Canadian Junior to Expand in Italy
Canadian oil and gas junior Zenith Energy has bought up seven natural gas concessions in Italy from London-based Coro Energy, a deal that will expand its footprint in the country considerably.
Zenith said on December 3 it had signed a share purchase agreement to acquire Coro’s entire Italian portfolio, which includes 100% interests in four concessions already in production, one primed for development and two more at the exploration stage. Zenith will initially pay £402,000 in shares for the assets, plus a further £3.5mn if gas production from the acquired concessions reaches an average of at least 100,000 ft3 or 590 barrels of oil equivalent/day over four successive months.
Zenith plans to boost output to 113,000 ft3/day by completing a series of well interventions within the first six to nine months of controlling the assets. The concessions yielded 40,000 ft3/day of gas in the first six months of 2019, generating €1.53mln in revenue. Their proven and probable reserves have been assessed at 7.5bn ft3.
Zenith CEO Andrea Cattaneo said the deal with Coro would set the company up as one of Italy’s leading gas producers.
“There are a number of opportunities to increase production from current levels in the acquired assets through targeted relatively low-risk well interventions, also present in our existing Italian portfolio,” he said. “Our newly enhanced technical team and financial resources will enable Zenith to apply renewed focus on its Italian portfolio.”
Zenith already produces a small amount of gas from concessions in Italy – a daily average of 31,500 ft3 in the first six months of this year – as well as some oil in Azerbaijan. It recently announced an all-stock takeover of Norwegian firm Nordic Petroleum, which it plans to use as a springboard for targeting opportunities in Norway’s upstream sector.
Coro wants to shed non-core assets to focus more on its business in southeast Asia.
"As the company continues to focus on the investment opportunities in southeast Asia, the disposal of our Italian portfolio removes non-core assets and streamlines our geographic focus,” CEO James Menzies said. “The Italian portfolio requires significant management time and capital expenditure to sustain its production and in-line with our stated strategy, we believe that focusing our resources on the rapidly growing South East Asian market will provide greater opportunity to maximise shareholder value.”
The transaction will need clearing by the Italian government and regulators at the Toronto stock exchange, where Zenith is listed. Neither company said when they expected the deal to be closed.