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Zenith Energy and Anglo African Oil & Gas renegotiate Tilapia acquisition

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Oilfield Technology,

Zenith Energy Ltd. has entered into a conditional Deed of Variation to amend the terms of the consideration payable for the acquisition of an 80% interest in Anglo African Oil & Gas's (AAOG) fully owned subsidiary, Anglo African Oil & Gas Congo S.A.U., which has a 56% majority interest in, and is the operator of, the Tilapia oilfield in the Republic of the Congo.

Under the original terms of the Acquisition, Zenith was to pay a consideration of £1 million to AAOG, of which £500 000 was to be satisfied in cash to be paid in six equal monthly instalments with the first instalment due on completion and the last being six months later, and £500 000 was to be satisfied by the issue of ordinary shares in the share capital of Zenith to be issued at the volume weighted average price of a Zenith common share for a period of 14 trading days prior to completion.

The Deed of Variation provides that the Consideration shall be decreased by 20% to £800 000 to be paid in cash only and in ten equal monthly instalments with the first payment due on completion of the Acquisition. As a result of this amendment, Zenith will no longer issue any equity as part of the Consideration for the Acquisition.

Completion of the Acquisition remains conditional on certain regulatory approvals being obtained in the Republic of the Congo including consent of the Minister of Hydrocarbons which Zenith is expecting to achieve in due course.

The aforementioned revision to the amount of the Consideration and the mechanism by which it is to be settled is conditional only on the passing of a resolution to be put to shareholders of AAOG at a general meeting. Otherwise, the terms of the Acquisition, as detailed in Zenith’s announcement dated 27 December 2019, remain unchanged.

It should be noted that if the Resolution is not passed at the General Meeting of AAOG shareholders, the Deed of Variation will not come into effect. Consequently, the Acquisition will proceed under the original terms of the SPA announced to the market on 27 December 2019. ?

Andrea Cattaneo, CEO, commented:

“We are pleased to have successfully renegotiated the terms of the Acquisition with the achievement of a 20% reduction and the avoidance of any Zenith equity issuance as part of the Consideration. Recent world events, specifically the Covid-19 pandemic, have severely impacted the international financial markets, and, by consequence, also negatively affected the valuation of our share price. In view of the above developments, we have decreased the Consideration to reflect an adjusted asset valuation commensurate with the decline in oil prices and to include cash only consideration which shall be funded by means of our publicly announced €25 million EMTN Programme. I look forward to updating the market in due course regarding Completion.”

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