(via Thenewswire.ca)
Calgary, Alberta / TheNewswire / September 29, 2015 / Zenith Energy Ltd. ("Zenith") (TSX VENTURE: ZEE) is pleased to announce that its 100% owned subsidiary, Canoel Italia Srl, has signed a contract to acquire cogeneration equipment and facilities from the current owner of the plant which treats gas from the Masseria Vincelli 1 in the Torrente Cigno concession in Italy. Through this agreement, the Company will be able to produce electricity and to sell it directly into the national electrical grid, using the gas produced from Zenith's Masseria Vincelli 1 well.
The net cost of the acquisition of the cogeneration plant was EUR470,000. The Company estimates that this investment has the potential to increase revenue threefold given the significant differential between electricity prices and prices previously received for the untreated gas.
The price forecasted for electricity in Italy has been developed by the Electricity Market Operator (GME), which reports a selling price of EUR50.00 MWh for the years 2015 and 2016, an increase to EUR55.00 per MWh for 2017, and up to EUR60.00 per MWh for the following years. Initial production is expected to be approximately 10,000 MWh per year which, in combination with condensate production, is expected to produce gross revenues of EUR660,000 per annum (~CDN $980,000 assuming current foreign exchange rates).
Zenith holds a 45% working interest in this field which comprises 38,183 acres (154.5 square kilometers) on the Adriatic coast. Gas from the Masseria Vincelli 1 well requires treatment as it contains about 35% CO2 and nitrogen, and does not enable the gas to be directly delivered into the national pipeline grid. After treatment, the gas is delivered to an in-situ electrical power generation plant that transforms it into electricity at the ratio of 2.4 kW per standard cubic meter.
The Company has acquired four (4) engines for the generation of electricity, with an hourly output capacity of 1.3 MW each, for a cumulative production capacity of 5.2 MW.
The existing well has produced 1,530 mmcf to date and current production is strong at approximately 470 mcf per day on a gross basis.
As described in the NI 51-101 report for the year ending March 31, 2015, prepared by Chapman Petroleum Engineering Ltd. ("Chapman"), the Company's remaining natural gas net reserves for the well are estimated at a proven 57 MMscf (P1) and probable 47 MMscf (P2) with an associated 2 Mbbls of condensate.
An additional 16.5 (7.2 Bscf net) of probable reserves of natural gas and 216,000 barrels (101,000 barrels net) of condensate have also been estimated based on the prospect of drilling an offset horizontal well to Masseria Vincelli-1 in a structurally higher location.
Andrea Cattaneo, Zenith's President and CEO notes, "We are pleased to have achieved our goal to diversify Zenith's revenue stream by generating electricity using existing and future gas production from the Torrente Cigno concession. Italy has very well developed national grids for integrating gas and electricity, with an impressive network of entry points for both. When, as in the Masseria Vincelli case, gas did not comply with the pipeline requirements, it was important for Zenith to find other avenues to sell the gas reserves and increase revenues. As an operator, Zenith continues to expand its core competencies which now include electrical generation capabilities."
About Zenith Energy Ltd.
Zenith is an internationally-focused oil and gas E&P company, publicly listed in Canada on the TSX-V under the ticker symbol ZEE. The Company's strategy is to acquire assets in established hydrocarbon districts with robust legal frameworks that protect the ownership rights of assets for investors. To maximize shareholder value, Zenith targets acquisitions and near-term production opportunities that offer strong logistics and close proximity to refineries and pipelines. In addition, the Company favors countries with transparent commodity pricing environments and attractive fiscal regimes, particularly for mature production assets having the capacity for further development and optimization. By investing in these regions, management is able to facilitate work programs efficiently, while having established infrastructure enables personnel to swiftly tie-in increased production. Zenith's management and directors have extensive international and governmental experience and possess the technical knowledge to execute this strategy.
Zenith is actively pursuing onshore fields with low acquisition costs from national or senior companies that have chosen to allocate their capital to unlock non-traditional resources with typically higher costs. Zenith's acquisition costs are further minimized by a strategy of reinvesting a portion of future cash flows back to remediation and capital improvements typically forgone on older fields. Combining its use of advanced technologies and implementing its engineering and technical expertise, Zenith's team continues to demonstrate the capacity to increase production, reduce costs and optimize remaining reserves through enhanced recovery to maximize its impact as an operator. Zenith currently operates two oil producing fields in Argentina and is developing a portfolio of natural gas properties in Italy.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Information
Certain information in this press release is forward-looking within the meaning of applicable securities laws, and related to anticipated financial performance, events and strategies. When used in this context, words such as "will", "anticipate", "believe", "project", "plan", "intend", "target" and "expect" or similar words suggest future outcomes. By their nature, such statements are subject to significant risks, assumptions and uncertainties, which could cause the Company's actual results and experience to be materially different than the anticipated results or expectations expressed. Although Zenith believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Zenith can give no assurance that they will prove to be correct.
In particular, forward-looking information and statements include, but are not limited to: (i) the anticipated capital expenditures (costs) required in order to commence or increase production at the Torrente Cigno Field; (ii) the ability of the Company to commence and increase production; (iii) the price of natural gas and electricity in Italy; (iv) the fluctuation of foreign exchange rates for currencies (v) the ability of the Company to comply with certain regulatory requirements; (vi) the Company's low overhead costs; (vii) the Company's ability to substantially increase its oil and gas production by the end of 2015 and through 2017; (viii) the Company's ability to produce gas and electricity for industrial and retail markets in Italy and Europe.
These statements are based on certain assumptions and analysis made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements include, but are not limited to: (i) assumptions related to international natural gas prices and the price of electricity; (ii) ability to obtain regulatory approvals; (iii) costs of acquisitions, construction and development; (iv) availability and cost of labour and management resources; (v) performance of contractors and suppliers; (vi) availability and cost of financing; (vii) assumption the Company will continue to focus its activities through low-risk exploration and production opportunities offering logistical and proximate locations to refineries and pipelines and gas ducts; and (viii) the Company's business strategy and outlook.
Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Company's expectations. Such risks and uncertainties include, but are not limited to, risks and uncertainties relating to: (i) political and economic conditions in the countries in which the Company operates or may operate; (ii) fluctuations in foreign exchange rates and natural gas prices; (iii) the Company's ability to access external sources of debt and equity capital; (iv) failure to obtain any required regulatory approvals;
(v) regulatory and governmental decisions including changes to environmental legislation; and (vi) availability and cost of labour, equipment and management of resources.
Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Canoel undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
For further information, please contact:
Jose Ramon Lopez Portillo Andrea Cattaneo
Chairman of the Board President & CEO
Email: info@zenithenergy.org
Telephone: (587) 437-1984
Fax: (403) 775-4474
This press release is not to be distributed to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law.
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