Zenith Energy is in advanced negotiations to contract a drilling rig ahead of its planned drilling operations on the Tilapia oilfield located in the Republic of the Congo.
As previously reported, Zenith has agreed to acquire an 80 percent interest in Anglo African Oil & Congo (AAOG Congo), which has a 56 percent majority interest in, and is operator of the Tilapia oilfield in the Republic of the Congo, by way of a conditional share purchase agreement (SPA) with Anglo African Oil & Gas (AAOG).
The SPA remains conditional on certain regulatory requirements in the Republic of the Congo, including the consent of the Minister of Hydrocarbons.
The Tilapia field is located 1.8 kilometers offshore of the Republic of the Congo, located in the Lower Republic of the Congo Basin. It is drilled from an onshore location and has production and storage facilities onshore.
The company said on February 11, 2020, it had identified two suitable drilling rigs, both of which were in the proximity of the License, thereby significantly reducing mobilization costs, to perform planned drilling operations in the License.
In an update on Wednesday, the company confirmed that it was in advanced negotiations to contract one of the drilling rigs currently being used by an international oil major in a neighboring oilfield and expected to become available during the next 30 days.
Zenith intends to start drilling operations during April 2020 following the completion of transaction with AAOG.
Funding for planned drilling operations in Tilapia is expected to be provided by means of Zenith’s publicly announced EUR 25 million ($27.1M) EMTN program, as well as certain repayments due to AAOG Congo from Société Nationale des Pétroles du Congo (SNPC) as a result of past work performed on the license for a total amount of approximately $5.3 million.
In accordance with the terms of the SPA, Zenith will retain 80 percent of the amount upon completion.
Andrea Cattaneo, Chief Executive Officer, commented: “It is the board’s view that there is significant potential for near-term value creation in Zenith’s equity due to a number of business development activities we are pursuing, foremost amongst which is completion of the AAOG Congo acquisition and the planned drilling activities in the Mengo and Djeno horizons.
“Management and I remain fully focussed on achieving completion, having recently met extensively with all the relevant authorities in the Republic of the Congo.
“As evidenced by our advanced negotiations with a local drilling contractor, we intend to commence operational activities without delay once completion is achieved.”