May 8, 2018
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon publication of this announcement via a regulatory information service ("RIS"), the inside information contained in this document is now considered to be in the public domain.
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Zardab Operational Update
Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN; TSX.V: ZEE), the international oil & gas production company operating the largest onshore oilfield in Azerbaijan, is pleased to provide an update on its operations in the Zardab oilfield.
Geological Study
As announced on April 10, 2018, the Company has commissioned an extensive geological and technical study to optimise the selection of potential drilling locations in preparation for its development drilling programme in Azerbaijan. The study initially focused on the Muradkhanli and Jafarli oilfields where the Company's production wells are located. The structural re-interpretation of seismic acquisitions and well data from a number of wells drilled in these two fields has already enabled the identification of a new, previously unexplored, Mesozoic carbonate prospect running across the two fields.
In order to maximise the potential success of the Company's ongoing workover efforts, Zenith has further expanded its geological study to concentrate on wells Z-21, Z-28, Z-3, Z-14 and Z-4. The primary objectives of the study are the identification of high-value drilling locations and possible workovers in Zardab, as well as the verification of previously announced discrepancies between historical well data and the actual characteristics and condition of each well today.
The preliminary findings of the ongoing geological study have encouraged the Company to increase the scale of its operations in Zardab.
Update
The Company can today confirm that it has now successfully pulled out a mixed string, comprised of 2 3/8" and 2 7/8" tubing, totalling 3,504 metres and that it has successfully pulled all of the 4 5" tubing, totalling 1,500 metres. Zenith is currently running wash pipe with a notched collar to fish the remaining 166 metres of 2 3/8" remaining in the wellbore.
Once this is completed, Zenith's field personnel will run in hole with a drill bit and clean out the casing to the well's total depth, 3,982 metres, and perform a production test.
In addition, the aforementioned geological investigation and extended technical analysis, has led the Company to consider the possibility of deepening Z-21 beyond the Maykop formation into the Eocene fromation by drilling an additional 300 metres. This would extend the total depth of the well to approximately 4270-4300 metres. The final decision on the deepening of Z-21 is predicated on the outcome of the initial production test to be performed once the casing of the well has been cleaned out to the current total depth.
The primary reason for the evaluation of this possibility is the proximity of well Z-21 to well Z-3, which was spud in 1979 and drilled to a total depth of 4,300 metres into the Eocene and Upper Cretaceous formations. Z-3 tested approximately 2,900 barrels of mixed hydrocarbons per day before the wellbore collapsed. Historical records indicate 775 metres of 2 7/8" tubing has been left in the well. In the event that a satisfactory rate of production was achieved from the Maykop formation in well Z-21 during the initial production test, the Company may choose not to perform any drilling operations in Z-21 and instead begin the workover of Z-3.
Well Z-28
As announced on February 19, 2018, a coiled tubing intervention successfully cleaned out the well to a depth of 3,583 metres but was unable to clean out the tubing to total depth due to obstructions. As a result, the Company will mill out 69 metres of tubing from 3,577 to 3,646 metres and then clean out the well to total depth, 3,944 metres.
The Company will provide an update regarding the commencement of Z-28 milling activities once the Z-21 workover has been completed.
Wells Z-4 and Z-14
The Company's geological study has also examined wells Z-4 and Z-14.
There is no confirmed date regarding when Z-4 was spud. Records indicate that it was drilled to a total depth of 4,715 metres and tested at a rate of 250 barrels of fluid per day in 1981, 70 per cent of which was assessed to be oil.
Z-14 was spud in November 1988 and drilled to a total depth of 4,610 metres. There is no record that the well was ever tested. The Company's field personnel have recently located and dugout the Z-14 wellhead- which was previously buried- with the objective of creating an entry point into the well.
The study of Z-4 and Z-14 well data has led to the identification of numerous oil and gas shows which are currently being further investigated.
Mike Palmer, Chief Operating Officer, Zenith Aran, the Company's Azerbaijan-based fully owned subsidiary, commented:
"It has been a long journey to arrive at where we are at now. Our understanding of the field and its vast potential is increasing day by day. Z-21 has the potential to be the most significant operation for the Company since it began operations in Azerbaijan. We are working day and night to achieve the resounding success we all deserve. I look forward to reporting on our progress in due course."
For further information please contact:
Zenith Energy Ltd.
Andrea Cattaneo
Chief Executive Officer
E-mail: [email protected]
Tel: +1 (587) 315 9031
Vigo Communications - PR Adviser
Patrick d'Ancona
Chris McMahon
Kate Rogucheva
Tel: +44 (0) 20 7830 9700
Daniel Stewart & Company Plc - (Joint Broker)
Robert Emmet- Corporate Broking
Nikhil Varghese- Corporate Finance
Tel: + 44 (0) 207 776 6550
Optiva Securities - (Joint Broker)
Christian Dennis
Tel: + 44 (0) 203 137 1903
Allenby Capital Limited - (Financial Adviser)
Nick Harriss
Nick Athanas
Tel: + 44 (0) 203 328 5656
Notes to Editors:
Zenith Energy Ltd. is an international oil and gas production company, dual listed on the TSX Venture Exchange and London Stock Exchange.
The Company operates the largest onshore oilfield in Azerbaijan following the signing of a 25-year REDPSA, (Rehabilitation, Exploration, Development and Production Sharing Agreement), with SOCAR, State Oil Company of the Azerbaijan Republic, in 2016.
The Company's primary focus is the development of its Azerbaijan operations by leveraging its technical expertise and financial resources to maximise low-cost oil production via a systematic field rehabilitation programme intended to achieve significantly increased revenue. Zenith also operates, or has working interests in, a number of natural gas production concessions in Italy. The Company's Italian operations produce natural gas, natural gas condensate and electricity.
Zenith's development strategy is to identify and rapidly seize value-accretive hydrocarbon production opportunities in the onshore oil & gas sector. The Company's Board of Directors and senior management team have the experience and technical expertise to develop the Company successfully.
To find out more, visit www.zenithenergy.ca or follow Zenith on Twitter @zenithenergyltd
