Member Info for MarketGunslinger

There are not enough PIs looking at this share yet, but if things continue in this fashion there will be soon.

It's good for us just now to be able to get in while the price is low but we do need the herd to arrive in order to push it to the next level. This will happen though as the good news keeps on flowing in.

Re Stefania Barbaglio:

Like I said on June 10th: When paid social media promoters start posting that "they are expecting some great newsflow" (or in this case: "Expecting some good news and market updates) it means that there is news coming imminently and the company expects it to be good.

All the scuttlebutt says that the license extension is done. if we close over 1p and then announce this news we can expect the share price to start a real upward climb from here.

I am genuinely excited...

Just egg?

Well judging by the track record it is not going to be oil is it?

So Brokerman Daniel (who has a track record of getting things accurately right about Tilapia and Zen) says that the Tilapia license extension is already done.

Highlander47 (who has a track record of getting things disastrously wrong about Tilapia and Zen) says that the extension will not be done without a minimum of $35.5 - $55.5 million (a second post on May 1st said: "They need $35 million by July, and ned to show a balance sheet to support the work programme, which to bring Tilapia into production is at least $20million.").

I wonder who will be right, lol?

Oh no, Highlander is back again with his usual nonsense.

When the current license holder continues to hold the license it is an extension - whether that is for 1 year or 25. As the incumbent holder Zenith are merely extending their terms.

Of course there will be a signature bonus - but given that the SNPC owe $5.3 million to Zen then it does not take a rocket scientist to see where this money is coming from. Just over a year ago on July 11th 2019 the IMF approved a three year credit facility of US$448.6 million to the Republic of Congo. When you take the IMF money you agree to abide by their terms and one of these terms is to pay your debts – even the little ones.

The work programme and corporate finances are already a done deal. Why else do you think that AC has met with the President and is now in the Congo.

Anyway, to show how little Alex knows I am going to leave you with a quotation from one of his posts on May 1st:
“How the hell do you think this very small placing will fund Tilapia. It needs immediately. $5.5million then at least a further$25million to fund the work programme, and all this before the licence expires in July, which is about six weeks away? Don't tell me that the new licence is in the bag and he will recover the %.3 million from SNPC - its not happening.”

By his reckoning, if Zen do not come up with $30.5 million by next week then they have definitely lost the license.

We’ll see who is right in the near future weeks but IMO Highlander is going to continue his history of being absolutely wrong in everything that he has ever thought , said and done about Tilapia and will be left with egg all over his face in the next few weeks…

Fantastic news. It is extremely impressive that Andrea Cattaneo has managed to get himself out to the Congo so quickly during Covid lockdown to get to work on the politicians.

Given the picture shows him standing outside the "Ministerie des Hydrocarbures" there is no question about what he is there to do. License extension talks are now officially in play.

Hopefully, while he is there he can also get cracking on getting some of that $5.3 million back from the SNPC. Then even Kelsbells might put a smile on his face!

Currently Zenith have:

1) A potential 5,000 bopd exploration asset in Tilapia (Congo). AC is in the Congo now to get the license extension sorted and also presumably to negotiate on a repayment schedule for the $5.3 million owed to AAOG Congo by the SNPC.

2) A 22.5% share of Sidi El Kilani which generates gross annual revenues of approximately US$15 million. We also know that they are looking at acquiring other Tunisian production licenses.

3) A bid in with a local partner for marginal field licenses in Nigeria. The last round of marginal fields that were brought through to production now average an output of 4,600 bopd per field.

4) A partner in Gabon looking into acquiring a production field producing 500 bopd and another field (requiring a workover) that last produced at 1,000 bopd.

5) A small level of existing production in Italy (55 bpod giving at $500k per annum revenue).

6) Exploration potential still to be developed in Azerbaijan.

The future is definitely looking bright here.

Fiah - you do not seem to have the most reliable track record in commenting on Zeniths. Back in February you suggested that AC had a plan to take the company private by delisting and just running it for his family.

Since then we have purchased Tilapia for a song, acquired production assets in Tunisia and have bids in for more assets in both Nigeria and Gabon.

You may have lost money in the past and you may not like AC but there is no denying that the company is now definitely moving in the right direction - and there is absolutely no chance of it being taken private.

Fantastic to see confirmation that AC is actually at the AAOG Congo offices as we speak.

Obviously the key reason for him being out there is to get the license renewed - which will help keep itsagame's nerves calmed down on this board and according to the AAOG board should also see one or two others come over from there to invest in Zenith.

Seriously though, I have been saying for months that the license renewal has been in the bag since before Zenith even bought the asset. There was no other reason for AC to be pictured on twitter meeting with the President in February and the subsequent front page news article in Les Depeches de Brazzaville in May was just further confirmation of my opinion.

I fully expect that the deal to renew the license will be done in this visit to the Congo and then the company will have added another pillar to the exploration side of the development strategy. It should also catch the attention of the wider investment market when the long term exploration future is assured.

If he can begin to sort out the repayments from the SNPC on the same trip then things would really take off. Even Kelsbells may get his 1.5p sell out price and have a smile on his face!

With license renewal in the immediate future, loan repayment possible and the acquisition of producing marginal fields in both Gabon and Nigeria in the pipeline, things are definitely looking interesting for the near future.

Do you have any knowledge about the production history of the Konzi Marine, Pointe Clairette and N'Tchengue Nord Est marginal fields that were mentioned in the Africanintelligence article?

I have had a quick look online but not found much yet. I can go into more depth over the next couple of days but thought that if you already knew something about them then that would save me a lot of time if you didn't mind helping.

Thanks,

MG

Marginal fields in Nigeria are badly named from a small cap oiler point of view as it suggests that they are not going to produce much oil. This may be true if you are Shell or BP, but from the point of view of Zenith Energy getting hold of one of these licenses could be massive.

A marginal field is defined by the Nigerian Department of Petroleum Resources as: “any field that has been discovered and has been left unattended for a period of not less than ten (10) years from the date of discovery – or such fields as the President may, from time to time, identify as a marginal field”. The important point here is, of course, that oil has already been discovered there.

They are marginal because they did not produce tens of thousands of barrels of oil per day.

I have just discovered a very interesting document about Nigeria's marginal fields published by the Journal of Business and Management Sciences in 2017 (focusing on the 2001 round and how this was not as effective as they had hoped that it would be in terms of getting these fields back into production – they only managed 10 out of 24 awarded fields.

However, the interesting part was that 10 of the 24 marginal licenses granted were successfully brought online through this process and their contribution to the country’s daily crude oil production has been noted as 2.1% of annual production in 2012 (see page 1 here: http://article.businessmanagementsciences.com/pdf/JBMS-5-1-1.pdf)

In 2012 Nigeria was producing an average of 2.2 million bopd (https://tradingeconomics.com/nigeria/crude-oil-production) which means that these 10 marginal fields were contributing 46,200 bopd to Nigeria. Divide this by ten and we get an average of 4,600bopd.

Considering that we are targeting 5,000 bopd in Tilapia after funding an exploration drill then we are now looking at a similar production potential if we are successful at the licenses in Nigeria. Obviously, there is 6 months to wait but since we know that the oil is already there, then if Zenith is successful in the license application then it could be another deal that is low-cost and potentially transformative for the company.

Docit - I think that it is the absolute opposite of AAOG. The trouble with AAOG Is that they put all of their eggs in one basket and gambled everything on Tilapia being a success so when it failed they lost the entire company (they could no longer raise any money and therefore became a shell company).

Zenith are doing something completely different. They are actively acquiring production assets (Tunisia with West Africa in progress) and they are looking at acquiring more (the additional assets that they are looking at in Tunisia). These will then deliver a cash flow to the company which they can use to service debt for their more high risk exploration plays.

Unlike AAOG Zenith do not have just one exploration asset on which they are risking everything. Alongside Tilapia they also have the Azerbaijan assets and, whatever comes out of the bids for the licenses in the Nigeria Marginal Fields bid.

Overall Zenith are 180 degrees opposite to AAOG in the way that they are approaching Tilapia IMO.

I wouldn't worry about losing Tilapia in the next two days anyway - the license doesn't expire until July according to Highlander's post May 1st.

The Tilapia license will 100% be renewed or Zenith would not have bought the asset.

This is an interesting and unexpected addition to the Zen story. These Mrginal Field licenses represent more assets that they are trying to acquire while making them pay for themselves which is a perfect way to do it from an investors point of view.

Three bits of that RNS I particularly like:

"The Company has also entered into negotiations with two pan-African financial institutions for a loan facility that will be used to fund the acquisition and development of Zenith's growing portfolio in West Africa. "

"The near-term production potential of certain assets is expected to facilitate the achievement of financing agreements to support our expansion."

"The Company can confirm that it is progressing in negotiations, first announced to the market on March 2, 2020, with an international oil major in order to provide funding for Zenith's development objectives in Africa in the form of an offtake agreement. "

All of these point to one thing - Zenith is getting very serious in it's African ambitions...

Getting out of the rehabilitation contract was a good thing anyway. If you look at page 74 of last year's annual report https://s3-eu-west-2.amazonaws.com/wp-zenith-2020/media/2020/03/26130226/Zenith-Financial-Statements-FY-2019-FINAL-1.pdf it shows that:

Revenue: $4190,000
Operating & Transportation Expenses: - $4,758,000
General and Administrative Expenses: -$1,264,000
Finance & Other expenses: -$66,000

Total: -$231,000

So for all of the fact that Az rehabilitation brought in $5.7 million of revenue, by the time all of the costs of the work had been taken out of it then it was costing $231,000 Canadian dollars per year.

There is no point in doing work unless it is making money and Zen were totally right to ditch it.

It's definitely clear that the main focus for Zenith is now Africa - but that is not surprising since they need production assets to generate the revenue to enable exploration to happen and since nothing worked out on the workovers in Az then this revenue was always going to come from elsewhere.

That said, I do not think that this means that we should write off the exploration potential in Azerbaijan. The revenue coming in from Tunisia should be more than enough to cover the people cost of a small-scale exploration campaign using the rigs that are already out there.

It would be great to get an definitive update from ZEN, but the rigs are mentioned in the latest investor presentation and there is no mention of them moving. It seems logical to me that they would stay in Azerbaijan to continue what should be a very low cost exploration programme if we only need to pay for people and not equipment.

I have reviewed AGEOS's hugely detailed and impressive posts on the Azerbaijan exploration potential - the following paragraph is all credit to AGEOS’s research (other than any mistakes in paraphrasing which are all on me).

AGEOS has compared Tilapia with the Zardab-Shikhbagy Field which is only 25% of ZEN's potentially productive Azer acreage. Tilapia is c50sq km whereas the Zardab-Shikhbagy Field is 156sq km. On a nearby licesnse are a number of wells that the soviets flow-tested in 1979 at 2450-2800bopd from the Eocene between 3200m & 3500m and Seismic profiles indicate the Eocene and Maykop extend over most of the 156 sq km and underlain by Cretaceous volcano-clastics and carbonates comparable with those of the adjacent Muradkhanli,Field from which production peaked at 10,000bopd in 1978.

In short Azerbaijan exploration still has massive potential. ZEN have got rid of the field rehab area which was costing money but we have the two rigs out there which will allow us to carry out an exploration programme for simply the cost of the people involved. There is also Block Energy who are relatively next-door and who would be potential customers for one or both rigs if we were not using them. Hopefully we get some clarification on what the Azerbaijan exploration programme will be in the near future.

Given that they have only drawn down £160k so far, it looks to me as if they are progressing on an asset acquisition and just using the Riverfort money to pay for the professional fees etc associated with it. It also gives an ongoing line of credit should they need it in the future.

The other interesting point is that Riverfort have clearly been briefed about what the new asset is and they are prepared to lend money on the back of it. They only loan money to companies that have reasonable liquidity and so they are clearly expecting the new asset to be of interest to investors.

For all these reasons, I think the doom and gloom on here today has been very over-rated - but it has made me happy as I have used it as a buying opportunity - a bargain at this price.

BTW and just for total clarity - there will definitely be significant dilution here when the eventual asset is reversed in. The is entirely to be expected and the gamble is that the value of the asset will outweigh the dilution that comes with it. Riverfort certainly seem to think so, as they do not usually lend this much money to companies with such small market caps (AAOG had a market cap of £17 million when they did the ISA deal) so I am taking that, not as a negative, but rather as a further endorsement that this share will go right up in value once the new asset is announced.

However, this risk is not for everyone. I like mid-risk high reward plays. Those who really believe that any form of financing from Riverfort is a death spiral should sell out now. You need to do what you are comfortable with.

GLA.

There are many on these boards who are always happy to slate Zenith as a company and undoubtedly there is much that has been done wrong over the last couple of years in Azerbaijan. Some of the problems were Zen’s own fault and some of them were just the perilous nature of the oil business

When we look back three months to the March 12th RNS entitled “Update on Acquisitions”, it is quite remarkable how much has been achieved. In the RNS were the following four items:

1. Acquisition of the massive exploration possibility of Tiliapia from AAOG.
2. Acquisition of one or two West African assets producing 600 and 1000 bopd respectively.
3. Acquisition of an interest in a 700bopd producing Tunisian asset.
4. Acquisition of Coro Energy’s natural gas production.

Fast forward three months and we not only see that fifty percent of the potential acquisitions have been completed but they have also been completed as significant discounts from the prices that were originally proposed.

On the Tilapia asset - Zenith have saved £800,000 and also increased their stake in AAOGC from 80% to 100% - paying only £200,000 for this instead of the £1 million originally quoted. This is for an asset that could potentially produce up to 5,000 bopd.

On the Tunisian asset – Zenith have paid $250,000 in cash and arranged that the second $250,000 will be paid off by the asset’s own revenue stream and that will deliver instant cashflow to the company.

It is a pretty rapid rate of progress and I think that the AC deserves a lot of credit for how quickly and efficiently he has carried out these transactions.

The next one that I want to hear about is the West African assets. If Zen can get 50% of the 600bopd asset then that will take the company’s overall production to over 500bopd (150 from Tunisia, 55 from the existing Italian assets and 300 from the West Africa assets). If Zen can get 50% of the 1,000 bopd asset then (after it is brought back online) then that would deliver 700 bopd and if we can get both then we deliver 1,000 bopd. With that amount of cash coming in from production, Tilapia development would be next on the cards.