Zenith is definitely preparing the groundwork for a substantial increase in share price, but it is the groundwork and we still need to finish off a number of issues before the market will seriously re-appraise the company’s potential.

At the moment, the big advantage that Zenith has against most of our small-cap rivals is that we have existing production assets (Tunisia and Italy) that are making the company a very substantial amount of net revenue each year. By my calculations we should be generating approximately $17 million per annum in total ($12 million from Tunisia and $5 million from Italy). We also have the $5.2 million owed to the company by the Congolese SNPC and the ongoing multi-million dollar court-case against the French drilling company SMP which are both a legacy of AAOG’s

However, Zenith does have a one disadvantage compared to our small-cap peers in that we do not currently have a big exploration/development asset that could (in the medium-term) deliver the kind of company-changing revenues that will propel Zenith into being a mid-tier (£100 million plus market cap) oil company.

This is because the two potentially company changing assets that we potentially have on the books, Tilapia and Benin, are not signed off as being ours yet. Essentially, we are still waiting for both applications to be approved. As soon as the approvals for these land then the company will have 50% of a potential additional 5,000 bopd production from the two sites as well as the means to fund them (the Italian and Tunisian revenues).

Until ownership of these two fields is formally agreed then neither the market itself, nor many investors, will be convinced that they are going to happen – but once they do, then a market-wide re-rate will be quickly on the cards.

Obviously, Tilapia is a bit of a mystery. It never occurred to me when we got the approval as the preferred bidder back in December 2020 that we would still be waiting around in September 2022 for the formal approval. However, it would appear, as AC has said on more than once occasion, that the wheels of bureaucracy grind very slowly in Congo and as long as the company still thinks that things are progressing there then I guess we will get there eventually. I only hope that it is before the end of the year so we can still complete the drill in H1 2023.

Benin, I believe, is going to be granted at a very different pace to Tilapia. We know from the last investor conference call that Andrea said that “we are looking to acquire assets that can be closed quickly” and I do not believe that the company would have applied for the Benin license if they did not expect that it would meet this criteria.

Clearly things are progressing in the right direction towards Zenith significantly enhancing both it’s oil production levels and it’s overall market cap and, consequently, as I said at the beginning of this post, the groundwork is being laid for a substantial increase in share price. One key point to remember is that neither Benin nor Tilapia are exploration plays, for the first drills at least. We know that there is oil in place in both licenses and that in Benin it has previously flowed at high rates as well so the risk level on both licenses is almost as small as it can be when it comes to Oil and Gas shares.

Once we acquire one or both of the Benin or Tilapia exploration/development licenses then the foundations of the company will be complete and we will have both the assets that can massively change the company’s fortunes in just a couple of drills and the cash-flow from existing production that will be required to develop them. The jigsaw is almost complete. We jus need to put the last couple of pieces in place by getting the contracts on the T2 and Benin licenses signed and the share price will rocket.