Member Info for Hedgehog100

With ZEN's Italian electricity & gas operations are now generating c. EUR 8.9M. p.a. profit on an annualised basis (see my 11.55a.m. 16.10.22 post), and rising strongly, you would think that these alone more than justify ZEN's market cap.

Which would mean that everything else is effectively 'in for free', i.e.:-

• ZEN's oil production operations in Tunisia: multi-million £ p.a. profitability (US$38/barrel recent production costs).

• ZEN's potentially billion dollar p.a. project in Republic of the Congo (Tilapia): licence award expected soon.

• ZEN's potential Benin project (Sèmè oilfield): licence award expected this quarter.

• ZEN is also believed to be in advanced negotiations for an acquisition in Egypt.

In conclusion, ZEN's stated aim of becoming a mid-tier O&G company, for which you would expect a market cap. of at least £100s of millions, is now starting to sound very realistic.

"Zenith Energy’s aim is to become a mid-tier, Africa focussed E&P company"
https://www.zenithenergy.ca/about/strategy/

Of course it's still wise for investors not to put all their eggs into one basket.

And the same applies to businesses, which is a lesson ZEN has learnt well since its Azerbaijan experience.

This can help you avoid 'running around like a chicken with its head cut off' ...

"All is going to come good the ducks are lining up in a rising tide."
"if all projects come to fruition no reason why we shouldn't be 10p and above.......however lets not count our chickens"

Shares like ZEN are as rare as hen's teeth, so we should soon be 'shaking our tail feathers' ...

Thanks for sharing that new Congo info., MG.

Congo's new enthusiasm for gas production looks to dovetail perfectly with ZEN's own African gas ambitions, and indeed their Italian gas experience.

From ZEN's October 2022 Investor Presentation:-

"The Company’s Italian ‘Gas to Power’ activities are intended to be replicated in certain Africa jurisdictions on a larger scale, specifically in the Republic of the Congo, where there is an abundance of unexploited natural gas reserves and a strong demand for stable electricity production."

https://wp-zenith-2020.s3.eu-west-2.amazonaws.com/media/2022/09/ZENITH-OCT-22-PDF-1.pdf

https://www.zenithenergy.ca/about/

"= c. EUR 8,924,852 annualised Italian electricity & gas profit, based on Q3 figures for electricity, and ZEN's 13.7.22 estimates for gas revenues."

I.e. ZEN's 13.7.22 gas pricing assumptions underlying its Sant’Andrea gas revenues estimate, applied to ZEN's annual natural gas production in its year to 31.3.22.

Thanks MG.

You may find ZEN's 13th. July RNS useful:-

13th Jul 2022 1:00 pm RNS Reactivation of Sant’Andrea concession in Italy
" ... The Company plans to reactivate the S. Antonio-1 well, with an expected initial production rate of 1,300 cubic metres of natural gas per day.
Monthly fixed production costs are expected to be approximately EUR 3,000 with estimated net revenues of approximately EUR 40,000 to EUR 50,000 per month. ... "
https://www.lse.co.uk/rns/ZEN/reactivation-of-sant8217andrea-concession-in-italy-fq4scsj5oyo49kt.html

Multiply 1,300 by 35.3147 for cubic feet =  45,909.11 cubic feet of natural gas per day = 16,756,825.15 cubic feet of natural gas p.a.
With c. EUR 480,000 - 600,000 of net revenue p.a.: take c. EUR 540,000 p.a. as the mid case.
And c. EUR 36,000 p.a. of annual fixed production costs.

16,756,825.15 cubic feet equates to c. 12.7374% of ZEN's annual natural gas production in the year to 31.3.22.
So pro rata, that annual production would generate c. EUR 4,239,484 p.a.
With pro rata annual production costs of c. EUR 282,632 p.a.
Which would leave c. EUR 3,956,852 p.a. of profit.

Add to that ZEN's Italian electricity profit.
This was c. EUR 1,242,000 profit in Q3 (July-September 2022), = c. EUR 4,968,000 annualised Italian electricity profit.

= c. EUR 8,924,852 annualised Italian electricity & gas profit, based on Q3 figures for electricity, and ZEN's 13.7.22 estimates for gas revenues.

And that figure has the potential to increase substantially, through both production and price increases:-

ZEN's investor call on 28.9.22 revealed that ZEN's mothballed Italian gas assets could increase its Italian gas production by 88% when brought back into operation.

ZEN's 13.7.22 estimates for gas revenues look to be based on far lower prices than those achieved recently.

" ...although he actually left on 8th. July."

Amendment:-
He actually left on 8th. September.

NWT haven't given a date when they will announce their full year results for the year to 30.4.22, and under AIM rules they have until the end of October to announce them, so they are not actually late as such.

But they are later than in recent years, and later than people were expecting.

There may be nothing in this.

Or there may be something else going on that we are unaware of at the moment.

I personally am optimistic, because all the research I have done indicates to me that the company is doing relatively well for the current conditions, and as such the business is worth far more than it's current share price.

But it may be that uncertainty about the results is holding the s.p. back at present.

Thanks Dabs.

It's also over three months since NWT non-executive director Robert Waddington resigned (for personal reasons - he's in his early 80s) on 6th. July, although he actually left on 8th. July.

NWT don't seem to be any rush to replace him.

Thanks for that NicetoMichu.

I've had a quick look at ZEN's 'competition' for the Benin Project, and it just confirms to me that ZEN should be the clear front runner.

ZEN looks to be the only listed company looking to take on the project, and the others also don't look to have the experience and track record that you would want.

And ZEN certainly seem confident.

Zengas said this about SAVE's discontinued interest:-
"Another one screened but hasn't fitted the bill."

Similarly, in ARA's recent interim results statement, a month ago, the company noted that the current energy crisis was boosting renewable energy growth:-

7th Sep 2022 7:00 am RNS Half-year Results

"Interim Results for the period ended 30 June 2022

7 September 2022 - Aura Renewable Acquisitions plc, a UK-based company, whose objective is to invest in the global renewable energy sector supply chain and thereby build shareholder value, announces its maiden interim results for the period from the date of incorporation on 4 November 2021 to 30 June 2022. ...

John Croft, the Chairman of Aura commented:

"During this initial financial period the Company joined the Standard Segment of the Main Market of the London Stock Exchange on 8th April 2022 and raised gross proceeds of £1,000,000 from a placing and subscription.

"Since listing, Aura has begun to explore a range of potential targets in the UK and overseas which could offer the opportunity for significant growth in this exciting and fast-moving market sector. We have also been in discussions with the Board's extensive professional and business networks to raise the Company's profile and highlight its intentions and objective to this large potential introducer base.

"The current worldwide economic and political uncertainty caused by supply chain issues, inflation, interest rate rises, hostilities in Europe and further afield, the lingering impact of Covid and climate change, have had a dampening impact on capital market activity and fund raisings during 2022.

"Despite these uncertainties, the growth in renewable capacity continues, with solar capacity leading the way. Installed renewable energy capacity around the world increased by 6% in 2021, despite post-Covid delays and rising raw material costs of 15%-25%. The International Energy Agency (IEA) expects 2022 to create further growth of 8% in installed capacity, not least as countries that have relied upon oil and gas from Russia are now accelerating the expansion in renewable energy capacity in response to the war in Ukraine.

"As a result of these market forces, we are more confident than ever that the renewable energy sector will offer excellent opportunities for acquisitive and organic growth for the foreseeable future, and we are committed to ensuring that the Company and its stakeholders have the chance to share in these opportunities." ..."

https://www.lse.co.uk/rns/ARA/half-year-results-sjcwoorehyzonr2.html

In their recent interim results statement just over a week ago, and similarly to ARA, CINH also noted that the current energy crisis was boosting renewable energy growth:-

30th Sep 2022 10:10 am RNS Interim Results and Loan Note Issue

"... The ongoing energy crisis is creating rising demand for secure, stable sources of power, particularly from environmentally sustainable sources as the world races to deliver on net zero targets ..."

https://www.lse.co.uk/rns/CINH/interim-results-and-loan-note-issue-5dp2j30x0lc07na.html

In their recent interim results statement, just over a week ago, CINH noted that the current energy crisis was boosting renewable energy growth:-

30th Sep 2022 10:10 am RNS Interim Results and Loan Note Issue

"... The ongoing energy crisis is creating rising demand for secure, stable sources of power, particularly from environmentally sustainable sources as the world races to deliver on net zero targets ..."

https://www.lse.co.uk/rns/CINH/interim-results-and-loan-note-issue-5dp2j30x0lc07na.html

From the Aura Renewable Acquisitions plc prospectus, dated 5 April 2022:-

"(iii) The Company has conditionally raised gross proceeds of £1,000,000 ... Under the terms of the Placing, Placees are entitled to receive one Freely Transferable Warrant for each New Ordinary Share subscribed for at no additional cost.
..."

"*Number of Ordinary Shares subject to Warrants 12,780,000"

https://aurarenewables.com/Investor-Documents/Prospectus.pdf

https://aurarenewables.com/investors/

The large majority of these warrants are exercisable at a share price of 15p/share.
And the others require the market price to have exceeded 15p for some time, and for the first acquisition to have been completed.

In relation to its IPO placing price of 10p, the ARA 'warrants premium' is similar to the situation at TMOR: where the IPO placing price was 1p, and the vast majority of the warrants are 'investor warrants', exercisable at a price of 1.5p/warrant.

So TMOR's proposed RTO at a s.p. of 2.25p clearly brings its warrants into play.
And this will doubtless be the aim of ARA: i.e. a RTO at a good premium to 15p, to bring its own warrants into play.

Thanks PawnSacrifice.

The €35K/month fixed costs are for ZEN's Italian electricity production, which is all from its Torrente Cigno asset:-
https://www.zenithenergy.ca/operations/italy/

ZEN's gas sales have all apparently been coming from just two other concessions (with the others having been mothballed - although that should be changing).
We don't know the production costs, but they must be pretty low, as ZEN was still producing and selling gas at gas prices about a tenth of those currently. So perhaps somewhere in the region of c. €40K/month production costs for the two sites combined, at recent output?: ZEN won't have the cost of conversion to electricity, but there are two sites, with quite significant production.

From Thursday's ZEN Twitter interview, with thanks to MarketGunslinger:-
"The all of a sudden, starting in January 2021 the price of gas and electricity started to ramp up and they have become ten times the original prices."

Meanwhile, ZEN's Italian gas production has also increased tenfold:-
From ZEN's 26.8.22 annual report, for its year end 31.3.22:-
"The Company sold 131,556 mcf of natural gas from its ltalian assets, as compared to 12,713 mcf of natural gas in the 2021 similar period."
https://wp-zenith-2020.s3.eu-west-2.amazonaws.com/media/2022/08/Annual-Report-Zenith-Energy-31.03.2022.pdf

So a tenfold increase in gas prices, combined with a tenfold increase in production, should equate to a hundred-fold increase in ZEN's Italian gas production revenues.

I've said previously that ZEN should report its Italian gas sales revenues, in addition to its electricity revenues.
Perhaps it wasn't worth it previously when the numbers were far smaller, but it certainly would be now, and would help to avoid confusion and underestimation of incoming revenues.

Of course all the booked revenues will be included in the coming interim report (for the half year just ended) in any case, and the company may not regard providing extra sales info. as a priority.

The annualised value of ZEN's Italian gas production now, at the far higher gas prices we have moved to recently, should equate to a several million euros p.a.

From ZEN's 26.8.22 annual report, for its year end 31.3.22:-
"The Company sold 131,556 mcf of natural gas from its ltalian assets, as compared to 12,713 mcf of natural gas in the 2021 similar period."
https://wp-zenith-2020.s3.eu-west-2.amazonaws.com/media/2022/08/Annual-Report-Zenith-Energy-31.03.2022.pdf

Mcf = 1,000 cubic feet, so 131,556 mcf = 131,556,000 cubic feet.

The recent and expected gas price in Italy has been or is in the region of 200 EUR/mWh .

"EU Natural Gas is expected to trade at 210.40 EUR/MWh by the end of this quarter, according to Trading Economics global macro models and analysts expectations."
https://tradingeconomics.com/commodity/eu-natural-gas

One cubic meter of gas equals about 11kWh.
Divide by 1,000 to convert to mWh, = c. 0.011mWh.
Divide by 35.3147 for cubic feet, = one cubic foot of gas = c. 0.000311.5mWh.
131,556,000 cubic feet x 311.5mWh = c. 40,979.7mWh
x recent & expected near future gas price of c. 200 euros per megawatt hour = c. euro 8.2M.

Which equates to c. £7.25M. of annualised revenue. At very high profit margins.

And ZEN's recent investor call revealed that ZEN's mothballed Italian gas assets could increase its Italian gas production by 88% when brought back into operation.
Which added to the existing level of output, at the same price as used above, could increase ZEN's annual gas revenues to c. £13.63M., at very high profit margins.

This is in addition to ZEN's Italian electricity revenues, which do not include the gas sales figures.

Thanks very much for your excellent work, MarketGunslinger.

The upside here is enormous, but it has great downside protection too, which is what makes it such a compelling opportunity.

I think that you $16-$18 million per annum figure is understated though.

Have you had a chance yet to give your assessment of ZEN's Italian gas production & potential, as per this 29th. September comment from you?:-

29 Sep '22
"Hedgehog - from the figures you have quoted, I agree it looks like I have under-estimated the potential of the Italian gas fields. This is because I have just been going off the electricity generation information released by RNS. and not by the gas numbers in the annual report.
I will take a look at the annual report as soon as I can to re-work the revenue figures. Thanks for pointing this out."

These very strong figures for three consecutive demonstrate that it is no flash in the pan, and that high prices are here for the foreseeable future.

Indeed as this is the most 'summer' quarter of the year, you would expect winter heating demand to fuel even stronger performance in the next two quarters.

Moreover, ZEN intends to ramp up production, which it can do quickly and cheaply.

A doubling of ZEN's electricity price achieved looks quite plausible this winter the way things are going.
And likewise, a doubling of megawatt hours output seems like a reasonable speculation for the medium term.
Which could therefore result in quadrupled monthly Italian electricity revenues, and an even greater increase in profit.
Which could equate to an annualised Italian electricity profit similar to ZEN's current market cap.

Remember that this doesn't even include ZEN's Italian natural gas sales, which aren't included in the electricity figures.
And ZEN's Italian gas production has been rising strongly, as have prices.
Indeed ZEN's investor call last week revealed that ZEN's mothballed Italian gas assets could increase its Italian gas production by 88% when brought back into operation.

ZEN's profit margins on both its Italian electricity and gas sales are huge at current prices: in effect, a bit like a 'licence to print money'.
So ZEN can probably make more profit on each £10M. of these electricity & gas sales than many companies make on revenues of £100M.

The market is gradually cottoning on to this fact, and a re-rate is underway accordingly, which likely has a long way to run yet.

18th Aug 2022 12:04 pm RNS New record profitability of Italian production
" ... During the month of July 2022, the Company produced a total of approximately 996.5 megawatt hours ("MWh").
Electricity prices during the month of July 2022 averaged approximately EUR 419 per MWh, resulting in net revenues of approximately EUR 417,000. Zenith's current net production costs remain fixed at approximately EUR 35,000 per month. ..."
https://www.lse.co.uk/rns/ZEN/new-record-profitability-of-italian-production-6t9wgfzolsbttw9.html

August 2022:-
During the month of August 2022, the Company produced a total of approximately 985.6 megawatt hours ("MWh").
Electricity prices during the month of August 2022 averaged approximately EUR 538 per MWh, resulting in net revenues of approximately EUR 530,000. Zenith's current net production costs remain fixed at approximately EUR 35,000 per month.

September 2022:-
During the month of September 2022, the Company produced a total of approximately 955.5 megawatt hours ("MWh").
Electricity prices during the month of September 2022 averaged approximately EUR 419 per MWh, resulting in net revenues of approximately EUR 400,000. Zenith's current net production costs remain fixed at approximately EUR 35,000 per month.

Q3 2022 ZEN Italian electricity production & revenues total:-
c. 2,937.6 megawatt hours ("MWh")
c. EUR 1,347,000 net revenues
c. EUR 1,242,000 profit (which equates to c. £1.1M. at current exchange rates)

= c. EUR 4,968,000 annualised profit

Mls,

This must be one of the most undervalued and exciting shares on the LSE.

So where is any justification for you statement that it needs propping up?

Frankly, you are embarrassing yourself.

We've had so much intelligent and useful posting over the last couple of days, that you usual facile nonsense sticks out like a sore thumb.

Hedgehog100 Posts: 2,344 Price: 25.00 Strong Buy
Buy Opportunity 17 Sep '22
" ...There's also the 'blue sky' possibility of a takeover of NWT ... and such takeovers are sometimes announced in tandem with a company's results."

Last month, RPS unveiled such a takeover alongside its interim results:-

09/08/2022 07:00 UK Regulatory (RNS & others) RPS Group PLC Interim Results LSE:RPS Rps Group Plc
09/08/2022 07:00 UK Regulatory (RNS & others) WSP Global Inc. Offer for RPS Group plc LSE:RPS Rps Group Plc

And today, ATQT has done the same thing:-

29/09/2022 07:00 UK Regulatory (RNS & others) ATTRAQT Group PLC Half Year Results LSE:ATQT Attraqt Group Plc
29/09/2022 07:00 UK Regulatory (RNS & others) Crownpeak Technology, Inc. Recommended Acquisition of Attraqt LSE:ATQT Attraqt Group Plc

The company is today's top gainer, with a rise of 66% to 29p:-

LSE % Gainers Top Lists
EPIC Name %
ATQT Attraqt +66%