TIDMZEN
RNS Number : 5005O
Zenith Energy Ltd
18 May 2018
May 18, 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")
Operational Update and Record Oil Production Revenue
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 operational progress in the Zardab
field.
Z-21 workover
As announced on May 8, 2018, Zenith has pulled out a mixed
string, comprised of 2 3/8" and 2 7/8" tubing, totalling 3,504
metres, as well as all of the 4 5" tubing, totalling 1,500 metres,
using its A-80 workover rig. In addition, in the period since the
aforementioned update, 111 metres of tubing from 3,504-3,615 metres
has been successfully cleaned out. Zenith has been unable to run
wash pipe beyond the depth of 3,615 metres to fish the remaining
166 metres of 2 3/8" tubing in the wellbore due to an unforeseen
change in the tubing diameter. The change in tubing diameter was
undocumented in any Z-21 well data.
The Company now intends to pull the entire tubing string out of
the well. It has been determined that a more powerful rig will be
required to perform the task. Once this is completed, Zenith's
field personnel plans to run in hole with a drill bit and clean out
the casing to the well's total depth, 3,982 metres, and
subsequently perform a production test.
The larger rig will also have the capacity to deepen well Z-21
beyond the Maykop formation into the Eocene formation by drilling
an additional 300 metres, extending the well's total depth to
approximately 4,270-4,300 metres. As announced on May 8, 2018, the
final decision on the deepening of Z-21 will depend on the outcomes
of the production tests to be performed once the casing has been
cleaned out to the well's current total depth. The Company will not
perform any drilling operations in Z-21 if a satisfactory rate of
production were to be achieved from the Maykop formation.
The primary reason for the evaluation of this possibility is the
proximity of Z-21 to well Z-3, 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.
Zenith confirms that it is currently in negotiations for the
contracting of a ZJ-30 150-ton workover rig to complete the Z-21
workover. An update will be provided when the rig has been
mobilised to the well location.
The Company also intends to use this rig for the workover of
Z-3, where historical records indicate 775 metres of tubing has
been left in the well, and for the completion of the Z-28 workover,
where 69 metres of tubing require milling out before the well is
cleaned out to total depth, 3,944 metres.
Electrical Submersible Pump Upgrade Programme (the "Upgrade
Programme")
As announced by Zenith on August 22, 2017, the Upgrade Programme
involves the installation of new electrical submersible pumps in
wells located in the Muradkhanli and Jafarli oilfields. The purpose
of the Upgrade Programme is to stabilise existing production from
the selected wells and lessen the likelihood of production outages
often resulting from older ESP technology. In addition, the Company
is also setting the pumps at an average depth of 2,500 meters to
achieve greater production from the wells. The previous ESP
technology limited the setting depths to 1,500 meters.
The Company confirms that its A-80 workover rig has left the
Z-21 well location to resume field rehabilitation activities in the
Muradkhanli and Jafarli fields. These operations include electrical
submersible pump maintenance work and the installation of a new
electrical submersible pump. Following this installation, the total
number of new electrical submersible pumps installed in the
Muradkhanli and Jafarli fields will be 12. Zenith's field team is
routinely monitoring production and it is expected that the number
of wells included in the upgrade programme will be increased
further.
Record Oil Production Revenue
The Company is pleased to confirm that its gross oil production
revenue has reached a new all-time record high since Zenith began
operations in Azerbaijan. The Company's subsidiary generated
revenue, gross of commissions and transportation expenses, of
approximately US$505,000 for its oil production during the month of
April 2018.
Mike Palmer, Chief Operating Officer, Zenith Aran, the Company's
Azerbaijan-based fully owned subsidiary, commented:
"We have achieved a number of key milestones using our own
equipment. This has allowed us to greatly reduce our operational
expenditure, and this is all the more positive when set against the
backdrop of the Company achieving record oil production revenue in
Azerbaijan.
The 150-ton workover rig we are looking to contract is
significantly more advanced and powerful than our A-80 rig. It will
enable us to increase our work rate, pull the entire tubing string,
and clean out the wellbore to TD in Z-21.
The ongoing geological study of Zardab has encouraged us to
greatly increase our efforts in this field and, accordingly, we
have decided to maximise the use of our resources in the area. The
new rig will play a key part in exploiting the big opportunities we
have at hand."
For further information please contact:
Zenith Energy Ltd.
Andrea Cattaneo
Chief Executive Officer
E-mail: info@zenithenergy.ca
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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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