Zenith Energy Regulatory News (ZEN)

ZENITH ENERGY LTD.

Zenith Commences Workover Programme in Azerbaijan

FOR IMMEDIATE RELEASE

(LSE: ZEN, TSX.V: ZEE)

Calgary, Alberta - January 24, 2017 - Zenith Energy Ltd. ("Zenith" or the "Company") the international oil and gas development and production company with assets in Azerbaijan, Italy and Argentina is pleased to announce an update on its operations in Azerbaijan.

Azerbaijan - Introduction

The Company, through its wholly owned subsidiary, Zenith Aran Oil Company Limited, recently assumed operatorship of Azerbaijan's largest onshore producing oilfield in a Rehabilitation, Exploration, Development and Production Sharing Agreement ("REDPSA"). The REDPSA was signed between Zenith Aran Oil Company Limited and SOCAR (State Oil Company of the Azerbaijan Republic) on 16 March 2016, was approved by Azerbaijan's Cabinet of Ministers on 25 April 2016, and subsequently ratified by the Azerbaijan Parliament on 14 June 2016. Production under the Zenith banner began on 11 August 2016.

Zenith holds an 80% participating interest in the three fields within the contract area (Muradkhanli, Jafarli and Zardab), while a SOCAR Oil affiliate company (fully owned by SOCAR) retains the remaining 20%. The duration of the REDPSA is 25 years, with a potential extension of 5 additional years.

It should be noted that in Azerbaijan a REDPSA has the unique feature of being a statutory law of the Country, having been enacted into national legislation following parliamentary ratification. 

Azerbaijan - Highlights

· Regular cashflow from Azerbaijan operations with production of approximately 295bopd.

· Initial payments from SOCAR Marketing Operations were reported already in November 2016 and to date all invoices due have been paid punctually.

· Signing of well workover contract and engagement of highly experienced local drilling company to initiate and execute workover of first two wells in the programme (M-195 and M-45).

Azerbaijan - Operations And Workover Programme

Further to prior announcements (see TSX-V) and the Company's admission to the Main Market of the London Stock Exchange, Zenith continues stable production rates of approximately 295bopd across its three producing fields of Muradkhanli, Jafarli and Zardab.

In addition to the TSX-V press release of 21 November 2016, Zenith continues to receive regular cashflow from SOCAR Marketing Operations for delivery of Urals crude oil from the Muradkhanli, Jafarli, Zardab fields. Since this date all invoices due for crude oil quantities formally delivered into the international pipeline network by Zenith Aran have been paid punctually and, at times, in advance of the due date.

A key element of Zenith's ongoing strategy for Azerbaijan is to increase the scale of its activity to deliver near-term incremental increases in daily oil production. To achieve this goal a workover programme aimed at rehabilitating the first 10 of 65 low producing wells at these fields has begun following the signing of the aforementioned workover contract.

The workover rig is en route to site and is expected to start operations on 31 January 2017. Further updates on the progress of the workover programme will be provided regularly.

 Andrea Cattaneo, Zenith Energy CEO, commented:

"We are pleased to announce the beginning of our workover programme so soon after Zenith's successful admission to the London Stock Exchange's Main Market. With the current price of Urals oil exceeding $51 per barrel, significantly higher than the price of oil when Zenith first assumed operatorship of these fields, the timing could not be more favourable for the Company to expedite its strategy to increase production.

Our fields, Muradkhanli, Jafarli and Zardab, have previously produced in excess of 9,000bopd with peak production even reaching 15,000bopd during the Soviet Union period. However, shortly after achieving these peaks, production significantly declined due to a series of mechanical failures; and progressively declined because of a lack of investment in the fields. This lack of material attention towards the fields can be explained by Azerbaijan's post-independence national energy strategy focused on offshore oil production.

 The Company believes that this lack of maintenance and gradual dilapidation of field equipment is the principal cause of the decline in oil production and that these fields are far from reaching a stage of natural depletion. This has been confirmed by the recent Competent Persons Report (CPR) that assessed 2P reserves of 33.4 million barrels of oil net to Zenith.

We look forward to providing Zenith investors with regular updates regarding the progress of our development and rehabilitation activities in Azerbaijan."

About Zenith Energy Ltd.

Zenith focuses on the acquisition and further development of proven onshore oil and gas fields where production has declined over time, but which are capable of increased productivity following an injection of capital and optimization through its corporate engineering and technical expertise. To maximize shareholder value, Zenith targets acquisitions of production opportunities that offer strong logistics and close proximity to refineries and pipelines. Zenith's management and directors have extensive international and governmental experience and possess the technical knowledge to execute this strategy.

For further information, please contact:

José Ramón López-Portillo Andrea Cattaneo

Chairman of the Board CEO & President

Email: info@zenithenergy.ca

Telephone: (587) 315-9031

Telefax: (403) 775-4474