Member Info for AGEOS

To avoid confusion, ECUMED [Ecumed Petroleum Tunisia Ltd] is the 100% ZEN-owned , Barbados registered company through with ZEN holds its 100% interests in the El Bibane and Robbana concessions. The Tunisian state oil company is ETAP.
As posted before, oil from El Bibane, Robbana and Ezzaouia is co-mingled and stored at the 200,000 barrel MARETAP [50/50 joint ETAP/EPZ (EPZ is ZEN owned) operating company] storage facility at Zarzis on the coast and sold, I understand as the Zarzis blend. The frequency of 'liftings' ie sales is variable.
Oil from the SLK field is processed via a Gas Separation Plant and transferred via a 125km, 22,000 bopd capacity pipeline to the La Skhira coastal terminal from where it is shipped as a different blend to that of Zarzis. Again, the frequency of liftings is variable.
Most oil sale contracts are subject to a % allocation for “the domestic market”, beneficial ownership of which effectively passes to the state.
AGEOS

MG You are of course correct in citing the NHNL website as confirming the continued involvement of Emerald Resources as Operator.

I was relying on extensive notes made back in September which includes the following from
www.africaoilgasreport.com [search OML 141 Nigeria] dated April 10th 2019.

“The Nigerian government has approved the request to revoke the licences of six Oil Mining Leases (OML's) …..
Revocation is the ultimate penalty for defaulting on royalty payments.....
The acreages affected include.......OML-141, held by Emerald Resources whose principal, Emmanuel Egbogah, passed on recently [18.06.2018]”

The Emerald Energy Resources Ltd website [ www.emeraldngr.com ] cites under “OML-141 Joint Interest Ownership” the following which is at least 3 years out of date, as is the rest of the website which appears not to have been updated since the principal, Egbogah died:
Emerald Energy Resources Ltd 53.9% [note the * Operator]
Amni Oil & Gas Ltd 44.1% [ Note that this company is listed on the Nigerian Corporate Registry as inactive ]
Bluewater O & G Inv 2% [Note that Bluewater transferred its 2% to Supernova Energy B V]

Also note that Emerald Energy Resources Ltd RC 312274 is currently shown as “Status Inactive” on the Nigerian Corporate Registry www.cac.gov.ng

The above suggests the possibility that Emerald Energy retains the “Operator” interest but lost the “licence”, and my guess is that the “sole risk beneficial interest” lies with the latter ie with Noble Hill, and it's that which counts where ZEN is concerned.
AGEOS

MG, great summary of what is a highly complex scenario..

With regard to your query regarding Emerald Energy Resources Ltd, the company lost its licence in OML-141 [including the Risk Service Contract for OML-141 NW] in April 2019 as part of a revocation of seven block allocations by the Ministry of Petroleum Resources, subsequently ratified by the Government.

As far as I can ascertain, the RSC for OML-141 NW was acquired with 100% interest by NHNL [Noble Hill-Network Ltd] whilst the remainder of OML-141 [the offshore & majority area] reverted to the Government, with one possible exception, a 2% “working interest” apparently still held by Supernova Energy B V. Three other companies also had a stake but I'll spare you the details.

This suggests that 100% beneficial interest [less royalties & taxes] in OML-141 NW is held by NHNL, so ZEN is negotiating to acquire a portion of that interest, probably equivalent to an equity stake in the company, which I believe is limited to 49% max by state law.
AGEOS

In view of these developments relating to Noble-Hill, some of the comments made by AC in the Nov 10th Investor Call assume an added significance. Thanks to MG's splendid effort in documenting the 'call' the following is of special note:

AC is reassured of the competence of Noble-Hill as RSC operator [I posted that the MD, Tom Cavanagh, is a former Exxon geologist] and appears confident of being able to raise the funds necessary for initial field development. Local banking is mentioned as a possible source for loan finance of c$5m. He states “OML-141 is an incredibly attractive field [certainly appears so from geo-tech data I've seen] and we believe that if we sign it we will be able to develop it soon after.” so appears to be on a potential fast-track. We can expect an RNS in December.

So, appears we may have another contender for the “company maker” some were debating a short time ago.
AGEOS

Fakevenues; that is indeed a significant development.

The Noble-Hill Network website, to which you provide a link, is a new and comprehensive upgrade to the one which I accessed in Sept-Oct, which in itself is an indication of imminent developments at the company.
Also, as you highlight, the 'Disclaimer Notice' puts an end to the RSA [Risk Sharing Agreement] in which ADM Energy continues [as recently as Nov 15th in RNS] to claim to have a controlling interest.
That leaves ZEN's stated interest in a possible equity share in Noble-Hill as the sole contender for a shared interest in the OML-141 NW RSC [Risk Service Contract] with Noble-Hill.
My previous lengthy posts of 07 & 14.09.2021 provide additional information.
AGEOS

Florida, thanks for the Aug 31st RNS reminder. I had forgotten the reference to a 'drill-ready' well location and completed civil-works which provides some reassurance regarding the ground conditions at one locality at least.

However, having been prompted to look at the satellite imagery of the area west of the Brass River which is where the 'Fields' are located, it appears that the few locations which could possibly be described as 'civil-works' are all adjacent to river tributaries and have purpose-built moorings alongside. None have any visible land access. The prospect for use of the ZEN rig therefore appears to be negligible. The RNS reference to the nearby Shell OML-33 prospect reinforces the point as access to that is described in a recent Wood Mackenzie report as limited to helicopter and boat, and consequently remaining undeveloped.

As you rightly note, only three weeks remaining of the DD period.

Having reconsidered what I posted yesterday there is an obvious answer to the query I raised of an apparent inconsistency of information in the 'Energy Year' article and the RAEX-Europe Credit Rating Report. Evidence in support of the 'answer' is in the “Use of Proceeds” listed in the 02.11.2021 RNS re the £3m capital raise.

This states “£600,000 – expected cost of drilling a new well in the Robbana concession” which must refer to the planned ROB-3, 2400m well “ As this was previously costed at $1.5m [June 10 RNS] the reduction in cost would be explained by use of ZEN's own rig. There is no way the well could be drilled for £600k at current industry rates without some compensatory factor.

The 'Use of Proceeds' also allocates “£1,300,000- funding of Zenith's share of work programme costs in respect of the Ezzaouia concession......including the drilling of two sidetracks in non-producing wells” Even at 45% of the total cost [ETAP must fund 55%] £1.3m seems very low since the CTF rigs used by ETAP are usually costed at up to £3m per well. That again suggests that AC may have negotiated use of the BD-260 with a consequent reduction in ZEN's cash contribution.

If, as seems to be the case, the above supports the statement in the RAEX Report, of deployment of the rig to Tunisia, we can expect confirmation with the anticipated announcement of operations for ROB-3 very soon.
AGEOS

Fakevenues, although Barracuda, Elepa South and the Curlew Channel are defined as being in the “swamp depobelt” the terrain within the belt varies from open water to mango marginal swamp, saturated ground and dry land. It appears from the limited mapping available that Barracuda and Elepa are well clear of the open water and presumably the marginal swamps. The suitability of the BD-260 rig will therefore depend on ground stability in the locations determined by the seismic analysis but regardless of that will inevitably require appropriate drill-pad construction and overland heavy vehicle access.

The 'Energy Year' article re “Zenith Energy” to which a link was posted by Fakevenues yesterday is especially intriguing in that it combines a highlighted subtitle link to data on Nigeria with the following textual statement :

“Owning its own drilling and workover equipment also represents an attractive proposition to potential partner companies who see the value in directly operating key operational equipment and may give Zenith equity in their licences in lieu of payment for drilling services” [penultimate paragraph]

The obvious implication is that. this is a thinly veiled hint that current negotiations with Noble Hill-Network Ltd might include deployment of the BD-260 rig to Nigeria in return for all or part of the equity stake in NHNL previously stated as ZEN's preferred option. This article, as with others in Energy Year is said to be the result of an interview with the CEO so is unlikely to include journalistic speculation.

However, the above scenario is at odds with the statement below, included in the recent RAEX-Europe Credit Rating Report and posted by GaryMegson.

“The company has also stated that the ZEN-260 drilling rig, which was used in Azerbaijan, is currently at a port on the Black Sea and is scheduled to be moved to Tunisia in the next months. The main use of the rig will be for drilling operations in the Robbana concession, as well as the Ezzaouia concession.” [page 4, penultimate paragraph].

As well as not having been publicly “stated by the company”, at least in RNS to my knowledge, such a deployment would appear to be potentially problematic in view of ETAP's 55% controlling share in the Ezzaouia concession. As the State Oil Company it can influence or determine what partnership companies can and cannot do in developing resources. Allowing ZEN to import the BD-260 rig for use at Ezzaouia would be surprising, given that ETAP has access to two CTF onshore rigs; a Midcontinental U-914 EC 2000HP, 15000ft depth rated rig and an Oil Well E 2000HP, 20,000ft depth rated rig, together with highly experienced drill crews. MARETAP, the joint operating company for Ezzaouia is listed as a customer of CTF.

There will of course be pro's and con's wherever the BD-260 is deployed but on balance the upgrade to a c5000m depth rating, originally intended for the ZEN-01 Azer well, should provide a sound basis for operations in most settings. C-37 was successfully drilled to 4350m in Sept 2019. Hopefully the investor call will provide clarification of this issue.
AGEOS.

Thanks EZHIK; your response always much appreciated. Hope no after effects from your encounter with covid, and yes a 'shot in the arm' for ZEN of the kind you describe would be most welcome.

CanaryinTheMine, “is there any way of telling from the video how much oil the pump is likely to produce?”

Simple answer is no, as it is the well-production rate, as determined by the physical-chemical characteristics of the reservoir and its constituent liquids/gases, and the structure of the well, which dictate the specifications of the sucker-rod pump and not the other way round. Basically, the pump assemblage is custom built to conform with the anticipated production potential of the well but with the proviso that the pump has greater capacity than the well. After the killing-fluid and water-emulsion is removed, the pump performance will be monitored and adjusted to ensure that pump capacity, as determined by stroke length x stroke frequency x plunger diameter, is consistent with downhole inflow rates sufficient to produce stable oil flow at surface.

It follows, from the above, that the pump assemblage is designed to handle at least up to the 60-80 bopd stated in RNS as a potential, a flow rate which may have been calculated on the basis of enhanced production from the uppermost Upper Meloussi reservoir alone. With the disclosure that some perforations into the lowermost reservoir have now also been cleaned out, the possibility of additional flow at that level also exists and no doubt the pump design would have been enhanced accordingly. The pump is within the production tubing and probable at or near well bottom judging from the stacks of bore-rod shown in an earlier visual, so perhaps they decided to increase the pump-barrel length in anticipation of extra production if the lower reservoir flows. We will know soon enough.

Apologies if this is incomprehensible. It would be far worse if I went into full techno mode.
AGEOS.

Welcome news of a successful workover of ROB-1[Robbana Field, Tunisia] today, but a possibly predictable market response. Whilst the reference to the “previous sucker rod pump functioning at only 20% capacity” implies previous unexploited production potential, there is also an intriguing mention of the clearance of “the lower perforations”

I explained in detail on 03.10.2021 that production from ROB-1 since 2012 had been confined to the uppermost of two known reservoirs in the Upper Meloussi sandstone, originally logged as “17.7m of net pay between 2103 and 2137m downhole”. That implies, two reservoirs of 17.7m combined thickness, separated by 16.3m of unproductive strata. The lowermost of these two reservoirs was the target of the 2012 failed re-perforation. A “failed re-perforation” does not necessarily mean “a bungled job”, it is more likely to imply failure to intersect sufficiently porous and/or permeable substrate or failure to induce flow. That is why I referred to a re-perforation of the lower casing as being a probable consideration in the workover, after de-waxing.

The fact that the workover did not extend to a re-perforation suggests that the removal of 200m of wax deposits [ref Oct 12 RNS] and “clearance of lower perforations”, is considered sufficient to enable potential flow from this lower reservoir. If flow is indeed induced from both lower and upper Upper Meloussi reservoirs as implied, this will be a significant precursor to the planned new ROB-3 well intended to target the same resource. As mentioned on 03.10.2021, additional wells targeting the as yet undrilled deeper 5.4million barrel Middle Meloussi reservoir, are also a possibility.

Regarding potential production from ROB-1, I quote AC as stating “we remain cautiously optimistic about the relatively sizeable production uplift we may be able to achieve” emphasising his use of the word “relatively” as meaning relative to the previous 20 bopd.
AGEOS.

Another possible driver of investor interest is that the Congo [Brazzaville] Conseil de Ministres is meeting today at 14.00hrs so understandably there is speculation that Tilapia might be on the agenda. The recent increasing frequency of meetings, ie on Oct 7 & 12 indicates a possible end to months of legislative inactivity, so maybe Stev Onanga the new DG of Hydrocarbons will finally present this for ratification by Council. We will know by Monday.

Florida, re your question on the POO thread. The Feb 2012 workover of ROB-1 included “optimization of the beam pumping system” and since the Sept 1 2021 youtube video shows a 'sucker rod pump' structure [not of the archetypal beam-pump nodding-donkey design but functionally the same] in the foreground, at 1.13min, it seems safe to conclude this is the current and probable future mode of extraction.

The adjacent Mazrane Field which has two wells, drilled in 2007 and 2015, currently producing a combined 140-160 bopd from the Upper Meloussi reservoir, also employs sucker rod pumps.

I doubt that ESP's would be appropriate. The economics usually doesn't justify their use in low production wells and especially for waxy oils such as this as it might require down-hole heaters to ensure the oil temperature doesn't fall below the “cloud point”, at which wax crystallisation begins. This is highly complex geo-tech, often specific to fields, reservoirs and even individual wells. Even the 'shear-rate' of the bottom-hole fluid flow is a relevant factor, so a subject best avoided on chat-boards.

ROB-1 first came into production in 1993, achieved peak average production of 410 bopd in May 1994 and was shut-in in 2009. It was reopened in July 2011 at 50 bopd but after the failed workover of 2012, fell to 27 bopd and as already stated declined slowly to the current c20 bopd. An increase to 50-80 bopd at ROB-1is the best we can hope for.
AGEOS

As detailed in paragraph 3 of my 14.09.2021 LSE Post regarding ZEN's 'Exclusivity Agreement' with Noble Hill-Network Ltd [NHNL}, news of the long overdue CPR for the Barracuda Field, commissioned by ADM Energy from Xodus Ltd was anticipated by the end of September. An update duly appeared in the annual and interim reports from ADM released on 30.09.2021 as follows:

“ The Company has commissioned [in May 2021] a Competent Person's Report ("CPR") on the Barracuda Field. ADM has received a draft of a preliminary report however it is not yet finalised pending further technical appraisal. Once finalised, ADM will be in a better position to conclude the full CPR report as well as its strategy for the Barracuda field. “ ref Interim Results for 6 months ended 30.06.2021 page 3.

The ADM Energy Annual Report & Accounts for year ended 31.12.2020, released 30.09.2021, includes an identical statement to the above as a post period note, on page 6.

This confirms, as I surmised on 14.09, probable difficulty in obtained access to and evaluation of the seismic and well-log data relating to Barracuda, and suggests a protracted and possibly incomplete conclusion to the CPR process. A favourable CPR is essential if the Risk Sharing Agreement [RSA] to which ADM and the other Consortium Members are party, is to proceed, and equally so if ZEN is to conclude an equity purchase agreement with NHNL.

Although this offers huge scope for speculation regarding possible outcomes, including the viability of the RSA, perhaps it is best to simply await developments.
AGEOS.

continuation:

Robbana oil is of 43 API [super-light] with a moderate paraffin wax content and low GOR [gas/oil ratio] so I suspect that 'flow optimisation' will include de-waxing of the production tubing and down-hole assembly. As the decline rate since 2012 has been very low, from 27 to 20 bopd, it is unlikely that waxing will have affected the reservoir sufficient to warrant re-perforation of the uppermost level. They may however attempt to improve flow by flushing out the perforations with hot oil or chemical solvents. Re-perforation of the lower reservoir will, on the other hand, probably require a re-drill of the casing [assuming it is not open-hole] as the previous perforations failed to intersect sufficient permeability, for which a wire-line intervention will presumably suffice.

Whilst the potential production increase from this single well is limited, the information gained will greatly assist in the planning of the new ROB-3 well, 60m SW of ROB-1, targeting approximately 100-150 bopd from the same Upper Meloussi reservoirs and from a 2P reserves estimated in 2014 at 360,131 bbls. These initiatives are also preparatory to possible exploitation of the deeper Middle Meloussi reservoir, not previously drilled but estimated to hold 5.4MMbls [5.4 million barrels] of oil in place. Note that the Robbana Field occupies only 1.68 acres of the 11,856 acre Robbana Concession.

Despite the obvious challenges we can be sure that the ECUMED field crew will be highly motivated to make a success of this workover as they will want to impress their new boss and enhance their credibility for further contracts. If they fail it is unlikely to be due to any fault on their part as Tunisian drilling crews are highly competent. Workovers are, as with all aspects of the industry, subject to the probabilities imposed by the geology.
AGEOS

The Tunisian Robbana Field ROB-1 well is currently undergoing a workover, intended to increase production from a previously stable 20 bopd to a targeted 50-80 bopd. As the success of such interventions is never guaranteed it is useful to understand some of the challenges involved and the implications of whatever results are achieved not just for this well but also for the planned ROB-3 well, intended as an immediate follow-on, and any additional wells which may be drilled.

Progress notified to date includes “Rigging-up” in progress Sept 3, “commencement of operations expected on or before Sept 10” and “working operations expected to take between 20-30 days from start to finish” so completion is expected sometime between now and Oct 10. This time schedule may not include flow-testing.

The workover has probably entailed two separate stages; firstly the optimisation of flow from the uppermost Upper Meloussi sandstone which has apparently been the sole source of production since 2012, and secondly the re-perforation of the lower Upper Meloussi sandstone in an attempt to induce flow from this deeper reservoir. An attempt to re-perforate this lower reservoir in February 2012 failed, so this is not a procedure for which success is guaranteed. The techniques are not difficult; the probability of success depends more on the petrophysical and sedimentalogical properties of the reservoir rocks at that precise location, originally logged as 17.7m of net pay between 2103-2137m down-hole.

To be continued

Is it a coincidence that the drone aerial view of El Bibane offshore is released on the same day as an RNS in which Luca Benedetto ZEN CFO & MD Italy states “It is our intention to replicate our successful model of electricity production at Torrente Cigno on a larger scale in certain African jurisdictions, following the identification of a suitable oil and gas production asset”?

I posted details of the El Bibane asset on 05.05.2021 including reference to the contingent reserves of 6.5 BCF [billion cubic feet] of gas. I also referred to the legacy infrastructure with which dry gas had been supplied from El Bibane and Ezzaouia, to the SEEB 27mW Power Facility which had generated electricity for the national grid from May 2003 to January 2010.

Although the SEEB Titan gas turbines were removed and sold in 2012, the site which is adjacent to the El Bibane MARETAP oil-condensate-gas processing facility, is still presumably owned by Ecumed and could be available for any future ZEN gas to power installation. The switchyard and 10km transmission line linking the former power facility to the nearest STEG substation may also be intact.

With Tunisian electricity demand predicted to double during the next 15 years and a shortage of local gas production [45% imported from Algeria in 2019] this seems likely to be one of the Gas to Power targets under consideration and alluded to by Luca Benedetto.
AGEOS

As surmised from the BCRA Credit Rating Report, the Tilapia PSC may well be at or near completion stage as the following extracts from the Annual Report for year ended March 31, 2021, published August 31st indicate

Pp 53 “as a result of the work conducted to date on the License” [re Tilapia] “it is expected that the signature bonus of US$2m....for the new license will be offset from the receivable “[ US$5.7m] due from SNPC.

Pp 79 “The costs associated with the termination of the Group's operations in Azerbaijan are approximately US$ 0.5m which are related to the transportation costs due to the relocation of the rig which was previously installed in Azerbaijan to its operations in Congo.” Whilst this may be a statement in anticipation of an intended future action for accountancy reasons, it certainly implies commitment to, or completion of, shipment of the BD-260 rig and ancillary equipment to the Congo. To comply with Congo import regulations ZEN would probably require prior legal surety of the purpose for which the rig is required ie to meet its obligations under the terms of the PSC.
AGEOS

Florida, unfortunately your response [on the 'credit rating upgrade' thread] is based upon an incorrect assumption regarding my reasoning. I concluded that I would not be surprised if the Nigerian deal falls through, not as you have presumed, because AC has rejected a number of previous opportunities, but because of his evidentially rigorous approach to such acquisitions and his requirement for substantial reliable production increase. I am implying my doubt, as a geologist, in the latter requirement being met, despite the historical evidence for potential at Barracuda and elsewhere in the NW.
I very much hope I am wrong and that AC and his team are convinced by the evidence that this will be a major contributor to ZEN's stated production target.