Member Info for MarketGunslinger

Hedgehog

I am not sure that you have read my most recent post in full. You appear to have picked up on one sentence of it and not bothered to read the rest of what I have written. Therefore you have erroneously assumed that I am not positive about Zenith and the company’s future when a thorough reading of what I had written would have led you to the opposite (and correct) conclusion.

You have asked me: “Why is that incredibly frustrating?” (referring to the delay in drilling Rob3)
The delay is incredibly frustrating because Rob-3 was originally due to be developed in June 2022, so it is now being delayed by 5 months.

You have also asked: “And why do you think that Tilapia news is the only potential news in the interim?”
I do not think that Tilapia is the only news to expect in the interim. If you read the full content of what I wrote you will see that I said that “It would not surprise me at all of the Rob-3 drill has been delayed AC has other acquisitions up his sleeve for the summer but we need to know this. I have emailed the company requesting an investors conference call soon and once this comes I suspect that we might find that the action behind the scenes is much more extensive that we currently think. AC is a deal-maker by nature and I don’t think that he has suddenly just stopped doing this.”

You then state: “Robanna is just one of ZEN's four concessions in Tunisia (and Robanna isn't just one well in any case).”
I am not sure what you mean by this . I am well aware of Zenith’s concessions in Tunisia, and I am aware that Robanna is made up of more than one well, hence I referred to Rob-3 in my post. However, you are unclear as to what you are suggesting. Are you expecting that Zenith will drill at Ezzaouia or elsewhere in Tunisia before Rob-3 is drilled in November?

Regarding Zenith’s Italian assets.
Zenith’s Italian assets are great and I agree with you that they are an exciting development opportunity. In fact, if you read my history I have suggested a number of times on this board that they have just as much potential as the Tunisian devleopments and from the point of view of the company spreading its risk it would be much better to develop them further before we did any more work in Tunisia. We know that the company has plans to increase production there in H2 this year and I am sure that you would agree that it would be good to make progress on this as soon as possible.

What AC did then that was very impressive was to seize the opportunity when the oil price was low and the agenda was all about decarbonisation and acquire assets for almost nothing from distressed competitors. The company is now reaping the rewards of this strategy.

Although it is incredibly frustrating to have this waiting period in front of us between now and November where there seems to be nothing to do other than wait for Tilapia news imagine how bad the situation would be if we did not have our Tunisian production assets. The worst case at the moment is that each month that goes by with nothing happening the company still nets $1 million in revenue. If we were back in the days of Azerbaijan with almost no production the company would be constantly issuing shares to keep itself alive and pay the day to day costs. Instead it makes more money every day.

Also, although I talk about a waiting in front of us at the moment, this is simply where we are today as we do not know what is happening. I am certain that AC is not just sitting around and doing nothing for the next four months but shareholders need to know from him exactly what he is doing as sharing his plans and the timescales for them would help restore optimism and give new investors a reason to buy into the company. We shouldn’t forget that the company was aiming to acquire a very significant asset in Nigeria (OML141) and the only reason that this did not go through was because of the legal action taken against the vendors by ADM Energy.

It would not surprise me at all of the Rob-3 drill has been delayed AC has other acquisitions up his sleeve for the summer but we need to know this. I have emailed the company requesting an investors conference call soon and once this comes I suspect that we might find that the action behind the scenes is much more extensive that we currently think. AC is a deal-maker by nature and I don’t think that he has suddenly just stopped doing this.

Gas is definitely starting to be an interesting development opportunity for Zenith and I had also noticed the information on the website that Callit posted yesterday that ““Zenith’s Italian energy production interests hold significant potential for development and increased energy production. The development programme is primarily concentrated on the Torrente Cigno concession, where the Company is finalising a plan to drill a development well, to be named MV-2, to explore the updip structure of the Miocenic and Cretaceous carbonates formations”.

I was wondering if the E1.3 million of financing that was announced alongside the Italian electricity revenue numbers on May 10th may be earmarked to carry out this work. I think that this is another question that I will raise at the next investors conference call, as if we could increase the $2-3 million in revenue that we generate from the Italian assets up to $3-4 million or even higher for a reasonable expenditure of money then this could be a very good idea in this environment.

Personally I wonder if that might not be a better expenditure of money than doing Rob-3 of the Ezzaouia workovers at the moment. It would have the advantage of meaning that we increased our production of gas alongside the oil production and were therefore in a position to take the benefits from increases in both commodities. It would also mean that we would start to solidify a large revenue stream in a stable European country. $15-20 million revenue a year from Tunisia is great but if we were able to get an additional $10 million revenue from Italy by spending a similar amount of money that it would take to get an additional $10 million of revenue in Tunisia then it would be better to spread the risk IMO. After the Azerbaijan experience I hope that the company have learned the lesson never to have all of their eggs in one basket again.

In Italy
1. We continue to generate extremely high electricity revenues from our Italian assets which are generating a net revenue of between Euros 2-3 million per annum.
2. Looking at the website we also have the potential to significantly increase the revenues generated from our Italian assets. I have never paid too much notice to these in the past but it is interesting to note that on the website they mention that “Zenith’s Italian energy production interests hold significant potential for development and increased energy production. The development programme is primarily concentrated on the Torrente Cigno concession, where the Company is finalising a plan to drill a development well, to be named MV-2, to explore the updip structure of the Miocenic and Cretaceous carbonates formations”.
3. I wonder if the latest financing of E1.3 million that was announced alongside the last electricity revenue numbers may be to carry out this work.

In Congo
1. We are still waiting for confirmation that we have received the new Tilapia license and while AC says all of the signs here are good, we have still been waiting for over a year since we were announced as the preferred bidder.
2. Indications that things are likely to end up good here can be taken from the fact that Andrea has mentioned that when the license is approved then we are likely to get more than one Congolese asset and so presumably he has been in ongoing (and positive) negotiations about this for some time.
3. I presume that with the receipt of $12 million in revenue from Tunisia during May and June we will be in a position to immediately commence fully funded work on one or more of these assets as soon as we get the license.

But in short, and as ever, we are really just stuck waiting for news at the moment. I assume that we should hear news about ROB-1 flow rates next though, like everybody else, what I really want too hear about is Tilapia.

We must be due a new conference call any time now and it would be good to hear directly from Andrea what is going on. All the pieces are in place for a massive expansion in share price but the big question is when will this happen. As soon as we get Tilapia then this is a market-wide re-rate for the company as we will have cash income and exploration potential which is the holy grail of all small-cap companies.

Zenith has never been in as good a position as the company is now if you ask me. We are generating very real cash revenue out of our Tunisian assets and we have significant expansion plans in Tunisia (of which the remedial work at Rob-1 is already in process) which should enable us to double production from the current levels by the end of summer. This could leave Tunisia developing in excess of $20 million per annum in profit. Our Italian assets also continue to generate Euros 2-3 million per annum and also have the potential to expand with some investment.

So we are generating massive profit from both the Tunisian and the Italian operations. However, the big news that we are all waiting for is of course (still) Tilapia. This is the news that will drive the shareprice forwards into multiples of it’s current values and is also the most mysterious bit about the company’s current operations. As soon as this arrives the game changes for Zenith completely. I was always delighted at the (relatively small) revenue generation that we were originally looking at from Tunisia because this would have allowed us to take out debt to drill Tilapia instead of having to issue equity as we have done in the past. However, with oil prices as their current unparalleled levels then it seems that by the end of June we will already have enough cash in the back to drill two Tilapia wells without having to borrow any money at all – though I totally accept that some of this money has to go to cover general company opex. Of course, first we actually have to be granted the Tilapia license and there brings me to my only issue with Zenith at our current status – we always seems to just be waiting for governments to make their decisions and until they do then the real value of the company will never be shown in the share price.

My assessment of what we are waiting on for Zenith is as follow.

In Tunisia:
1) We are expecting to despatch another $5.5 million worth of oil next month and will, presumably, receive payment for that in July.
2) We are waiting to hear the satbilised flow rates for the ROB-1 workover which should hopefully deliver100-120 bopd (which should generate a net revenue of $3.6 – 4 million per annum) at an oil price of $117 and an opex cost of $25.
4) We still have the fully funded work on Ezzaouia and Rob-3 to carry out towards the end of June.

Paul – no that process was the “Inquiry of Public Utility” (enquête d'utilité publique) ("IPU") which was organised and performed by the Ministry of Hydrocarbons during January 2021 and which was announced as completed in the RNS on 10th February 2021: https://www.lse.co.uk/rns/ZEN/successful-completion-of-ipu-in-congo-hd5vr3nz75mu6is.html

I have no idea what is holding up the granting of the Tilapia license now other than they fact that Andrea has said that getting anything done in the Congo takes forever. In the last investor conference call he said:

“I know that sometimes our shareholders are frustrated with how long it takes between talking about a deal and then completing it but in Africa time is very difficult and there is nobody about (our size) who is completing transactions quicker than us. Zenith is a very aggressive company but we do things above board and so we are not worried about falling foul of authorities.”

He also said:

“Our African experience started in 2019 when we acquired AAOG Congo from AAOG. After 2 years we are still waiting but we are still supremely confident that we will complete this transaction. It has taken longer than has been expected but the consolation on this is we can be awarded with more than just Tilapia. Tilapia is a great field that is very affordable and it should only cost $5 million to get production of 5,000 (AAOG said). We are slightly more more cautious in our predictions but still expect production in the thousands.”

I guess we just wait.

CharlieSays – CAD$10 million of the operating losses that you refer to relate to appear to mostly be an accountancy issue as they specifically state om page 54 of the accounts that CAD$10 million of this were non-one-off, non-cash, administrative expenses mostly relating to the Congo (Tilapia) assets. The remaining $CAD 8 million is made up from CAD$ 2 million operating losses (from legacy Azerbaijani operations) and the usual company operating expenses (which at £3.7 million is pretty average for a company in this sector).

The gain on business combination is also really mostly an accountancy thing. It relates to the acquisition of the Tunisian “Ezzaouia” assets that Zenith acquired from Candax in Q1 2021 and specifically, the NPV that was put onto the company by the Chapman Group (as mentioned on p56 of the annual report). It seems like a massive premium to be put on an asset that was acquired for just $150,000 but we need to remember that Candax was deeply distressed at the time of the acquisition.

In reality, we all admired at the time what a good deal the Candax acquisition was especially sine we only paid $150,000 for a company that had had 25,000 barrels of oil in storage with a value of $1,250,000, but it is only since the oil has started to be produced and sold at these new oil prices that we can really see a basisi for the NPV that the company allocated to it. Since acquisition Zenith’s 45% stake has been producing approx. 210 bopd for Zenith which delivers a net profit (at today’s oil price) of approximately $6.5 million per annum. The value put on the asset of CAD$36 million equates to US$28 million and so means that the value put on Ezzaouia is slightly less than 5 times its annual earnings - which is not unreasonable IMO.

The really interesting part of all of this is that the Ezzaouia assets were just the first purchase that Zenith made in Tunisia last year and the others all fell after the financial year-end. These additional assets have produced a further 230bopd in production over the last year or so and should make an even more significant impact on the 2022 accounts than Ezzaouia did on the 2021 accounts – especially as so many of the losses put on 2021 were a one-off.

Overall, the Tunisian assets are producing about $16 million a year in net revenue for the company at the moment and if production is increased up to 1,100 bopd (as the company is planning) then this should increase to approx. $30 million by the end of this year. And of course, if Tilapia comes in we can double these figures.

TLP-103C is a nearly completed well that was drilled to 80% of the depth and, according to Andrea’s interview with Financial Fox in February 2021 and there only remains a few hundred meters to drill as a sidetrack/completion before it can be taken into production. It is important to note that this Djeno structure that it is targeting is extremely promising and has produced at least 1,000bopd everywhere it has been drilled in Pointe Noire. What Zenith now know (having had access to all of the AAOG data) is that there were a series of technical mistakes that were made by AAOG in the original drilling of well 103 and so they are confident that they can succeed in this well by doing the right things.So, in conclusion we have a drill that simply needs a sidetrack to be completed and after this will have high expectations of delivering 1,000 bopd production.

It is hard to tell how much the drill will cost to complete but considering it is 80% complete and it only requires a sidetrack being drilled an estimate of between £2.3 - £4.8 million (between 50% and 25% of the £9.6 million spent on the original drill does not seem to wide of the mark). This money could easily be raised by debt as it would not be difficult to service a loan of £4.8 million with a cash flow of $16 million (which is the current net revenue delivered from the Tunisian assets).

Revenue from a successful drill would be pretty significant at today’s prices and considering the opex costs that were originally put out by AAOG. 1,000 bopd production would be split 50%-50% between Zenith and the SNPC (presumably with drilling costs to be covered first) and this would give Zenith an initial production of 500bopd. With oil prices at $101 and doubling up on the $5 opex listed by AAOG to call it a more conservative $10 this would give Zenith a net revenue of $91 per barrel which would work out at $45,500 per day or another $16 million per annum. Essentially a successful sidetrack at Tilapia would pay for itself in under 6 months and then the revenue produced from the well would allow the company to fund a comprehensive drilling program on an ongoing basis. This could either target the full 5,300bopd that AAOG talked about as being potentially available in Tlilapia or it could fund exploration work in the new Congolese license that Andrea has said that we are in discussions about.

The financial benefits to Zenith from Tilapia alone could clearly be company-making but whereas with many other companies this would be the only asset that the company had, with Zenith it is simply the cherry on the top of the cake. Anyway, I hope this all helps. Feel free to ask any more questions if you have them.

However, there is no question in my mind that the big prize for Zenith in the immediate future is still Tilapia and it is a source of great frustration to me that the license is taking so long to be granted but it feels like things must be coming to a successful conclusion now. Andrea has said in the investor conference calls that the company is getting on well with the relevant officials in Congo but that there is simply no way to speed them up. Officialdom in Africa simply goes at the speed that officialdom in Africa wants to go. Assuming that the new license is granted for Tilapia 2 then Zenith will have acquired for £200,000 a 25 year license on an asset that AAOG originally paid almost £7 million for when it only had 5 years left. The license also contains a well (TLP-103C) that has already been drilled at a cost of £9.6 million (£5.4 million net to AAOG with the rest owed by SNPC) and has discovered oil across 56 meters. This money spent by AAOG Congo but owed by the SNPC is very important to Zenith as when they bought AAOG Congo this debt became due to them. At the last count I have seen, the amount of money owed now stands at $5.7 million owned by SNPC to AAOG Congo. Although it is highly likely that much of this money will go back to the government when it comes to finalising the signing on bonus it is still means that a 25 year oil license where oil is known to be present was acquired in it’s entirety for a mere £200,000. If for any reason the license is refused then the company is still owed $5.7 million from the Congolese government and this will be a strong reason for then to grant the license approval in the first place.

Although the drill itself was not commercially viable, the fact that it did discover oil is important and the information that was gathered during the failed drill is going to be extremely important to making sure that any new drill is successful. Other things that we know from the release of information by AAOG is that they thought that the original well (targeting the Djeno layer) would deliver at least 1,000 bopd and that it could deliver up to 2,500 bopd (see page 19 of the AAOG AIM Admission document). They also thought that by drilling down to the Mengo layer with a second well then they could increase this production up to 5,300 bopd and they stated that opex costs (at the 5,300 per day production level) were less than $5 per barrel.

Banburyboy – it is Congo-Brazzaville not the DRC, but you are right that both Italy and Tunisia look very promising even without Tilapia. Here are my thoughts on the company as a whole in case there is anything here that you don’t know.

Tunisia oil and Italian power are really promising. Zenith have just sold $6.4 million worth of Tunisian oil and are due to sell another $5 million worth in June. The delay is slightly irritating as we were all expecting to sell the full $11 million worth of oil in one go, but over the long term it will probably be beneficial to the company as having four different points in the year when Tunisian revenue is received is actually better for cash-flow purposes than just having two payment windows.

Overall, with electricity production in Italy now being worth approximately EUR 3 million per year and oil production in Tunisia equating to approximately 440 bopd (Ezzaouia 210 bopd / SLK 110 bopd / El Bibane 100 bopd / Robanna 20bopd) with a value (at oil price $101 and opex $25) then we have a current oil production in Tunisia worth approximately $13 million annually. This give us a total income from Italy and Tunisia of about $16 millon per annum today.

However, we should also see a significant increase on this in the near future as there are a number of projects that we expect to carry out in Tunisia in the near future which will significantly increase production.

1. We are expecting the workover of ROB-1 to increase production there by another 100 bopd which is worth another $3 million per annum to Zenith. This rig is already on site and operating so I would hope that the production increase will be apparent on the balance sheet by May.

2. We know that the company are intending to drill ROB-3 in June this year, and that in the evens of a successful outcome this will deliver 150-200 bopd net to Zenith. We know that this is anticipated to cost £600,000 and is fully funded out of the November raising.

3. We also know that Zenith intend to drill two new sidetracks back to back at Ezzaouia which will target an increase in production of 500 bopd (250 net to Zenith) at a cost of £1.3 million which was also fully funded out of the November raising.

4. We also know that Zenith are continuing their attempts to acquire the additional 22.5% of SLK which would cost about $500k and deliver an additional 110 bopd.

So in all, if all goes well by June we would hopefully expect to see an increase in Tunisian production from the current numbers of 440bopd up to 1,100 bopd which would mean that we would be generating approximately $30 million in net revenue from Tunisia as well as another $3 million from Italy. This means that the company is making a huge amount of profit even without Tilapia.

It is not just the ROB-1 rig IMO either AGEOS. At precisely 1 minute 43 seconds in, just before the video ends it pans out to a wide angle view of the site and then we can see not one but two workover rigs in the same shot. The first one is fully put up in the middle of the screen and the second is folded away in the bottom left hand corner.

There is no reason for Zenith to have two workover rigs on the ROB-1 site and so the second rig must be for the planned Ezzaouia sidetracks – which, if I am right, is clearly commencing much sooner than we all think. From the January 24th RNS the production aim once both of these sidetracks have been completed is to increase Ezzaouia production from 500 to 1,000 bopd and we know from last year that the work was fully funded.

If the Ezzaouia sidetracks are successful and do deliver another 250 bopd net to Zenith then we could be looking at an additional $8 million in revenue per annum. Let’s hope they get drilling soon.

Investverysmart, with the greatest respect I would like to get his input on the matters that he has raised as opposed to your opinion of what his opinion is.

It is of course possible that you are right and he is just here to disrupt the forum but it is also possible that he is a legitimate investor with a genuine concerns about the company’s aims and we should give him the chance to articulate this in his own words.

A genuine investor would have a list of matters than concern him and detailed reasons as to why this is the case and he would also be able to engage in serious debate about this. A troll just aim to disrupt without being able to contribute anything of note.

it is perfectly possible to have a negative view about a company while at the same time being well informed and able to debate one’s opinion and I am therefor happy to believe that mls is a genuine investor. I look forward to reading the detailed reasons as to why he feels as he does in the near future.

Hi mls - when you posted about cornerstone investors, divis and share buy-back schemes last Thursday I responded to you but you never replied. In case you missed my response, here it is again - it would be great to have some detailed input from you.

Updates on any share-buyback scheme and cornerstone investor will only come after both the receipt of funds from the stored oil and the granting of the new Tilapia license. It is not credible for either of these things to happen prior to these very significant corporate events occurring. So I would expect news on them to be Mid-May at the earliest but more likely June.

As far as dividends are concerned, I don't believe that Andrea has ever mentioned them. That just seems to be something discussed by us on the forums. It would obviously be great if it happened but realistically we are a long way away from dividends at the moment.

Predicting the future is always difficult to do as it is far easier to get it wrong than it is to get it right but what I can say is that AC is making all of the right plans to get Zenith to a stage where could be considered investable by institutions and he is sharing them with us via the investors conference calls. If he can deliver on these plans then it is possible that Zenith can make it and make those of us who have invested at these levels very wealthy. The first step is Tilapia. Over to you AC...

Florida, it is interesting that you mention getting institutional investors on board for Zenith as this was something that I was musing about a week or so ago. My conclusions were as follows as to what Zenith would need to do in order to attract a reasonable grade of institutional investor:

1. No fund is going to invest in a company that is just an explorer. You have to be a substantial producer too.
2. The production that is coming out needs to show a clear profit at the end of the year and this profit therefore has to be a financial one – ie it shows in the end of the year accounts after all company expenses have been paid.
3. The company would also have to have a clear plan of how to expand and show increased revenues and share price return over the next few years.
4. The fund would have to be sure that the company was not going to keep issuing shares but would be able to service expansion via debt.
5. Ideally most major funds like to see companies that they invest in pay dividends.
6. Funds are unlikely to invest in companies that have a market cap of less that £100 million

So where does Zenith stand in this process.

1. Zenith is already starting to be a substantial producer. The fact that we are about to sell $10-14 million worth of oil by the end of this month is proof of this.
2. This year's annual report should definitely show that Zenith is making an annual profit.
3. Expansion plans are in place at Zenith – mainly with Tilapia but also in Nigeria where according to AC we are looking at 5-6 different options and also the mysterious "company making" deal that he says is in process and could increase the market cap by 10-15 hours.
4. AC has promised that we are not going to issue more shares in the near future and has said that we are actually going to start buying back shares. He also says that we are in debt negotiations with pan-African institutions and we have already shown the bond markets that the company can successfully and regularly service debt.
5. We are nowhere near being able to pay dividends.
6. We have a long way to go before our market cap in excess of £100 million.

So, as you can see Zenith is making all of the right steps towards being the kind of small oil company that could get institutional fund investment but we're not there yet. The next step will be to acquire Tilapia and then see a substantial increase in the current market cap (up to £50 million). Then with the development of production in the Congo and the acquisition of another significant African asset we could perhaps make the move to a level that is investable by funds. If all goes well this could be the end of 2022 or the beginning of 2023.

Updates on any share-buyback scheme and cornerstone investor will only come after both the receipt of funds from the stored oil and the granting of the new Tilapia license. It is not credible for either of these things to happen prior to these very significant corporate events occurring. So I would expect news on them to be Mid-May at the earliest but more likely June.

As far as dividends are concerned, I don't believe that Andrea has ever mentioned them. That just seems to be something discussed by us on the forums. It would obviously be great if it happened but realistically we are a long way away from dividends at the moment.

This convertible loan is a pretty good deal in my opinion. We all know that convertibles are the easiest way for small cap companies to get financing, which is why they do it. Generally these are not that good for investors as they almost always get paid off in shares because of cash and involve increased dilution. However, most of the companies that take out these convertibles are not producing anything so they have no choice but to pay them off in shares.

Zenith’s position is different. Because the company is actually producing oil and generating revenue from doing so there is no reason to assume that the debt will automatically be settled by issuing new shares. In fact, it is highly likely that they will pay in cash rather than shares as this is what they did on the previous convertible loan which was announced as paid on March 4th 2022.

The big question here in my opinion is why Zenith need access to this convertible loan and why they need to draw down $2 million now, especially considering that they are fully financed for the workovers and sidetracks at Ezzaouia and Robanna and the are due to get in excess of $10 million from the imminent sale of the 114,000 barrels of oil held in Tunisa.

The answer to this is twofold in my opinion. Firstly we have to remember that the 31st March is the expected date that the sale price for the Tunisian oil will be set and the 1st April is the expected pick-up date but this is not the date that Zenith will receive the money from the sale. This will be at least 30 days away and (again in my opinion) will actually end up being the first week of May..

So really the question should be rephrased to: “why would Zenith need access to $2 million immediately when they have all of their existing drilling commitments financed and are covering their own operating costs? Since they have $10 million+ coming in withing 6-8 weeks what is so urgent that they need $2 million now”?

In my opinion the only answer is that they need funds to seal the receipt of the Tilapia license. We know that the granting of this is meant to be imminent (thought to be fair we have been waiting for this for a long time) and we know that there are always various costs associated with the granting of such licenses. We also know that while African governments are quite happy to keep Western companies waiting around for year for licenses to be granted they get very unhappy if cash due to them is not paid exactly on the nail.

So, in conclusion, I think that the announcement of this debt facility is a very good sign for Zenith as it implies strongly to me that we will see the granting of the Tilapia license to use in the near future – and certainly before mid-March which is when we would access to the cash from the sale of the Tunisian oil. We have been waiting for this one for ages now, but I do believe that this debt agreement is the biggest sign so far that the Tialpia license is very very close.

Investverysmart – they have not specified an exact date, but in the Jan 26th RNS they did say that they would hold in stock 114,000 barrels of crude on 31st March and that the lifting of this oil is scheduled for April.

Based on the information that AC has given in the various investor conferences I think that the overall process will go something like this:

1. Price is agreed for the oil before it is shipped (presumably the 31st March date specified in the RNS)
2. The tanks will collect the oil (presumably on April 1st) from Tunisia and take it to an Italian refinery which I suspect will take 2-3 days including loading and unloading.
3. The refinery will then have to check that the oil quality is as it was agreed to be.
4. I would then expect payment to be made 30 days after this approval.

So I think that the oil will be picked up on April 1st but the money will not be received until early May. However, once the price is agreed (March 31st) then that will be the money received no matter what the change in oil price up or down from that point onwards.

Interoil

Interoil present their data in a slightly different format and do not separate the oil and gas revenues so we need to look at the figures in more detail to analyse how much oil they have produced.

Their daily production for the same 6 months time period (Q2 & Q3 2021) shows that they had revenues of $3.2 million in Q2 2021 and $3.3 million in Q3 2021 totalling $5.5 million in the half year.

The oil price average for Q2 2021 was $65.1 which means that production then was:
$3.2 Million / $65.1 = 49,155 barrels of oil produced in the quarter

49,155 / 91.25 (days in a quarter) = 539 bopd produced

The oil price for Q3 2021 was $69.4 which means that production was:
$3.3 million / $69.4 = 47,550 barrels of oil produced

47,550 / 91.25 (days in a quarter) = 521 bopd produced

So in total over the half year they have produced: 49,155 + 47,550 = 96,705 barrels of oil and oil equivalent / 182.5 = 530bopd

Comparison

So when we have the two quarters directly compared we have two companies that basically produce exactly the same amount of oil per day. Yet the market capitalisation of Interoil at 476M NOK (£40 million)is more than twice that of Zenith at 217.467M (£19 million).

If anybody has a good comparator company to compare Zenith with on LSE then I am happy to look at this too – just let me know.

Please let us try and get this board back onto sensible and informed discussion rather than posters simply sniping at each other.

Here is a copy of a post that I put on the Norwegian forums, with the numbers changed from Krone to Sterling.

I have been trying to decide what fair value for Zena would be at this moment in time – both in market cap and share price assuming that the company was valued similarly to some of it’s peers.

At the moment, the only real peer company that I have found listed in Oslo is Interoil, but if anybody knows any other companies that I could make a good comparison against then please let me know and I will look into them.

Interoil has a market cap of almost £42 million and has 182 million shares in issue.
Zenith has a market cap of £19 million and has 1.8 billion shares in issue.

So, Interoil is valued at more than twice the level that Zenith is. However, when you look in detail at the producing assets of both companies it turns out that they produce almost exactly the same amount of boepd (for details of how this was worked out see below). In short, Zenith appears to be very much undervalued by the Norwegian markets at the moment. Personally I think that we should see a market correction made the moment we sell the 114,000 barrels of oil in storage in Tunisia. Once we get that $14 million into the company bank then the markets should see that we are a serious business and re-rate us to where we belong as a 500 million NOK company.

Also, we need to remember that 500 million NOK is where we should be now, without even including the Tilapia 2 license which has huge production and exploration potential. Although this has not formally been granted yet then I would expect that as soon as it is then we will see a huge re-rate in the value of the company. After all, if it should be 40 million now then we should expect it to be at least £80 million once Tilapia 2 is on board.

My Calculations about ZENA vs IOX

Both companies have current production numbers that they have published in their quarterly and half-yearly reports

Zenith
Zenith have announced in the 6 months ended September 30th 2021 that they produced 94,662 barrels of oil from its Tunisian assets and also sold 2,792MWh of electricity from its Italian assets as well as 4,743mcf of natural gas produced in Italy.
This equates to daily production of

94,662 / 182.5 days = 518 bopd
2,792MWh / 182.5 days = 15.29MWh /d
4,742 mcf / 182.5 = 25.98 mcf/d

In order to give a like-for like comparison then we need to convert the 15.29MWh electricity to Barrel of Oil Equivalents which Is done by multiplying by 0.588441 = 9 boepd.

The 25.98mcf/d converts to 4.6 boepd (divided by 5.624).

In total this gives Zenith a daily production of 532 boepd.