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I’m pretty excited about today’s RNS as I was getting a bit frustrated that there had not been any news about the Robanna wells since back in June.

Obviously, from the June RNS we were expecting ROB3 to be the first well drilled and for it to be drilled in August, but having read through the latest news I think that the new way around is better. Not only are we adding an additional workover drill targeting another 55 barrels per day by the end of next month but we are also only paying $550k for getting it done. At today’s crude price of $67 this should mean that the we generate enough gross revenue to cover the cost of the well in only 150 days.

What I also like about the new plan is that we get the workover drill which should me much simpler to complete (taking half the time and only costing one third of the price of the infill well) out of the way quickly. This means that we get valuable data from the workover which will help to ensure the success of ROB3 and also means that we are generating cash from the concession straight away – even while we are analysing the data from ROB1.

Overall, I am really pleased with the fact that we are now getting our Tunisian production firmly under way. We have an absolutely clear date for the workover drill and we know that ROB3 will come straight after ROB1. On top of this we also have a confirmation that we will get an update on the Ezzaouia drill shortly and that this will be carried out before the end of this year. Finally we shouldn’t forget that none of the Robana or the Ezzaouia assets are in the competent persons report that was issued back in July and so as AC says then we should hopefully get an update on this quite soon.

With another major reserves update in the pipeline and increased production on the way then things are looking good for the future of Zenith.

It has now been announced by the Congolese government: https://gouvernement.cg/compte-rendu-du-conseil-des-ministres-du-mercredi-28-juillet-2021/

I don't like to crow, but I do believe that I predicted this happening well before the election!

"Hopefully Donatien Mpika, ZEN's Country Manager, and AC, have direct access to Itoua, so news of Tilapia, and maybe MKB or an alternative, may not be too far off."

Ageos - They do appear to have direct access to Itoua. Here is a AC's quote from the Norwegian investors conference call:

"there is now a new oil minister and we have met him and his management team thanks to the very good reputation of our new country manager – who is somebody who has worked in both government and private oil companies in Tunisia for the last 7 years. He joined us in March and thanks to him things are moving quickly; there is mutual respect between us and the government and we are doing everything that the ministry wants us to do in order to be awarded the license. I expect the timescale (of the license granting) to be reasonably short but the timescale reasonably short in Africa has various meanings."

Donatien Mpika is already proving his worth it would seem.

SES AUTRES ENNEMIS
Bruno Jean-Richard Itoua demande par ailleurs l'éviction
de l'actuel PDG de la SNPC, Maixent Raoul Ominga.
Proche de l'ex-ministre des finances et ancien directeur
financier de la SNPC Calixte Nganongo, devenu l'un des
conseillers financiers officieux du chef de l'Etat, Ominga
ne serait pas, selon Itoua, l'homme de la situation. Le
ministre lui reprocherait notamment de ne pas avoir
valorisé le permis MKB opéré par SNPC et surtout de n'avoir pas pu redresser la situation financière de
l'entreprise.
Bruno Jean-Richard Itoua devrait aussi faire face à son
collègue des finances, du budget et du portefeuille
public, Rigobert Roger Andely, décidé à suivre -
particulièrement sur le plan fiscal - les activités
pétrolières (AI du 17/06/21). Andely bénéficie pour cela
de la confiance du président congolais, conscient de la
situation financière difficile du pays. Le ministre Andely
s'est ainsi doté d'un conseiller aux ressources naturelles
(une première au ministère des finances), en la personne
de Serge Ndeko, ex-DG des hydrocarbures entre 2005 et
2018. Fondateur avec Itoua et Gokana de la SNPC et
également ancien d'Elf, Ndeko avait été exclu de la SNPC
en 2002, et depuis il n'entretient plus de bons rapports
avec ses deux anciens compagnons.
Enfin, il faudrait également compter dans ces futures
batailles pétrolières avec Denis-Christel Sassou
Nguesso, dit " Kiki ", nommé en mai ministre de la
coopération internationale et de la promotion du
partenariat public privé. Déterminé à suivre les
entreprises publiques congolaises et les partenaires
économiques du pays, le fils cadet du chef de l'Etat vient
de désigner comme conseiller aux investissements son
ami Cédric Okiorina, qui fut longtemps directeur chargé
de la commercialisation à la SNPC et représentant de la
pétrolière congolaise à Singapour.

The French original

Sa couronne de chef du pétrole conquise, Itoua
passe son temps à régler ses comptes
Le nouveau ministre des hydrocarbures, Bruno Jean-Richard Itoua, travaille avec la plus grande
énergie à mettre de côté tous les responsables du pétrole qui ne lui sont pas loyaux.
Rien ne va plus au ministère des hydrocarbures entre le
tout nouveau titulaire du portefeuille, Bruno JeanRichard Itoua, et la DG des hydrocarbures Teresa Goma.
Réputée très proche de Denis Gokana, le conseiller
spécial aux hydrocarbures du président Denis Sassou
Nguesso, Goma ne supporte plus les vexations de son
ministre qui ne l'associe à aucune réflexion stratégique,
ni à aucune des audiences qu'il multiplie depuis fin mai
avec les principaux acteurs du secteur pétrolier. Itoua
l'empêche même de présider les comités de gestion -
entre l'Etat et les compagnies pétrolières - qui sont
pourtant du ressort de la direction générale des
hydrocarbures (DGH), depuis l'ère de l'ancien ministre des
hydrocarbures passé au transport Jean-Marc Thystère Tchicaya

ITOUA DÉFIE DENIS GOKANA
Bruno Itoua veut être le seul maître à bord du secteur
pétrolier congolais. Il travaille ainsi à écarter son ennemi
intime Denis Gokana. Tous deux anciens d'Elf et
cofondateurs en 1998 de la Société nationale des
pétroles du Congo (SNPC), Bruno Itoua, qui a dirigé cette
entreprise de 1998 à 2005, et Denis Gokana, qui lui a
succédé en 2005, ont une relation compliquée. Ces deux
anciens amis sont en perpétuelle concurrence pour
gagner le statut de pétrolier favori du régime.
Itoua fait valoir en haut lieu que la position de Gokana
est plus préoccupée par les intérêts d'Africa Oil and Gas
Corporation (AOGC), sa société pétrolière, que par ceux
du pays. Le conseiller du chef de l'Etat reproche de son
côté la forte proximité du ministre avec les traders
(Glencore, Trafigura...), lesquels auraient à nouveau fait
miroiter au président Sassou que Bruno Itoua était la
personne idoine pour apurer le contentieux financier les
opposant au Congo.

HIS OTHER ENEMIES
Bruno Jean-Richard Itoua also asks for eviction of the current CEO of SNPC, Maixent Raoul Ominga.
Close to the former finance minister and former director SNPC financier Calixte Nganongo, who became one of the unofficial financial advisers to the head of state, Ominga would not be, according to Itoua, the man for the job. The Minister would reproach him in particular for not having
valued the MKB permit operated by SNPC and above all for not having been able to redress the financial situation of the company.
Bruno Jean-Richard Itoua should also face his finance, budget and portfolio colleague audience, Rigobert Roger Andely, decided to follow - particularly on the tax front - the activities
oil (IA of 06/17/21). Andely benefits for this of the confidence of the Congolese president, aware of the difficult financial situation of the country. Minister Andely has thus acquired a natural resources advisor (a first at the Ministry of Finance), in the person by Serge Ndeko, former Director of Hydrocarbons between 2005 and 2018. Founder with Itoua and Gokana of SNPC and also former of Elf, Ndeko had been excluded from the SNPC in 2002, and since then he no longer maintains good relations with his two former companions.

Finally, we should also count in these future oil battles with Denis-Christel Sassou Nguesso, known as "Kiki", appointed in May Minister of international cooperation and the promotion of private public partnership. Determined to follow Congolese public enterprises and partners economic development of the country, the youngest son of the head of state to appoint as investment advisor his friend Cédric Okiorina, who was a director in charge for a long time marketing to SNPC and representative of the Congolese oil company in Singapore.

I found a very interesting article in Africa Intelligence the other day. It seems from my reading of this that Teresa Goma may be on her way out as she does not enjoy the confidence of the new oil minister at all. https://www.africaintelligence.com/oil--gas_state-strategy/2021/07/15/itoua-now-crowned-as-oil-minister-seeks-to-settle-scores,109679880-art

My French is by no means perfect and the google translate of this article is a disaster, but if I am reading this right then her days at the ministry may be numbered and this will be good for Zenith as she has never been our biggest fan.
Feel free to correct if your French is better that min. I include the French and the English version (from Google Translate) below.

Regards,
MG

His crown of conquered oil chief, Itoua spends his time settling accounts
The new Minister of Hydrocarbons, Bruno Jean-Richard Itoua, works with the largest
energy to put aside all those responsible for oil who are not loyal to him.
Nothing goes to the Ministry of Hydrocarbons between the all new holder of the portfolio, Bruno JeanRichard Itoua, and the DG of Hydrocarbons Teresa Goma. Known to be very close to Denis Gokana, the advisor special oil from President Denis Sassou Nguesso, Goma can no longer bear the vexations of its minister who does not associate her with any strategic thinking, nor to any of the audiences he has multiplied since the end of May with the main players in the petroleum sector. Itoua even prevents her from chairing management committees - between the State and the oil companies - which are yet the responsibility of the general management of
hydrocarbons (DGH), since the era of the former minister of hydrocarbons passed to transport Jean-Marc Thystère Tchicaya.

ITOUA CHALLENGES DENIS GOKANA
Bruno Itoua wants to be the only master on board in the sector Congolese tanker. He thus works to ward off his enemy intimate Denis Gokana. Both Elf alumni and co-founders in 1998 of the National Society of Congo Oil (SNPC), Bruno Itoua, who led this company from 1998 to 2005, and Denis Gokana, who succeeded in 2005, have a complicated relationship. These two old friends are in constant competition for gain the status of the regime's favorite oil tanker. Itoua argues in high places that Gokana's position is more concerned with the interests of Africa Oil and Gas
Corporation (AOGC), its oil company, only by those from the country. The adviser to the head of state criticizes his on the side of the minister's close proximity to traders (Glencore, Trafigura ...), which would again have done to show President Sassou that Bruno Itoua was the suitable person to settle the financial disputes opposing the Congo.

Great research AGEOS - I had given up on ETAP as it seemed to have been stuck in 2020 forever. Thanks for that - it means I can update all my spreadsheets now.

We should definitely keep an eye on it as that 800 barrels (if it stays like that) means another 150bopd net to Zenith which is an additional $11,250 per day.

Fingers crossed the numbers stay high.

END!

9. What can shareholders expect in terms if key highlights and flash points of value creation in the next month or two before we do the next conference call?

a) Zentih is engaged in a variety of negotiations with the intention and the ability to close in the near future. This is both for known deals like Tilapia and Tunisia and also for new deals. We are very active in making negotiations to close, announce and grow the company. All of these deals can happen and we are just waiting on the speed of the counterparties as these are big organisations and governments that move at a slower speed than we do.

b) Part of these deals are already known to our shareholders (presumably he is talking here about Tilapia and Sidi El Kilani) and these deals are going to happen.

c) In the new portion of deals (which we cannot talk about in detail due to rules on market confidentiality) we are allowed to say that we are going for bigger fish. We have demonstrated our technical abilities to produce and finance production in Tunisia and we are now able to discuss bigger deals. On top of this in Nigeria specifically small 200bopd deals do not exist and in Nigeria we are looking for deals of a dimension that, if realised, would bring our stock something like 10-15 times the current price. Timing however, is at the leisure of the vendors and the regulators but we are very persistent and we hope that the counterparties will close the deal if only from their own exhaustion.

8. Why does Zenith not publish a list of shareholders on its website?

Not by choice but through history we are a Canadian company with a listing in London and Oslo. Because we have these three markets of shareholders and we have been advised by our lawyers that just to present a list of holders in Norway would be misleading as the largest Norwegian shareholder may not be the largest global shareholder. So we cannot do this. It is not us not trying to be transparent but we are advised by our advisors not to do this.

The company has an obligation to issue a news release if anybody owns more than 5%. However, expecting that zenith gives the normal Norwegian VPS list on the website like other Norwegian companies would be wrong as there are shareholdings in other markets which would not appear on that list.

7. What is the reasons for the fact that Zenith is so undervalued? There are many companies that have fractional or no production that have values much higher than Zenith and in the Norwegian market there are very few listed oil and gas companies but those that are listed are many multiples of Zeniths size and have productions which are much larger – but the gap between Zenith and these companies is still too large. How do you see Zenith fulfilling its potential in terms of valuation?

Firstly we have to look at the history of our company. We arrived in Oslo which is generally our most liquid market only in 2018. Since then, our stock has been in limbo for a bit when we started to become unhappy with the geology of our assets in Azerbaijan. After this, Covid came and the oil price collapsed down to $14 for Brnet in April 2020. This had a tremendous affect on companies in Lodnon and Oslo. Then we had the delays in Tilapia and misinformation distributed by company enemies which have held the stock back and prevented focus on our success eventually in Congo. Some of these people have already been brought to court and condemned and the others will follow the same path. There is also the fact that people bought at a low price and then sold out for a profit of 350%. So we have to avoid the fact that people leave Zenith because they do not see the imminent results of all our work. I have not spent a lot of time analysing competitors behaviours in Africa but I cannot believe that they have achieved things there quicker than us. Also with many of our competitors they are not the operators and so they are just passengers in the train whereas Zenith is actually the driver. This is much harder and slower to achieve than just being a farm-in partner. So there is an underestimate of our value which can only be rectified by 2-3 research houses covering the value properly. But when this is done I hope that the share price will rise up to a level that represents its real value.

As soon as Zenith gives proof of concept and fully completes its acquisitions as well as showing operational success in Robana then the gap between what the share price should be and the share price is will narrow dramatically. Zenith needs to prove itself to the market in order to reach its true potential.

6. Shareholders have pointed out that the company lacks analyst coverage. Is there any progress on changing this?

We have made a lot of effort to do this. We have made attempts in Norway but without any success as the majority of the research houses are part of top brokers who are only interested in covering companies wit a 700-800million NOK market cap. The market in London is more varied and we are discussing with high quality brokers in London to cover us with research.

This research is very important for three reasons: It illustrates in an independent way that the company is undervalued; the fact we have very important reserves; the fact that we have the possibility to acquire additional assets in the short term. We hope to be able to announce an English analyst soon and we are also in discussions with a French-speaking research house about Zenith.

These will help reset the target value of the company. When I see the blogs in England and Norway I see people talking about a share price of 2-3p and 20-25 NOK but I would say that the true value of Zenith is much higher and can only be assessed by an independent analyst who will be able to make a peer-comparison. Zenith is not only undervalued in absolute terms but also in comparison terms. There are companies who have much higher prices than us who represent less potential than us in Africa.

We will communicate our reserves report soon as it is nearly ready and when it is public this will allow the research houses to comment on the size and the value of these reserves.

4. Tunisia – The plans to drill Robana 3. When can shareholders expect operations to begin and what expectatiosn they should have?

It is the first capex activity we are doing in Tunisia. It is a 100% owned field without any partners which means that we can go quickly. We have just appointed a new production and technical director and we only acquired the field on May 22nd so we are going very quickly. We can expect to start any time between 15th August and 15th September.

The Robana field is of small dimension but a steady reservoir with minimal decline and although it is an island it has good transportation links and we have no difficulties to produce and then export the oil. Our three fields (Ezzaouia, Robbana and El Bibane) are located very close to each other and the blend that results from the mix of oil and condensates produces a blend called Ezzaoiua on the international markets which has an API of between 42-43 so it is very attractive for Mediterranean refineries.

Sidi El Kilani will produce a light sweet oil which is the most common and well known oil in Tunisai and is in demand. So with all four of our fields we have the ability to make quick interventions when we control them (ie the SLK deal goes through) and then develop production quite easily as there is infrastructure and the country is not too big.

5. Could you give more information of the El Bibane development program as that appears to have huge potential for 500-600bopd. In near term production?

El Bibane Is a very critical field for us as will be the first field where we are the full 100% operator of an offshore field and this will make us almost unique in the London and Oslo markets for a company of our size. So let us have the time to get used to operating the field first and only then will we look at re-entering one of the shut-in wells which are meant to produce 600 bopd minimum. We have to walk before we can run when it comes to offshore so we need a little bit more time before announcing the start of an offshore operation. I would add that this will be done in parallel with the Tilapia drilling as soon as we crystalise the license in Congo.

2. How will Zenith finance these acquisitions as we are talking about big numbers?
Often the easiest way to do this is to issue shares but more and more we are trying other products. The bond activities are doing well (pure debt without any equity component) and we are developing it by seeking ratings which will be renewed in the next 6 weeks. At the moment we have a B- rating but we expect that this will be changed upwards especially with the new oil price.

We also have pre-financing activities – for the sale of future production. This is quite complex to do but we are progressing with it. Also there is general financial products of innovation such as Islamic finance which we are looking into. So we are always looking for different options to mean that we do not have to issue equity. Although we do have to sometimes print shares we are trying to do this less often and we believe that the new financial instruments that we are developing, especially in light of the money received from oil sales can replace equity issues.

3. Gas to power – could you give more information as to your vision of gas-to-power activities in Africa?

In Africa there is still a lot of gas being flared despite the rulings of governments. However when an oil company has nothing to do with gas then the only thing to do is to flare it. This is the situation in most countries in Africa. Our plan is to set up small gas to electricity plants like the ones that we have in Italy. The government are tremendously interested and positive. The realisation of this has been slow because it does not make a lot of money for local interests but it is in demand from the local communities and we do think that over time this will start to take off in the 2-3 countries that we are visiting regularly.

1. With the major companies leaving the O&G space Is there are opportunity for Zenith to increase exponentially in size. Zenith has stated a target of producing 23,000 bopd by 2023 and so how do you see that playing out?
Strategically, in European capitals such as Paris, Amsterdam and London there is a frenzy to exit oil and gas activities by the majors – trying to improve their image and move from fossil fuels to green energy by divesting assets. In this strategy they have to find a buyer for these assets. If the assets are very complex and large (100,000 bopd) then they will not engage in discussions with Zenith as we do not have the financial resources to take over the field but all of the rest of the portfolio especially in certain large countries like Nigeria are made from a compendium of medium producing fields of 20/25/30,000 bopd. These are the target of our acquisitions as these fields can be sold not as part of a portfolio but individually so that will permit us to participate (sometime alone and sometimes with local partners) in the acquisition of these fields. The target that we have set ourselves of 20,000 barrels can therefor be met and surpassed in one go if the right field is purchased.
There are a lot of these types of opportunities available but we do have to create a perception that Zenith are able to run this type of field so the first time that we get a field that is between 6-10,000 barrels then it will be a very strong proof of concept and abilities that will permit us to enter other negotiations.
Sometimes shareholders alert us when a major is leaving a country and wants to divest it’s entire portfolio there but it is not credible that we can take a full portfolio in a full country. However, what we are presenting to you here are not dreams but things that we are negotiating and that could close at any moment. So I repeat – there are a lot of majors leaving Africa and putting fields for sale or even returning them to the government. We have a prudent approach not to engage in mega-deals where the discussions may last 2-3 years and then fail. Instead we are negotiating multiple deals between 3-10,000 barrels which can be completed to contract signing within weeks.

Italy – in Italy we will continue our activities where we make electricity out of gas, in our case sub-standard gas. This model is very attractive for our ministerial contacts in Africa as in Africa there are tremendous quantities of gas reserves, some completely untouched but below commercial definition because the infrastructure for transporting gas in Africa is very expensive so fields that would be considered commercial in Italy or France of Poland are not considered commercial in Africa. Our strategy for small and medium gas fields is to install a gas to power facility and produce electricity which is in great demand for the whole of sub-Sahaaran Africa where it is not possible to have a steady electricity supply at home. In this continent, regardless of what is happening in the West, there is still a long-term demand for oil and gas. While there is a political focus on green energy in Africa the core of the continent still needs fossil fuels – and as the majors are leaving this activity it represents a great opportunity for us.

Now for the questions please…

Another area we are looking at in Nigeria where there are an enormous amount of fields which are often managed in a very dormant way by their historical owners. There is also the marginal fields bid round from 2020. I should point out that everything that involves bureaucracy in Sub-Saharan Africa typically takes a very long time so the bid round contrary to what has been mentioned in the press round is not actually finished There is still an allocation of fields to be made as 50% of the fields signing bonus has not been received by the state and as a consequence if these bonuses are not paid then the allocation is not completed and there is still space for negotiation with other parties. However, as I have already commented in previous conference calls, the fields that have been put in last years bid round do have larger complications and lower quality than other options that are already available in the country. Also, despite the fact that the fields are producing, there are various entities and individuals that the govt want to partner with international companies. This is because there is a complete lack of capital in the region despite the fact that there are 200 million people and banks and an important stock exchange. However for oil and gas which require a certain amount of long-term funding there is no potential funding in country. Therefor the majority of the owners of Nigerian fields are in search of an international partner with whom they can JV the development of the fields.

These kind of negotiations can only happen in person due to the complexity of the discussions and so we are spending a lot of time there. At the moment we have 12 negotiations in Nigeria and we are confident that one of them at least will be completed in the not too distant future.

I want to note that we were discussing in other countries marginal fields producing 200-400 bopd with some potential upside but in Nigeria the minimum negotiation that we are having at the moment is for 3,000 barrels. In Niigeria the definition of marginal fields starts at anything below 17,000 barrels. So there is marginal and marginal – a field producing 8-10,000 barrels is called marginal in Nigeria due to the amount of oil they have but this would not be called marginal in other parts of the world.

Passing through to the sub-Saharan region we made the acquisition of AAOG in December 2019 which was the only asset of the oil company AAOG PLC in London. This asset is extremely attractive and there is a very prospective field called Tilapia which is very sought after. We produced from this field for a few months until the license expired and since then we have been in the process of signing a new license. The election period has taken away a lot of ministerial management resources and time because they were all caught up in the election but there is now a new oil minister and we have met him and his management team thanks to the very good reputation of our new country manager – who is somebody who has worked in both government and private oil companies in Tunisia for the last 7 years. He joined us in March and thanks to him things are moving quickly; there is mutual respect between us and the government and we are doing everything that the ministry wants us to do in order to be awarded the license. I expect the timescale (of the license granting) to be reasonably short but the timescale reasonably short in Africa has various meanings.

We are also spending our time while we are waiting for the license to be granted in identifying other oil license opportunities in Africa. We have already identified two other opportunities in Congo of which one is fairly advanced in progress. Shareholders may remember in December and January of our updates on the assessment of our technical capabilities that the Congolese government wanted to perform including sending a delegation to Europe to make a thorough investigation of our financial and technical capabilities at our site in Italy.

Hi everybody I had spent some of the morning re-listening to and writing up the content of the investor conference call from Friday which was put up on Zenith's youtube channel earlier today. It is amazing how much more information that you get from reading than listening so I hope that this helps.

We are an African focused company. Our only non-African asset is in Italy and we will explain later why this remains in our portfolio. Our refocus on Africa has only happened in 2020 so we have been working very hard in our new focus despite covid. During Covid when most people were not travelling and were in lockdown Zenth has made extensive trips to Africa and has achieved much because of this.

The first page is our financial structure. We have two listings – one in the main market in London and the other in the high-growth Euronext in Oslo. The market cap is approx. £14 million and there are 1,377,000,000 shares in issue (approx.). The shares listed in Oslo are all of the shares and a reduced number are listed in Lodnon but we are creating a prospectus to bring all the shares into London too so you can move them between stock exchanges.

Our philosophy is to concentrate on production assets in Africa –(North Africa and Sub-Shahara Africa). The first part, North Africa, is represented at the moment solely by Tunisia where we have made 4 acquisitions: Ezzaoiua, Robanna (which are onshore and producing oil). The third one is El Bibane which produces mainly gas and condensate and is offshore. At the same time more than a year ago we have acquired 45% of Sidi El Kilani which is an important license that originally produced 20,000 barrels of oil per day and has reduced over the years mainly due to lack of investment by the partners. The partners that have sold to us are two mega companies -CNPC the third largest oil company in the world and KUFPEC which is a subsidiary of the Kuwaiti National oil company. These two companies are so big that they did not have the time to spend their technical resources on what is for them a small field.

Although the deal has not been finished yet, the economic date is from when the deal was first signed and we are progressing steadily in a very bureaucratic environment to secure this acquisition. The great part about our host country, Tunisia is that it permits oil companies to sell their oil directly to any refineries in the Mediterranean. This allows us to auction the oil for the best price. We announced yesterday morning we sold our first lot of oil, which has gone to Italy and this oil has obtained a very good price which is a combination of the high oil price and also that our oil is recognised as a good blend that can be sold to various refineries in the Mediterranean region.