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Zenith Energy in negotiations to contract drilling rig in the Congo

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Oilfield Technology,

Zenith Energy Ltd. is in advanced negotiations to contract a drilling rig to perform planned drilling operations in the Republic of the Congo.

Zenith has agreed to acquire an 80% interest in Anglo African Oil & Congo S.A.U (AAOG Congo), which has a 56% majority interest in, and is operator of, the Tilapia oilfield in the Republic of the Congo, by way of a conditional share purchase agreement (SPA) with AIM quoted Anglo African Oil & Gas plc (AAOG).

The SPA remains conditional on certain regulatory requirements in the Republic of the Congo, including consent of the Minister of Hydrocarbons.

As announced on 11 February 2020, the company has identified two suitable drilling rigs, both of which are in the proximity of the license, thereby significantly reducing mobilisation costs, to perform planned drilling operations in the license.

The company can confirm that it is in advanced negotiations to contract one of the aforementioned drilling rigs, which is currently being used by an international oil major in a neighbouring oilfield and is expected to become available during the next 30 days.

Zenith intends to commence drilling operations during April 2020 following completion.

Funding for planned drilling operations in Tilapia is expected to be provided by means of Zenith's publicly announced €25 million EMTN programme, as well as certain repayments due to AAOG Congo from Société Nationale des Pétroles du Congo (SNPC) as a result of past work performed on the license for a total amount of approximately US$5.3 million. In accordance with the terms of the SPA, Zenith will retain 80% of the aforementioned amount upon completion.

Andrea Cattaneo, CEO, commented: "It is the Board's view that there is significant potential for near-term value creation in Zenith's equity due to a number of business development activities we are pursuing, foremost amongst which is completion of the AAOG Congo acquisition and the planned drilling activities in the Mengo and Djeno horizons.

Management and I remain fully focussed on achieving completion, having recently met extensively with all the relevant authorities in the Republic of the Congo.

As evidenced by our advanced negotiations with a local drilling contractor, we intend to commence operational activities without delay once completion is achieved."

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