BUILDING A TRANSFORMATIONAL OIL AND GAS PRODUCTION AND DEVELOPMENT PORTFOLIO IN AFRICA - JULY 2021
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JULY 2021 BUILDING A TRANSFORMATIONAL OIL AND GAS PRODUCTION AND DEVELOPMENT PORTFOLIO IN AFRICA LSE: ZEN OSE: ZENA www.zenithenergy.ca @zenithenergyltd
DISCLAIMER This document (the “Presentation”) has been prepared by and is the sole responsibility of Zenith energy Ltd. (“Zenith” or the “Company”). All information used in the Presentation has been 2021 compiled from publicly available sources that are believed to be reliable. However, because of possible human or mechanical error by Zenith, its affiliates or its sources, Zenith cannot ZENITH ENERGY guarantee the accuracy, validity, timeliness or completeness of any information provided for in this Presentation. JULY 2021 No guarantee, warranty or representation, express or implied, can be given by Zenith as to the accuracy, adequacy or completeness of the information contained in this Presentation and they are not responsible for any errors or omissions or results obtained from use of such information. Neither Zenith, nor any affiliates, officers, directors or employees accept any liability or responsibility in respect of the information which is subject to change without notice and may only be correct at the stated date of their issue, unless in case of gross negligence, fraud or wilful misconduct Zenith expressly disclaims any warranties of merchantability or fitness for a particular purpose. In no event will Zenith, its affiliates or any such parties be liable to you for any direct, special, indirect, consequential, incidental damages or any other damages of any kind even if Zenith have been advised of the possibility thereof. The Presentation has been prepared purely for information purposes, and nothing in this report should be construed as an offer, or the solicitation of an offer, to buy or sell any security, product, service or investment. The Presentation reflects the objective views of Zenith and does not constitute investment advice. The information provided in this document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Zenith or its affiliates to any registration requirement within such jurisdiction or country. The fact that Zenith has made available through this Presentation various information this constitutes neither a recommendation to enter into a particular transaction nor a representation that any financial instrument is suitable or appropriate for you. Each investor must make their own independent decisions and obtain their own independent advice regarding any information, projects, securities, or financial instruments mentioned herein. The Presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “envisages”, “estimates”, “anticipates”, “projects”, “expects”, “intends”, “may”, “will”, “could”, “seeks” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include matters that are not historical facts and speak only as of the date of the Presentation. They appear in a number of places throughout the Presentation and include statements regarding Zenith and the directors of Zenith’s current intentions, beliefs or expectations concerning, amongst other things, investment strategy, financing strategy, performance, results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which Zenith operates. Although Zenith believes that the expectations reflected in these forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties and other factors. These risks and uncertainties include, among others, uncertainties in the exploration for and development and production of oil and gas, uncertainties inherent in estimating oil and gas reserves and projecting future rates of production, uncertainties as to the amount and timing of future capital expenditures, unpredictable changes in general economic conditions, volatility of oil and gas prices, competitive risks, counterparty risks including partner funding, regulatory changes and other risks and uncertainties discussed in the Company’s periodic reports. The Company cautions you not to place undue reliance on these forward- looking statements, which speak only as of the date of this presentation, and Zenith undertakes no obligation to update or revise any of this information. The receipt of this document by any person is not to be taken as constituting the giving of investment advice by Zenith to any to any such person. By accepting this document, the recipient agrees to be bound by the limitations set out in this notice. This notice shall be governed and construed in accordance with English law.
A DUAL LISTED INDEPENDENT OIL AND PRODUCTION POTENTIAL OF APPROX: GAS PRODUCTION COMPANY PURSUING 2,000 - 3,000 2021 ZENITH ENERGY TRANSFORMATIONAL OPPORTUNITIES IN AFRICA BOPD BY CLOSE OF 2021 JULY 2021 METRICS KEY SHAREHOLDERS: Board of Directors, Mirabaud & Cie (Europe) SA, Premier Miton Investors STOCK TICKER (LSE: ZEN / OSE: ZENA) MARKET CAP CIRCA £14M SHARES IN ISSUE (APPROX) EXISTING ASSETS 1,377M SLIDE 01 TARGET
A DUAL LISTED INDEPENDENT OIL AND PRODUCTION POTENTIAL OF APPROX GAS PRODUCTION COMPANY PURSUING 2,000 - 3,000 BOPD 2021 ZENITH ENERGY TRANSFORMATIONAL OPPORTUNITIES IN AFRICA BY CLOSE OF 2021 JULY 2021 Development Recent Highlights strategy defined by: Zenith is seeking to build a highly prospective oil and gas production and development portfolio in Africa. • Acquiring and developing assets with untapped reserves 1 First sale of Tunisian oil production - agreement 6 Official confirmation regarding to sell approximately 68,000 barrels net to the successful completion of the and existing production Zenith (including 20,000 barrels of domestic Enquiry of Public Utility (Enquête market sales) for total receivables of d’Utilité Publique) following an • Maximising revenue by approximately US$4.5million. in-depth technical and financial implementing low-cost oil review, performed by the Ministry 2 Acquisition of 100% working interest in the El of Hydrocarbons of the Republic production models Bibane and Robbana concessions. of the Congo during the month of January 2021. As announced on • Ownership of key operational 3 Acquisition of 45% working interest in the December 23, 2020, the Company Ezzaouia Concession, onshore Tunisia. equipment with the objective will now proceed with the potential of reducing costs, third- 4 Appointment of new Country Manager in the finalisation and ratification of Republic of the Congo to progress negotiations the Production Sharing Contract party delays, and decreasing with the Ministry of Hydrocarbons. (“PSC”) for Tilapia II. reliance on third party oilfield service companies 5 Extension of longstop date for acquisition from 7 Assessing a number of oil and KUFPEC, a subsidiary of the State of Kuwait’s gas production and development national oil company, for a 22.5% interest in opportunities in Africa to enrich • Highly incentivised Board Sidi El Kilani, an onshore oil production asset in the Company’s portfolio. of Directors and Senior Tunisia. Extension of longstop date also agreed Management, holding previously with CNPC International (Tunisia) significant interests in Ltd., (“CNPCI”), a subsidiary of CNPC, for its 22.5% interest in Sidi El Kilani. the share capital of Zenith. SLIDE 02
TUNISIA OVERVIEW HIGHLY PROSPECTIVE OIL TARGET PRODUCTION BY CLOSE OF 2021: AND GAS PRODUCTION AND DEVELOPMENT 2021 OPERATIONS IN TUNISIA 1,000 ZENITH ENERGY BOPD JULY 2021 TUNIS TOTAL ZENITH ROBBANA PRODUCTION IN 100% WORKING INTEREST TUNISIA APPROX. PRODUCTION OF APPROX.: 600 25 BOPD NEAR-TERM PRODUCTION BOPD POTENTIAL: 100-150 BOPD SIDI EL-KILANI EL BIBANE 100% WORKING INTEREST ALGERIA ROBBANA EL BIBANE PRODUCTION OF APPROX.: 80- EZZAOUIA 100 BARRELS OF CONDENSATE + 5.5-6 MMSCF NATURAL GAS (RE- INJECTED INTO FORMATION) TUNISIA NEAR-TERM PRODUCTION POTENTIAL: 500-600 BOPD SIDI EL-KILANI EZZAOUIA 45% CONDITIONAL 45% OF APPROX. INTEREST OF 460 BOPD PRODUCTION APPROX. 550 BOPD NEAR-TERM PRODUCTION PRODUCTION POTENTIAL: 1,000 BOPD LYBIA SLIDE 03
EZZAOUIA ACQUISITION HIGHLIGHTS CURRENT GROSS PRODUCTION OF APPROX: TUNISIA 460 2021 ZENITH ENERGY BOPD JULY 2021 Zenith has acquired an interest of 45% in the EZZAOUIA Concession by way of the 100% purchase of Ecumed Petroleum Zarzis Ltd (“EPZ”) announced during March 2021. Acquisition Highlights: Discovered by Marathon Petroleum On April 19, 2019, the Tunisian MARETAP, the joint operating Corporation in 1986, with production State represented by the Ministry company, operates an oil storage activities starting in 1990 with a peak of Industry and Small & Medium terminal at the port of Zarzis with a production being achieved of 35,000 Enterprises informed ETAP and storage capacity of approximately barrels of oil per day in 1991. EPZ that the Comité Consultatif 200,000 barrels of oil. des Hydrocarbures (“CCH”) had provided a favourable opinion to the Operated by MARETAP, a joint application submitted by ETAP and operating company owned in EPZ for a new 20-year concession to Tunis partnership with the national oil be called “Ezzaouia”. company of Tunisia, ETAP, on a 50:50 basis, which holds a 55 percent interest in Ezzaouia. Development obligations during the course of the new 20-year concession are expected to include Sidi El-Kilani the drilling of a side-track, the drilling Robbana Planned field production TUNISIA El Bibane of a replacement well and that of a Ezzaouia optimisation and workover activities development well. are expected to increase Ezzaouia gross production to 1,000 bopd (potentially resulting in a production EZZAOUIA 45% OF APPROX. SLIDE of 450 bopd net to Zenith). 460 BOPD 04 PRODUCTION
SLK ACQUISITION HIGHLIGHTS CURRENT GROSS PRODUCTION APPROX: NATIONAL PRODUCTION APPROX: TUNISIA 550 35,000 2021 ZENITH ENERGY BOPD BOPD JULY 2021 The Company has acquired a cumulative conditional interest of 45% in the North Kairouan permit and the Sidi El Kilani Concession (“SLK”) This results from the following transactions: Conditional acquisition from KUFPEC, Conditional acquisition from Completion of both acquisitions is Extension of longstop a subsidiary of the State of Kuwait’s CNPC International (Tunisia), subject to a favourable opinion being date for completion of national oil company, of its 22.5% a subsidiary of China National granted by the Comité Consultatif des SLK acquisitions agreed working interest for a consideration Petroleum Corporation (CNPC), Hydrocarbures (“CCH”) of the Republic with both sellers of US$500,000 in April 2020. On June of its 22.5% working interest for a of Tunisia and the approval of the 11, 2020, the Company announced consideration of US$300,000 in Tunisian State represented by the that it had already paid US$250,000 September 2020. Ministry of Industry and Energy. to KUFPEC and that it expected the Tunis balance consideration payable would be satisfied by the oil production revenue generated since the date of the acquisition. Sidi El-Kilani Robbana TUNISIA El Bibane Ezzaouia Currently producing at an approximate rate of 550 barrels of oil per day using natural flow regime (without artificial SLIDE lift technology). 05
ACQUISITION OF EL BIBANE CURRENT PRODUCTION NEAR-TERM PRODUCTION OF APPROX: POTENTIAL: TUNISIA 80-100 500-600 2021 ZENITH ENERGY BARRELS OF CONDENSATE BOPD JULY 2021 NATURAL GAS Acquisition Highlights: PRODUCTION APPROX: Zenith has acquired a 100% interest in the highly prospective, offshore El Bibane concession. 5.5-6 MMSCF Located 16 kilometres offshore from 3 wells remain active within El Well intervention planned to restore the port of Zarzis in the Gulf of Gabes Bibane: EBB-5, EBB-4 and EBB-3RE2. production EBB-3 at a rate of 500 BOPD. A total of 6 wells plus 4 sidetracks have been drilled. Covers an area of approximately El Bibane expires on December 31, 2033. 228 square kilometres and in approximately 7-8 meters water depth Currently produces approximately 80-100 barrels of condensate per day (API 49/50) with 5.5-6 MMSCF of Tunis natural gas from well EBB-5, which is Upon initial development, a peak re-injected into the formation via well production of 4,500 bopd was EBB-4. achieved. The reservoir is located in the cretaceous Zebbag fractured dolomite formation at approximately Well EBB-3 is temporarily shut-in, Sidi El-Kilani 2,150 metres below surface. having previously produced between Robbana approximately 500-600 BOPD (35 API). TUNISIA El Bibane Ezzaouia Zenith has acquired a 100% working interest in El Bibane. EL BIBANE 100% OF APPROX. SLIDE 80-100 BARRELS 06 OF CONDENSATE PRODUCTION
ACQUISITION OF ROBBANA NEAR-TERM PRODUCTION CURRENT PRODUCTION POTENTIAL OF APPROX: 0F APPROX: TUNISIA 100-200 25 2021 ZENITH ENERGY BOPD BOPD JULY 2021 Acquisition Highlights: Zenith has acquired a 100% interest in the onshore Robbana concession (“Robbana”): Located onshore in the island of ROB-3 will target two proven Djerba in the southern Gulf of Gabes hydrocarbon-bearing reservoirs in the Cretaceous Upper Meloussi sandstone formation, from which Covering 48 square kilometres successful production has been achieved from ROB-1 for many years. Robbana currently produces A production of approximately 100- Tunis approximately 25 barrels of oil per 150 barrels of oil per day is expected day from well ROB-1 in the event of a successful drilling operation. Plans being finalised ntends to drill ROB-3, an infill vertical well, in the Drilling operations are expected to Sidi El-Kilani proximity of the producing ROB-1, to take approximately 60 days from Robbana a total depth of approximately 2,400 TUNISIA beginning to end, with a total El Bibane metres. Ezzaouia budget of approximately US$1.5 million being allocated. ROBBANA 100% OF APPROX. SLIDE Robbana expires on November 4, 2034. 25 BOPD PRODUCTION 07
CURRENT CONSERVATIVE MAX REPUBLIC OF THE CONGO, PRODUCTION APPROX PRODUCTION TARGET FOLLOWING SUCCESSFUL PRODUCTION POTENTIAL: DRILLING ACTIVITIES: TILAPIA 30 500 - 1,000 5,000 2021 ZENITH ENERGY BOPD BOPD BOPD JULY 2021 Geographic position Upside potential Highly strategic acquisition • Located in the Lower Republic • Successful recent drilling • Zenith acquired 100% of AAOG of the Congo Basin, West African undertaken during 2018 and Congo, the former operator of the Atlantic Margin, which extends from 2019 identified multiple potential Tilapia oilfield with a 56% interest. Gabon down to Angola, a prolific productive reservoirs across a • Remaining 44 percent was hydrocarbon region number of formations including held by the national oil company, • Individual wells in this region have the regionally proven Mengo and Société Nationale des Pétroles recorded production rates of up to Djeno reservoirs du Congo (“SNPC”). 5,000 barrels of oil per day. • Recent expert wireline log • Acreage is situated 1.8km offshore analysis* (has indicated that (drilled from onshore negating reservoir quality is “between the necessity of offshore drilling good and excellent”. equipment) *commissioned by AAOG Congo after drilling • First production in 2008. activities in the Djeno REPUBLIC • Close to nearby infrastructure OF THE (Oil storage /processing facilities - CONGO 45-minute drive from Point Noire and 17km from nearest refinery.) SLIDE TILAPIA LOUBOMO 08 BRAZZAVILLE POINTE-NOIRE
REPUBLIC OF THE CONGO, TILAPIA PRODUCTION PRODUCTION POTENTIAL FOLLOWING NATIONAL PRODUCTION APPROX: DRILLING: APPROX: TILAPIA 30 UP TO 5,000 350,000 2021 ZENITH ENERGY BOPD BOPD BOPD JULY 2021 AAOG Congo’s licence to operate the Tilapia SNPC owes AAOG Congo approximately Zenith has commissioned a new Competent oilfield (“Tilapia I”) expired on July 18, 2020, as US$5.3 million. Zenith has met with SNPC and Person’s Report in compliance with Canadian publicly announced by Zenith Energy and expects to obtain the full repayment of the securities laws, specifically the COGE Handbook previously announced by AAOG plc. aforementioned amount. and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. The seller of AAOG Congo has also novated 100% of the intercompany loans with AAOG Congo to Zenith as of the date of Completion, equivalent to approximately £12.5 million. Plans to commence drilling activities in Zenith has submitted an offer to the Ministry of Plans to commence drilling activities in well well TLP-103C at the earliest opportunity in Hydrocarbons for the award of a new 25-year TLP-103C at the earliest opportunity in the event the event that the Company is successful licence in relation to the Tilapia oilfield, to be that the Company is successful in obtaining a in obtaining a new 25-year licence for the named “Tilapia II” and established a new local new 25-year licence for the Tilapia oilfield. Tilapia oilfield. subsidiary, Zenith Energy Congo SA, at the request of the Ministry of Hydrocarbons. REPUBLIC OF THE CONGO SLIDE TILAPIA LOUBOMO 09 BRAZZAVILLE POINTE-NOIRE
WORKING INTERESTS IN ITALY - CASH GENERATING 368.96 KM2 ENERGY PRODUCTION OF ITALIAN NATURAL GAS PRODUCTION 2021 A low-risk jurisdiction with a strong EU regulatory framework CONCESSIONS ZENITH ENERGY JULY 2021 Italy has a long and successful history of natural gas production and exploration across its territory SOUTHERN GAS • Balanced energy production portfolio providing cashflow with CORRIDOR - TAP stable low-cost natural gas production PRODUCTION • Moderate investment expected to achieve significant increase CONCESSIONS in natural gas production ITALIAN NATIONAL • Low-grade sour gas production is used at the Torrente Cigno Genoa PIPELINE INFRASTRUCTURE concession to profitably generate electricity • Italy’s economy is heavily dependent on oil and gas On July 31, 2020, Zenith received approval for a legally ADRIATIC binding loan facility for an amount of approximately SEA EUR 300,000 from an Italian governmental entity for ROME development activities in Africa, specifically in the Republic of Congo and the broader West Africa region. The Company plans to file an application for a second loan facility of this kind to fund infrastructural investments in its Italian natural gas, condensate and electricity production operations. The Company’s Italian ‘Gas to Power’ activities are intended to be replicated in certain Africa jurisdictions on a larger scale, specifically in the Republic of the Congo, where there is an abundance of unexploited natural gas reserves and a MEDITERRANEAN SEA strong demand for stable electricity production. CURRENT PRODUCTION NATURAL GAS 2P RESERVES: CONDENSATE 2P RESERVES: 6 OPERATED CONCESSIONS 2 EXPLORATION PERMITS OF APPROX: 16.3 255 SLIDE 10 90 BCF MBBLS 3 NON-OPERATED CONCESSIONS 2 EXPLORATION PERMITS AWAITING APPROVAL BOE
OWNERSHIP OF DRILLING EQUIPMENT Zenith strongly believes in the benefits of owning 1. Cost control 2021 ZENITH ENERGY and operating the key equipment required to develop 2. Operational independence JULY 2021 its asset portfolio. For the following reasons: 3. Direct oversight on execution 1 1 WORKOVER RIG DRILLING RIG ( 375HP) (1 , 20 0 HP ) capable of drilling to a depth of approx 5,000 metres (depending on well design) SLIDE 11
EUR 25 MILLION EMTN PROGRAMME To date, Zenith has issued the 2021 following, multi-currency Euro ZENITH ENERGY Medium Term Notes at par JULY 2021 value: (the “Notes”) Zenith has launched a EUR The EMTNs are admitted to trading 25,000,000 multi-currency Euro on the Third Market (MTF) of the EURO 1,000,000 bearing an interest 1 Medium Term Notes (EMTN) Vienna Stock Exchange and will be of 10.125% per year the “EUR-Notes” Programme. due on January 27, 2024. ISIN: XS2108546735 As announced on January 29, 2021, the Company has paid all coupons, in full and on time, for the aforementioned instruments since their respective issuances GBP 1,000,000 bearing an interest providing a clear demonstrative of Zenith’s effective cashflow management offering investors a fixed semi-annual return on their investment. 2 of 10.5% per year the “GBP-Notes” ISIN: XS2108546578 The Notes are governed Zenith is carefully developing its debt USD 1,000,000 bearing an interest 3 by Austrian law and are financing capabilities, with a focus on non- of 10.375% per year the “USD-Notes” not convertible into Zenith equity dilutive funding, in order to facilitate equity. the attraction of more significant interest ISIN: XS2108546651 from investors as it implements its ambitious African development strategy. CHF 1,000,000 bearing an interest Zenith has made coupon payments, in full and on time, in relation to all of its 4 of 10.00% per year the “CHF-Notes” ISIN: XS2108546818 outstanding fixed-income debt instruments SLIDE 12
SUMMARY INVESTMENT CASE PRODUCTION POTENTIAL OF APPROX DURING 2021: Identifying and completing a number of potentially 2,000 - transformational oil and gas production opportunities 2021 ZENITH ENERGY JULY 2021 across Africa 3,000 BOPD Tunis MANAGEMENT ALIGNED CONDITIONAL EXISTING WITH SHAREHOLDERS - THE TOTAL PRODUCTION BOARD OF DIRECTORS AND OF APPROX. 650 BOPD TUNISIA MANAGEMENT COLLECTIVELY ACROSS PORTFOLIO HOLD APPROXIMATELY 10 PERCENT OF ZENITH’S SHARE CAPITAL . 1 4 UNIQUELY POSITIONED BY WAY OF EXTENSIVE STRINGENT DUE NETWORKS AND RELATIONSHIPS TO EXECUTE A DILIGENCE PERFORMED COUNTERCYCLICAL ACQUISITION CAMPAIGN IN FOR ALL NEW ASSETS AFRICA TARGETING LOW-RISK OIL PRODUCTION BEING REVIEWED AS ASSETS GENERATING SIGNIFICANT PRODUCTION POTENTIAL ACQUISITIONS REVENUE. REPUBLIC OF THE CONGO 2 3 5 HIGHLY EXPERIENCED READY AVAILABILITY OF HIGHLY KNOWLEDGEABLE OPERATIONAL TEAM WITH DRILLING EQUIPMENT AND AND WELL CONNECTED Brazzaville PROVEN TRACK-RECORD TECHNICAL PERSONAL ADVISORY COMMITTEE OF SUCCESS ACROSS ALL ACQUISITION RECENTLY CREATED TO OPPORTUNITIES . (COMPANY SUPPORT ITS BUSINESS OWNS KEY DRILLING DEVELOPMENT ACTIVITIES EQUIPMENT INCLUDING A IN WEST AFRICA SLIDE DRILLING RIG (1,200HP) AND 13 A WORKOVER RIG (375HP))
TEAM Executive Directors & Senior Management 2021 ZENITH ENERGY JULY 2021 Luca Benedetto Luca Benedetto trained in Italy as a registered Chief Financial Officer accountant with further education in IFRS accounting & Executive Director and consolidation at IPSOA Milan. He has more than (UK based) twenty-five years of accounting, auditing and financial administration experience. Andrea Cattaneo Chief Executive Officer & President Dr. José Ramón López Portillo Former Mexican Ambassador to Food and Agriculture (UK & Africa based) Chairman and Non-executive Organisation (United Nations) and Minister in Mexican Director, (UK based) Federal Government. Leading researcher on the energy security of Mexico. He is also the Former Chairman of the Proven deal maker and FAO council. Holds a doctorate from the University of Oxford government advisor with in political science and international relations. specific expertise in FSU and African countries. He has more than 30 years of Dr. Dario Sodero Experienced energy industry executive with strong experience in sovereign Non-executive Director, geological, technical and exploration expertise in North loans, capital markets and (Canada based) America, North Africa and the Middle East. Holds a doctorate oil trading between Western in Geological Sciences from the University of Turin, Italy. and emerging countries. Andrea is one of Zenith’s founders and largest Sergey Borovskiy Sergey has over 25 years of experience in business shareholders. Non-executive Director management in China and Hong Kong, he is fluent in Russian, (China based) English and Mandarin and holds a degree in economics. He is Chairman of various oil & gas consulting, engineering, trading, chemical, seismic research and exploration services companies based in China and Hong Kong. SLIDE 14
CONTACT Zenith Energy Ltd. Andrea Cattaneo Chief Executive Officer E-mail: info@zenithenergy.ca Tel: +1 (587) 315 9031 Allenby Capital Limited - Financial Adviser & Broker Nick Harriss, Nick Athanas Tel: + 44 (0) 203 328 5656 SLIDE 08
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