Zenith Energy Ltd. ("Zenith" or the "Company") (TSX VENTURE: ZEE) is pleased to announce that the Company has received a Presidential Decree in Azerbaijan to acquire three producing onshore oil fields.
As reported several times in quarterly MD&A filings, the Company has been in negotiations for the last 15 months with our counterparty in Azerbaijan, SOCAR (State Oil Company of Azerbaijan Republic).
Approval by Presidential Decree at the end of negotiations is required for a contract with SOCAR according to the internal process under the Laws of the Republic of Azerbaijan. The Presidential Decree has just been signed by the President of the Republic of Azerbaijan and this event triggers the Company's obligation for continuing disclosure. Some additional procedural steps will be implemented before the hand-over of the fields to Zenith.
The three fields have a compounded acreage of 642.4 square kilometres, and produce ~315 barrels of crude oil per day at present, although they have produced larger quantities previously (Source: SOCAR, State Oil Company of Azerbaijan Republic). Gas is also produced, but in low quantity, and is used at the site. The fields are named Muradkanly, Yafarli and Zardob. Zenith will be the operator of the concession and will have an 80% interest, while the local state party will retain 20%. The license will have a duration of 25 years. Zenith's technical personnel have already been allowed access to the fields to inspect the current operation and evaluate the existing infrastructure.
Due to the confidential nature of negotiations, economic details of the acquisition will be released at a later date. The contract will also be subject to regulatory approval in Canada.
As reported in Zenith's press release from September 25, 2015, the Company has opened an office in Baku, the capital of Azerbaijan. This corporate office is a two and a half hour drive from the operational office presently used to manage the producing fields, which are in the southern region of Azerbaijan.
Similar to Zenith's activity in other countries, the Company will create a wholly-owned subsidiary fully dedicated to this project. This strategy has proven to attract significant local expertise and enabled the Company to effectively integrate new methods, technologies and personnel. Azerbaijani management familiar with the properties will initially be supplemented by new technical and operational personnel from Zenith, however the Company will also begin to actively identify international management and specialists willing to relocate to Azerbaijan as part of its strategy to grow domestic production.
An internationally recognized independent reservoir engineering firm is currently preparing a 51-101 National Instrument report to evaluate the remaining reserves and the expected productivity potential of the three fields.
Andrea Cattaneo, President and CEO of Zenith Energy comments: "This acquisition represents Zenith's first investment into a country that management has held in high regard and is the culmination of over 15 months of negotiations and due diligence with local authorities."
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