3rd Quarter Results

RNS Number : 0713F
Zenith Energy Ltd
16 February 2018
 

February 16, 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")

 

Filing of Quarterly Results 

 

Zenith Energy Ltd., ("Zenith" or the "Company"), (LSEZENTSX.VZEE), the dual listed international oil & gas production company operating the largest onshore oilfield in Azerbaijan, is pleased to announce the filing of its consolidated quarterly results for the three and nine months ended December 31, 2017.

 

In accordance with Canadian securities laws, the Company's quarterly results were filed on SEDAR on February 15, 2018.

 

Highlights for the three and nine months ended December 31, 2017 include the following:

 

·   During the three and nine months ended December 31, 2017, the Company produced 22,317 and 70,271 barrels of oil from its assets in Azerbaijan. 

 

Production from a number of the Company's wells in Azerbaijan was suspended during Q3 as a result of field rehabilitation operations, specifically the installation of electrical submersible pumps and well interventions. Daily production from the field was also affected as a result of the Company receiving faulty chemical to treat its oil production from an international chemical supplier. Zenith is now seeking to have the faulty chemical replaced and has ordered new chemical supplies to avoid similar problems being incurred in future.

·   During the three and nine months ended December 31, 2017, the Company sold 3,578 and 13,199 mcf of natural gas production from its Italian assets. 

·   During the three and nine months ended December 31, 2017, the Company sold 295 and 782 barrels of condensate production from its Italian assets.

·   During the three and nine months ended December 31, 2017, the Company sold 1,922 and 7,185 MWh of electricity production from its Italian assets. 

·  On November 1, 2017 the Company announced that it had signed a commitment letter with Olieum Services WLL ("Olieum"), an integrated oilfield services and equipment joint venture based in Bahrain, for the procurement of a Genesis BQ500 onshore drilling rig. Olieum has worked closely with the Company to structure a unique lease arrangement that aligns Zenith's targeted growth plans and cash flows with its future equipment requirements.

The Genesis BQ500 is the latest generation, automated onshore hydraulic drilling rig to be manufactured by B Robotics W S.R.L, a founding partner in Olieum, and a leading Italian oil and gas innovation company specialising in the design and manufacture of advanced oil and gas drilling equipment. The rig is expected to deliver enhanced automation, efficiency and safety to the Company's drilling operations, whilst driving down costs and time-to-production. This has largely been achieved through extensive research and development in modular rig design, and in key components including the monkey board, slips, lay-up and down machine, pipe containers, roughneck, subs and bits loader, and all the working floor tools.

Manufacturing of the Genesis BQ500 is scheduled to begin upon the fulfilment of the preliminary conditions detailed in the commitment letter. This is expected to take place in early 2018, with delivery anticipated in late 2018.

·   The Company recorded revenues of CAD$1,620k for its production during the three months ended December 31, 2017.

·   The Company incurred CAD$3,418k of capital expenditures in the nine months ended December 31, 2017, primarily resulting from the field rehabilitation programme underway in Azerbaijan.

  

Zenith Chief Executive Officer, Andrea Cattaneo, commented: 

 

"Although we have faced some operational challenges in recent months, I believe these are now being successfully addressed and the Company has a very exciting development journey ahead, coupled with potential transactions to enhance the portfolio and broaden the risk profile of our assets. Accordingly, I look forward to announcing increased production revenue in the next set of quarterly results as we improve well performance and look to grow our daily production levels."

  

Consolidated Statement of Comprehensive Income

 

Continuing operations

 

Nine months ended

 

 

31 December 2017

31 December 2016

 

 

Unaudited

Unaudited

 

Note

CAD $'000

CAD $'000

Revenue

22

4,402

2,984

Royalties

 

                                     -  

(7)

 

 

 

 

Cost of Sales

 

 

 

Production costs

 

(1,959)

(1,804)

Depletion and depreciation

7

(976)

(523)

Gross Profit / (Loss)

 

1,467

650

 

 

 

 

Administrative expenses

4

(962)

(3,697)

Gain on business acquisition

 

                                     -  

771,189

Operating Profit / (Loss)

 

505

768,142

 

 

 

 

Fair value movements

 

                                     -  

(40)

Gain (loss) on sale of marketable securities

 

                                     -  

4

Foreign exchange

 

                                     -  

221

Net Interest expense

5

64

(570)

 

 

 

 

 Profit/(Loss) for the period before taxation

569

767,757

 

 

 

 

Taxation

6

                                     -  

(153,044)

 

 

 

 

Profit/(Loss) for the period from continuing operations

 

569

614,713

 

 

 

 

(Loss)/Profit from discontinued operations, net of tax

 

                                     -  

                                     -  

 

 

 

 

Profit/(Loss) for the period

 

569

614,713

 

 

 

 

Other Comprehensive Income

 

 

 

Items that may be subsequently reclassified to profit or loss:

 

 

 

Exchange differences on translating foreign operations, net of tax

 

68

(8,428)

 

 

 

 

Total Comprehensive Income for the period attributable to equity holders for the parent company

 

637

606,285

 

 

 

 

Earnings per share (CAD$)

20

 

 

Basic from profit / (loss) for the period

 

0.01

10.59

Diluted from profit / (loss) for the period

 

0.01

5.90

From continuing operations - basic

 

0.01

10.59

From continuing operations - diluted

 

0.01

5.90

From discontinued operations - basic and diluted

0.01

5.90

 

 

Consolidated Statement of Financial Position

Nine months ended

 

 

 

31 December 2017

31 December 2016

 

 

 

Unaudited

Unaudited

ASSETS

 

Note

CAD $'000

CAD $'000

Non-current assets

 

 

 

 

Property, plant and equipment

7

                    1,075,743

                    1,066,398

 

Capitalised expenses

8

                             2,378

                                    -  

 

Other financial assets

9

                                430

                                161

 

 

 

                    1,078,551

                    1,066,559

Current Assets

 

 

  

 

Inventory

19

                                296

                                322

 

Trade and other receivables

22

                             1,912

                             1,956

 

Financial instruments at fair value through profit or loss

12

0

                                    -  

 

Cash and cash equivalents

 

                             2,358

                                315

 

 

 

                             4,566

                             2,593

TOTAL ASSETS

 

                    1,083,117

                    1,069,152

EQUITY AND LIABILITIES

 

 

  

Equity attributable to equity holders for the parent company 

  

 

Share capital

10

                          20,867

                          11,456

 

Share warrants and option reserve

11

                             1,172

                             1,800

 

Contributed surplus

 

                             2,232

                             2,231

 

Retained earnings / (deficit)

 

                        554,646

590,687

 

Total equity

 

                        578,917

606,174

Non-current liabilities

 

 

  

 

Borrowings

13

                             2,339

                             2,376

 

Deferred consideration payable

15

                        484,034

                        287,044

 

Convertible loans

14

                                    -  

                             1,309

 

Decommissioning provision

16

                             7,980

                             9,704

 

Deferred tax liabilities

6

                             2,398

                        153,927

 

Total non-current liabilities

 

                        496,751

                        454,360

Current Liabilities

 

 

  

 

Trade and other payables

22

                             3,857

                             4,893

 

Oil share agreement

 

                                    -  

                             1,063

 

Borrowings

13

                             2,771

                             1,946

 

Deferred consideration payable

15

                                440

                                502

 

Convertible loans

14

                                381

                                214

 

Total current liabilities

 

                             7,449

                             8,618

TOTAL EQUITY AND LIABILITIES

 

                    1,083,117

                    1,069,152

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

Share capital

Warrants and share option reserve

Contributed surplus

Retained earnings / (deficit)

Total

 

 

CAD$'000

CAD$'000

CAD$'000

CAD$'000

CAD$'000

 

Balance as at 1 April 2016

               9,578

                         1,510

                     2,231

(15,598)

(2,279)

 

Income/(loss)

                      -  

                                -  

                            -  

                     606,285

   606,285

 

Other comprehensive income

                      -  

                                -  

                            -  

                                 -  

               -  

 

Total comprehensive income

                      -  

                                -  

                            -  

                     606,285

   606,285

 

Share issue net of costs - conversion of loan notes

                   300

                                -  

                            -  

                                 -  

            300

 

Share issue net of costs - debt settlement

                     45

                                -  

                            -  

                                 -  

              45

 

Share issue net of costs - private placement

               1,533

                                -  

                            -  

                                 -  

        1,533

 

Value of options issued

                      -  

                            290

                            -  

                                 -  

            290

 

Expired options

                      -  

                                -  

                            -  

                                 -  

               -  

 

Total transactions with owners recognised directly in equity

               1,878

                            290

                            -  

                                 -  

        2,168

 

Balance as at 31 December 2016

             11,456

                         1,800

                     2,231

                     590,687

   606,174

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

Share capital

Warrants and share option reserve

Contributed surplus

Retained earnings / (deficit)

Total

 

 

CAD$'000

CAD$'000

CAD$'000

CAD$'000

CAD$'000

 

Balance as at 1 April 2017

             17,229

                         1,877

                     2,332

                     554,009

   575,447

 

Income/(loss)

                      -  

                                -  

                            -  

                             637

            637

 

Other comprehensive income

                      -  

                                -  

                            -  

                                 -  

               -  

 

Total comprehensive income

                      -  

                                -  

                            -  

                             637

            637

 

Share issue net of costs - conversion of loan notes

                      -  

                                -  

                            -  

                                 -  

               -  

 

Share issue net of costs - debt settlement

                      15  

                                -  

                            -  

                                 -  

               15  

 

Share issue net of costs - private placement

                      1,343  

                                -  

                            -  

                                 -  

               1.343  

 

Share issue net of costs - exercise of options

               2,280

(685)

(100)

                                 -  

        1,495

 

Expired options

                      -  

(20)

                            -  

                                 -  

(20)

 

Total transactions with owners recognised directly in equity

               3,638

(705)

(100)

                                 -  

        2,833

 

Balance as at 31 December 2017

             20,867

                         1,172

                     2,232

                     554,646

   578,917

 

                   

 

Reserve                                              Description and purpose

Share capital                                     Amount subscribed for share capital

Warrants and share                       Relates to possible increase in equity for options issued                              option reserve 

Combined surplus                          Cumulative earning from non-operational sources

Retained earnings (deficit)        Cumulative net gains and losses recognised in the consolidated 
                                                               statement of comprehensive income.

 

Consolidated statement of cash flows

Nine months ended

 

 

31 December 2017

31 December 2016

OPERATING ACTIVITIES

Note

CAD $'000

CAD $'000

Profit/(Loss) for the year before taxation

 

                      569

             614,714

Items not involving cash:

 

                         -  

                         -  

Shares issued for services

 

                        15

                      131

Shares issued for accrued interest

 

                         -  

                         -  

Options issued

 

                      685

                      290

Options expired

 

(20)

                         -  

Gain (loss) on sale of marketable securities

 

                         -  

(4)

Fair value adjustment on marketable securities

 

                         -  

                        40

Foreign exchange

 

                        68

                        61

Gain on business acquisition

 

                         -  

(771,189)

Deferred taxation

 

                         -  

             153,044

Gain on conversion of convertible notes

 

                         -  

                         -  

Fair value adjustment on derivative liability

 

                         -  

                         -  

Depletion and depreciation

 

                      976

                      523

Impairment of property and equipment

 

                         -  

                          2

Other expense

 

                         -  

                         -  

Finance expense

 

(64)

                      194

Change in working capital

18

                      546

                      285

Net cash used in operating activities

 

                  2,775

(1,909)

INVESTING ACTIVITIES

 

  

  

Proceeds on sale of marketable securities

 

                         -  

                        11

Cash on disposal of subsidiary

 

                         -  

                         -  

Investments in subsidiaries

 

(3,996)

                         -  

Purchases of property, plant and equipment

 

(3,418)

(103)

Change in working capital

18

                         -  

                        11

Net cash used in investing activities

 

(7,414)

(81)

FINANCING ACTIVITIES

 

  

  

Repayment of notes payable

 

                         -  

                         -  

Proceeds from issue of shares, net of transaction costs

 

                  1,343

                  1,325

Proceeds from exercise of options

10

                  2,280

                         -  

Proceeds from issue of bonds

 

                         -  

                      191

Repayments of loans

 

(550)

                         -  

Proceeds from loans

 

                         -  

                      360

Net cash generated from financing activities

 

                  3,073

                  1,876

Net increase/(decrease) in cash

 

(1,566)

(114)

Foreign exchange effect on cash held in foreign currencies

 

                         -  

(5)

Cash at beginning of nine-month period

 

                  3,924

                      138

Cash at end of nine-month period

 

                  2,358

                        19

 

 

For more information please visit: www.sedar.com

 

 

 For further information, please contact:

 Zenith Energy Ltd.  

    Andrea Cattaneo

 Luca Benedetto

   Chief Executive Officer 

 Chief Financial Officer

   Email: info@zenithenergy.ca

 

Telephone:  +1 (587) 315 9031

 

Vigo Communications - PR Adviser

Patrick d'Ancona

Chris McMahon 

Kate Rogucheva

Tel: +44 (0) 20 7830 9700

 

 

Beaufort Securities Limited - (Joint Broker)

Jon Belliss

Telephone: +44 (0) 207 382 8300

 

Daniel Stewart & Company Plc - (Joint Broker)

Robert Emmet- Corporate Broking

Nikhil Varghese- Corporate Finance 

Telephone:   + 44 (0) 207 776 6550

 

Optiva Securities - (Joint Broker)

Christian Dennis

Telephone: + 44 (0) 203 137 1903

 

Allenby Capital Limited (Financial Adviser)

Nick Harriss

Nick Athanas

Telephone:   + 44 (0) 203 328 5656


This information is provided by RNS
The company news service from the London Stock Exchange
 
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