Last checked at 16 Nov 2017 07:00
November 16, 2017
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.
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Filing of 2017 Second Quarter Results
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 filing of its consolidated quarterly results for the three and six months ended September 30, 2017.
These results were filed on SEDAR (www.sedar.com) on November 15, 2017 in accordance with TSX and Alberta Security Commission rules.
Highlights for the three and six months ended September 30, 2017 include the following:
• The Company produced 23,095 and 47,954 barrels of oil from its assets in Azerbaijan. At the end of September 2017, there were 2,588 barrels of unsold oil production in Azerbaijan held in inventory which was sold in subsequent months.
• The Company sold 4,831 and 9,621 MCF of natural gas produced from its Italian assets.
• The Company sold 264 and 488 barrels of condensate produced from its Italian assets.
• The Company sold 2,741 and 5,263 MWh of electricity generated from its Italian assets.
• The Company incurred CAD$931k in capital expenditure in the six months ended September 30, 2017, primarily resultant from the Company's field rehabilitation and development programme underway in Azerbaijan.
• The Company announced that it had signed a contract for the procurement of oil production materials with Kerui Petroleum, a leading Chinese manufacturer of oilfield equipment, on August 21, 2017. The procurement of this new equipment will enhance Zenith's operational capabilities, enable the Company's personnel to work in remote field locations, and replenish Zenith's stock of oil production materials. The total value of the procurement contract was USD$1,706k (approximately £1,325k; CAD$2,146k).
Zenith Chief Executive Officer, Andrea Cattaneo, commented:
"These Q2 results confirm the transformational impact of Zenith's Azerbaijan acquisition on the Company's financial position.
I look forward to announcing increased production revenue in the next set of quarterly results as we achieve further growth in our daily production of oil."
Consolidated Statement of Comprehensive Income |
| ||
Continuing operations |
| Six months ended | |
|
| 30 September 2017 | 30 September 2016 |
|
| Unaudited | Unaudited |
| Note | CAD $'000 | CAD $'000 |
Revenue | 22 | 2,782 | 1,067 |
Royalties |
| - | (7) |
|
|
|
|
Cost of Sales |
|
|
|
Production costs |
| (1,490) | (785) |
Depletion and depreciation | 7 | (609) | (204) |
Gross Profit / (Loss) |
| 683 | 71 |
|
|
|
|
Administrative expenses | 4 | (157) | (1,796) |
Gain on business acquisition |
| - | 771,189 |
Operating Profit / (Loss) |
| 526 | 769,464 |
|
|
|
|
Fair value movements |
| - | - |
Gain (loss) on sale of marketable securities |
| - | 4 |
Foreign exchange |
| - | 90 |
Net Interest expense | 5 | 53 | (245) |
|
|
|
|
Profit/(Loss) for the period before taxation | 579 | 769,313 | |
|
|
|
|
Taxation | 6 | - | (153,044) |
|
|
|
|
Profit/(Loss) for the period from continuing operations |
| 579 | 616,269 |
|
|
|
|
Profit / (Loss) from discontinued operations, net of tax |
| - | - |
|
|
|
|
Profit/(Loss) for the period |
| 579 | 616,269 |
|
|
|
|
Other Comprehensive Income |
|
|
|
Items that may be subsequently reclassified to profit or loss: |
|
|
|
Exchange differences on translating foreign operations, net of tax |
| (158) | (8,195) |
|
|
|
|
Total Comprehensive Income for the period attributable to owners of the parent |
| 421 | 608,074 |
|
|
|
|
Earnings per share (CAD $) | 20 |
|
|
Basic from profit / (loss) for the period |
| 0.01 | 10.39 |
Diluted from profit / (loss) for the period |
| 0.01 | 6.23 |
From continuing operations - basic |
| 0.01 | 10.39 |
From continuing operations - diluted |
| 0.01 | 6.23 |
From discontinued operations - basic and diluted |
| 0.01 |
6.23 |
Consolidated Statement of Financial Position | Six months ended | ||||||
|
|
| 30 September 2017 | 30 September 2016 | |||
|
|
| Unaudited | Unaudited | |||
ASSETS |
| Note | CAD $'000 | CAD$'000 | |||
Non-current assets |
|
|
| ||||
| Property, plant and equipment | 7 | 1,073,436 | 1,066,801 | |||
| Capitalised expenses | 8 | 2,210 | - | |||
| Other financial assets | 9 | 430 | 167 | |||
|
|
| 1,076,076 | 1,066,968 | |||
Current Assets |
|
|
| ||||
| Inventory | 19 | 208 | 317 | |||
| Trade and other receivables | 22 | 1,382 | 1,547 | |||
| Financial instruments at fair value through profit or loss | 12 | - | 353 | |||
| Cash and cash equivalents |
| 2,393 | 126 | |||
|
|
| 3,983 | 2,343 | |||
TOTAL ASSETS |
| 1,080,059 | 1,069,311 | ||||
EQUITY AND LIABILITIES |
|
|
| ||||
Equity attributable to equity holders for the parent |
|
| |||||
| Share capital | 10 | 18,587 | 10,351 | |||
| Share warrants and option reserve | 11 | 1,633 | 2,247 | |||
| Contributed surplus |
| 2,232 | 2,231 | |||
| Retained earnings / (deficit) |
| 554,430 | 592,476 | |||
| Total equity |
| 576,882 | 607,305 | |||
Non-current liabilities |
|
|
| ||||
| Borrowings | 13 | 2,380 | 2,665 | |||
| Deferred consideration payable | 15 | 484,034 | 287,044 | |||
| Convertible loans | 14 | 385 | 887 | |||
| Decommissioning provision | 16 | 7,980 | 9,793 | |||
| Deferred tax liabilities | 6 | 2,398 | 153,928 | |||
| Total non-current liabilities |
| 497,177 | 454,317 | |||
Current Liabilities |
|
|
| ||||
| Trade and other payables | 22 | 2,720 | 4,033 | |||
| Oil share agreement |
| - | 1,039 | |||
| Borrowings | 13 | 2,840 | 1,503 | |||
| Deferred consideration payable | 15 | 440 | 502 | |||
| Convertible loans | 14 | - | 612 | |||
| Total current liabilities |
| 6,000 | 7,689 | |||
TOTAL EQUITY AND LIABILITIES |
| 1,080,059 | 1,069,311 | ||||
|
|
|
| ||||
|
|
| |||||
|
| ||||||
Consolidated Statement of Changes in Equity | Share capital | Warrants and share option reserve | Contributed surplus | Retained earnings / (deficit) | Total |
| CAD | CAD | CAD | CAD | CAD |
| $'000 | $'000 | $'000 | $'000 | $'000 |
Balance as at 1 April 2016 | 9,578 | 1,510 | 2,231 | (15,598) | (2,279) |
Income/(loss) | - | - | - | 616,269 | 616,269 |
Other comprehensive income | - | - | - | (8,195) | (8,195) |
Total comprehensive income | - | - | - | 608,074 | 608,074 |
Share issue net of costs - conversion of loan notes | 300 | - | - | - | 300 |
Share issue net of costs - debt settlement | 45 | - | - | - | 45 |
Share issue net of costs - private placement | 1,141 | - | - | - | 1,141 |
Value of warrants issued | (713) | 737 | - | - | 24 |
Expired options | - | - | - | - | - |
Total transactions with owners recognised directly in equity | 773 | 737 | - | - | 1,510 |
Balance as at 30 September 2016 | 10,351 | 2,247 | 2,231 | 592,476 | 607,305 |
|
|
|
|
|
|
Consolidated Statement of Changes in Equity | Share capital | Warrants and share option reserve | Contributed surplus | Retained earnings / (deficit) | Total |
| CAD | CAD | CAD | CAD | CAD |
| $'000 | $'000 | $'000 | $'000 | $'000 |
Balance as at 1 April 2017 | 17,229 | 1,877 | 2,332 | 554,009 | 575,447 |
|
|
|
|
|
|
Income/(loss) | - | - | - | 421 | 421 |
Other comprehensive income | - | - | - | - | - |
Total comprehensive income | - | - | - | 421 | 421 |
Share issue net of costs - conversion of loan notes | - | - | - | - | - |
Share issue net of costs - debt settlement | - | - | - | - | - |
Share issue net of costs - private placement | - | - | - | - | - |
Share issue - exercise of options | 1,358 | (224) | (100) | - | 1,034 |
Expired options | - | (20) | - | - | (20) |
Total transactions with owners recognised directly in equity | 1,358 | (244) | - | - | 1,014 |
Balance as at 30 September 2017 | 18,587 | 1,633 | 2,232 | 554,430 | 576,882 |
Reserve Description and purpose
Share capital Amount subscribed for share capital
Warrants and share Relates to possible increase in equity for options issued option reserve
Combined surplus Cumulative earning from non-operational sources
Retained earnings (deficit) Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Consolidated statement of cash flows | Six months ended | ||
|
| 30 September 2017 | 30 September 2016 |
OPERATING ACTIVITIES | Note | CAD $'000 | CAD $'000 |
Profit/(Loss) for the period before taxation |
| 579 | 616,269 |
Items not involving cash: |
| - |
|
Shares issued for services |
| 15 | 214 |
Shares issued for accrued interest |
| - | - |
Gain (loss) on sale of marketable securities |
| - | (4) |
Fair value adjustment on marketable securities |
| - | - |
Foreign exchange |
| 34 | 61 |
Gain on business acquisition |
| - | (771,189) |
Deferred taxation |
| - | 153,044 |
Gain on conversion of convertible notes |
| - | - |
Fair value adjustment on derivative liability |
| - | - |
Depletion and depreciation | 7 | 609 | 204 |
Capitalisation of expenses | 8 | (2,419) | - |
Impairment of property and equipment |
| - | 1 |
Other expenses |
| - | - |
Finance expenses | 5 | (53) | 42 |
Change in working capital | 18 | (393) | (177) |
Net cash used in operating activities |
| (1,628) | (1,535) |
INVESTING ACTIVITIES |
|
|
|
Proceeds on sale of marketable securities |
| - | 11 |
Cash on disposal of subsidiary |
| - | - |
Purchases of property, plant and equipment |
| (931) | (31) |
Change in working capital | 18 | - | 3 |
Net cash used in investing activities |
| (931) | (17) |
FINANCING ACTIVITIES |
|
|
|
Repayment of notes payable |
| - | - |
Proceeds from issue of shares, net of transaction costs | 9 | 1,258 | 1,116 |
Proceeds from exercise of options | 10 | 100 | - |
Proceeds from issue of bonds |
| - | 191 |
Repayments of loans | 13 | (330) | - |
Proceeds from loans |
| - | 236 |
Net cash generated from financing activities |
| 1,028 | 1,543 |
Net increase/(decrease) in cash |
| (1,531) | (9) |
Foreign exchange effect on cash held in foreign currencies |
| - | (3) |
Cash at beginning of year |
| 3,924 | 138 |
Cash at end of period |
| 2,393 | 126 |
For more information please visit: www.sedar.com.
For further information, please contact:
Zenith Energy Ltd.
Andrea Cattaneo | Luca Benedetto |
Chief Executive Officer | Chief Financial Officer |
Email: info@zenithenergy.ca |
|
Telephone: +1 (587) 315 9031
Telefax: +1 (403) 775 4474
Optiva Securities - (Joint Broker)
Christian Dennis
Telephone: + 44 (0) 203 137 1903
Beaufort Securities Limited - (Joint Broker)
Jon Belliss
Telephone: +44 207 382 8300
Allenby Capital Limited - (Financial Adviser)
Nick Harriss
Nick Athanas
Telephone: + 44 (0) 203 328 5656
Yellow Jersey (Financial PR/IR)
Tim Thompson
Telephone: +44 (0) 203 735 8825