Filing of 2017 Second Quarter Results

RNS Number : 6481W

Zenith Energy Ltd

16 November 2017

November 16, 2017

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon publication of this announcement via a regulatory information service ("RIS"), the inside information contained in this document is now considered to be in the public domain.

ZENITH ENERGY LTD.

("Zenith" or the "Company")

Filing of 2017 Second Quarter Results

Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; TSX.V: ZEE), the dual listed international oil & gas production company operating the largest onshore oilfield in Azerbaijan, is pleased to announce the filing of its consolidated quarterly results for the three and six months ended September 30, 2017.

These results were filed on SEDAR (www.sedar.com) on November 15, 2017 in accordance with TSX and Alberta Security Commission rules.

Highlights for the three and six months ended September 30, 2017 include the following:

• The Company produced 23,095 and 47,954 barrels of oil from its assets in Azerbaijan. At the end of September 2017, there were 2,588 barrels of unsold oil production in Azerbaijan held in inventory which was sold in subsequent months.

• The Company sold 4,831 and 9,621 MCF of natural gas produced from its Italian assets.

• The Company sold 264 and 488 barrels of condensate produced from its Italian
assets.

• The Company sold 2,741 and 5,263 MWh of electricity generated from its Italian assets.

• The Company incurred CAD$931k in capital expenditure in the six months ended September 30, 2017, primarily resultant from the Company's field rehabilitation and development programme underway in Azerbaijan.

• The Company announced that it had signed a contract for the procurement of oil production materials with Kerui Petroleum, a leading Chinese manufacturer of oilfield equipment, on August 21, 2017. The procurement of this new equipment will enhance Zenith's operational capabilities, enable the Company's personnel to work in remote field locations, and replenish Zenith's stock of oil production materials. The total value of the procurement contract was USD$1,706k (approximately £1,325k; CAD$2,146k).

Zenith Chief Executive Officer, Andrea Cattaneo, commented:

"These Q2 results confirm the transformational impact of Zenith's Azerbaijan acquisition on the Company's financial position.

I look forward to announcing increased production revenue in the next set of quarterly results as we achieve further growth in our daily production of oil."

Consolidated Statement of Comprehensive Income
Continuing operations		Six months ended
		30 September 2017	30 September 2016
		Unaudited	Unaudited
	Note	CAD $'000	CAD $'000
Revenue	22	2,782	1,067
Royalties		-	(7)

Cost of Sales
Production costs		(1,490)	(785)
Depletion and depreciation	7	(609)	(204)
Gross Profit / (Loss)		683	71

Administrative expenses	4	(157)	(1,796)
Gain on business acquisition		-	771,189
Operating Profit / (Loss)		526	769,464

Fair value movements		-	-
Gain (loss) on sale of marketable securities		-	4
Foreign exchange		-	90
Net Interest expense	5	53	(245)

Profit/(Loss) for the period before taxation		579	769,313

Taxation	6	-	(153,044)

Profit/(Loss) for the period from continuing operations		579	616,269

Profit / (Loss) from discontinued operations, net of tax		-	-

Profit/(Loss) for the period		579	616,269

Other Comprehensive Income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations, net of tax		(158)	(8,195)

Total Comprehensive Income for the period attributable to owners of the parent		421	608,074

Earnings per share (CAD $)	20
Basic from profit / (loss) for the period		0.01	10.39
Diluted from profit / (loss) for the period		0.01	6.23
From continuing operations - basic		0.01	10.39
From continuing operations - diluted		0.01	6.23
From discontinued operations - basic and diluted		0.01	6.23

Consolidated Statement of Financial Position			Six months ended
			30 September 2017	30 September 2016
			Unaudited	Unaudited
ASSETS		Note	CAD $'000	CAD$'000
Non-current assets
	Property, plant and equipment	7	1,073,436	1,066,801
	Capitalised expenses	8	2,210	-
	Other financial assets	9	430	167
			1,076,076	1,066,968
Current Assets
	Inventory	19	208	317
	Trade and other receivables	22	1,382	1,547
	Financial instruments at fair value through profit or loss	12	-	353
	Cash and cash equivalents		2,393	126
			3,983	2,343
TOTAL ASSETS			1,080,059	1,069,311
EQUITY AND LIABILITIES
Equity attributable to equity holders for the parent
	Share capital	10	18,587	10,351
	Share warrants and option reserve	11	1,633	2,247
	Contributed surplus		2,232	2,231
	Retained earnings / (deficit)		554,430	592,476
	Total equity		576,882	607,305
Non-current liabilities
	Borrowings	13	2,380	2,665
	Deferred consideration payable	15	484,034	287,044
	Convertible loans	14	385	887
	Decommissioning provision	16	7,980	9,793
	Deferred tax liabilities	6	2,398	153,928
	Total non-current liabilities		497,177	454,317
Current Liabilities
	Trade and other payables	22	2,720	4,033
	Oil share agreement		-	1,039
	Borrowings	13	2,840	1,503
	Deferred consideration payable	15	440	502
	Convertible loans	14	-	612
	Total current liabilities		6,000	7,689
TOTAL EQUITY AND LIABILITIES			1,080,059	1,069,311

Consolidated Statement of Changes in Equity	Share capital	Warrants and share option reserve	Contributed surplus	Retained earnings / (deficit)	Total
	CAD	CAD	CAD	CAD	CAD
	$'000	$'000	$'000	$'000	$'000
Balance as at 1 April 2016	9,578	1,510	2,231	(15,598)	(2,279)
Income/(loss)	-	-	-	616,269	616,269
Other comprehensive income	-	-	-	(8,195)	(8,195)
Total comprehensive income	-	-	-	608,074	608,074
Share issue net of costs - conversion of loan notes	300	-	-	-	300
Share issue net of costs - debt settlement	45	-	-	-	45
Share issue net of costs - private placement	1,141	-	-	-	1,141
Value of warrants issued	(713)	737	-	-	24
Expired options	-	-	-	-	-
Total transactions with owners recognised directly in equity	773	737	-	-	1,510
Balance as at 30 September 2016	10,351	2,247	2,231	592,476	607,305

Consolidated Statement of Changes in Equity	Share capital	Warrants and share option reserve	Contributed surplus	Retained earnings / (deficit)	Total
	CAD	CAD	CAD	CAD	CAD
	$'000	$'000	$'000	$'000	$'000
Balance as at 1 April 2017	17,229	1,877	2,332	554,009	575,447

Income/(loss)	-	-	-	421	421
Other comprehensive income	-	-	-	-	-
Total comprehensive income	-	-	-	421	421
Share issue net of costs - conversion of loan notes	-	-	-	-	-
Share issue net of costs - debt settlement	-	-	-	-	-
Share issue net of costs - private placement	-	-	-	-	-
Share issue - exercise of options	1,358	(224)	(100)	-	1,034
Expired options	-	(20)	-	-	(20)
Total transactions with owners recognised directly in equity	1,358	(244)	-	-	1,014
Balance as at 30 September 2017	18,587	1,633	2,232	554,430	576,882

Reserve Description and purpose

Share capital Amount subscribed for share capital

Warrants and share Relates to possible increase in equity for options issued
option reserve

Combined surplus Cumulative earning from non-operational sources

Retained earnings (deficit) Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

Consolidated statement of cash flows		Six months ended
		30 September 2017	30 September 2016
OPERATING ACTIVITIES	Note	CAD $'000	CAD $'000
Profit/(Loss) for the period before taxation		579	616,269
Items not involving cash:		-
Shares issued for services		15	214
Shares issued for accrued interest		-	-
Gain (loss) on sale of marketable securities		-	(4)
Fair value adjustment on marketable securities		-	-
Foreign exchange		34	61
Gain on business acquisition		-	(771,189)
Deferred taxation		-	153,044
Gain on conversion of convertible notes		-	-
Fair value adjustment on derivative liability		-	-
Depletion and depreciation	7	609	204
Capitalisation of expenses	8	(2,419)	-
Impairment of property and equipment		-	1
Other expenses		-	-
Finance expenses	5	(53)	42
Change in working capital	18	(393)	(177)
Net cash used in operating activities		(1,628)	(1,535)
INVESTING ACTIVITIES
Proceeds on sale of marketable securities		-	11
Cash on disposal of subsidiary		-	-
Purchases of property, plant and equipment		(931)	(31)
Change in working capital	18	-	3
Net cash used in investing activities		(931)	(17)
FINANCING ACTIVITIES
Repayment of notes payable		-	-
Proceeds from issue of shares, net of transaction costs	9	1,258	1,116
Proceeds from exercise of options	10	100	-
Proceeds from issue of bonds		-	191
Repayments of loans	13	(330)	-
Proceeds from loans		-	236
Net cash generated from financing activities		1,028	1,543
Net increase/(decrease) in cash		(1,531)	(9)
Foreign exchange effect on cash held in foreign currencies		-	(3)
Cash at beginning of year		3,924	138
Cash at end of period		2,393	126