Zenith Energy Ltd Zenith purchases Chinese oilfield equipment (4749O)
21 8월 2017 - 3:00PM
UK Regulatory
TIDMZEN
RNS Number : 4749O
Zenith Energy Ltd
21 August 2017
August 21, 2017
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Zenith completes purchase of Chinese oilfield equipment
Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; TSX.V:
ZEE), the dual listed international oil & gas production
company operating the largest onshore oilfield in Azerbaijan, is
pleased to announce that the Company has signed a contract for the
procurement of oil production materials with Kerui Petroleum, a
leading Chinese manufacturer of oilfield equipment.
The total value of the procurement contract between Kerui
Petroleum and Zenith is USD 1,705,608 (approximately GBP1,325,000;
CAD$ 2,146,000). The terms of payment have been defined in
accordance with INCOTERMS 2010, and will take place within 1 year
of the contract's effective date. Zenith will pay 15 percent of the
total contract value in advance as deposit.
The procurement of this new equipment will enhance Zenith's
operational capabilities, enable the Company's personnel to work in
remote field locations, and replenish Zenith's stock of oil
production materials.
Delivery of these materials is expected within 90 days.
The materials procured include: a blowout preventer (BOP); a
full set of well control equipment; drill pipes to be used as a
work string; tubing to be used in the installation of new electric
submersible pumps and in old wells that have been returned to
production; new oilfield infrastructure; lighting equipment; and a
generator system to enable a workover rig to operate without the
need for nearby infrastructure across Zenith's 642.4 km(2) field
area.
The procurement of these materials evidences Zenith's preference
towards employing its own equipment and resources across its
operational activities. This ensures lower costs, direct
accountability, and comprehensive oversight of the Company's
operations. The Company's stock of oilfield equipment will also
avoid the risk of Zenith's operations being affected by third-party
delays in supplying equipment that the Company's systematic field
rehabilitation activities require on an immediate basis.
Zenith's CEO, Andrea Cattaneo, commented:
"I thank Kerui for the confidence they have shown in Zenith.
This is demonstrated by the fact that they have granted the Company
a supplier credit line of one year in our first contract.
At the same time, this also confirms the confidence our balance
sheet instils in counterparties. The new connections Zenith is
developing in China increasingly indicate that procurement
contracts of this type can, when necessary, be replicated for
larger equipment worth many times the value of the present
contract.
The Board of Directors recognises the existential dangers
presented by risky expenditure. There are many examples of junior
oil & gas companies that have voided any gains achieved by
their workover or drilling operations due to the sizeable levels of
debt incurred towards third-party oilfield service companies.
Owning our own equipment will enable the Company to have physical
assets with tangible value. Indeed, in the worst-case scenario of
there being an unsuccessful outcome in any given operation, the
Company will still retain unchanged operational capabilities that
will position Zenith for future success elsewhere, rather than
being left with a series of expensive bills to pay.
Similarly, operating our own equipment will be significantly
cheaper, ensures comprehensive operational oversight, provides
direct accountability and delivers unparalleled operational
flexibility. Zenith's operational team will have full knowledge of
the capabilities of its equipment, designing its operations from
the outset in consideration of the condition and type of equipment
that will be employed.
The use of debt, in this case supplier credit from a leading
Chinese manufacturer of oilfield equipment, is Zenith's preferred
form of funding and avoids the unnecessary dilution of the
Company's very undervalued equity. The Board of Directors is a
significant shareholder in the capital of the Company and wants to
minimise dilution whenever possible, being aligned to the interests
of shareholders."
For further information, please contact:
Zenith Energy Ltd.
Andrea Cattaneo
CEO & President
Email: info@zenithenergy.ca
Telephone: +1 (587) 315 9031
Telefax: +1 (403) 775 4474
Allenby Capital Limited - (Joint Broker)
Nick Harriss
Nick Athanas
Richard Short
Telephone: + 44 (0) 203 328 5656
Optiva Securities - (Joint Broker)
Christian Dennis
Telephone: + 44 (0) 203 137 1903
Abchurch (Financial PR/IR)
Tim Thompson
Telephone: +44 (0) 200 7398 7700
This information is provided by RNS
The company news service from the London Stock Exchange
END
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