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continuation:

The Elepa South oilfield is possibly the prospect which was first identified by Oryx Petroleum as Clarendon South, a “three-way dip closure against a S-displaced fault”. A second prospect, Clarendon North straddles the western border of NW OML 141into OML 59 and is a”three way dip closure against a N-displaced fault”.. Both appear to be based on seismic interpretation alone, as is also the Curlew Channel gas and condensate prospect located in the southern region of the NW area.

The wider geographical implications of ZEN's initiative arise from the historic background to OML 141. This was license area OPL 229 in the 2000 competitive bidding round, and was awarded to Emerald Energy Resources Ltd a Nigerian independent which was in 2007 granted a 20 year lease [presumably inclusive of Risk Service Contract] for the whole area including the NW. Prior to April 2019, when the OML 141 lease was revoked, apparently due to non-payment of fees, Emerald was seeking farm-ins and participants in Risk Development Finance Contracts for various projects in the lease area. Apart from CNOOC [35% WI for which it paid $60m] from 2006-8 and Oryx [38.67% WI ] from 2011-17, which tried exploratory farm-ins, Noble Hill-Network Ltd appears to have been the only other participant, acquiring in Sept 2014 the 100% Risk Service Contract for the 105 sq km of the NW, including Barracuda and the other prospects detailed above. Presumably the lease and associated RSC for the marine portion of OML 141, 1190 sq km in area and >25m water depth has reverted to the Nigerian Dept of Petroleum Resources and remains so since none of the O & G prospects it contains would have qualified as Marginal Fields in the latest bidding round. Of the 10 prospects 2 have been drilled with encouraging results and most could be exploited from wellhead platforms organised around a Mobile Oil Processing Unit with access to the nearby Brass Marine Terminal for export.. This could therefore constitute long term potential if ZEN acquires an equity interest in NHNL.

Long-term investors will recall that AC walked away from an Exclusivity Agreement for the acquisition of a major Central Asian asset in 2018 as well as the Coro Italy acquisition and other gas assets in Norway and Poland during 2019/20, so is not easily satisfied with whatever is on offer. This Nigerian opportunity will demand very rigorous scrutiny so I will not be surprised if it meets a similar fate.
AGEOS.

Further to my post of 07.09.2021 regarding NW OML 141 there are aspects other than the potential of the Barracuda Field which will doubtless be considered by ZEN in evaluating a possible equity stake in Noble Hill-Network Ltd [NHNL]. The 'Exclusivity Agreement' RNS specifically mentions the Elepa South oilfield and the Curlew Channel gas and condensate prospect but there are other potential targets in the 105 sq km NW area all of which are presumably included within the Risk Service Contract [RSC] 100% held by NHNL and in which ZEN would acquire an interest in proportion to whatever equity holding it acquires. A stake in these assets might in the longer term also open the door to involvement in development of known prospects in the offshore 1190 sq km area of OML 141, as will be outlined later.

With regard to the Barracuda Field the most convenient, but somewhat superficial, source of information is that of the ADM Energy website, via 'operations/barracuda' [ www.admenergyplc.com ] for which, note the following anomalies.
Firstly the details of equity owners of OML 141 listed beneath the asset map is misleading. Emerald Energy Resources Ltd lost its licence in OML 141 in April 2019, the AMNI International Petroleum Development Co is listed on the Nigerian Corporate Registry as “inactive” and Bluewater O & G appears to have transferred its 2% OML 141 interest to Supernova Energy B.V. in 2019. Secondly the ref to Karra Oil Noble Hill UK Ltd is now outdated [company dissolved 03.08.2021] and is superseded by the formation of K.O.N.H. (UK) Ltd [registered 19.02.2021] as explained in my 2 posts of 31.08.2021. The 'OML 141 geology' highlights are also regional generalities which do not necessarily apply to Barracuda.

For a comprehensive account of Barracuda we must await the CPR, which as ADM confirmed on 25.05.2021 has been commissioned from Xodus Group Ltd. Although anticipated within “4-6 weeks” I assume it has been delayed possibly due to difficulty in obtaining access to the 700 sq km of 3D seismic,1200 km 2D seismic and well-log petrophysics, originally and probably still held by Emerald Energy. That will include the data acquired by CNOOC Ltd in 2007 and by Oryx Petroleum which spent $14.6m on seismics in 2014. A positive conclusion to this CPR will be necessary before the RSA Consortium can confirm the operational agreements in place with Eunisell Ltd, OES Energy Services [rig provider] and 4Motion Drilling Services, to commence with the Barracuda 5 well. The CPR will also be a decisive element of ZEN's due diligence and in the consideration of any financing. As ADM is due to release 2020 results by end of this month, an update on the CPR and other RSA related developments should accompany this.

To be continued

Although I have no equity interest in ADM Energy I do have a substantial share-holding in Zenith Energy, for which reason I have researched ADM's prospective involvement in development of the Barracuda Field to better understand its relevance to ZEN's possible role as RNS'd in the “Exclusivity Agreement” of 31.08.2021.

On 31.08.2021 and 01.09.2021, I contributed several posts [see history via a click on 'AGEOS'] which essentially concluded that ADM;s potential interest was confined to a stated “70% interest in the Barracuda Risk Sharing Agreement [RSA]” whereas ZEN is exploring as stated “ the potential purchase of an equity stake in Noble Hill-Network Ltd [NHNL]” The two interests are different and complementary.

To clarify the issue I have added two posts to the ZEN share-chat site. On 06.09.2021 [Monday at 15:36] in response to a post by MarketGS, I explained the legal basis of the Risk Service Contract [RSC] for the development of the whole of NW OML-141 lease area, and in which ZEN would acquire an interest if it purchases an equity stake in NHNL. I also explain that ADM's interest is legally separate as it is a 70% indirect interest in the Risk Sharing Agreement [RSA] for the Barracuda Field, in which ADM is lead member of a Consortium. A second post, on 07.09.2021 [Tues 13.48] details the whole issue from ZEN share-holders perspective.

In conclusion it appears that it would probably be in the interests of both ADM and ZEN shareholders if both companies are successful in their initiatives. ADM in obtaining a potential return from capital and operational input into Barracuda via the Consortium, and ZEN from potential returns from the whole NW. OML 141 [105 sq km] area, including Barracuda, via an equity interest in NHNL.

I post this in response to the increasingly irresponsible speculation and misinformation appearing on this site in the hope of encouraging a more reasoned discussion. Having researched ADM thoroughly I have found little of concern other than the risks facing most early stage O & G enterprises and wish all share-holders ' best of luck' with their investment.
AGEOS.

The Exclusivity Agreement with Noble Hill-Network Ltd (NHNL) [ref RNS 31.08.2021] relating to the NW OML-141 licence area of Nigeria, whilst being only the initiation of an evaluation and due diligence process, nevertheless is the precursor to a potentially significant asset acquisition for ZEN. If successfully concluded it appears that ZEN participation will be in the form of the “purchase of an equity stake in NHNL” thus acquiring “participation in the Risk Service Contract (RSC), 100% held by NHNL, “for the development of the North-West Corner of OML-141 (NW OML 141).

The RSC is the legal instrument under which NHNL exercises sole rights to develop the North West part of OML-141 and should not be confused with the Risk Sharing Agreement (RSA) entered into by ADM Energy as outlined in my 06.09.2021 post, and which is a contractual agreement between as yet unspecified members of a consortium and relating to the Barracuda Field alone.

Since ZEN's objective is to “purchase an equity stake in NHNL” it is perhaps worth examining what this might entail, a subject so far not considered on this chat-site. Noble Hill-Network Ltd is a private company limited by shares, incorporated in Lagos on 16.10.2014, reg no RC 12118898, specifically for “developing NW OML 141”. The founder and MD from 2014 to present-day is Thomas Cavanagh, a Houston/Nigeria based , former Exxon geologist. There are 6 other board members all executives of regional O & G service companies. Shares in NHNL are held by two companies, Network Oil & Gas Ltd [Benin City] with two Board members, and Noble Hill Exploration & Production Ltd of which Cavanagh is President & MD and majority or sole shareholder. To comply with Nigerian law at least 51% of shares in NHNL must be held by Nigerian nationals so ZEN will presumably be limited to acquiring 49% maximum. An equity purchase agreement would presumably be allied to a capital injection either directly into NHNL and/or into the Barracuda Field RSC as a consortium member.

To be continued.

The appointment of Stev Onanga as DGH [Directeur General des Hydrocarbures] is not only a positive preliminary to final approval of the Tilapia II, 25 year licence but also has implications for the acquisition of additional assets in Congo Brazzaville. In his previous role as General Manager of SONAREP, the Research and Production subsidiary of SNPC [National Oil Company], Onanga was not only responsible for the State's 44% operational interest in the Tilapia Field [since 2005] but also for its interest in the MKB Fields [Mengo, Kundji,, Bindi and Tchiniambi, 700 sqkm] which has progressively reverted back to SNPC control during the last decade as production has matured and declined.

AC has made numerous references to possible additional acquisitions in the Congo including the 07.07.2020 RNS to that effect and the Feb 2021 Fin Fox interview in which he mentions “discussions re second and possible third and fourth assets”. In a 10.07.2020 post on the subject of a second Congo asset, I detailed the possibilities and concluded that the Kundji Field was the most likely candidate, which with two wells still in production in early 2019, conformed with the description of the target in the 07.07.2020 RNS. Following AC's mention during the Fin Fox interview of possible additional acquisitions, I extended the likely targets to include the Mengo and other MKB Fields as detailed in a 12.02.2021 post.

Without reiterating details from those earlier posts it is perhaps worth emphasising that despite ELF having extracted 1.5million bbls of oil from the MKB Fields during the 12 years to 1992, oil in place was still certified as >1.3billion bbl in 2013 with further untested potential in the deeper Vandji sandstone. The technical challenges for further production from the Mengo sands are known and Panoro Energy developed plans for several hydraulically enhanced 500-600 bopd wells at Kundji by 2011 but withdrew for reasons unspecified. Since then the Chinese State company,Wing Wah Petrochem, has successfully developed the adjacent onshore Banga Kayo Field, achieving an estimated production of 50,000 bopd apparently by drilling numerous low production wells in close proximity [No information from Wing Wah but reported as 460 wells from 50 platforms according to an independent source.] If Wing Wah do not extend their activities further then the feasibility of ZEN deploying its own rig on one or more of the MKB Fields therefore remains a possibility.

The appointment of Stev Onanga should therefore not only facilitate the conclusion of Tilapia negotiations but also of one or more subsequent acquisitions.
AGEOS.

The “2021 CPR” released via RNS on 22.07.21 provides an independent evaluation of reserves for assets in Italy and Tunisia [in part] in compliance with NI 51-101 Standards of Disclosure for the Canadian O & G Industry. The Report contains significant information of which that relating to Tunisia is of particular interest as it concerns immediate and medium-term prospects of increased production The following comments are therefore confined to those aspects alone.

AC in his RNS comments emphasised that this Report does not include 2P reserves for our 45% Sidi El Kilani Tunisian interests. In addition, from having assessed the data on which this CPR is based I have no doubt that our 100% interests in both the Robbana and El Bibane Fields are also excluded All three are described on the ZEN website as being subject to future CPR's. The Tunisian element of this current CPR is therefore based wholly on our 45% interest in the Ezzaouia Field, the significance of which includes the following:

O & G Reserves [F1] Ezzaouia
Total Proved Reserves of light and medium oil [including solution gas] 242 MSTB [1000 Stock Tank Barrels] Net, ie 242,000 bbl. These reserves are defined as “Developed Producing” implying they are expected to be recovered from completed reservoir intervals open at the time of estimate, ie from current producing wells [4 producing, 9 non-producing]. The calculation will have been based on data from production volumes to date and projected decline rates. With current production at over 700 bopd gross [ref ETAP website] that Total Proved Reserve [presumed to be 45%] is equal to only two years production, implying the exclusion of production enhancement potential from those Reserve calculations. The 242,000 bbl of Proved Reserves appears therefore to be an extremely conservative figure. Production optimization and associated workover activities by MARETAP, the joint operating company, are presumably currently in progress as evidenced by recent fluctuations in daily production numbers.

To be continued

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