Member Info for MarketGunslinger

Not sure it can be called "just in time" when the article is dated July 17th 2019!

And then we have also got David Burton' s " A picture speaks a thousand words..." tweet that shows AC in a meeting with Denis Sassou Nguesso himself. https://twitter.com/DavidBurton1971/status/1230749438886342658/photo/1

If you ask me, the license extension was sorted out well before ZEN even acquired Tilapia from AAOG.

The ducks are all lining up in a row now...

The interesting part of this is that if you look up Les Dépêches de Brazzaville on Wikipedia then it shows that it "is a French-language daily newspaper in the Republic of the Congo published by published by ADIAC and owned by Jean-Paul Pigasse."

If you then follow the link to John-Paul Pigasse it gets even more interesting as part of his entry says: "He is friends with Congolese President Denis Sassou Nguesso".

It may be a stretch, but somebody who is good friends with the President is not going to put that story on the front page of his newspaper if the President is not predisposed to grant the extension of the license.

This is very good news IMO.

pawnsacrifice - I actually made a mistake with the numbers for ZEN as the figures I was using for all the companies ended in April and so did not include the May fundraising so the numbers for ZEN should be £12,8 million rounded up to £13 million ( since 2008 (previously it was £12.35m rounded down to £12m). To be specific the exact amount is £12,897,055 since 2018. The numbers for all of the other companies were correct as of April.

Kenirogas - the £12,897,055 is money raised across all exchanges (Canada UK & Oslo).

The point of this all is that everyone says that ZEN raise money a lot. Quite simply, they don't compared to their peers.

If you wanted a private Cayman island company you could get one for approx. 2% of what Forum paid for AAOG.

The whole point of having a listed vehicle is that shares are publicly tradeable and money can be raised. That is why AAOG was worth £500k to Forum in the first place. There is no way this is going to end up "on a shelf in the camen islands." or indeed as a private company anywhere.

The plan appears to still be that ZEN needs to have production assets bringing in cash flow in order to fund the targeting of expensive but high reward exploration assets. However, instead of having these in the same place ZEN have (wisely IMO) spread their net wider and utilised the Covid crisis to put the deals together to acquire spread-out production assets in Tunisia and West Africa. Between them, these assets (with the existing small scale Italian capacity) should deliver approximately 700 bopd (and more if ZEN take more than a 50% stake in the West Africa assets). Assuming opex costs of $15/b in Tunisia & West Africa and an oil price of $33 then this should deliver $8.6 million in revenue and $4.8 million in operating profit to ZEN every year.

This $4.8 million will be a recurring income that will enable the company to utilise debt (including bonds) to fund its exploration word aiming for company changing results. The exploration itself has also been significantly expanded by the acquisition of the Tilapia asset in the Republic of Congo from AAOG. This was acquired for the bargain price of £200,000 (for an asset that AAOG paid £6 million for in 2017 and then spent over 10 million on since) and was the only asset responsible for driving the AAOG market cap up to £33million in 2019.

So once the various deals are complete ZEN will have production assets which will cover expenses and enable debt to be serviced. They will also have two big exploration assets in their portfolio in Congo and Azerbaijan. Every asset that Zen owns will be located in a different jurisdiction which will mean that they are not subject to a single point of failure (as they were in Azerbaijan and AAOG were in Congo). It’s a sensible strategy and in the current share price the upside is huge and the downside is negligible.

Kelsbells – you make some very valid points and I appreciate the cynicism shown by you and others. However, as I keep saying this is a different investment proposition now than it was 2-3 years ago for a couple of reasons:

The first is the price – although this is cold comfort to existing investors, the price is now below 1p and the downside if very limited from 0.8p, - the share is trading at an all-time low and with oil prices at there lowest in 20+ years, in the middle of a global recession. Things have simply got to get better from here.

The second is the type of assets that the company is acquiring. 2-3 years ago, ZEN was all about Azerbaijan and essentially all of its eggs were in one basket there. You can see why the plan seemed sensible , as the rehabilitation wells were meant to deliver cashflow to fund the company while it went out in search of the exploration “big time” (which is of course why all of you long term holders originally bought in). However, clearly working in Azerbaijan proved much more difficult than was anticipated (data not correct, wells in much worse condition than advertised etc).

The trouble with everything being focused on Azerbaijan was that when things went wrong there and instead of making money the rehabilitation programme began costing money (as seen on p74 of the 2019 annual report) then the plan of using income to fund exploration (via debt I assume) fell apart.

The pivot that Zen have since made in acquiring other assets is pretty much a return to the original plan that everyone bought into 2-3 years ago but with some additional tweaks thrown in to make sure that the same mistakes are not made again.

There is dilution here (as with all small cap companies) in order to acquire assets but it is not as much as you would think when compared to ZEN’s peers:

Since 2018:

UKOG have raised £46 million in equity
AAOG raised £23 million in equity
BLOE raised £18 million in equity
ZEN raised £12 million in equity
SOLO have raised £6 million in equity

So this idea of ZEN always raising money is a bit of a misnomer. They actually raise less money than the majority of their peers – the difference is that they raise it small and regularly rather than large and twice a year.

And the $5.3 million now owed to ZEN by the SNPC.

The list of events that will potentially make the ZEN share price go up goes on and on...

"Hello guys Anyone knows how much Aaog assets Left they have and locution ?Last one guys the 200k what have they done with it no rns so far and the new Ceo We don’t see any movement so far"

- Captainmouse - AAOG only ever had had one asset, which was Tilapia in the Congo. This has now been sold to ZEN for £200k so they have no assets left. This is why they are referred to as a cash shell.

They are not going to "do" anything with the £200k as it is not enough money to "do" anything with. Forum, who now control AAOG will just keep that in the bank to pay for day to day expenses while they go about their real business of securing assets to vend into AAOG. It will be at this point you will see an RNS.

As Tiburn has explained very clearly below, this investment is currently a gamble as ew do not know what assets Forum will end up putting in AAOG. However, it is an educated gamble because the share price at the moment is pretty much the same as Forum paid for their own shares (0.5p). In order for them to make any money out of the £500k they invested to get control of AAOG, then they have to get the share price up to be many multiples of 0.5p - which means that investors and board are all on the same side (for now) and everyone wants the same thing (the share price to go up).

IMO this will definitely go up as Forum want to make money not throw it away. It is just a question of by how much...

For me, this is a hell of a lot of potential for ZEN in the here and now, and it is an enormous amount less risky that it was buying in at around 13p or whatever price it was when you first made your investment.

As I said yesterday, investing in small cap shares is about getting the timing right and making sure that the risk is limited (ie the potential upside is many times better than the potential downside). There is very little downside from here for 0.8p and the upside is very significant.

ZEN is putting together a lovely balanced portfolio of assets that encompass both production (that will deliver immediate cashflow( and exploration (that has the potential to completely redefine the value of the company). This means that they may well be able to access some sizeable investment as well as being able to service significant debt.

And after righting all of this I had forgotten to even touch on the Azerbaijan exploration potential which is still there and is a whole post in it's own right.

The potential here is clear to see.

johnnym - Why would you say that there was more potential back then?

1) At the moment ZEN are about to close on negotiations to 22.5% of production assets in Tunisia that last year grossed $15 million. It produces 700bopd which means that there will be 158 barrels net to ZEN. Assuming a cost of extraction of $15 and an oil price of $33(as per the US Energy Administrations price outlook guidance for 2020) then ZEN is looking at a revenue of $1.8 million per annum and a net profit from operations of $1 million per annum.

2) ZEN are also in negotiations to purchase a stake in a West Africa asset which is not producing at the moment and will need some kind of a workover (say $1 million) to get it working again. However, when it was last producing it was doing so at 1,000 bopd. I hope ZEN will take all of this asset but let's say for the moment that it is only 50%. This still means 500 bopd net to ZEN and at the same costings as above is a revenue of $6 million per annum and a net profit from operations of $3.3 million per annum.

3) ZEN also have a profit from their Italian operations coming in of $504,000 coming in from their existing Italian operations as can be seen in the annual accounts.

In the short term future this means a direct profit from operations of $4.8 million per annum.

4) ZEN also have what I have chosen to call the "exploration" upside of the Tilapia assets that it bought from AAOG for $200,000 (an absolute steal since AAOG paid £6 million + for the exact same assets back in 2017). Tilapia was the only asset that AAOG ever had and as recently as April 2019 this asset alone drove the market cap of AAOG up to a value of £27 million.

AAOG have said in the annual reports that their intention was always to produce 5,300 bopd from Tilapia and that at those levels it would have a cost basis of only $5 per barrel to get out of the ground (see page 6 of the 2017 Annual report https://www.aaog.com/docs/librariesprovider10/archive/reports/aaog-annual-report-2017.pdf?sfvrsn=a8959c13_2)

If ZEN were to manage to do the same thing then their 56% share of the asset would be worth $32.5 million per annum in net revenue - even at $33 POO.

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Obviously production from Tilapia is a long way off and will require the investment of million of dollars to bring off but given that they should have an income of 713 bopd by the end of this year (Tunisia, West Africa and existing Italy) giving them a net income of $4.8 million from operations. This is enough to service debt to both fund Tilapia and also to purchase further exploration assets - not to mention it means a cash flow coming in that nearly matches the current market cap.

And as mentioned above, if Tilapia can be made a success then that is $32.5 million per annum of profit coming into the company from a single asset.

Sorry all, my mistake. I was using AIM as a catch-all term for small-cap shares, which of course I should not have. Replace "AIM" with "small-cap" and the points below still stand though.

Well 13p is not going to happen any time soon, but nor is 35p for Angus, 31p for AAOG or 7p for UKOG - the list goes on throughout the decades. Even bigger companies recently like Cineworld from 310p in May last year to 22p in March this year have crashed at least as badly as ZEN and in a lot shorter timeframe also.

Investing in AIM is about timing as much as anything else. given that you bought your 13p shares on one of only 7 days in the history of ZEN on AIM when it traded above 13p you were clearly very unfortunate and got caught in at pretty much the all time high. It is now at pretty much it’s all-time low.

The company that you bought into at 13p and the company as it stands now are not at all the same investment proposition. One of the key tenets of investing in Aim shares should be to limit your downside. When the share is trading at an all-time low and with oil prices at there lowest in 20+ years, in the middle of a global recession then there is pretty much no downside left. Things have simply got to get better.

When you add in the fact that ZEN are busy acquiring both cut price production and cut-price exploration assets then things start to look a lot more rosy for the short and mid-term future. As I said up front, you are not going to see 13p again any time soon but, if things go well with the new assets (especially the exploration/production in Tilapia) then 3-5p is very doable and that would see a 5-6bagger from here.

Compass007 - why do you always make the subject of every post you make a "?" Is it an indication that you are permanently confused LOL?

Read the extended debate from yesterday gentlemen. Zen are manufacturing small quantities of PPE and hand sanitisers in order that they can ensure that their oil projects can keep fully functioning under lockdown restrictions and to give them leverage in negotiations.

Oh, and they also bought AAOG's Congo assets (which AAOG originally paid £6 million for) for £200k. And these come with a debt of $5.3 million now owed to ZEN. If they can recover the money owed then it will double the market cap.

Not bad for a £200k deal...

A hell of a lot of shares traded again today over 5% of the total shares in issue.

Sorry, that came across wrong. I was not trying to be nasty. As it goes, I agree with you.

I'm not sure it is a case of pumping and dumping on this share at the moment. It is really just an educated gamble.

The bit that makes it a gamble is that we have no idea what assets Forum are going to put into this cash shell but the bit that makes it educated is the fact that we know that they have spent approx. £500k getting control of AAOG and that they paid about 0.5p for their shares. Therefore in order to see a return on their investment they have to get the share price significantly up from here.

Having seen quite a few shell companies reincarnate and take off in my time, I find that if you are buying your shares at the same price as the people who control the company are paying then you are in a good position to make money. In fact, IMO anything below 1p is a fairly safe price here. Unless Forum are incompetent then the market cap of AOOG will go to many multiples of its current price as they start to vend new assets in.

This is a gamble on the success of the principle of a shell company. A gamble on the success of the assets can only be made once we know what these are.

Canary - you have got very knowledgeable about this all of a sudden. I guess the calculations that you were doing yesterday evening have finally paid off. LOL

What are your thoughts on the money Zen will make from the PPE now?