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In a post dated 29th August last year, I detailed advanced tendering by CTF [Compagnie Tunisienne de Forage] the most likely contender for supply of a MidCo rig to ECUMED for drilling of the ROB-3 well, .based on the details of the tenders which conformed with the time schedules and the material requirements to drill a 2,500m well. ZEN had previously announced November 2022 for commencement of drilling.
It is disappointing that ZEN have not updated the market on the reasons for failure to meet this time schedule even though, as I suspect, it is due to the bureaucratic gridlock associated with the current political crisis in the country. However, it appears that CTF have now set revised deadlines during this January for the tenders to provide all the ancillary equipment and materials detailed in their original specifications, so hopefully there will be some progress with ROB-3 during Q1 2023.
AGEOS
The Director of Cabinet of the Minister of Hydrocarbons, Professor Macaire Batchi, during his chairmanship of the Committee on Hydrocarbon prices in the Republic of Congo, held today, 11th January, and due to close on 13th January, 2023, announced a good outlook for the coming year and quoted the Minister of Hydrocarbons as follows:
“With regard to crude oil production, thanks to the launch of projects to optimise production through the development of new operating licences and the redevelopment of mature fields, we have set ourselves the ambitious target of passing the symbolic mark of 300,000 barrels of crude oil per day produced in the Republic of Congo this year.”
Hopefully, the Ministers reference to “new operating licences and the redevelopment of mature fields” includes Tilapia, in favour of ZEN.
AGEOS
Acquisition of a PSC agreement for Block 1 assumes a special significance when you have access to the latest and most advanced analysis of the integrated seismic and well data for the region. AC hints as much in his reference to “a new Seme North oilfield” which although first identified as a prospective field in 2015 has been the subject of more recent detailed geophysical studies
Benin-based, State and University geophysicists with assistance from Schlumberger have identified unexploited reservoirs in the central and western parts of the North Seme Field and have produced 3D geometrical and petrophysical modelling which will assist in technical development of the field. Such studies significantly derisk the exploitation of recoverable reserves, in this instance estimated at 30 million barrels assuming a 30% Recovery Factor.
From my initial understanding of the data, the main H6 Horizon Reservoir, [Turonian Sandstone, Abeokuta Formation] is shown to be comprised of 7 lithostratigraphic, discontinuous, sub-reservoir units and 4 barrier units, up to 100m in total thickness, segmented into structural blocks by faulting. Petrophysical modelling indicates an average 18% porosity, good permeability, and pressure gradients conducive to favourable flow rates which may not require water flooding stimulation techniques. The high water cut [up to 90%] evident in some of the wells still producing in 1998 appears to have been confined to the eastern part of the field and, as data suggests, may not be a factor in the central and western areas.
The existence of such a recent, authoritative seismic analysis, provides further reassurance that the PSC if successfully concluded, will provide ZEN with a potentially transformational asset.
AGEOS
Whilst the prospective Yemen acquisition is understandably the centre of attention at present, the 20 year 'exploitation concession' recently granted to ETAP by the Tunisian Ministry of Industry, Mines and Energy, and posted here by 123tor on 24th December with the link reproduced below, should be noted as being of some significance.
https://en.africanmanager.com/tunisia-ministry-of-industry-grants-etap-hydrocarbon-exploitation-concession/
Ezzaouia, in which ZEN [via its 100% ownership of EPZ ie ECUMED Petroleum Zarzis Ltd] has a 45% beneficial interest, with ETAP [State Oil Company] holding the balance of 55%, is operated by MARETAP a joint operating company in which ZEN and ETAP have equal 50% interest. Since ZEN's acquisition in early 2021 EPZ, and in consequence ZEN also, has been waiting for government approval of the joint EPZ/ETAP 'New Concession' proposals first submitted I believe in 2019.
This most recent announcement appears to confirm the long awaited government approval of this 'New Concession', for a period of 20 years from 01.01.2021, to EPZ/ETAP and to the joint operating company MARETAP. Presumably this will be confirmed by RNS and followed by activation of the 'production optimization and drilling program at Ezzaouia' which is inherent in the terms of the 'New Concession' and has previously been mentioned by AC.
AGEOS
Dalila Bouattour was appointed as the new CEO of ETAP on Sept 5th. That follows removal of the former CEO by presidential decree, and the initiation of investigations into alleged administrative and legal abuses, which have understandably caused delays in implementation of work schedules at the state oil company.
Hopefully this will expedite the proposed ETAP/MARETAP [ZEN joint operating company] development program at the Ezzaouia Field. A January 24th 2022 RNS anticipated this as including two sidetracks from two non-producing wells which if successful should increase total production to around 1000bopd from the concession. It is my understanding that ongoing geotechnical reservoir studies may lead to more ambitious developments at Ezzaouia. Likewise for the El Bibane concession. Meanwhile I anticipate an announcement of the start of civil works for the ROB-3 drill site sometime this month, as outlined in my 29th August post.
AGEOS
ScipioAfricanus
It is not possible to calculate the true width of the PEP001 150m @ 3g/t Au intercept from the data available. However, using the data inherent in the vertical section, the intercept has a maximum thickness of around 112.5m. True thickness will be less and will be dependent on the angle at which the drill intercepted the mineralised unit in the horizontal plane, and on the spacial form of the mineralised unit itself. It could be a breccia pipe and not necessarily, as implied by the vertical section, a tabular unit. Further drilling will establish which.
The RNS statement that “surface exposures of vein development suggests an east-west strike, with a moderate to steep southerly dip” rather confuses the issue as it is unclear whether “east-west strike” refers to the mineralised veins or the unit of stockwork and breccia containing the veins. The regional structural strike is SSW – NNE, a trend to which the APTA stratigraphic sequence and VMS deposit conforms, but this reference to an E-W strike with a southerly dip suggests a very different structural and consequentially mineralogical scenario at Pepas. At the very least it appears to be Miocene epithermal and not over-printed onto earlier VMS.
Whilst most will disregard all this as irrelevant detail and point to the “150.90m @ 3.00g/t Au” as the only evidence of consequence, it is only further drilling which will justify that confidence. Regardless, OMI appears to be fulfilling the hopes of long term holders.
AGEOS
Continuation:
My sources indicate that CTF [Compagnie Tunisienne de Forage] are the likely contractors of a MidCo rig, [subcontracted via ECUMED on behalf of ZEN], CTF having recently invited tenders for various lots of well control equipment to be supplied during September for 60 days + standby and transit time. Presumably therefore the BD-250 rig, which was mentioned in the March 4th Prospectus [page 42 item 3,] as intended to be “transported to Africa” at a cost of £300,000, is not at present destined for Tunisia. Which suggests that Congo [Brazzaville] is currently the preferred destination for the ZEN owned rig.
In a post dated 30.11.2021, I suggested that the Mazrane Field, immediately adjacent to Robbana, might be a tempting acquisition target as production had slumped from 140-160 bopd to 18 bopd during October and remained below 50 bopd since. Recently production has been increased to 160-180 bopd due to remedial action on the two wells, which produce from the same reservoir targeted by ROB-3, thus providing supportive evidence for a successful outcome to the ROB-3 drill. It is also worth re-emphasising that the ETAP/HBS contract for Mazrane includes the drilling of two additional wells with a production target of around 1000 bopd, so the stated target of 200-250 bopd for ROB-3 + ROB-1 is quite conservative.
AGEOS.
Although the long awaited drilling of ROB-3 is a relatively minor development compared with the imminent “near-term progress”anticipated to be Tilapia or possibly an acquisition in another jurisdiction, it appears that tendering for equipment for ROB-3 is underway in Tunisia, and developments in an adjacent field are supportive of a positive outcome.
The following extracts from RNS 1102Q 24.06.2022 provide an outline of the proposals re ROB-3.
As previously announced, the Company has selected the well location for the drilling of ROB-3, a new well that will reach a total target depth of approximately 2,500 metres, following an in-depth geological and reservoir review enhanced by new information obtained during the workover of ROB-1. Civil works are expected to begin during the month of September 2022, with a commercial tender for the selection of a drilling services contractor to be conducted during the coming months, alongside completion of the necessary local approval process in accordance with applicable Tunisian legislation.
Drilling activities are expected to commence in November 2022, following the mobilisation of a drilling rig to the well location. The necessary long-lead items have already been acquired and are being held in storage by the Company and funding for ROB-3 is expected to be obtained by way of the Company's existing cash reserves.
CEO's comments:
Our attention will now turn to drilling ROB-3, having obtained valuable insights about the formation by way of our work in ROB-1. Our geological and reservoir studies have been further refined and it is important to recall that third-party geophysical analysis suggests that the Robbana concession has likely only produced 4.35% of its estimated reserves to date.1 This gives us confidence in the future production potential of Robbana through the ROB-3 well which will be drilled later this year. Our objective for Robbana is to reach a daily production rate of approximately 200-250 BOPD, which would represent the achievement of approximately a tenfold increase in daily production from the concession since it was acquired by Zenith.
To be continued
Hedgehog100, thanks for info re the Annual Report change of date, which prompts me to add the following:
Bruno Itoua, Minister of Hydrocarbons, Congo [Brazzaville] is one of the Keynote Speakers at the MSGBC Oil, Gas & Power Conference, Dakar, Sept 1-2. The outline program released yesterday appears to schedule his contribution as part of the West African NOC Forum on the morning of Thursday September 1st. Since Ministers use these high profile occasions to release news of the signings of significant national contracts it is possible that an announcement of both the Trident OGX/Orion Oil/MKB [ref 22.05.2022 post] and ZEN/Tilapia II contracts will be included. The timing of such an announcement could explain why the release of Final Results has been brought forward by a day, to Tuesday Aug 30th.
AGEOS
For those who may question the significance of the reference to “potential near-term progress” cited in the Aug 19th RNS as reason for the rescheduling of the Investor Call, I would remind everyone of the following which I posted on July 28th.
Extract from the Aug 2022 Newsletter to Zenith Fixed Income Investors
“The Company has a number of significant ‘growth catalysts’ between now and the close of 2022 that might bring about a transformational leap forward in its size and revenue generation. This is especially the case in respect of our long-held business development objectives in the Republic of the Congo, where we expect to be awarded a new 25-year licence for the Tilapia oilfield, as well as in other jurisdictions where the Company is reviewing potential acquisition opportunities.”
AGEOS
There is no leak. The Aug 19th RNS entitled “Rescheduling of Investor Call to September 8, 2022” includes the following:
“The Investor Call will now be held on September 8, 2022, at 10:00 AM BST/11:00 AM CEST via teleconference due to potential near-term progress, including publication of the Company's audited annual financial results for the year ended March 31, 2022.”
The reference to “potential near-term progress” warranting a rescheduling of the Investor Call is sufficient of a driver to justify the current SP rise.
An “August 2022 Newsletter to Fixed Income Investors” has today appeared on the ZEN website, from which the following extract is just part of what is a very positive introduction by AC.
The Company has a number of significant ‘growth catalysts’ between now and the close of 2022 that might bring about a transformational leap forward in its size and revenue generation. This is especially the case in respect of our long-held business development objectives in the Republic of the Congo, where we expect to be awarded a new 25-year licence for the Tilapia oilfield, as well as in other jurisdictions where the Company is reviewing potential acquisition opportunities
Regarding results, Zenith published the following on the Oslo Bors NewsWeb site on 13th July 2022. So 2022 results should be released 31st August.
FINANCIAL YEAR 2022
31.08.2022 - Annual Report
12.10.2022 - Annual General Meeting
FINANCIAL YEAR 2023
30.11.2022 - Half-yearly Report
31.07.2023 - Annual Report
12.10.2023 - Annual General Meeting
ZEN Twitter posts, for which thanks to KathyB
2/2) Torrente Cigno, one of #Zenith's onshore assets in Italy, profitably generates approximately 900MWh of #electricity every month #GasToPower #ZEN #ZENA July 19, 2022
(1/2) #Energy prices across Europe have continued to increase due to supply constraints. Prices in Italy hit unprecedented highs in the first half 2022 with further rises expected through the rest of the year July 19, 2022
Why Zenith? Zenith is uniquely positioned by way of extensive networks and relationships to execute an acquisition campaign targeting low-risk energy production assets #ZEN #ZENA #Africa #Oil #Gas #OOTT July 18, 2022
Continuing the subject of further acquisitions, although ZEN [ref RNS 02.03.2022] elected to not renew the Option Agreement with Noble Hill-Network Ltd [NHNL] for the purchase of a 42% interest in the share capital of NHNL, it stated “The Company remains of the view that the development of the North-West Corner of OML 141 in Nigeria has significant potential, and it shall look to revisit the opportunity once the ownership of NHNL is unequivocally confirmed by the Nigerian courts.”
Since then the Interim Injunction obtained by ADM Energy plc & K.O.N.H.(UK) Ltd, restraining NHNL from disposal of equity to any third party investor, and which was the cause of ZEN's decision not to renew the Option, was extended by the Federal High Court of Nigeria to 16.11.2022. Note, it was the Interim Injunction which was extended, not the timing of any legal ruling on the validity or otherwise of the 70% share holding in NHNL claimed by KONH [also claimed in RNS 30.03.2022 to be a 70% interest held by KONH in a Risk Sharing Agreement RSA, ie a contract, not an equity stake.], a claim for which I can find no legally meritorious evidence whatever in the Nigerian corporate registration system. This latter point may explain why ADM Energy informed the court “that they (ADME & NHNL) are in settlement discussions with a view to resolving the dispute” [ref ADM RNS 01.07.2022.] which to a legal mind implies there is no legally valid case for an equity-stake claim so at best the plaintiff hopes for a monitory pay-off re the RSA and avoidance of a counter-suit for damages.
Whilst I anticipate that ZEN will have a further opportunity to participate in an equity stake in NHNL, the publication of the CPR for the Barracuda Field on 30.03.2022 may not be sufficiently encouraging to merit involvement. The resources are classified as Prospective and within four potential Agbada Sandstone reservoirs, C, D1A, D1B and a 'Deep Prospect'. Unrisked Resource is calculated probabilistically at P50 [most likely] as:
C3 193 mmbbl [million barrels oil] with 15% CoS [chance of success]
D1A 25 mmbbl with 30% CoS
D1B 103 mmbbl with 18% CoS
D.P. 51 mmbbl with 25% CoS
Whilst the economics of a successful drill program appear robust, the CoS estimates offer a cautionary note for an early stage company contemplating what would be a significant capital investment.
AGEOS.
continuation:
AC need be in no hurry to conclude a Saouaf deal with UPL. The 20th June RNS from UPL which referred to “a continuation of discussions with interested parties, as well as opening discussions with new potential partners” regarding the Farm-In, not only crashed the Pennpetro share price but produced a retaliatory RNS on the 24th confirming the “exclusivity to the Farm-In to the Saouaf Permit until 15th July 2022” and an apology, extracted by PPP from UPL. I suspect that relationships between the two entities are now somewhat strained and with an end on July 15th of the Exclusivity Agreement, the stated intention of “both parties to use their best efforts to finalise and execute the Farm-Out Agreement currently in draft form” will most likely fail to materialise. The Chairman of PPP, in the recently released 2021 Annual Report has inevitably highlighted the prospect for a positive deal but that should be read in the context of 2021 not 2022. Part of the deal is to reimburse UPL for £290,000 of costs incurred, in the form of PPP shares at a value of £0.35, not a very attractive proposition with the current value at £0.17, and there are several other aspects of the HoT [Heads of Terms] unfavourable to UPL. Perhaps of most significance is the total absence of any cash, a commodity UPL is in desperate need of and which ZEN could supply in return for a buy-out of Upland (Saouaf) Ltd.
A buy-out of Upland (Saouaf) Ltd would provide ZEN with Operator status in a 50/50 joint venture relationship with ETAP [State Oil Company] for the remainder of the Prospecting Validity Period, valid until 23.12.2022, with the option of entering the Exploration Phase which requires the acquisition of 150km of 2D seismic and the drilling of an exploration well within three years. The current Prospecting Validity Period requires UPL to “acquire, process and interpret 300km of new 2D seismic data” an obligation which appears not to have been met as the current geoseismic interpretation is clearly based on data acquired in 2006 and 2012. This discrepancy would have to be renegotiated with ETAP prior to the acquisition as it appears to be an obligation inconsistent with current data requirements and which ZEN might wish to be integrated with any seismic survey of the adjacent N Kairouan Permit area assuming ZEN acquires the 22.5% interest from KUFPEC to supplement that acquired from CNPC.
With regard to AC's probable priorities relating to acquisitions, additional current oil production will be first and foremost and maybe in new jurisdictions as both Tunisia and Congo [Brazzaville] appear to be in bureaucratic stasis due to current political and economic instability. .Acquisition of the Saouaf Permit area would however be a strategically significant addition to the Tunisian portfolio with medium/long-term transformational potential.
AGEOS.
Further to my posts of 21 & 24. 06.2022 regarding the Saouaf Licence, Tunisia, the Exclusivity Agreement granted [UPL RNS 16.03.2022] by Upland Resources Ltd [UPL] to Nobel Petroleum USA Inc [NPUSA] a wholly owned subsidiary of Pennpetro Energy Plc [PPP] relating to a Farm-In to the Saouaf Permit, expired last Friday without notification by either company of a Farm-In being successfully concluded. In the absence also of a mutually agreed extension to the Exclusivity Agreement it is reasonable to conclude that the Farm-In is available for others to negotiate or, as I suggested on 22.06.2022, could be superseded by an offer to acquire Upland (Saouaf) Ltd, UPL's Tunisian subsidiary, a proposition which could be of interest to ZEN and beneficial to UPL in its need for funds.
The exploration potential of the Saouaf area and its relevance to ZEN's N Kairouan Permit was outlined in my 21.06.2022 post [with ref to previous more detailed posts]. Of the 11 prospects and leads identified by Roberto Bencini of GA.I.A. Srl [GAIA Consulting], within the Saouaf area, the best-defined structure named 'Pyrite' is estimated to contain a Prospective Resource of P50 value 1.1 TCF [trillion cubic feet] of gas, equivalent to 183 Mmboe [million barrels of oil]. Similar plays named Galena and Marcasite have been identified in nearby stratigraphically equivalent Jurassic-Lower Cretaceous structures. A possible major sub-salt play has also been identified with the potential for multi-TCF of recoverable gas.
Whilst Saouaf would not be a priority acquisition for ZEN, since it has no current or prospective short-term production and would incur significant developmental cost, it nevertheless could be an attractive strategic addition to the Tunisian portfolio not only because the country is already failing to meet its own domestic demand for energy but has spare capacity in the trans-Med pipeline which transmits N African gas to Italy and runs through the Saouaf permit area. Tunisia recently failed to negotiate an increase in domestic gas supplies from Algeria and is currently using its strategic stock of petroleum products [30 days supply of LPG and 60 days of gas & oils] to meet local demand. With national production of 35,000 boed [barrels of oil equivalent per day], consumption of 90,000 boed and national refining capacity of 32,000 boed, the import requirement of 58,000 boed in refined products is at current price levels a major cost to the country and a clearly unsustainable supply imbalance.
To be continued
Latest addition to ZEN website & twitter.com but appears to be subsciption only access.
Alternative Resource Capital – Research Note
"Exceptional transformation... and it may be just a beginning." ? Take a look at Alternative Resource Capital’s new note on Zenith.......
- June 28, 2022
Pennpetro Energy Plc issued the following statement by RNS today in regard to the Tunisia Saouaf Licence, presumably in response to the UPL RNS of June 20th which referred to “opening discussions with new potential partners”, the subject of my Tuesday June 20th post.
“Clarification re Proposed Farm-In and Tunisian Saouaf Licence
London, 24 June 2022 - Pennpetro, an independent oil and gas company focusing on production in the Gonzales Oil Field in Texas, USA, would like to clarify the recent RNS statement issued by Upland Resources Limited ("Upland") on 20 June 2022, which caused deep market uncertainty as to the status of its Saouaf permit in Tunisia and specifically as to the intending role of the Company.
Upland sent official apologies to Pennpetro for the unintended consequences caused by the narrative in its announcement, and in his address to Pennpetro's management, Mr. Amin Azal Nasharuddin, a Board director of Upland Resources Limited, confirmed that Pennpetro retains the exclusivity to the Farm-In to the Saouaf Permit until 15 July 2022, while both parties use their best efforts to finalise and execute the Farm-Out Agreement currently in draft form.”
No doubt more will be revealed in due course.
AGEOS