BAKU, Azerbaijan, Nov.20
By Leman Zeynalova – Trend:
Canadian Zenith Energy’s revenues are forecast to rise by around 85 percent at the end of 2020 financial year, Trend reports citing Rating-Agentur Expert RA (RAEX).
“Growth prospects for the company are encouraging. In FY 2019 (March 2019), revenues increased by 31 percent and, in our conservative scenario, we expect this metric to hike by around 85 percent as of the end of FY 2020 (March 2020),” reads the RAEX report.
In respect to reserves, the overall level is substantial enough to generate consistent cash flows in the 25-year time span of the Rehabilitation, Exploration, Development and Production Sharing Agreement, according to the rating agency.
“In our opinion, the reserve life is adequate as we calculate the 1P life to be about 4.5 years while the 2P at around 14 years under the assumption of the company’s forecast level of production. In our view, the outlook for the development of the global oil and gas industry is assessed as moderate in the mid-term perspective as uncertainties in regards to the global economy prevail. Still, we project positive operating cash flow for FY 2021 (March 2021) in our conservative scenario which also accounts for moderate oil prices (USD 60 per barrel),” says the report.
RAEX believes that Zenith Energy has an aggressive but coherent and feasible investment plan in the mid- to long-term horizon representing around 18 percent of total assets from FY 2019 (March 2019);
“After having increased substantially in FY 2019 (March 2019), the level of debt recently decreased. We anticipate debt levels to increase as the company is planning a new debt issuance of around EUR 25 m; nonetheless, we expect it to remain at acceptable levels. Moreover, all debt currently on the company’s balance sheet has fixed interest rates, which eliminates any type of interest rate risk,” said the
Zenith Energy’s operations (in terms of revenues) are concentrated in the following countries: 88 percent in Azerbaijan and 12 percent in Italy. The company is specialized on the following industries: Oil and Gas industry. The overall corporate industry risk for the rated company was assessed as adequate.
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