March 17, 2022    

ZENITH ENERGY LTD.

("Zenith" or the "Company")

Financing Update

Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; OSE: ZENA), the listed international energy production and development company, is pleased to announce that it has entered into a US$6,000,000 unsecured convertible loan facility (the "Facility") with a consortium of institutional lenders (the"Lenders"), to provide additional funding for the Company's field development operations in Tunisia and potential near-term business development in the Republic of the Congo.

Highlights

The Facility includes an initial immediate advance of US$2,000,000 (the "Drawdown"). The Company has the right to draw down up to a total capital exposure of US$2,000,000 every 4 months from the Lenders.

Each Drawdown has a repayment term of 15 months, of which the first three months of repayment holiday, and the remaining twelve of equal principal instalments.

Zenith shall pay interest on the outstanding amount of the Facility at the rate of 9% per annum (the "Interest Rate").

Under the terms of the Facility, the Company has issued the Lenders with 92,094,691 share purchase warrants (the "Warrants") to subscribe for the equivalent number of common shares of no par value in the share capital of Zenith ("Common Shares") at a price of NOK 0.1458 per Common Share (equivalent to approximately £0.012) for subscription at any time, with a 24-month term from the date of issuance, and subject to the articles of the Company and the terms and conditions of the Facility.

During the term of the Note, the Lenders may, from time to time, elect to convert varying amounts of Principal and Interest of the Facility. Half of each Drawdown may be converted at 130% of the relevant Reference Price, and half at 150% of the relevant Reference Price, the Reference Price being the average of the 15 daily VWAPs, on the Euronext Growth Oslo, preceding each Drawdown. The Lenders have trading restrictions meaning they cannot sell more than 15% of monthly volume for the duration of the Facility.

No conversions will take place for the first 2 months following each relevant drawdown. Conversions are restricted to no more than 30% of each Drawdown for the first 4 months.

An application will be made for any Common Shares issued and allotted on exercise of the Warrants or Conversion to be admitted to the standard segment of the Financial Conduct Authority UK Official List and to trading on the Main Market for listed securities of the London Stock Exchange (the "Admission") and the Euronext Growth Oslo. The new Common Shares will rank pari passu in all respects with the existing common shares of the Company.

In accordance with the terms of the Facility, repayment of each Drawdown can be made in cash ("Cash Repayment") for a charge of 2.5% of the relevant Drawdown amount outstanding.

The Facility agreement includes normal warranties and default clauses.

Pledging of shares by CEO as third-party guarantor

The Chief Executive Officer & President of the Company, Mr. Andrea Cattaneo, has agreed to act as a third-party guarantor in support of the Company, in connection with the Facility. On March 16, 2022, Mr. Cattaneo pledged a total of 11,228,022 common shares in the capital of the Company, in which he has a direct beneficial interest.

Andrea Cattaneo, Chief Executive Officer, commented:

"We are pleased to have concluded this finacing to further reinforce our working capital position at a time of great activity on a number of fronts for the Company, both in terms of asset development and potential near-term asset acquisition.

In view of Zenith's upcoming planned sale of oil production in Tunisia, as well as other potential share price catalysts, we shall seek to avoid dilution taking place by repaying the Drawdown by way of cash payments, as well as settling other outstanding loan facilities in such a way that Zenith can continue to maximise the benefits of the current energy pricing climate to significantly improve its balance sheet.

I look forward to reporting on our progress in due course." 

Further Information:

Notes to Editors:                       

Zenith Energy Ltd. is an international oil and gas production company, listed on the London Stock Exchange (LSE:ZEN) and the Euronext Growth Market of the Oslo Stock Exchange (OSE:ZENA).

Zenith's development strategy is to identify and rapidly complete value-accretive hydrocarbon production opportunities in the oil & gas sector, specifically in Africa.

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Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

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