Zenith Energy has announced that its newly created wholly owned subsidiary Zenith Energy Netherlands has signed a conditional sale and purchase agreement ('SPA') with KUFPEC (Tunisia), a 100% subsidiary of Kuwait Foreign Petroleum Exploration Company, a subsidiary of the State of Kuwait's national oil company, for the acquisition of a working interest in, inter alia, the North Kairouan permit and the Sidi El Kilani Concession, which contains the Sidi El Kilani oilfield ('SLK').
The Seller holds an undivided 22.5% interest in the Tunisian Acquisition, together with 25 Class B shares in Compagnie Tuniso-Koweito-Chinoise de Pétrole (CTKCP), the operator, representing 22.5% of the issued share capital of the company.
Zenith's partners in the Tunisian Acquisition will include the national oil company of Tunisia, Entreprise Tunisienne d'Activités Pétrolières (ETAP) with a 55% interest and CNPC, China National Petroleum Corporation with a 22.5 % interest.
The Seller has agreed to sell, assign and transfer to Zenith Netherlands the Tunisian Acquisition on the terms and subject to the conditions set out in the SPA.
The consideration payable by Zenith Netherlands under the SPA is US$500,000.
Completion of the Tunisian Acquisition is conditional on approval being granted by the Comité Consultatif des Hydrocarbures of the Republic of Tunisia in respect of the transfer of the Seller's right, title and interest in and under the SLK Concession to Zenith Netherlands.
As first announced on March 2, 2020, Zenith is currently in negotiations with an international oil major to sign an offtake agreement for the asset's future oil production in order to fund the Tunisian Acquisition and its development post-completion.
Tunisian Acquisition Highlights
- First discovered in 1989 by KUFPEC with commercial production commencing in 1993 and reported to be the second largest oilfield discovered in Tunisia since 1989.
- SLK reached a peak production of c. 20,000 boepd in 1995.
- Covers an area of 204 sq kms, located onshore, in the Pelagian Basin, Eastern Tunisia.
- SLK is one of the most productive fields in onshore Tunisia and currently produces, natural flow, at a rate of approx. 700 bopd.
- Generates gross annual revenues of approx. US$15 million.
- SLK produces 39 API gravity oil from a fractured carbonate reservoir (Abiod Formation), at a depth of c. 1,600 metres. The reservoir characteristics are enhanced by natural fractures and locally by dolomitisation.
- SLK Facilities include a permanent Gas Oil Separation Plant (GOSP) and a Pipeline of 125 km x 8" diameter, 22,000 bpd capacity from the field to La Skhira terminal.
Zenith expects to soon commission a new Competent Person's Report in compliance with Canadian securities laws, specifically the COGE Handbook and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, in order to obtain an updated reserves evaluation for the Tunisian Acquisition.
Andrea Cattaneo, Chief Executive Officer, commented:
'We are delighted to have executed the SPA with regards to the interest in the Sidi El Kilani Concession, a highly productive Tunisian onshore oil production and development asset, which has consistently outperformed even the most optimistic production forecasts since commercial production commenced in 1993.
The Board views Tunisia as a safe, democratic jurisdiction with a well-established history of successful oil and gas production activities for junior, independent companies such as Zenith. Upon completion of this deal, Zenith will have material production revenue for reinvestment in field development activities. Our strategic outlook is that oil prices will progressively strengthen in line with a gradual worldwide recovery in financial and industrial activity following the progressive alleviation of the devastating COVID-19 pandemic.
The current low oil price environment provides an unprecedented opportunity for companies wishing to expand countercyclically by securing large, revenue generating oil and gas production assets at advantageous terms. I am also delighted to have initiated a fruitful relationship with KUFPEC, a highly respected subsidiary of Kuwait's State Oil Company with operations across the world including Norway, and I look forward to exploring further cooperation opportunities in the future.'
Source: Zenith Energy