Member Info for MudPump

AJ, I'm sure the tender was on behalf of Socar, to fix the price Zena will charge. AC was clear in the last presentation: the 260 will start at C37 early March, then onto C30 (or other if casing damage is found), as early production boost opportunity + training of the Zen crew by robotics staff + to test the lower formation play. Then onto Zen-1. Subject to modification of course. A100 due early march also.

I suppose that if an interesting bid is made for the deepening work AC will take it, but I suspect that the reason for the formal tender process is that the rig is owned by Zena, so Zenith Aran will need to pay Zena for the work. Socar are on the hook for 20% I think, so they will want to make sure that what they are charged by Zena (Zenith) is in line with the market. Also to avoid shifting profit out of the Azer vehicle to Abu Dhabi using dodgy transfer pricing - which I know has caused problems in other O&G jurisdictions. Obviously AC couldn't say that this is the real reason or the bidders won't waste their time.
The equity raise is possibly triggered by covenants on the bonds or outstanding loans - there is bound to be an equity/debt ratio limit. The willingness of institutional buyers to take equity at this level might help limit the damage from CB bomb still hanging over us - I hope AC can terminate this thing asap. The eurobond issue is a real achievement so don't underrate him.
Operationally the C37 deepening is not just a workover, though it should add enough from the known reservoir to pay for itself, but a poke at a new play. Success in the lower formation could cause the mother of all rallies, so all to play for here......

I am sure that there is no value attached to Italy in the current share price, and even if they doubled production there I doubt it would move the needle. On the other hand if they were to sell the Italian operation for any decent amount of cash and put the proceeds into Az I think it would be viewed positively. The only argument for keeping Italy would be if somehow the apparent diversification is important for the bond rating.

https://oilprice.com/Energy/Energy-General/Italy-Looks-To-Block-Oil-Gas-Exploration-Permits.html

No idea if this impacts ZEN's plans but the Italian government line that "(Italian) upstream oil and gas activity (is) not of strategic importance to the country" certainly holds true for ZEN also....

Mudstud, I'd be grateful if you could expand on your comment: " you wouldn't want me to start deramping with what I know;-)"

AJ - now you know what you're doing wrong with your investment strategy. Harrizma has explained it perfectly; you have to buy BEFORE things go up. Once they've gone up, THEN you sell. And buy something else just BEFORE it goes up. Like all great ideas, it's obvious when someone points you in the right direction......I hope you make it to the elite group one day.

I would argue that the delays to date, the changes of plan, the dodgy accounts and the "AC discount" are priced in, although it can certainly go lower with if there is more dilution or further major delay. But I think there is sufficient money to hand to get a result from C37 existing and deepening. Z21, Z28 and MOC1.......and success in any one of those is not priced in. So the balance of risk is to the upside IMO.

MOC-1 also....

Mudstud, you exited nicely on the finance worries, buy I don't agree that this is a binary bet. Those are often found offshore where a small company bet everything on a wildcat. If Zen have their own kit they can move from opportunity to opportunity between the 3 different fields fairly cheaply, they only need success in some of those for the venture to become self-funding and achieve a valuation based on repeatability.

"Well done to the crew and the little 80" ....got to echo that sentiment. I wonder whether the pricey ex-pats helped or hindered the situation on the ground. Did anyone speak to Mike Palmer directly regarding his reason for resigning (or 'being resigned')?

Z, Most of the local staff you refer to are operational rather than admin I assume, so will be carried in the production expenses line. GNF operates a similar PSA in Az, with large local staff: 6mth admin costs are C$1.8m vs C$4.5m for Zen, but they have revenue of approx C$40m p.a.
Remember that ZEN admin costs for the same period in 2017 were C$157,000 !
Something is seriously amiss here.....

Travel is way too much in my opinion - the non-exec directors need to get a handle on this.....some of this will be due to the Indonesia red herring.
When things like audit and banking fees are broken out what on earth can be 585 of "other admin expenses" ?
Given the 10% dilution at year low and apparent 360k listing fee together with no doubt lavish travel and entertainment fees in Norway on top this Norway listing needs to be justified by a lot more than the $4000 market turnover to date.
I am sick of seeing private investors money subsidising "life-style" companies, but it is incumbent upon the investors to detect the abuses, the boards are usually packed with chums of the ceo. I do not want to see that outcome here....
What about the C$10.6m in "supplier" payables? Any ideas?

Z, the company has C$3.2m of receivables, presumably oil produced but not yet paid for. Would you care to speculate what the C$10.6m of payables are? There are no explanatory notes in the accounts that I can see. For context, the approx yearly revenue of the company is C$8m.

ORJ I have lost count of the number of times I have read variants of "long and strong" as a company spends it's way into administration. Let's make the analysis less superficial then; would you care to analyse the C$4.5m of 6 month expenses and justify them? What are the Canada listing costs?, including the need to duplicate some accounting and legal functions, vs the benefits - look the the volume on the Canadian market. Norway is indeed not a full listing, and seems to generate very little interest there, but has already cost a dilution of nearly 10% at a 12% discount to the virtual year low, with an 8% haircut. If there is one thing you would expect from AC it should be to have sufficient contacts in Italy to offload that distraction, he is "a proven deal-maker". And yes I do hold shares - for the Az asset, not the performance to date...

AJB is spot on here. We have an annualised C$ 9m in admin expenses, partly to support listings in 3 markets. Last 10 days turnover in Canada and Norway was about USD 5,000. We have half a new workover rig in Az, month late, although the strategic u-turn suggests it may not be needed. We have half a rig in somewhere in Italy, paid for with a death spiral convertible structure that will result in massive dilution. We owe C$ 7m net to suppliers. Meanwhile there has been no action on the ground for months, and production is continually falling. If there were a serious move to unseat AC by someone with expertise in oil, and an agenda to slash the admin costs, sell off Italy and focus 100% on getting oil out of the ground in Azer it would probably get a lot of support from shareholders.....
.

.....maybe explains the 180 non-appearance - not in a position to rent it (probably haven't yet paid for the last time). AC maybe hoped with the stock price higher he could raise enough, but down here it's too expensive. I think we'll be waiting for the 260 and the 120, see what we can do with those before we run out of cash......

Over CAD 7 mil. net owed to "suppliers"..............

6 month figures, CAD:

483K in "professional fees" (not including legal or audit or listing costs) ?
585k in "other" ?
488k in travel ?

I don't know the Azeri land rig market, but I find it hard to believe that there is a whole lot of suppliers competing for business. Something doesn't smell right, and the market senses it hence the weakness. Maybe AC is stalling on the 180 because he thinks the 260 might arrive soon. For a decent oil company the market would accept the situation, but in the case of ZEN, with it's historic performance, there is reasonable doubt about the ability of the company to even get the right rig on-site, never mind deliver any positive results......

The expected date of arrival of the 180 rig is price sensitive news. If AC has this information and is withholding it from the market while buying shares he will be breaking the law.