control from SNPC seems unlikely; more so that a client of Trident OGX has, or is negotiating for, part or whole of the MKB interests.
To be continued.
Londonfishb5,
I see from your post history that you're a fellow-geologist, with considerable O & G operational experience, including that of the Nigerian delta. As such your continued contributions to this BB would be greatly appreciated. I'm an ex-academic with numerous former specialisations so that leaves unlimited scope for your expertise. Your focus on ADME is I assume for the trading opportunities. ZEN, we hope, has longer term potential.
Fakevenues
If I have time and anything useful to add, I will do so at the weekend. Otherwise trust Londonfishb5 as he has more appropriate experience and knowledge.
Those familiar with the wider O & G industry in Tunisia will have noted the recent temporary suspension from the LSE of Upland Resources Ltd [UPL] which was made at the company's request for the reason of being unable to file company accounts by the deadline of Dec 31st 2021 due to the stated “principal outstanding matter relating to a financial liability associated with the Company's Tunisian Permit.” The permit in question is that of Saouaf which as described in a previous post, has a common border with the northern limit of ZEN's N Kairouan Permit [SLK Field included].
Upland has a 50/50 JV agreement with ETAP for the 4004 sq km area and is in its first [prospecting] period, lasting until Dec 23rd, 2022, after being granted a one year extension covering the current year. Geophysical work to date has identified a number of “leads and prospects” [ see co website for details] several of which extend into ZEN's acreage.
Whilst the suspension may well be solely for clarification of an accounting detail, AC's stated objective of acquiring further Tunisian assets, allied with Upland's possible financial challenges [current mkt cap £2m] make this another possible target for ZEN ambitions.
AGEOS
“Canadian oil and gas company Zenith Energy plans to strengthen its partnership with Tunisia and invest more in the hydrocarbon sector, CEO and President of the company Andrea Cattaneo said Tuesday.
He was speaking at a working session held with Minister of Industry, Mines and Energy Neila Genji at the ministry's headquarters.
The Minister said her department is committed to continuing to support investors in research and exploration in the hydrocarbon sector and help them work in the most favorable conditions.
One of the government priorities is to resume the normal pace of activities in this dynamic sector in order to increase domestic oil production, which is likely to bolster energy security.”
Ref: Tunis Daily News 06.01.2022.
TYB; impossible to predict, but yesterdays initiative is encouraging as it's the first licence approval submitted by the new Minister since his appointment.
An RNS announcing agreement of the terms of the Tilapia II 25 yr licence will come before submission to the Council of Ministers and I assume AC is working on that agreement now.
Since negotiations for the Tilapia II licence inevitably depend upon the sympathetic involvement of the Ministry of Hydrocarbons it is at least encouraging that the new Minister, Bruno Itoua, appears to be cracking on with the job.
At a meeting of the Council of Ministers held yesterday he introduced the first major production sharing agreement [PSA] of his administration, relating to the offshore Marine XII permit area. This includes the massive 5.8 billion boe gas and oil pre-salt Nkala Field first discovered by ENI in 2015. SNPC the state oil company have a 10% interest so in time they should be able to afford to pay ZEN the $5.7m owed. I can post a translation [not google-translate] of the relevant Minutes of the meeting if anyone is interested.
This is a precursor of the governmental process to which the Tilapia II licence will be subject as it too will presumably have to be submitted to the Council of Ministers before submission to Parliament for final approval.
AGEOS
Florida; When Bruno Itoua, the new Oil Minister criticised Ominga,the DG of SNPC for not developing its assets ie MKB and Tilapia, he added “and above all for not having been able to put the companies financial situation in order”.
That suggests the $5.7m owing to ZEN's subsidiary may be a 'stretch too far' for SNPC even if $2m of that is credited as the licence signature bonus. AC may be using the $3.7m balance owed as a bargaining tool re any signature bonus for the possible JV or insisting on it as cash.
The “ issue of the receivable and a Tilapia licence” being linked, as in your quote from Align, is certainly true as it has been stated twice to my knowledge that the $2m signature bonus will be deducted from the total receivable.
Negotiations regarding finalisation of the Tilapia II licence were inevitably delayed by the cabinet reshuffle following the presidential elections earlier this year.
As posted in September,, Stev Onanga General Manager of SONAREP, the subsidiary of SNPC {National Oil Company] which has been responsible for Tilapia since 2005, was appointed DGH [Directeur General des Hydrocarbures]. The previous DGH, Teresa Goma, had appeared to be opposed to ZEN acquiring the Tilapia licence.
In addition a new Oil Minister, Bruno Itoua, was appointed and lost no time in criticising the Director General of SNPC, Maizent Ominga, for not developing the licences held by the company, specifically mentioning the MKB Fields, but no doubt by implication also referring to Tilapia since these were at the time the only assets under its control.
Also in September it was revealed that during a visit by the OPEC secretary general, SNPC had stated its “hopes, with new oil field developments to increase production to around 30,000 bopd”. It is unclear from the context whether or not this included Tilapia as the only specifics were of “five appraisal wells drilled during the last year and currently under test” and which could only have been in the Kundji Field, one of four constituents of MKB. The SNPC statement also included “SNPC is looking to form a joint venture to start operations on a third dormant field and has been cooperating with the Ministry of Hydrocarbons in order to find a company for the project.” Remember, AC in a 07.07.2020 RNS referred to a “JVA for the acquisition of a second asset in the Republic of the Congo”. See posts of 10.07.2020, 12.02.2021, 08.08.2021 & others.
In October the Ministry of Hydrocarbons issued a revised map of the “Congo Coastal Basin Exploration and Exploitation Permit Areas” which shows Tilapia as an 'Exploitation' area under the auspices of SONAREP, so no change at that time.
There were no further disclosures of relevance at the recent Cape Town & Dubai Africa Oil conferences of which I am aware.
So that appears to be the context within which AC continues his negotiations and I'm sure he is as keen as everyone else to see this, and probably the JV also, finalised.
AGEOS.
MGS, thanks, always good to be reminded of the broader picture and none better than your periodic updates.
Regarding Tunisia you could also add the proposed $3.5m intervention at well EBB-3 in the 100% owned El Bibane Field, which AC has mentioned several times as being “under consideration, to restore production of 500+ bopd” although my guess is it has lower priority than the land-based developments at Robbana, Ezzaouia and Sidi El Kilani.
Completion of the 45% interest in the latter, SLK, could also trigger a significant workover and enhancement program to increase the current 655 bopd to nearer 1000 bopd, as ETAP are known to have a particular interest in wanting to develop this and the wider Kairouan Concession. I've referred to recent ETAP geologists' reports on this in several posts.
Also don't forget the Mazrane Field as a possible target for the “additional Tunisian assets” AC refers to [see Nov 30th post]; just requires a couple of workovers, same as ROB-1, and production could increase from current >50 bopd to 200+ [50/50 share with ETAP]. This and Bir Ben Tartar are however only two of maybe 20 targets which AC could be considering, so highly speculative at this stage.
No comment re Tilapia at this stage as too much misinformation still in circulation from AAOG days but hopefully its time will come soon. Also remember that completion of Tilapia II triggers a second acquisition about which I've posted much before.
Thanks again and keep up the great work.
Florida, I defer to what is evidently better judgement on your part, as to the probable outcome of this Nigerian affair.
Even if there was a third party involved as events suggested, ADM Energy would not have been able to obtain a court injunction against NHNL without sufficient and compelling documentary evidence to convince a judge of the probable merits of their claim. It would be highly unlikely that NHNL would have been unaware of such evidence and would therefore have been duty bound to disclose that evidence to ZEN as part of the DD process. That AC concluded any 'Option Agreement' and certainly one which involved buying a 42% equity stake in NHNL, strongly suggests that no such disclosure was made.
Your letter of 30th Nov to AC raises the relevant questions in exemplary form and I suspect, if not answered directly, except perhaps in an acknowledgement, will be, by RNS and probably very soon.
Thanks Michu for your assessment, which I take very seriously indeed. I am aware that as a geologist I have an innate bias towards those aspects of any investment, so very much appreciate your viewpoint.
In view of today's revelation that ADM Energy have a court injunction in force against NHNL barring disposal of any equity interest, it appears that a positive conclusion to the 'option' is now very much in doubt. So your preference may well be met.
As an aside, which may interest you. I have a special regard for the familial 'Michu' as he was a 'hero of the 1989 revolution' and valued friend during my years in that beautiful country.
Thanks Upside.
The following extract is from an RNS released today by ADM Energy [see LSE ADME share BB].
“ADM and its legal advisers, continue to assert that NHNL's position as proffered is untenable and wholly without merit and are taking all necessary legal steps to protect and secure ADM's interest in the circumstance.
In the above regard, ADM and KONH instigated proceedings against NHNL at the Federal High Court of Nigeria, Lagos. The Court has been asked, inter alia, to determine KONH's rights to its 70% interest in NHNL and all other related matters. ADM is pleased to announce in the meantime that, on 10 December 2021, it obtained an interim injunction restraining NHNL, its officers, agents, privies or person howsoever connected from selling, disposing, divesting or tampering with the 70% shareholding interest of KONH in NHNL to third-party investors or in any other manner whatsoever. “
No chance of the 'Option' proceeding under a court injunction.
Florida – agree with you entirely where the potential litigation is concerned but didn't refer to it as NicetoMichu hadn't raised it as part of his Thursday post. In addition I would expect that DD will include legal assurance of no basis for litigation both in respect of equity interests in NHNL and with regard to the RSA claimed by ADM. From the evidence of which I am aware, both NHNL and ADM Energy appear to have been the targets of third party manipulation, rather than the instigators, some aspects of which I have detailed in previous posts. I doubt this will provide a basis for litigation between the two companies but agree that AC must be 100% sure of that before taking up the “Option”.
continuation:
As previous link appears to have failed, hopefully this will succeed:
https://link.springer.com/content/pdf/10.1007/s13202-017-0363-x.pdf
Although no data comparable with that of this SH Field has been released for Barracuda we can be certain that such exists and that equivalent interpretation and evaluation has been completed. Both the 2016 Ryder Scott CPR and the 2019 Degeconek CPR will have contributed to that end, and as previously posted, the area has been subject to 700 sq km of 3D seismic, 1200 km of 2D seismic and to well-log petrophysics. Nothing less than the type of rigorous evaluation exemplified by this SH Field study would have been concluded for Barracuda, for it to be possible to identify the four locations for drilling. Each well will have its own 'risk' profile and each profile will to a greater or lesser degree be independent of the others. Thus if B-5 fails or falls short of economic viability it does not follow that the potential of any or all of the other proposed wells is similarly reduced. Each well is assessed on its own 'probabilities'. Consequently there is no “bet [by AC] on one well being successful.”
The financial risk to ZEN of participation in the B-5 well should also be assessed within the wider context of anticipated developments in Tunisia and Congo [Brazzaville] both of which should be very positive for market perception of the company during Q1/Q2 2022, coincidental with the B-5 drill schedule. However, regardless of such potential positive context, it is perhaps inevitable that the market will react unfavourably to any shortfall in the results from B-5. An increase of $20m in debt plus the prospect of a further $3m to fund B-6 would immediately impact the market capitalisation severely. Conversely a positive result from B-5 should be rewarded very favourably. Such is the dilemma of investing in an early-stage company. Best of luck to you Michu, and all.
AGEOS
NicetoMichu,
In response to your Thursday 18.32 post, although I understand your concern regarding AC's proposal to acquire an equity stake in NHNL and thereby finance the B-5 well at Barracuda, the 'risk' element to the transaction is not that of “effectively betting the company on this one drill being successful” as you so dramatically describe it, but I suggest, is far more nuanced.
Firstly it is important to remember that the $20m outlay is to acquire 42% of NHNL, including 42% of its 100% interest in the RSCA [Risk Service Contract Agreement] for 105 sq km, inclusive of the Barracuda and Elepa South Fields and the Curlew Channel gas & condensate prospect, and also of any additional prospects which may be identified or acquired in the future. The medium-long-term potential of this 42% interest far exceeds that of a single well. Barracuda alone has an estimated 23,000 bopd potential from 6 wells. For comparison, Perenco have just acquired Total's 8400 bopd offshore Gabon, mature production for $350m.
Secondly, according to the 'Option RNS' the costs of drilling and commissioning B-5, are to be paid by NHNL from the $20m 'Consideration'. This implies a cost substantially below the historical $25m for a 10,000ft well, which accords with the current industry demand that costs must and can be reduced to nearer $5m per 10,000ft by efficiency improvements. At least one industry provider is quoting $5m, in this case for a horizontal extension. This provides some reassurance that the planned B-6, 7 & 8 wells, to which ZEN will be required to contribute 42% of the costs, will not be excessive.
Thirdly, it is useful to have some understanding of the structural geology of the delta fields, as it provides context within which the 'risks' associated with drilling a well can be assessed. The four diagrams [Fig 2] on page 2 [page 52 of publication] of the geophysics paper [link below] regarding the SH Field, are probably illustrative of the kind of structures which characterise the Barracuda Field, and Fig 4 [page 55] & Fig 5 [page 56] typical of the seismic data sets on which such structural interpretations are based. The 'abstract' provides a descriptive summary of delta field characteristics.
Seismic interpretation and petrophysical evaluation of SH field, Niger Delta - Sanuade2018_Article_SeismicInterpretationAndPetrop.pdf
To be continued
Kingoftheworld
Please provide the reference and link to the “news report” you refer to; and why “ATOG/AAOG”, it has nothing to do with AAOG.
The order of the Tunisian Ministry specified that “ATOG had failed to deposit the bank guarantee required for the two permits” hence its withdrawal of the permits.
Also please explain and justify your statement that “the govt turned down zen for not being financially capable on one of the attempted deals” Which government and which deal, plus the published references for this claim.
Of the various options for further acquisitions available to ZEN a priority must be that of the remaining 22.5% in SLK Tunisia ,originally announced in RNS April 20, 2020 as an SPA with KUFPEC the Kuwait State O & G Company. Completion of that deal is still subject to approval of the Comite Consultatif des Hydrocarbures and as has been demonstrated with the recent ZEN/CNPC deal for its 22.5% of SLK, can be circumvented by acquisition of the holding company itself.
Therefore I assume ZEN will have been negotiating to acquire KUFPEC (Tunisia) Ltd or its local subsidiary, which as far as I can ascertain has no other assets than the 22.5% stake in the SLK Field and the North Kairouan Permit, plus 25 Class B shares in CTKCP the operator. Completion of that deal would give ZEN 45% unencumbered interest in SLK [55% held by ETAP the State O & G Co] and the N Kairouan Permit, and enable immediate development of further production potential.
ZEN paid $250,000 to KUFPEC in June 2020 as 50% of the total due and presumably the other 50% by Oct 2020 as agreed, and probably from the proceeds of sale of oil production which was also due to ZEN as part of the SPA. Any further payment to acquire KUFPEC (Tunisia) Ltd or its subsidiary should therefore be minimal.
Today's EUR 3m 'Loan for African Development' RNS refers to an immediate drawdown of EUR 1m which suggests an imminent transaction and since the CFO refers to “potential near-term acquisitions in Tunisia and beyond”, a conclusion to the SLK acquisition seems a likely proposition. However, since the plural 'acquisitions' is used, a number of further initiatives may also be in store.
AGEOS
Former investors of Anglo African O & G [AAOG] might derive some satisfaction in knowing that Anglo Tunisian Oil & Gas [ATOG], the private company set up by James Berwick and David Sefton [whilst still directors of AAOG, in 2019] to acquire certain Tunisian assets deemed inappropriate for AAOG to acquire because of its Tilapia failure, has just been deprived of two of its Tunisian permits.
The Tunisian Ministry of Industry, Mines and Energy published in the Official Gazette of Nov 23rd that it had relieved ATOG of its exploration permits for the South Remada and Jenein Centre concessions, which it had acquired through the takeover of Medco Energy O & G Tunisia. ATOG had failed to honour its state financial obligations and now also faces combined compensation demands of $9.2m from the Ministry.
Having screwed-up at AAOG (Tilapia) and now in trouble at ATOG, I wonder if Berwick, in desperation for cash and another corporate exit, will provide AC with more bargain opportunities. AAOG has a 100% interest in the 352 sq km onshore Bir Ben Tartar Concession which currently produces at around 500 bopd average [subject to a PSC with ETAP] and which is within the South Remada 3681 sq km concession adjacent to the Libyan border. It also has 5% interest in three other smaller [230, 130 & 55 bopd] producing fields, 10% interest in an onshore exploration and developmental prospect, and two adjacent offshore fields [100 & 80% interest] both in exploration/developmental status. Of these the Bir Ben Tartar Field would be an obvious target for ZEN.
Pure speculation but one to watch.
AGEOS.