BAKU, Azerbaijan, March 2
By Leman Zeynalova - Trend:
In view of Zenith's strategic focus on pursuing large-scale oil production and development opportunities in Africa, the Company will hand over the Contract Rehabilitation Area ("CRA") to SOCAR, Trend reports citing Zenith Energy.
Zenith, which is the operator for development of Muradkhanli-Jafarli-Zardsab onshore Azerbaijan, expects to shortly define the handover process of the CRA.
It will continue to operate the CRA and maintain oil production activities in Azerbaijan without interruption until the handover is completed.
The company expects to achieve a near total reduction of operating expenses in Azerbaijan upon completion of the handover of the CRA.
In addition, the company's local subsidiary is owed approximately $700,000 from sales of produced oil which Zenith expects to receive in the near future.
Current production from the CRA is approximately 180 barrels of oil per day.
As a consequence, Zenith will not proceed with previously planned well interventions in relation to wells C-37 and C-30 of the Jafarli oilfield, which is expected to increase the company's free cash base.
The Company confirms that, once the handover of the CRA is completed, its sole operational focus in Azerbaijan will be in relation to performing exploration activities.
"The transformational development oil production and revenue generation opportunities we are currently completing in Africa require a strategic review of our focus to optimize the deployment of our financial resources and management attention,” said CEO of Zenith Energy Andrea Cattaneo. “We shall continue with our 25-year REDPSA, which remains intact, with regards to exploration activities to be undertaken during 2020 and potentially beyond."
Azerbaijan’s state oil company SOCAR and Zenith Aran Oil Company signed a REDPSA in March 2016 for a block that includes the Muradkhanli, Jafarli and Zardab oil fields. Zenith Energy Ltd established its subsidiary company Zenith Aran Oil Company Ltd for production operations in these three fields. Production under the agreement began in August 2016.
Zenith holds an 80-percent participating interest in the three fields within the contract area, while SOCAR retains the remaining 20 percent. The agreement is for 25 years, with a potential extension by five additional years.
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