Another 125 barrels of oil a day net to Zenith with the potential for another 500-600 bopd after a workover and all for $200,000. I would say that this is better than good news. I would say that it is another spectacular deal by AC.
If it doesn't involve stretching us too thin on finances or meaning that we have to issue more shares then I am all for further acquisitions. I think that it may be better that we are a junior 12.5% partner like fakevenues suggests rather than having to run operations in three countries. As you say though, AC is best placed to decide and if he takes it on then he clearly thinks that it will be beneficial to shareholders.
It is not just the signature bonuses that we will have to pay though, we will then have a work program that we will need to carry out in order to keep the license and this is likely to cost millions more - on top of the money we'll need to develop Tilapia. I am not completely against getting the marginal fields because we can potentially fund Tilapia out of the SNPC money and Tunisia out of the stored oil money, but any marginal field exploration or production activities will require additional funds that need to be raised from somewhere. AC has proved that he can always find deals and so we may be better to focus our attention and financial firepower on two countries for the moment as three assets in three countries may stretch us too thin just now.
Since we have jus acquired another asset in Tunisia I reckon that it is safe to say that we are no longer interested in the Nigerian marginal fields, especially at $5million signature bonus minimum. It's probably a good thing too. Operating in a third territory at this stage in Zenith's development would stretch the company and its cash resources far to thin IMO.
Recent history shows us that when AC says something like "we intend to capitalise on certain additional possible acquisition opportunities that may present themselves in the near-term" in an RNS then it usually means that he is already in the middle of negotiating for another asset already. Zenith look like they are already building a significant production base in Tunisia so it should not surprise any of us if we add to it in the near future. We have only spent $150,000 in cash of the 1.5 million Euros that we have available for acquisitions...
BOOM BOOM coming?
$400k a month is a seriously large amount of money as cashflow. Obviously we have the costs coming off the top of that but even if the cost is $30 per barrel then we will still be making almost $225,000 per month from this one well and we still have a significant development/exploration upside to come.
We should expect the election result later this week and that is the first stage. I think that it will take time for Tilapia to be approved as they need to form the government first but the timescales posted by MG seem pretty on point to me. Should be a boost later this week anyway when the election result comes in.
Well whoever just exercised those warrants in Norway has just paid out well over £200k at a 20% premium to todays price. They are certainly confident in the company's future. I'd definitely prefer to follow the trail of someone who can drop serious money into their investments rather than Mudstud and his useless tips. The warrant money goes straight into the company coffers too so more funds in place to tide us over until we can sell the £1m worth of Tunisia oil.
Looks like the farmyard gang are out in force on the boards this morning. Old MacDonald's farm must be looking pretty empty today as all of the stupid cows are on here! I love that fact that they are now blaming AC for the political situation in Tunisia and for things stopping for the election in Congo. Old AC must be a very powerful man in their eyes. How much is 65,000 barrels of oil worth? More than Old MacDonald and his farm, that's for sure.
Even if the operating costs are $35 per barrel then this is still $2.5 million per year. Why, how much do you think that the operating costs can be? AC is not going to make the same mistake as was done in Azerbaijan. That is what I like about him, he learns his lesson and changes his plan accordingly. If he keeps bringing in deals like this then he deserves his bonus.
I can see why AC took the financing to make this purchase now. 210 bopd with easy export to the international markets. How high can this acquisition take us? Well 210 bopd at $69 per barrel is worth over $5 million per year so my betting is pretty high.
Don't forget the $5.7 million owed by the SNPC so in total we are looking at nearly $10 million on top of the existing market cap before you even take into account the value of the licenses themselves. This is going to be massive.
Another cracking deal by AC. 210 bopd and $1.25 million in cash. The man knows a bargain when he sees one! So when the other Tunisia assets come on line then this should leave us with almost 500bopd from Tunisia plus $3-4 million in cash from the value of the oil stored.
Patience is a virtue and it is a virtue that it is necessary to have to make money trading stocks. As Warren Buffet famously said: “The stock market is a device to transfer money from the impatient to the patient.”
But perhaps even more pertinent is the quote from his vice-chairman at Berkshire Hathaway (also a billionaire btw): "Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”
AGEOS - yes I remember that. It looks good for Zenith in Congo but as I said in my last post I do not think that we will get any progress there until the election result is known which I guess will be on March 22nd so not long to wait.
Now I have read what you posted on the Nigerian marginal fields yesterday it seems like the COngo would be a better place for us to acquire fields than Nigeria though. Since the minimum signature bonus in Nigeria is £5 million then for us to get any worthwhile stake of 20% or more is going to cost us at least $1 million which will need to be paid in 45 days. Seems tight to me and so I would prefer to stay out of Nigeria to avoid stretching ourselves too thin. What do you think?
Rimsha – I agree it would be good to have an update from the company. My opinion of what you have raised is:
Tilaipail - we are going to have to wait another 11 days until after the election for any news on Tilapia.
Tunisia- AC told us by twitter that he is going to buy another Tunisian asset and then raised the money to do so. With all of the rumours doing the rounds on this I would expect news soon. I think that for SEK we have to wait until the Tunisian political situation sorts out but it would be nice to have some news on ths.
Nigeria – no guesses on this. I would love an update but having read what has been put up yesterday I am slightly concerned that getting even 20% of a Nigerian asset would cost us £1 million cash in signature bonus so it may over-stretch us. After we get the SEK money it would be great but I guess we have to trust AC on this
Rig status – didn’t they say that they would only send the rig after they have Tilapia licenses ratified?
Twitter/comms/pr – not sure what you mean here. I think that this is all quite good.
The existing deals that Zenith have done with Tunisia for Sidi El Kilani are for producing fields so I would be surprised if any new Tunisia deals were for exploration as I think that the Tunisia focus is on delivering cashflow. However, it is worth remembering that we have two rigs and only one of them will be any use in Tilapia so some exploration upside in Tunisia may not be the worst thing in the world anyway. As I keep saying the key thing is to get the Sidi El Kilani deal over the line as that will be worth several million dollars straight into the Zenith bank account.