Zenith Energy Regulatory News (ZEN)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO OR IN THE UNITED STATES, JAPAN OR AUSTRALIA. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SUBSCRIBE OR PURCHASE ANY OF THE SECURITIES DESCRIBED HEREIN

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon publication of this announcement via a regulatory information service ("RIS"), the inside information contained in this document is now considered to be in the public domain.

November 7, 2018 

ZENITH ENERGY LTD.

("Zenith" or the "Company")

Admission to trading on the Merkur Market and completion of Private Placement

Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; TSX.V: ZEE) the dual listed international oil & gas production company operating the largest onshore oilfield in Azerbaijan, is pleased to announce the approval for admission to trading of its share capital on the Merkur Market of the Oslo Børs (the "Merkur Market"). The Merkur Market is a multilateral trading facility owned and operated by the Oslo Børs.

Admission to the Merkur Market

The Company believes that the Merkur Market will provide a complementary platform for the trading of its securities due to its energy-focused institutional and retail investor base. Norwegian equity markets have long supported production focused oil & gas companies such as Zenith whose primary objective is converting significant proven untapped reserves into production. Zenith's strategic preference towards owning the key equipment required for the long-term development of its Azerbaijan assets is also expected to be valued in a market which has traditionally hosted numerous listed rig providers and oil service companies. Zenith's admission to trading on the Merkur Market is also expected to provide Norwegian investors with an opportunity to access international oil & gas projects of which there is a relative paucity on the Oslo Børs.

In addition, Norway is known to have an active debt financing market for energy companies. The Company believes that its new presence on the Merkur Market will increase its ability to access the local debt markets, should Zenith choose to pursue this funding option, following the Company's recent assignment of a medium to long-term issuer credit rating of "B+" with Positive Outlook on October 8, 2018 by ARC Ratings, S.A, announced by the Company on October 10, 2018.

Company highlights:

· Significant oil reserves and resources from operated oil and gas fields

· Positive operating cash flow at today's average production of approximately 300 bopd against a backdrop of resurgent oil prices

· A clear pathway to increase oil production in Azerbaijan to 3,000 bopd by the close of 2020 via systematic well workover and drilling operations

· Low-cost operations with low capex requirements and attractive fiscal terms

· Stable production of natural gas, condensate and electricity in Italian operations

· The first day of trading on the Merkur Market is expected to be November 8, 2018 (ticker: ZENA-ME).

Zenith operates the largest onshore oilfield in Azerbaijan with an 80% participating interest in a 25-year Rehabilitation, Exploration, Development and Production Sharing Agreement (REDPSA) with SOCAR (State Oil Company of the Azerbaijan Republic), which retains the remaining 20% interest. The REDPSA area contains three contingent oilfields - Muradkhanli, Jafarli and Zardab - with independently assessed 2P reserves of 31.7 million barrels of oil. In addition, the company holds working interests in six operated and three non-operated natural gas concessions in Italy with independently assessed 2P reserves of 16.4 BCF of natural gas.

Completion of Private Placement

In order to satisfy the Merkur Market admission requirements the Company has completed a private placement with Norwegian investors (the "Private Placement"). The Private Placement has successfully raised gross proceeds of NOK 7,273,850 (approximately £668,300 or CAD$1,141,600) through the placement of 20,782,429 common shares of no par value (the "Placement Shares") at a subscription price of NOK 0.35 per share (approximately £0.032 or CAD$0.055 per Placement Share). This is equivalent to a discount of 12.3% to the closing mid-market price of the Company's common shares of no par value ("Common Shares") on the Main Market of the London Stock Exchange on November 5, 2018. The Placement Shares will be issued in the form of depositary interests in the VPS, the Norwegian Central Securities Depositary. No Insider/Person Discharging Managerial Responsibility has subscribed for Placement Shares.

The Placement Shares, together with the Company's existing issued share capital of 216,320,158 Common Shares are expected to be admitted to trading on the Merkur Market with the ticker ZENA-ME on November 8, 2018. The Placement Shares will rank pari passu in all respects with the Company's existing Common Shares.

Following issuance of the Placement Shares, the Company will have a total of 237,102, 587 Common Shares in issue. 237,102,587 Common Shares will be admitted to trading on the Merkur Market and listed on the TSX Venture Exchange in Canada. An application for the Placement Shares to be listed on the standard segment of the UK Official List and to be admitted to trading to the Main Market of the London Stock Exchange will be made within 12 months of the issue of the Placement Shares; the number of Common Shares listed on the standard segment of the UK Official List and to be admitted to trading to the Main Market of the London Stock Exchange remains at 216,320,158.

Andrea Cattaneo, Chief Executive Officer, commented:

"I am pleased that Zenith will be admitted to trading on the Merkur Market of the Oslo Børs. Norway is one of the world's most sophisticated equity and bond markets for energy companies and is well-known to present ample opportunities for value creation. Our admission to trading on the Merkur Market, a multilateral trading facility, will complement our full listings on the London Stock Exchange and the TSX Venture Exchange.

The Board of Directors is opposed to unnecessary equity dilution and as such the Company has carried out a strategic Private Placement primarily to satisfy the Oslo Børs' Merkur Market admission requirements. The proceeds of the Private Placement will be used to accelerate the execution of our near-term Azerbaijan drilling programme whose results should progressively enable a material reappraisal of the Company's market value.

I would like to thank Arctic Securities AS who has acted as Merkur Advisor to the Company, Orion Securities who has acted as manager for the Private Placement, and Arntzen de Besche Advokatfirma AS who has acted as legal advisor to the Company in connection with the Private Placement and the admission to trading on Merkur Market."

Further Information:

Zenith Energy Ltd 

Andrea Cattaneo 

Chief Executive Officer 

E-mail: info@zenithenergy.ca

Tel: +1 (587) 315 9031

Allenby Capital Limited - Financial Adviser

Nick Harriss

Nick Athanas

Tel: + 44 (0) 203 328 5656

Daniel Stewart & Company Plc - Joint Broker

Robert Emmet - Corporate Broking

Tel: + 44 (0) 207 776 6550

Optiva Securities - Joint Broker

Christian Dennis

Tel: + 44 (0) 203 137 1903

Vigo Communications - PR Adviser

Patrick d'Ancona

Chris McMahon 

Tel: +44 (0) 20 7930 0230

Crux Advisers AS - Norwegian IR adviser

Carl Christian Bachke

Tel: +47 (0) 909 808 48

This announcement and the information contained herein is issued for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, including the Placement Shares.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Information

This news release contains certain forward‐looking information and statements relating but not limited to the admission to trading on the Merkur Market, the admissioin to trading of the Placement Shares on the London Stock Exchange, future production of oil and gas, and the use of proceeds from the Private Placement. Forward-looking information typically contains statements with words such as "anticipate", "plan", "estimate", "expect", "potential", "could", "will", "should", or similar words suggesting future outcomes. The Company cautions readers not to place undue reliance on forward‐looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by Zenith. In addition, the forward‐looking information is made as of the date hereof, and the Company and its affiliates expressly disclaim any obligation or undertaking to update, review or revise any forward-looking statements contained in this document to reflect any change in their expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law.

Forward‐looking information is not based on historical facts but rather on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity and testing programs, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability and timely receipt of any necessary government or regulatory approvals. Although the Company believes the expectations and assumptions reflected in such forward‐looking information are reasonable, they may prove to be incorrect. Forward‐looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by Zenith including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), access to debt and equity markets, the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity, including the risk of political instability.

Notes to Editors: 

Zenith Energy Ltd. is an international oil and gas production company, dual listed on the TSX Venture Exchange and London Stock Exchange. The Company was assigned a medium to long-term issuer credit rating of "B+" with Positive Outlook on October 8, 2018 by Arc Ratings, S.A.

The Company operates the largest onshore oilfield in Azerbaijan following the signing of a 25-year REDPSA, (Rehabilitation, Exploration, Development and Production Sharing Agreement), with SOCAR, State Oil Company of the Azerbaijan Republic, in 2016. 

The Company's primary focus is the development of its Azerbaijan operations by leveraging its technical expertise and financial resources to maximise low-cost oil production via a systematic field rehabilitation programme intended to achieve significantly increased revenue. Zenith also operates, or has working interests in, a number of natural gas production concessions in Italy. The Company's Italian operations produce natural gas, condensate and electricity.

Zenith's development strategy is to identify and rapidly seize value-accretive hydrocarbon production opportunities in the onshore oil & gas sector. The Company's Board of Directors and senior management team have the experience and technical expertise to develop the Company successfully.