January 26, 2016 - 9:48 AM EST
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Zenith Establishes Zenith Aran Oil Company Ltd. to Operate in Azerbaijan

(via Thenewswire.ca)



Calgary, Alberta / TheNewswire / January 26, 2016 / Zenith Energy Ltd. ("Zenith" or the "Company") (TSX VENTURE: ZEE) is pleased to announce that, further to the announcement made by the Company on October 27th, 2016 and a similar press release by SOCAR, the State Oil Company of the Republic of Azerbaijan on October 30th, 2016, Zenith has formed a wholly-owned subsidiary, Zenith Aran Oil Company Ltd, a British Virgin Island company with permanent and stable branch in Azerbaijan.

Similar to the Company's activity in other countries, Zenith incorporated an element of a local name, in this case "Aran", to reflect the central Azerbaijan region where its three producing fields are located. This local identification is considered important to management, and indicative of both Zenith's long term commitment to Azerbaijan and plan to exclusively focus on the recently acquired fields. Having a wholly-owned subsidiary fully dedicated to this project is a strategy that has proven to attract significant local expertise and enabled Zenith 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.

Zenith Aran Oil Company Ltd. will continue to operate from the parent company's branch office Azure Plaza, in Baku, the capital of Azerbaijan. This corporate office is a two and a half hour drive from the operational office located in the Aran region, from where Zenith's producing fields are managed.

The Company and its advisors are currently focusing on coordinating the official handover of operations to Zenith Aran Oil Company. In cooperation with the various Ministries and local entities, Zenith has made significant progress in dealing with matters not only pertaining to production and future development, but items dealing with human resources including taxation, employment and labour and environmental accounting.

Zenith's three Azerbaijan fields have a compounded acreage of 642.4 square kilometres, and are currently producing ~350 barrels of crude oil per day, although they have historically produced larger volumes (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 and has the capacity to be extended for an additional 5 year period.

Further to the Company's acknowledgment that it has retained an internationally recognized independent reservoir engineering firm to prepare a 51-101 National Instrument report, Zenith anticipates that the evaluation of the remaining reserves and the expected productivity potential of the three fields will be available for release shortly.

About Azerbaijan

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 historically. Since gaining independence in 1991, Azerbaijan has attracted significant new foreign investment.

Azerbaijan's development as a supplier of petroleum to Europe continues 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.

SOCAR, the State Oil Company of Azerbaijan Republic, has estimated Azerbaijan's proven recoverable crude oil reserves are 2 billion tonnes. During 2012, the country produced approximately 879,800 barrels per day with a reported domestic consumption at 85,000 barrels per day, making Azerbaijan among the 20 largest exporters in the world. Wholly located within the South Caspian Sea basin, Azerbaijan is one of the region's most strategic export openings to the west, and an increasingly important supplier of natural gas to Europe via the country's existing and proposed pipeline network.

SOCAR and its subsidiaries are parties in 18 Production Sharing Agreements (PSA) with 25 companies representing 15 countries. ACG PSA is the largest of Production Sharing Agreements active in the oil and gas setor of Azerbaijan. This project has been created to develop Azeri-Chirag-Gunashly oil fields having huge hydrocarbon reserves and includes such oil companies as BP, Statoil, Exxon Mobil, TPAO, ITOCU, Amerada Hess, Chevron-TEXACO and INPEX. The project plays a vital role in Azerbaian's economy.

The second largest PSA is Shah-daniz project and currently, production rate of natural gas and condensate from that field is constantly growing. BP, Petronas, Total, LUKOIL, NIKO and TPAO oil companies are involved in this project.

Other projects active in the oil-gas sector of Azerbaijan are CNODC and Fortune in Kursangi and Garabaghly oil fields, Global Energy in Mishovdagh and Kamaladdin oil fields, AZEN in Binagady, Girmaky, Chakhnaglar, Sulutepe, Masazir, Fatmayi, Shabandagh, and Sianshor oil fields, Rafi oil in Surakhany oil field and Apsheron Investments in Zykh and Hovsan oil fields based on PSA.

French Total company is the operator of Absheron field and its partners in the project are SOCAR and French Gas De France Suez.

Subject to the key commercial principles of PSA concluded on Nakhchivan structure, RWE company continues exploration of the geological data proivded by SOCAR

About Zenith Energy Ltd.

Zenith focuses on near term to acquire and further develop proven onshore oil and gas fields where production has declined over time, but is both capable of growing again with new investment and that can be further optimized with engineering and technical experience.

Zenith's management and directors have extensive international and governmental experience and possess the technical knowledge to execute this strategy and believe that the application of certain technologies and alternative procedures may substantially improve the current marginal productivity of these fields. Zenith's acquisition costs are further minimized by a strategy of reinvesting a portion of future cash flows back to remediation and capital improvements typically forgone on older fields.

Management is particularly interested in growing corporate profitability in tandem with gross revenues, so the ability to leverage to Brent pricing with this acquisition is complementary to our premium natural gas pricing from Italian operations and the stability of oil revenue generated in Argentina.

Andrea Cattaneo, President and CEO of Zenith Energy comments, "We are truly pleased with the continued advances in Azerbaijan and ability to establish a domestic operating entity. To date, Zenith's management has meticulously studied the operating environment and investment climate of the Azerbaijan petroleum sector, identified several opportunities and finalized negotiations on three highly desirable onshore fields. Zenith's Azerbaijan acquisition is a world class asset which will greatly benefit all stakeholders as we develop the resources. Further, this concession of onshore production is consistent with our objective to acquire compelling investments in economically viable basins that may be enhanced further with economies of scale."

While oil majors continue to pursue the development of new, high impact offshore fields, historical onshore fields that produced using conventional means remain highly attractive. Similar to the "marginal" fields in other prolific oil producing nations, these fields may benefit with the additional expertise of the committed management and technical team of Zenith Energy. The Company is confident in its overall strategy to acquire such assets and to implement alternative technologies for secondary and tertiary recovery. As part of its strategy, Zenith expects to use a portion of the cash flow it generates for remediation activities as part of its corporate commitment to improving the working conditions and environment where it operates. As well, given Zenith's prior acquisition history and successful operations in Argentina and Italy, the Company expects that it will be able to implement best practices to improve both the economics and environmental state of these fields.

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

Forward-Looking Statements

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 raise financing needed to 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 obtain additional financing or other resources to realize its 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.

For further information, please contact:

Jose Ramon Lopez Portillo Andrea Cattaneo

Chairman of the Board CEO & President

Email: info@zenithenergy.org

Telephone: (587) 437-1984

Telefax: (403) 775-4474

This press release is not to be distributed to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law.

Copyright (c) 2016 TheNewswire - All rights reserved.

Source: TheNewsWire (January 26, 2016 - 9:48 AM EST)

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