BAKU, Azerbaijan, April 23
By Leman Zeynalova - Trend:
Canada’s Zenith Energy Ltd., operator for the development of Muradkhanli-Jafarli-Zardab block of oil fields onshore Azerbaijan will complete the handover of the Contract Rehabilitation Area (CRA) to Azerbaijan’s state oil company soon, Trend reports citing Zenith Energy.
Zenith Energy Ltd. said it continues to operate the Contract Rehabilitation Area generating a daily production of approximately 180 barrels of oil per day.
As announced on March 2, 2020, the company is currently formalizing the handover process of the CRA to SOCAR. Zenith expects the handover to be completed during the next 20 business days.
Upon completion of the handover, the company will no longer have any oil production operations in Azerbaijan and all field production personnel, approximately 171 employees, will be transferred to SOCAR.
The company confirmed that its Azerbaijan subsidiary has recently received two payments for a total of approximately $350,000 from SOCAR.
It is anticipated that total receivables from oil sales towards Zenith's local subsidiary will amount to a total of approximately $1,200,000 once the handover is completed and that payment will be received shortly thereafter.
In view of Zenith's strategic focus on pursuing large-scale oil production and development opportunities in Africa, the company earlier decided to hand over the Contract Rehabilitation Area to SOCAR.
The company expects to achieve a near total reduction of operating expenses in Azerbaijan upon completion of the handover of the CRA.
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.
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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