Investors Conference Call 22/02/2022

MarketGunsling
ZENA 22.02.2022 kl 16:26 4271

Zenith Investor Conference Call 22/02/2022

Zenith currently has production in Italy, Tunisia and Congo but we are also in official negotiations in Nigeria and many more that are “cooking” elsewhere.

Italy is the surprise for 2022 as gas producers have been suffering from low prices through from 2010 to 2019. Suddenly for geopolitical reasons we have had an increase in gas price and the price has continued to sky-rocket as there is a shortage of gas and the lack of supply has boosted gas to this level.

Zenith have always believed in their Italian gas operations and we believe that we are in a new era of gas and there may not be as much of this around as we need. Ther is now a ministerial movement in Italy that will help bureaucratic processes to be speeded up and make gas production easier. We know that we have to take official promises with a pinch of salt but it does look like the situation will help us grow our production and acquire new assets.

Our existing gas production that was never traditionally mentioned by investors now delivered a lot pf profit and we are looking at acquiring more gas assets in Italy or neighbouring Europe.

In Tunisia we have made great advances in 2020 and 2021 when we completed the acquisition of two companies quite rapidly (Ecumed) and then we were able to complete on Nov 17th the acquisition of 22.5% of SLK and we are still targeting the acquisition of KUFPSC’s 22.5% stake also. This shows our ability to grab the opportunities that come from majors and second-tier majors to abandon their overseas assets. The supermajors want to get away from any producing field that is not vital for their cashflow. In principle this means all the fields in Africa as the super-fields are all offshore.

Zenith has many other negotiations going on in Africa which have not reached announceable stage yet. However, we are looking at trying to acquire assets that can be closed quickly. Our African experience started in 2019 when we acquired AAOG Congo from AAOG. After 2 years we are still waiting but we are still supremely confident that we will complete this transaction. It has taken longer than has been expected but the consolation on this is we can be awarded with more than just Tilapia. Tilapia is a great field that is very affordable and it should only cost $5 million to get production of 5,000 (AAOG said). We are slightly more more cautious in our predictions but still expect production in the thousands.

In Tunisa we are moving from exploration to production. With Ezzaouia we have a number of projects that we cannot announce yet but we hope to announce the development plans in a few weeks and this should hopefully add 1,000 of production only in Ezzaouia.

Robanna was the first field that we worked on and its current capacity is 250-300 bopd but the field has not been maintained for the last ten years so there is a lot of work to do but we only bought Robanna and El Bibane for $100.

Rob-1 well we are looking to repair the casing at the moment and we are also preparing to drill Robanna 3 this is analogous to a competitors well which has always done 250-300 bood.

El Bibane is our first experience offshore and we are currently just producing condensate.

The blend of oil that we produce is sold every 9 months and we will be selling our next export cargo at the beginning of April.

Sidi El Kilani is a very famous field and it still produces naturally with very little artificial stimulus. KUFPEC and CNPC found SLK too small for them to be interested in so there is plenty of development potential.

Production in Tunisia is perfectly located to export our crude oil to Italy.

There are also possibly other acquisitions in Tunisia but our initial strike took all of the small and easily available assets and so we prefer to focus in other jurisdictions where we can complete deals more quickly.

I know that sometimes our shareholders are frustrated with how long it takes between talking about a deal and then completing it but in Africa time is very difficult and there is nobody about (our size) who is completing transactions quicker than us. Zenith is a very aggressive company but we do things above board and so we are not worried about falling foul of authorities. This means that we cannot speed up African bureaucracy but our solution is to have multi-pronged deals in process so when one is stalled then others are in progress.

I am very confident in the success of our ongoing transactions or I would not have bought 40 million shares the other month. Slide 13 show what we are up to but we also have the court case vs the SNP and the $5.7 million owned by the SNPC which is not contested.

In Tunisia we are about to sell 114000 barrels of oil and are about the drill Rob 3 as well as drilling two new wells in Ezzaouia.


Now onto question which may clarify anything I have forgotten.
MarketGunsling
22.02.2022 kl 16:28 4258

Now onto question which may clarify anything I have forgotten.

Questions

1. Congo – how close are we to getting approval for the T2 license?

This is difficult to answer if you do not understand African bureaucracy. We are in a very advanced stage but in Africa this still means that the minister can go to Opec conferences for two month and other officers are sick or not working and so there are cultural reasons that delay our closing of the transaction. The winds are blowing in our favour and everybody is convinced we deserve this field, but we have to wait a little longer.

2. When are you planning to go to Congo?

In the next week.

3. If Zenith is awarded T2 – how long will it be before operational/drilling activities can begin?

6 months from the signing of the license.

4. Why are big companies leaving Tunisia if there is still so much potential in these fields?

Oil companies are generatllly leaving medium size countries and fields and are only focusing on huge fields (usually offshore) which deliver their cashflow. Getting rid of their smaller fields allows them to say that they are getting outof “bad” fossil fuels but it gives opportunities to companies like us. We can therefore do quick transactions with the majors and don’t have to go through governments, We are also an operatior and are recognised as such by 5 countries and majors and ministers will not allow the purchase of these marginal fields by somebody who is not an operatior.

5. Nov 2021 investor call mentioned negotiations for new assets in Tunisia,. How are these processing?

We are still negotiating on a number of deals but with oil prices as they now are these acquisitions are getting mor expensive and so we have lost a number of these deals dues to a raising in asking price. In Tunisia we are having two negotiations which we hope to complete in 2022.

6. El Bibane – is there a timeline for the shut-in El Bibane 3 well?

El Bibane is 100% controlled by us and so ew do not need to get their official approval like we do for Ezzaouia. In Robanna we can guarantee that we will do the remidial work and Rob1 and drill Rob3. In the case of El Bibane we are examining the re-ntry of a well that has the potential of producing 600 bopd.

7. Rob1 – what is the plan and when will the remedial work begin?

Imminently there will be some operational development and we will make an announcement

8. Will the SLK transaction be done in the same way as the CNPC one?

The legal fashion will be identical and we want to increase production there to thousands of barrels a day via artificial listing.

9. OML141 March 1st expirty and court case. What will Zenith do if it is not sorted and can Zenith walk away ?

If we want we can walk away today. We have no obligation. However, it is very strange and with an element of malice that the court ruling is set at the same day of our expiry. We could get an extension on the option with NHNL if we wanted but we are wary of getting stuck in another Tilapia.

We are already in negotiation of 5-6 Nigerian deals and the appeal of OML141 was quick production and staggered payment. We understand that retail investors don’t want long-drawn out negotiations and we are always looking at speed of executions without bureaucratic complications (transactions between private companies) and that can be brought to productions quickly. However at the same time this is Africa .

For example Baraccuda would have been perfect if it was not for the malicious court case and so we could have completed the transaction in a matter of hours were it not for the court case. Note that this is not the only opportunity that we have and we have many many good opportunities.


10. What is your prediction on oil prices in the next few months and how does this affect Zenith from an equity point of view?

Many oil price specialists have said that a full invasion of Ukraine would see the oil price above $120. Remember that there has not been much investment in oil over the last 18 months and Covid being over will increase demand. We are very profitable at the current level. I am disappointed that our share price has not increased but our share price is driven by news. WE want to get institutional investors to be brought on board in both London and Norway who will see the potential long-term?

11. Is Zenith more profitable than any time in its history – Italian profits, price of oil and less equity raising. Is the company more profitable now than at any stage in its history?

Yes, absolutely. We have repaid most of our debt, have very profitable daily operations and have a trend to complete acquisitions. We are in a good position in Africa where there are more fields for sale than there people who are eligible to buy.

12. Does the company have any plan to initiate a buy-back programme to reduce the number of shares in issued?

The BoD is meeting in 3 weeks to discuss initiating a buyback program.

13. July 2021 AC mentioned that they company was looking for big assets that might enable the company to increase 10-15 times in size – 2022?

At the moment we are in to negotiations of this size. They are not yet at an annoucneable stage but we have developed new avenues in new countries that were not previously knows.





14. Where do you see Zenith at the end of 2022?

a. In production of in excess of 3,000 bopd (1 million per annum)
b. Completed one of the supernational negotiations that we are doing in Africa which will allow us to raise money without issuing equity (presumably he is talking about debt here). Ou r focus is now on selling oil and minimal dilution with the board considering a buy-back programe. We printed equity in the pandemic as this
i. Local lending by local banks in countries
ii. Supernational lending – African development back
iii. Pre-sales of oil and also progressing the bonds where we have always paid unlike some of our peers and so investors wish to reinvest in the Zenith bonds.

jantt
22.02.2022 kl 16:37 4208

nr 12 buy-back ville være dejligt hvis det begyndte snart.
Hvis de køber nok tilbage burde det da give noget på kursen
TheLondonOiler
22.02.2022 kl 17:28 4086

thanks for taking the time for such a detailed write up. It looks like AC has some concrete plans for huge success for us shareholders, I truly believe 2022 is the year where value will be shown significantly. Very excited for both the short and long term future.
castro1
22.02.2022 kl 19:58 3813

En nydelig rapport som bekrefter at det bare er å legge beina på bordet og vente på en serie av gode meldinger. Føler meg ekstremt komfortabel nå.
castro1
22.02.2022 kl 20:24 3714

Sykt spennende uttalelse:
13. July 2021 AC mentioned that they company was looking for big assets that might enable the company to increase 10-15 times in size – 2022?

At the moment we are in to negotiations of this size. They are not yet at an annoucneable stage but we have developed new avenues in new countries that were not previously knows.
Joffe3
22.02.2022 kl 20:59 3624

Alle Sammen!

Fantastisk god følelse nå,da er det bare å lene seg tilbake og se pensjonen vokse.

Joffe 3.
Slettet bruker
22.02.2022 kl 21:12 3588

Skal vi ta tak i aksjen i morgen! Sende ZENA inn på vinnerlisten!
takumi
22.02.2022 kl 21:35 3514

Nice work MG!

Det er tydelig at her foregår det ting i kulissene og forhåpentligvis vil det løsne snart. Men Afrikatid er noe eget og vi må nok bare smøre oss med tålmodighet fram til meldingene vi venter på kommer. AC virker ihvertfall å være relativt komfortabel så jeg mistenker at bunnen er satt for denne gang!
Herman*
22.02.2022 kl 21:51 3459

Et tilbakekjøpsprogram virker ekstremt prematurt. Skal de låne penger til å kjøpe aksjer? De trenger jo å bruke sin positive cashflow på å finansiere utviklingsaktiviteter. Et tilbakekjøpsprogram nå er ikke bærekraftig, men i løpet av 12-24 mnd vil det være en smart løsning om selskapet er veldig underpriset.

Ellers bra at de dropper prosjektet i Nigeria, ikke fullt så bra at oljeprisen har gjort det vanskelig å lande avtaler i Tunisia.

Tilapia: Tja, høres rart ut. «Alle» mener Zenith fortjener Tilapia, men ingen har tid til å sluttføre prosessen. Jaja, umulig å vite om vi snakker om to uker eller 12 mnd…

Zenith trenger å øke produksjonen, så kommer aksjekursen automatisk.
Liverbirds
22.02.2022 kl 21:52 3452

Har kjøpt litt mer de siste dagene før telefonkonferansen.
Slettet bruker
22.02.2022 kl 22:02 3410

De har ikke gitt opp Nigeria! Men de kan tre ut av opsjonen uten kostnad.
Herman*
22.02.2022 kl 22:09 3375

«We could get an extension on the option with NHNL if we wanted but we are wary of getting stuck in another Tilapia.»
Slettet bruker
22.02.2022 kl 22:14 3353

Høye priser på strøm og olje gir noen ekstra slanter i kassa.
Selv ett minimalt tilbake kjøp av aksjer vil være positivt ....



Slettet bruker
22.02.2022 kl 22:20 3317

Vi får avvente hva retten sier 01.03.
Selskapet som mener de har eierskap er vel nær konkurs også?
De har ikke betalt noe og ikke holdt avtalene.

Herman*
22.02.2022 kl 22:24 3290

Poenget er at kursen vil falle tilbake når støttekjøpene slutter så fremt de ikke klarer å øke produksjonen betydelig. Og for å øke produksjonen må de jo investere en del cash. Nå bør en først og fremst se på produksjonsutviklingen i Tunisia, så kommer nye lisenser når de kommer.
Herman*
22.02.2022 kl 22:26 3276

Retten skal ikke si noe 1.3, men rettssaken begynner første uka i mars. Denne kan dra ut i det uendelige-ref at de ikke ønsker en «ny Tilapia». De kan dog komme til et forlik, da vil jo saken stille seg annerledes.
Hektor
22.02.2022 kl 22:40 3212

Da er det bare å sette opp nakkestøtte i bilen den dagen meldingen kommer kl 0800, dette var fantastisk å høre, spennende tider også neste uke når de reiser til Congo.
Slettet bruker
22.02.2022 kl 22:43 3191

En avtale som kan øke selskapets størrelse 10-15 ganger! Hva kan det være ?
Viking_I
22.02.2022 kl 23:06 3127

Zenith can buyback 200 to 400 million shares from market before tilapia announcement and after announcement use it as payment for further aquisitions.
Herman*
22.02.2022 kl 23:24 3075

And how will they finance development activities in Tunisia and aquisitions prior to the finalization of Tilapia?
Redigert 22.02.2022 kl 23:33 Du må logge inn for å svare
Slettet bruker
23.02.2022 kl 08:38 2766

Nå må alle som har ledig kapital laste opp!!!

Hva gjøre vi på 9 øre?????


En avtale som kan øke selskapets størrelse 10-15 ganger er ventet.
Viking_I
23.02.2022 kl 08:50 2707

They already collected money for that please go through the RNS in Nov and Dec.
https://newsweb.oslobors.no/message/545694 - £3 million
https://newsweb.oslobors.no/message/548572 - EUR 3 million
by selling oil in March end they will get - $10 million

Redigert 23.02.2022 kl 08:51 Du må logge inn for å svare
Viking_I
23.02.2022 kl 08:58 2658

As per Norskbull news is on the way
https://www.norskbulls.com/SignalPage.aspx?lang=en&Ticker=ZENA.OL
Do not sell until 2nd March. (for small investor, only suggestions).
Redigert 23.02.2022 kl 09:13 Du må logge inn for å svare
Hektor
23.02.2022 kl 09:25 2567

In Tunisia we are about to sell 114000 barrels of oil - Hørte jeg riktig i går på IC skulle det skje tidlig neste uke eller nærmere sagt prisen settes og eksport 31 mars. Vi får nok en kursoppgang i forventninger her på kort sikt.
Redigert 23.02.2022 kl 09:35 Du må logge inn for å svare
Viking_I
23.02.2022 kl 09:37 2514

i am waiting for ROB-1(10% to 15% upside any moment), SLK (20% upside from here), Congo (100% to 150% upside from here ) and Nigeria (100% to 150% upside from here) update from next week also Cancellation of 40% warrants up to tomorrow.
share buyback will trigger upto 50% upside from here (if bought form open market) will be decided in next 3 week by board of directors meeting.
Redigert 23.02.2022 kl 09:42 Du må logge inn for å svare
Tricky
23.02.2022 kl 09:39 2508

From the presentation it's mentioned sales before end of March, I.e. the profit will be capture in the annual report. Which will then will show a very good result and EQ. Should justify a better share price than now as I see it, no matter TP II or other triggers reach before that time.
Redigert 23.02.2022 kl 09:50 Du må logge inn for å svare
Liverbirds
23.02.2022 kl 10:31 2375

Er det noen her som virkelig ønsker å tjene penger på Zenith?

Det føles virkelig ikke som det er det!
C-Eiken
23.02.2022 kl 10:32 2367

Hvis man daytrader kan man være heldig at hive 5-10% dagligt på den, det er da en vis form for penge ?
TheLondonOiler
23.02.2022 kl 12:02 2223

Very silly to day trade with what's to come and risk a big rise. Personally I believe on the Tilapia news alone we should get double the share price. With all that's yet to come from oil production increase with sales at peak prices, as well as electricity sales in Italy and new projects acquired it would be very silly to day trade and miss out on what's yet to come.
Viking_I
23.02.2022 kl 12:26 2150

Unless and until we Zenith will not start buyback price will come down with day traders. Zenith should start from next week 10 million per day for next 1 month if they want positive effect of buyback program.
Pessimist1
23.02.2022 kl 14:23 1979

We are in total disagreement here, a buyback would need approval from both the board and the shareholders. That being said it is not normal for a company that raises capital to spend the money on buying back shares. Buying back shares is a clear indication that we dont have more room to grow and have excess capital, that is not the case for Zenith. The negative shareprice development is due to several factors, it is not only the fact that there are a lot of shares total that makes the shareprice slide downwards. The fact of the matter is that you can make quite a bit of money placing your capital in more safe investments in the oil industry, this simple fact makes capital flow from less risky investments to larger investmets. Coupled with high inflation the market does not want to place capital in companies where financing might be required. Both you and I know that Zenith is on solid financial footing, but the people not following the company to closley need only to look at the statements in the last couple of years and see the volume of placements, this also makes it hard to find capital for Zenith.

The only thing that will make the company increase in value is of course substansial news, and news that make the risk of raises go out the window. In four weeks time that will no longer be a problem when the oil sales happen I think most of the risk in terms of financing our growth will be non exciting. This will get the attention of shareholders.

But a buyback wont happen before a meeting with the board and if they have capital to develop all the fields in their portfolio and dont need cash to grow further.
Viking_I
23.02.2022 kl 14:32 1948

They already collected cash for development in Nov and Dce. Now due to oil price they cant make more acquisition in near future with oil sale money they can buy back shares 200 to 400 million with throwaway price. After all development of field and tilapia price will increase to 3 to 4 times and same shares they can use for raising capital for new field.
C-Eiken
23.02.2022 kl 14:37 1930

Wrong, some fields might be up for sale due to high maintinance cost and shutdown production. Maintinance might quick cost $1m which many smaller owners wont have due to recent low oil prices, so fields might be at a stand-still until someone is willing to take the risk and repair them.

If you don't produce any oil, you can't earn money for repair or maintiance, and for past years oil price have been really low, and owners might only been able to pay the bills with no money in the bank.
Pessimist1
23.02.2022 kl 14:45 1908

I agree it is a throwaway price, but it is quite clear you do not have a degree in economics. What you are saying is theoretically true, you could buy your own shares and sell them at a higher price to raise capital. But what you are suggesting would blow the risk profile out the window. What you are suggesting is a bad idea for several reasons.

Market uncertainty, the current climate on the stock exchanges and the financial markets around the world leads capital to flow from risky investments to more safe investments. What you are suggesting is clearly saying that there will be enough liquidity in the stock to be able to sell in an instant if you need cash quickly. This is not the case.

Holding large amount of securities will potentially have consequences for the credit rating because you open yourself up to a higher shift in company assets.

This is an oil company not a financial institution. Can you name a couple of companies who are currently using your model or have used it in the past? Because if this is such a brilliant solution then everyone would be utilizing it.

The fact of the matter is that when you are a junior oil operator the focus should be on developing the fields, increasing production, having cash at hand if anything interesting happens. Playing the stockmarket should not be the primary focus of the company.

Lets take an example, I get debt financing of 100 mill, you get debt financing of 100 million. You need 20 million cash at all times to not be in vialation of you loan agreement. You decide to take the 20 million you have in cash and spend 50 percent of it on shares in your own company. Leaving yourself with ten million in cash. I decide to keep the cash in an account. Lets say a black swan occurs and the general market drops, your stock is not very liquid so the shareprice plumits 30 percent, then you are in breach of your lending agreement.

If the company has excess cash the normal practice is to either pay a dividend or buyback shares and delete them. This is normally only a problem when the company is over capitalised.

I rest my case, I dont think buybacks will happen anytime soon, I dont think you will change your position on it. So in reality no point in discussing it.
Viking_I
23.02.2022 kl 14:48 1897

If it is so simple to make maintenance then, EBB-3 may start producing oil until now. No one will sell oilfield cheaply in current oil price scenario. Only solution to throw out this senseless day traders and robot traders with buyback program for next one month and make company investor friendly with less shares in market.
Pessimist1
23.02.2022 kl 14:53 1880

But like you know, and like he stated in the IC a buyback program will not happen before there is a board meeting, which will not happen yet. So dont spend to much time talking about things that will not happen.