Member Info for MarketGunslinger

Debt funding is the sign of a company that is significantly maturing. Most notably because the lender has to believe that the lendee will have the capability to pay the debt back. However, some shareholders are never satisfied. They moan like hell about the fact that Zenith issue placings and then when they raise money via debt then they moan like hell about that too.

I feel most of the serious derampers on this board do not know anything about finance. You do realise that if the warrants are actually engaged then the price will have to massively increase from where it currently is to make it worthwhile for the lender.

So let’s assume that the price needs to double to 2p in order to make the first 85 million worthwhile. This would mean that the company receives £1,445,000 in cash for the warrants and that if they were to sell at 20 then the lender would make a profit of £255,000.

Assume that the price increases to 2.5p for the second tranche of 85 million to be worthwhile then they company would receive a further £1,870,000 from the exercise of the warrants and then the lender would be able to sell at 2.5p for a further profit of £255,000.

So the lender makes £510,000 and the company receives £3,315,000 and the share price would now be at 2.5p and would more than double from where we are at now.

There is really nothing to moan about now. If the company had raised via equity placing (that you always moan about) then they would have had to issue 150 million shares now at 1p and they would only have raised £1.5 million. Instead of this we have got E1.5 million as a loan with a 9% repayment coupon and if the warrants are exercised then the share price has more than doubled and Zenith receives an additional £3,315,000. And for all of this to be valid then this share price rise has to take place within a year. There is simply nothing not to like here.

The really important part of the RNS is the mention that the company is viewing potential other asset acquisition opportunities. You fir that together with AC’s tweet about potential additional opportunities in Tunisia https://twitter.com/CattaneoGenoa/status/1363817620223492104 and it is pretty clear where this is all pointing. Zenith have borrowed to money to buy a new asset and increase the value of the company.

The lender believes that Zenith shares will more than double in value over the next year and they have put their money where their mouth is. For me Zenith is looking better and better in 2021.

I couldn’t disagree with that asessment more Zengas. As I have said repeatedly Zenith have not said any of the things that they are accused of saying in the Africa intelligence article.

Somebody who has a vendetta against Zenith (quite likely this Teresa Goma woman herself) has deliberately leaked a letter that they claim has been sent to Zenith even though the company has categorically come out and said that they have never received it. They have then been attacked on the basis of this article.

As we have seen from other press articles from the Congo Teresa Goma has a reputation for being both unstable and prejudiced against people who have a different skin colour to her. She was never going to be positive about Zenith whatever they do.

It is noth the first time that negative stories about Zenith have been leaked to Afric Intelligence and it likely that a lot of these issues are nothing to do with Zenith and are instead about power and influence in the Congo. We know that Zenith have been communicating directly with the Congolese President Dennis Sassou Nguesso and we know that elections are coming up on March 21st 2021 so political tensions are significantly heightened there.

If you think through what AC said in the email then it is pretty clear that he has nailed his colours to the President’s mast and that Teresa Goma is not part of that camp. He has also been explicit that he thinks that once the election is out of the way then she will be dismissed and replaced by somebody else. Regardless of what he says though she is never going to be anything but angry to somebody that she perceives as an ally of her enemy so in my opinion AC has done the right thing by bringing the attack straight back to her. He has made it clear whose side that he is on here and at least brought what he thinks out into the open for all of us to see.

Considering that Dennis Sassou Nguesso won the last election when he got 60% of the vote and his nearest rival got 15% https://en.wikipedia.org/wiki/Elections_in_the_Republic_of_the_Congo then I for one am confident that AC has chosen to back the right horse.

The previous link did not work because the filter on here will not let the word R A Ci I S T be published.

I was doing some investigations last night into Teresa Goma the key figure in the Africa Intelligence article that was published yesterday. It would appear that she has a track record of having: a firey temper, an unstable personality and a clear hatred of white people.

In the article I have found it details how in a meeting with major Congolese oil companies in 2019 she had already offended so many company CEOs that the CEOS of Total Congo and Perenco Congo refused to attend a meeting with her to fix oil prices and the CEO of ENI Congo left the meeting before the organised lunch after being called an “apartheid white”.

All of this can be seen in the article here. https://tinyurl.com/ycklls77

Teresa Gomez’s character is described as “angry and irritating” and although I cannot see the letter that is connected with the article it implies that the way she speaks and writes is uneducated and unprofessional – which would fit in with the slightly unhinged language used in the Africa Intelligence such as “false declarations and irregular methods”

It seems that Teresa Goma is irrational and angry and not just with Zenith but with every oil company that is operating in the Congo. I think that we can safely say that her opinions (even if the letter is genuine) should not be taken too seriously. If we were contacted by an angry President of Congo or Minister of Hydrocarbons then it may be something that we should be concerned about. However, an article published entirely on the basis of a letter that has been alleged to have been sent by an unimportant civil servant with a history of irrational behaviour is not something to be taken seriously. It would not surprise me if she leaked the letter herself without even sending it to Zenith – she really does appear to be that unstable.

I was doing some investigations last night into Teresa Goma the key figure in the Africa Intelligence article that was published yesterday. It would appear that she has a track record of having: a firey temper, an unstable personality and a clear hatred of white people.

In the article I have found it details how in a meeting with major Congolese oil companies in 2019 she had already offended so many company CEOs that the CEOS of Total Congo and Perenco Congo refused to attend a meeting with her to fix oil prices and the CEO of ENI Congo left the meeting before the organised lunch after being called an “apartheid white”.

All of this can be seen in the article here. http://zenga-mambu.com/2019/05/07/pouvoir-de-brazzaville-en-plus-detre-incompetent-il-devient-******e/

Teresa Gomez’s character is described as “angry and irritating” and although I cannot see the letter that is connected with the article it implies that the way she speaks and writes is uneducated and unprofessional – which would fit in with the slightly unhinged language used in the Africa Intelligence such as “false declarations and irregular methods”

It seems that Teresa Goma is irrational and angry and not just with Zenith but with every oil company that is operating in the Congo. I think that we can safely say that her opinions (even if the letter is genuine) should not be taken too seriously. If we were contacted by an angry President of Congo or Minister of Hydrocarbons then it may be something that we should be concerned about. However, an article published entirely on the basis of a letter that has been alleged to have been sent by an unimportant civil servant with a history of irrational behaviour is not something to be taken seriously. It would not surprise me if she leaked the letter herself without even sending it to Zenith – she really does appear to be that unstable.

So Zenith announced that they had received confirmation of the success of the IPU (which they clearly have done as there is nothing in the article to question this) and that they would now move on to proceed with the POTENTIAL finalisation of the PSC. The key word here is potential. At no stage do they say that they have been awarded the license and at no stage do they claim that a “document has been signed by the Congolese authorities to award the permit to the company.”

Even in the interview that Andrea Cattaneo recently carried out with Stefania Barbaglio on 02/02/2021 he said that “After the approval of the IPU the license should then proceed to the signing of a Production Sharing Agreement (PSC) and then the PSC goes to the cabinet of ministers to be ratified and then after that it goes to parliament for the final ratification and to be passed into law.” Again, the key word – should. Not that it has, already been but that it should proceed throught to a PSC and then ratification.

It would appear that Africa Intelligence have constructed a bit of a straw man here. They claim that in a letter that they have seen (but has apparently never been sent to Zenith) that Zenith are accused of claiming all sorts of thing that even the simplest glance at the interviews and press releases makes it clear that Zenith have not claimed.

This is truly awful reporting. The most superficial glance at the statements made by Zenith would have made it clear to Africa Intelligence that Zenith had never made the claims that AI have accused them of and I think that the company have done exactly the right thing by taking legal action against Africa Intelligence. Their lawyers should have a field day with this….

Put simply, there is nothing to see here. This is a complete non-story.

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I am not sure why Africa Intelligence goes out of its way to cause so much trouble for Zenith. Almost every article that they publish is negative and it is almost as if they have some kind of vendetta against the company. Though, of course, it could simply be that they are constantly fed information by those who genuinely do have a vendetta against the company.

I think that what is especially noticeable in this recent article is how little of the article actually appears to be grounded in fact. The article implies that Zenith have claimed that they have been awarded the Tilapia permit when apparently “ no document has been signed by the Congolese authorities to award the permit to the company.”

The really interesting thing is that Zenith had never made any claim that they have been awarded Tilapia as far as I can see.

When we go back to the RNS in December 23rd – the company make no claims about being guaranteed the license. They explicitly say that they have been “selected as the successful bidder for the award of a new 25-year licence to operate the Tilapia oilfield ("Tilapia II").” Which is clearly true as this has never been questioned by anybody. They also go on to say that “In accordance with Congolese procedures for the award of new hydrocarbon licences, the award of Tilapia II is subject to completion of an inquiry of public utility (enquête d'utilité publique) ("IPU") to be organised and performed by the Ministry of Hydrocarbons during the month of January 2021, as well as the subsequent potential finalisation and ratification of the Production Sharing Contract ("PSC") for Tilapia II.”

There is absolutely no claim that the license has been awarded – simply that they have been chosen as the successful bidder (which they have) and that they have a number of other stages to complete before they are legally awarded the license.

In their RNS release about the subject on February 10th they mention that “the company has received formal confirmation regarding the successful completion of the Inquiry of Public Utility (Enquête d'Utilité Publique) ("IPU"), following an in-depth technical and financial review, performed by the Ministry of Hydrocarbons of the Republic of the Congo during the month of January 2021”. They then went on to say that “As announced on December 23, 2020, the Company will now proceed with the potential finalisation and ratification of the Production Sharing Contract ("PSC") for Tilapia II.”

(POST 1 of 2)

To save you doing that though the total oil production from Sidi El Kilani for the calendar year of 2020 was 200,086 barrels which works out as 548 bopd.

Zenith's share of this is 45% and the 22.5% that they bought from KUFPEC has been generating them oil from April 2020 while the 22.5% that they bought from CNPC has presumably been generating them an income since they signed the agreement in September.

You can get all of the production figures from here: http://www.etap.com.tn/index.php?id=1641

In short, Congo have a real electricity deficit but they do have a lot of natural gas reserves so there is the significant potential of improving this especially by using the gas generated from oil production for electricity production instead of simply flaring it off. Obviously this is a much more efficient and environmentally friendly of getting rid of the gas than simply burning it and so it is no coincidence that the delegation from the Ministry of Hydrocarbons were interested in looking at Zenith’s gas to electricity setup as this is where they can get a lot of quick and easy electricity supply from .

We know that the delegation from the Ministry of Hydrocarbons visited the Zenith gas to electricity Cogno production centre in Italy yesterday as the company informed us in their tweet. If the content from Brokerman Daniel’s article from yesterday is to be believed then he seems to think that as a result of seeing Zenith’s expertise in this area then Zenith will be invited to take part as a preferred bidder in any license rounds that will come up in the future.

If BMD is correct - and the fact that the RoC have such problems with their electricity supply as well as the interest that the delegation from the ministry of hydrocarbons showed in Zenith gas to electricity production centre suggests that he is. This then puts Zenith in a very strong position with regard to bidding for any further gas and oil concessions in the Republic of Congo.

We know that we have already been linked with local partners and additional license possibilities. It now looks like these will be coming sooner than we thought. With Tunisia well overdue and worth somewhere between $1.5 - $2 million in cash to the company, the future is looking very bright here.

The figures for the Republic of the Congo (Congo Brazzaville) are below – mostly taken from: https://www.economy.com/congo-brazzaville/indicators

The Republic of Congo have a total population of 5,518,092
Almost half of this population (2,600,000) do not have access to electricity.

Only 62% of urban areas are electrified and many of these areas including the capital Brazzaville and the economic capital Pointe -Noire still suffer significant outages.

The country ranks 143rd out of 195 countries worldwide in electricity production and 158th for electricity consumption.
Indigenous production is 62% from fossil fuels (mostly gas) and 38% from hydroelectric plants.

A new Minister for Energy (Sofien Ben Touns ) was appointed in Tunisia 2 days ago - see Reuters article here: https://www.reuters.com/article/us-tunisia-politics-goverment/tunisian-pm-appoints-new-ministers-in-sweeping-cabinet-reshuffle-idUSKBN29L0O2

I wonder if this reshuffle is what has been causing the delay in getting the Tunisia approval over the line? If this is the case we may see the approval coming in the next week or so. It has to be a good sign for some movement in the near future and this will be massive for Zenith as the approval will come with somewhere between $1-2 million dollars for the oil that will be due directly to Zenith.

Rocklawn, thankfully for all of us the treasury shares are fully included in the shares in issue and always have been. There has been no dilution and we will not see the shares in issue go up in the next few days. They will remain at 1,070,644,350 as per the bottom of most RNS releases.

Apologies, I just noticed that I wrote that we were owed $5.87 million by SOCAR when of course it was actually the SNPC.

I was just looking at the RNS releases and over the last two weeks, Zenith has received an awful lot of cash.

1. Treasury Shares £328,000
2. Warrants £371,000
3. Oil production from SOCAR $480,000 (£355,000)

So Zenith has received more than £1 million in the last two weeks. There has not even been any dilution because the treasury shares were already factored into the market price (so no new shares issued) and someone was clearly keen to get their hands on them as they paid the closing price on Friday.

Ok, we have used $420,000 (£311,283) to pay off Azerbaijan debts but this has come directly off the balance sheet and we still have still have £743,469 more cash in the bank than we did at the end of the year - as well as having Tilapiaa in the bank and Tunisia next up.

Once Tunisia is approved I expect us to bank anywhere between another $1-2 million (£740,000 - £1.48 million) and we also have the $5.7 million (£4.22 million) that SOCAR owe us to be paid back soon. I expect that this will commence once the formal approval for Tilapia has been issued in early February.

I have to say, both cash-wise and asset-wise Zenith has never been in such a strong position.

We also still have

So the balance sheet is improved by approx $450k with the paying off of debt and the warrants exercised at a premium generating £371k free cash for the company.

With $1-2 million due to come in from Tunisia as soon as that is approved then the company is looking like it will shortly be in a fairly cash-rich position and that is without any of the revenue from the SNPC $5.7 million.

I feel that 2021 is going to be a very big year for Zenith.

Highlander is De Jure correct that Zenith do not yet have a 25 year license for Tilapia. The company confirmed this themselves in their RNS on December 23rd. However, he is also De Facto completely wrong about it as they have been appointed as the successful bidder and the license is now all but in their hands.

All that remains now is for Zenith to complete the final formal processes before the 25 year license is officially granted by the government - however, the decision to give it to them has already been made. There are no longer any other horses in the race and so Zenith are going to be given the license in the very near future, it is just a matter of completing the regulatory requirements.

All is explained in the Zenith RNS: https://www.lse.co.uk/rns/ZEN/successful-bid-for-tilapia-ii-lz7ofr8ipunko20.html

“Zenith Energy Congo SA ("Zenith Congo"), has been selected as the successful bidder for the award of a new 25-year licence to operate the Tilapia oilfield ("Tilapia II").
In accordance with Congolese procedures for the award of new hydrocarbon licences, the award of Tilapia II is subject to completion of an inquiry of public utility (enquête d'utilité publique) ("IPU") to be organised and performed by the Ministry of Hydrocarbons during the month of January 2021, as well as the subsequent potential finalisation and ratification of the Production Sharing Contract ("PSC") for Tilapia II.”

Bye Kels - I am glad you got a profitable exit price. Good luck with your other investments and a Happy New Year to you too.

kelsbells you posted the following comment to me back in July;

“20/07/2020 - MG I can confirm that defining a repayment of the $5.3m will keep me happy because it’s the only thing that’s going to get this sp anywhere near 1.3-5p in the next 6 months . Then I can get out again ..and stay out !”

So here we are, having reached 1.40p as I post. It is above your 1.3p minimum target to get out covering your costs and in fact will allow you to sell your 1.5 million shares for £21,000 which represents a £1,500 profit on your investment. All this has also happened without the SNPC money being repaid. So it looks like you were wrong on all counts!

So I assume that you have now sold out your 1.5 million shares and got out for good as you have promised so many times that you would do? Of course, if you are still holding onto them then it means that you have finally seen the light and agree that there is much much higher for the share price to climb. Which is it?

Remember that the Tunisia announcement is expected any day now - though I must admit that it is looking like the new year now, and that will be MASSIVE for Zenith.

Not only does it instantly deliver $2 million into the company coffers which should add another 15% onto the share price , it also removes any need to raise money and also delivers a future cash flow into the company that can potentially be used to access debt funding to pay for the costs of the Tilapia drill.

Zenith is growing nicely as a company and Tunisia is the next piece of the jigsaw to move it up a notch as a producer with massive exploration upside. There is so much news to come here and all of it is looking good.

So in total there is a £1.5 million difference between the technical market cap from the Oslo exchange and the London exchange. You could work out the exact market cap if you could be bothered to find out how many shares trade on each exchange but I have not got the time or the inclination to do this.

The key point IMO is that AAOG traded at a market cap £29 million based on Tilapia alone and they only had three years left of the license there and it was their only asset. We have a 25 year license now, have our own rig and a bunch of other assets including Tunisia, potential additional licenses in Nigeria and Congo and $5.7 million owed to us by the SNPC.

The market cap (and share price) of Zenith Energy is clearly going to rise very significantly in 2021.

GLA.