Last checked at 20 Feb 2017 07:45
ZENITH DIVESTS ARGENTINE OPERATIONS
Calgary, Alberta, February 20, 2017, Zenith Energy Ltd. ("Zenith" or the "Company")
(LSE: ZEN: TSX.V: ZEE) the dual listed international oil & gas production company is pleased to announce the sale of its operations in Argentina to a group of local energy investors.
The Company acquired the Don Ernesto and Don Alberto fields in July 2010 and, following a systematic programme of operational improvements and cost reductions, was successful in achieving substantial increases in oil production and profitability. Zenith also demonstrated that there was significant potential for further field development.
Unfortunately in August 2015, due to a series of circumstances beyond the Company's control, production at Zenith's Argentine operations was suspended. This was caused by the collapse of a major storage tank owned by Yacimientos Petrolíferos Fiscales ("YPF"), Argentina's national oil company. This meant that Zenith's production of oil could no longer be transported through YPF pipelines, resulting in the suspension of production in the Comodoro Rivadavia area where these fields are located.
To date, the issues affecting the transportation of oil have not been fully resolved and a persisting uncertainty on the recommencement of operations has led Zenith to reconsider its operational involvement in Argentina.
The sale of the Company's Argentina subsidiary has been fixed at a nominal sum in recognition of the costs the new owner is expected to incur to return these fields to production. In addition, Zenith will no longer be liable for any environmental responsibilities or future well abandonment obligations for the Don Alberto and Don Ernesto fields.
Termination of activities in Argentina will enable Zenith's management to more effectively direct its focus on its Italian operations and especially towards Azerbaijan, where the Company's most important assets are located, and where a systematic programme of field rehabilitation has begun. This re-alignment reflects the Board's aversion to operational overstretch and the Company's preference for a strong, concentrated focus towards the achievement of its production objectives in Azerbaijan.
Andrea Cattaneo, Zenith CEO, commented:
"The disposal of our activities in Argentina is a strategic move. This will enable the Company to positively recalibrate its operational footprint in a way that coherently reaffirms our Italian energy production interests and specifically the primary importance of our transformational opportunity in Azerbaijan. The risk of overstretching where the management team is active on too many fronts is now reduced.
The Board of Directors and the management team will now be in a position to direct undistracted attention to the Company's primary objectives of achieving incremental production increases in Azerbaijan and continuing stable energy production activities in Italy.
Zenith will also be able to evaluate the acquisition of additional production opportunities in the European and Caspian region, building on the momentum of its recent progress to further support the Company's continued expansion."
For further information, please contact:
José Ramón López-Portillo Chairman
Andrea Cattaneo CEO & President
Email: info@zenithenergy.ca
Telephone: +1 (587) 315-9031
Telefax: +1 (403) 775-4474