Member Info for AGEOS

I see from the latest “Newsletter to Fixed Income Investors” recently posted on the ZEN website, that AC has left little doubt that Tilapia is 'in the bag'. The following quotes appear to confirm this.

“Zenith Energy achieved a significant degree of growth during 2021 as we successfully implemented our strategy of acquiring revenue generating oil production and development assets in Africa, specifically in Tunisia and Congo Brazzaville, ...”

“It is our expectation that we shall soon be in a position to progress our activities in the Republic of the Congo for the award of a new 25- year licence for the Tilapia oilfield.”

AC is too astute to commit to such statements in a legally onerous document without certainty of a successful outcome to such a claim.
AGEOS

Florida, couldn't have put it better myself. The following details the operational controls in Tunisia.

Fakevenues, operational control of the Bibane & Robbana Fields and their associated infrastructure is in the hands of the Tunisia-based staff of Ecumed Petroleum Tunisia, a 100% owned subsidiary of ZEN, and acquired from Candax in April2021. Additional technical staff including a Production & Technical Director [ref AC July 2021] were appointed by June 2021.

Day to day operational control of the Ezzaouia Field and associated infrastructure [45% ZEN interest] is, on the other hand, maintained by staff of MARETAP, a 50/50 joint operating company owned in partnership with ETAP {state oil company with 55% interest]..A similar arrangement applies to the Sidi El Kilani Field but with CTKCP staff as operators.

The operational progress you want to see, presumably that of workovers, sidetracks and new-drills, was, as we know, outlined in RNS on 24th Jan for Robbana and Ezzaouia, with that of El Bibane under ongoing technical evaluation. The schedule may appear delayed but that is to misunderstand the evaluation and logistical process. ROB-3 is to be drilled from a new location due to a “geological and reservoir review” and the Ezzaouia sidetracks await “completion of a reservoir study” Similarly for El Bibane. The Production & Technical Director and his team will be the main determinants of this.

Further to yesterday's post on this subject, I see that the conference promoter, www.energycapitalpower.com includes the following statement in its promotional information.

“Leading upstream activities in the Kundji and Tilapia fields, SNPC drilled five appraisal wells in 2021, with a view to increasing output by 30,000 bpd. “

There is no evidence to suggest that any drilling has taken place at Tilapia since AAOG's efforts, so I conclude that all 5 appraisal wells undertaken by SNPC [State Oil Company] during 2021 were at Kundji and for geotechnical reasons, which I wont detail here, probably targeted the deep Vandji reservoir. This conclusion is confirmed by an SFP [State Drilling Subsidiary] statement that its MR 8000 rig has been exclusively employed in the Cuvette and Kundji prospects in recent years. In July 2020, I posted that the Kundji Field [one of the 4 MKB Fields] was the most likely target for the “second Congo asset” referred to in the 07.07.2020 RNS, as it had two functional wells, probably still in production from the Mengo sandstone in early 2019. The disclosure of appraisal drilling at Kunjdi during 2021 thus maintains the possibility of ongoing ZEN interest in this as a JV acquisition although admittedly complicated by the Trident OGX interest detailed in my 06.02.2022 post.

The conference brochure also includes, amongst the discussion topics, the following which may be of particular relevance to ZEN's potential strategic involvement in the local gas to power market, “Congo’s gas masterplan and the opening of new strategically profitable opportunities - strategies to monetize stranded and flared gas.” This has particular significance with regard to the gas resource at Tilapia. The AAOG Oct 2016 CPR for Tilapia cited estimated recovery factors of 5-20% for oil and 60-80% for gas from the Tilapia Djena reservoir, which is described as being a structurally confined gas resource with a significant oil rim. It would not be surprising therefore if ZEN's submission for the 25 year Tilapia licence included proposals for development of the gas resource. If AC appears on the speakers list for this conference it will be an encouraging indication of a probable positive outcome to this protracted negotiation.
AGEOS

As the link failed and the website omits to list the event, just search on “Republic of congo to host first-ever international energy summit in Brazzaville”

Oil Review Africa, www.oilreviewafrica.com issued a promotional release on Jan 19th, for an Energy Summit to be held in Brazzaville from June 15-17, 2022, to which the link below should provide access. If not use the link above and search events.

Republic of Congo to host first-ever International Energy Summit in Brazzaville

Since the stated purpose of the event is to “showcase partnership and investment opportunities in hydrocarbon exploration, gas monetisation,[and] green energy.....with a focus on the Republic of the Congo as a key investment destination...” Bruno Itoua as “Minister of Hydrocarbons & President of OPEC for 2022” has plenty of incentive to finalise as many deals as possible in time for announcement at or before the conference.

Failure to complete the Tilapia/Zenith transaction by then would not go unnoticed by the international O & G industry and conference attendees.
AGEOS

Yes Fakevenues, and we can only hope the impact is a positive one.

With Congo [Brazzaville] ranked 162 out of 180 on the Transparency org World Corruption Index it is not impossible that the individual, self-styled as the “Director General of Trident OGX Energy Afrique” on a well known website for four months during 2021, might end up as a proxy in control of MKB. Orion Oil paid $150m for a 20% interest in MKB in 2013 on the basis of 1.3 billion barrels of oil reserves so the political elite will have their eyes on this one.

If AC can bring Tilapia intact into the ZEN fold it will have been a considerable accomplishment. To add even one of the MKB Fields at a similar cost would be masterly.

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”.