Zenith Energy Regulatory News (ZEN)

October 20, 2017

ZENITH ENERGY LTD.

("Zenith" or the "Company")

Zardab Field Operational Update

 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 an operational update on wells Z-21 and Z-28 in the Zardab field, Azerbaijan.

The Company's operational team is routinely performing checks on a number of wells across the Zardab field.

The Company has recently carried out an intervention in the Z-21 well, specifically by coiled tubing and wireline, without the use of a workover rig. Well Z-21 had been shut-in since 1988 and no surface pressure had previously been recorded in well inspections.

Well Z-21 has periodically been flowed since the completion of this work, producing at a rate below 5 BOPD with negligible wellhead surface pressure recorded. On account of this low production it was decided not to flow the well for a period of two weeks.

On October 18, 2017, an unforeseen build-up in pressure caused a blowout after the failure of a flange on the wellhead. The Company's field personnel immediately sealed the well and replaced the broken flange. Zenith's environmental team arrived on-site within 15 minutes and the Z-21 wellsite has now been environmentally restored.

A subsequent well test on October 19, 2017 observed that the surface pressure of well Z-21 had substantially increased and stabilised at 30 atmospheres (atm), with a peak surface pressure reading of 90 atm. The Company's operational team views the significant increase in pressure as highly surprising, especially as previous well tests had, as aforementioned, recorded very low surface pressure.

The Company cannot forecast the potential post-workover oil production achievable from well Z-21 on the basis of the high pressure now recorded at this well, but the data strongly confirms that there is significant bottomhole pressure with large quantities of oil to be produced. Well tests will continue to take place until the ZJ-30 180 tonne workover rig, currently engaged in the workover of well Z-28, is scheduled to arrive in November 2017. 

Update on high-impact workover of well Z-28

The Company is pleased to provide an update on the workover of well Z-28. This is the most significant workover that the Company has undertaken since Zenith began operations in Azerbaijan.

Well Z-28 has been cleaned out with all tubing removed to a depth of 2922 metres. The next task is to perform a well cleanout down to the liner top at a depth of 3568 metres. The Company's petroleum engineers are regularly examining data collected from the well in order to clean out the liner and maximise the potential success of the workover. A quad neutron log has been run to the depth of 2922 metres, providing the most advanced well log recorded in the Zardab field. Whilst this technology has not yet been run through the productive series of the well, it has provided highly valuable information that is now being analysed.

Mike Palmer, Chief Operating Officer, Zenith Aran, the Company's Azerbaijan-based fully owned subsidiary, commented:

"Zardab is a young, hugely unexploited field with original high reservoir pressure. The blowout at Z-21 confirms Zardab's vitality and abundance in oil. I have had a lot of oilfield surprises in my 37 years of activity in the industry, most of them bad. The very high pressure generated without warning in Z-21 is not only a surprise, but a complete shock. Indeed, I was fortunate enough to view this first-hand whilst on location. Our small, inexpensive and systematic well interventions are paying off. There is a lot of work to be done before we can produce the well, but we expect a successful workover of Z-21 to generate significant production. 

I am pleased with the rapid progress achieved at Z-28. This is a challenging workover and we have been able to overcome all the problems that we have encountered. The next few weeks will be slow and difficult, but we are confident that we can get the job done successfully. We have assembled one of the most talented operational teams in the region."

For further information, please contact:

Zenith Energy Ltd.

Andrea Cattaneo

Chief Executive Officer 

Email: info@zenithenergy.ca

Tel: +1 (587) 315 9031

Fax: +1 (403) 775 4474

Optiva Securities - (Joint Broker)

Christian Dennis

Tel: + 44 (0) 203 137 1903

Beaufort Securities Limited - (Joint Broker) 

Jon Belliss

Tel: +44 207 382 8300 

Allenby Capital Limited - (Financial Adviser)

Nick Harriss

Nick Athanas

Richard Short

Tel:   + 44 (0) 203 328 5656

Yellow Jersey (Financial PR/IR)

Tim Thompson

Tel: +44 (0) 203 735 8825