Zenith has an 80% interest in three oil fields onshore Azerbaijan, collectively called the Muradkhanli Contract Area. Current production is circa 300 barrels per day from 65 wells, 81% of which produce under natural pressure.
Through simple workovers, management is targeting up to 1,000 bopd by 1Q18, an ambitious but feasible target due to many years of suboptimal field management. The more exciting workover prize is from five wells in the Zardab Field. Two of these each produced >500 bopd before plugging with sand within 1 week. Zenith is targeting 200 bopd from the five Zardab wells which appears conservative.
New drill targets on the property are Zenith's most valuable asset, consultants estimate 76 million barrels of gross 2P reserves. Targets include under a lake where large areas were not drilled and multiple infill locations across the 642km2 licence. 2017 will be dominated by workovers and we expect the first new well in 2018.
The workover programme starts this week with M-195 and M-45. There is plenty of newsflow to look forward to and we initiate coverage with a 31p price target and SPECULATIVE BUY recommendation. Read the full report