Corporate M&A

Zenith Acquires Candax's 45% Stake in the Ezzaouia Concession in Tunisia

By Mahati K L
March 16, 2021
2 minutes read
Oil Derrick

Calgary-based E&P company Zenith Energy Ltd. has entered into a Share Purchase Agreement (SPA) with Candax Energy Ltd. to acquire its wholly-owned subsidiary Ecumed Petroleum Zarzis Ltd. (EPZ) which holds a 45% interest in the Ezzaouia Concession, onshore Tunisia.

Under the terms of the SPA, Zenith will acquire 100% of EPZ for the aggregate cash consideration of US$150,000, plus an additional US$100,000 via issuance of Zenith ordinary shares, which will be issued within 60 days of completion. In addition, the company will also make certain royalty payments, calculated as US$0.35 per barrel of hydrocarbons produced from the Ezzaouia oil field and allocable to EPZ, with the royalty not being less than US$50,000 p.a. for a period of 10 years.

The Ezzaouia concession is located in the Zarzis peninsula, south of the island of Djerba, in the southern Gulf of Gabes. The field was first discovered by Marathon Petroleum Corp. in 1986, with production activities starting in 1990. The peak production of 35,000 barrels of oil per day (bbls/d) was achieved in 1991. The license targets the Zebbag (Lower Cretaceous) and Mrabatine (Upper Jurassic) formations. The acquisition has certain development obligations during the 20-year term of the concession, including the drilling of a side-track, a replacement well, and a development well.

Oil from the concession is exported to international markets through an oil storage terminal that is connected to Ezzaouia by way of two pipelines located at the port of Zarzis, with a storage capacity of approximately 200,000 barrels of oil. Production from the license currently averages approximately 210 bbls/d, net to Zenith’s acquired 45% interest, with approximately 25,000 barrels currently held in storage (commercial value of around US$1.25 million). Zenith plans to commence field production optimization and workover activities to increase Ezzaouia’s gross production to 1,000 bbls/d.

The concession is operated by MARETAP, a joint operating company owned by Candax in partnership with the national oil company of Tunisia, Entreprise Tunisienne d’Activités Pétrolières (ETAP) on a 50:50 basis. ETAP holds the remaining 55% interest in Ezzaouia.

“I am delighted to have completed this transaction which reflects the continued successful implementation of our development strategy – that of acquiring prospective oil production and development assets – and delivers immediate daily production revenue to Zenith during a time of material appreciation in the price of oil,” said Andrea Cattaneo, CEO of Zenith Energy.

LSE- & OSE-listed Zenith Energy is primarily focused on oil & gas exploration, development, and production operations in Africa, and currently holds assets in Congo-Brazzaville, Tunisia, and Italy. Allenby Capital advised Zenith Energy on the transaction.

Candax operates as a wholly-owned subsidiary of Geofinance NV, and is engaged in oil & gas exploration and production in Tunisia and Madagascar.

Share
More news
Access our Global Upstream Oil & Gas M&A, Financing and Corporate Database
Quick registration, online payment and instant access
View pricing