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CALGARY, Alberta, Oct. 28, 2015 (GLOBE NEWSWIRE) -- Zenith Energy Ltd. ("Zenith" or the "Company") (TSX-V: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."
Azerbaijan is located at the crossroads of Western Asia and Eastern Europe. After gaining independence in 1991, Azerbaijan became a member of the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, the Islamic Development Bank and the Asian Development Bank. Azerbaijan is one of the birthplaces of the oil industry, with trade dating back as early as the 3rd and 4th centuries. The world's first paraffin factory was opened in the country in 1823 and the first oil well was drilled in 1847. In the 1870s, the region experienced the first true oil boom with oil drilling beginning on a massive scale highlighted by the Vermishevsky oil gusher on June 13, 1872 which produced an estimated 2600 barrels per day during its first three months. Several cycles of oil development have occurred within the country, and after gaining independence in 1991, Azerbaijan started to attract significant foreign investment.
On September 20th, 1994, after three and a half years of arduous negotiations, Azerbaijan and a Consortium of foreign oil companies signed a production sharing contract to develop Azerbaijan's Caspian oil reserves. This contract was later named the Contract of the Century due to its tremendous importance. Thirteen companies from eight countries participated in the signing of the Contract of the Century.
Azerbaijan's development as a supplier of petroleum to Europe continued to evolve with the national strategy to develop infrastructure including the BTC (Baku-Tbilisi-Ceyhan) pipeline, officially opened on July 13, 2006. The BTC pipeline transports crude 1,769 km from the offshore Azeri-Chirag-Guneshli oil fields in the Caspian Sea to the Mediterranean Sea. Possessing the capacity to transport more than one million barrels per day, this pipeline is the second longest in the world and pumps oil from the Sangachal Terminal near Baku (Azerbaijan), through Tbilisi (the Georgian Capital) to Ceyhan, a port on the south-eastern Mediterranean coast of Turkey.
Azerbaijan is estimated to hold proven reserves of 14.748 billion barrels (2 billion tonnes) of crude oil and condensate and an additional reserve of 2.55 trillion cubic meters (90 Tcf) of natural gas. (Source: SOCAR, State Oil Company of Azerbaijan Republic).
Wholly located within the South Caspian Sea basin, Azerbaijan is one of the region's most strategic energy export openings to the west, and an increasingly important supplier of natural gas to Europe via the country's existing and proposed pipeline network.
Companies working in Azerbaijan include, among others, these majors: BP, Statoil, SAIPEM, ExxonMobil, ITOCHU, Chevron, Petronas, TOTAL, LUKOIL, TPAO and GDF SUEZ.
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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward-looking statements and information concerning (i) the Company's goal of acquiring producing properties in Azerbaijan, (ii) the current and future production potential of the properties, (iii) the revenue associated with production and (iv) the pricing and profitability of oil and gas production. The forward-looking statements and information are based on certain key expectations and assumptions made by Zenith, including the ability to execute its strategy and realize its growth opportunities including its ability to finance and execute its plans. Although Zenith believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Zenith can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, Zenith being unable to finance or realize growth opportunities. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Zenith undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
CONTACT: For further information, please contact:
Jose Ramon Lopez Portillo
Chairman of the Board
CEO & President
Telephone: (587) 437-1984
Telefax: (403) 775-4474
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Source: Zenith Energy Ltd. via Globenewswire