Zenith Energy : Update on legal claim against SMP

November 11, 2020
    
ZENITH ENERGY LTD.  
  
("Zenith" or the "Company") 

Update on legal claim against SMP

Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; OSE: ZENA-ME), the
listed international oil & gas production company focused on pursuing African
development opportunities, is pleased to provide an update on the legal claim
(the "Claim") initiated during 2019 by its subsidiary in the Republic of the
Congo,  Anglo African Oil & Gas Congo S.A.U ("AAOG Congo"), against Société de
Maintenance Pétrolière ("SMP"), the rig contractor employed for drilling
services in wells TLP-103 and TLP-103C of the Tilapia oilfield, following a
series of significant performance failures by the SMP 102 rig (the "Rig") during
drilling activities. 

Background 

On July 15, 2019, AIM quoted Anglo African Oil & Gas plc ("AAOG"), the previous
owner of AAOG Congo prior to its acquisition by Zenith, made an announcement
confirming that AAOG Congo had made the Claim following poor performance by SMP
in the drilling of wells TLP-103 and TLP-103C, and the refusal of SMP to engage
in negotiations to cover the significant cost overruns that had been incurred by
AAOG Congo as a result of this.

The Claim was launched in the Paris commercial court against SMP to recover
costs of US$3.1 million relating to SMP's unsatisfactory performance. 

In taking the decision to launch the Claim for costs against SMP the following
reasons were considered significant at the time:

o	AAOG Congo had maintained extensive, contemporaneous technical records of the
failures of the Rig and the losses and delays that were caused as a result;

o	SMP had not put forward evidence, of any kind, to suggest that Rig performance
was not the cause for cost overruns; and

o	Advice from International counsel in London, Paris and the Congo was that the
Claim had merit.

To strengthen its position, in addition to the commencement of the Claim, AAOG
Congo also withheld payment of SMP's final invoice for an amount of
approximately US$650,000, and exercised a retention right over the Rig which, at
the time, was positioned within the Tilapia oilfield. 

SMP subsequently retaliated by obtaining a number of unjustified seizure orders
over the fixed assets of AAOG Congo in the Republic of the Congo, as well as
over its local bank accounts. 

As detailed in AAOG's above-mentioned announcement dated July 15, 2019, the
seizure orders were unenforceable because AAOG Congo's fixed assets were owned
in partnership with SNPC, the National Oil Company, and consequently could not
be seized. 

Further, the granting of these orders had no bearing on the merits of the claim
launched in the Paris courts by AAOG Congo against SMP. 

Under the rules and conventions of the Paris commercial court, mediation between
the parties engaged in a dispute is a recommended course of action. As a result,
a supervised mediation meeting took place during the Autumn of 2019. 

On December 11, 2029, AAOG announced that mediation efforts had proven
unsuccessful and that, as a result, AAOG Congo would continue to vigorously
pursue its Claim in the Paris courts. 

Update 

The Company can confirm that it has recently been successful in obtaining a
revocation of the court order that had wrongfully blocked its bank accounts. An
amount of approximately US$36,000 has now been unfrozen and made available to
provide additional funding for AAOG Congo. 

Zenith believes the Claim launched by AAOG Congo has merit, especially on
account of the significant evidence collected at the time to substantiate its
position.

Following interactions with its French legal advisers, the Company has decided
to continue vigorously pursuing the Claim to recover costs of approximately
US$3.1 million. The possibility of increasing the Claim amount is also being
explored in consideration of the commercial damages suffered by AAOG Congo as
direct result of SMP's drilling performance. 

The Company has not provided for the potential recovery of such costs in its
cashflow projections. Therefore, any success in this matter would enhance the
Company's cash position.


Andrea Cattaneo, Chief Executive Officer, commented:

"We are pleased to have successfully obtained the revocation of the court order
that had resulted in AAOG's bank accounts being frozen. The recovery of
approximately US$36,000 has a symbolic significance because it shows that we are
steadily achieving the gradual recovery of moneys rightfully held by, as well as
owed to, AAOG Congo. 

The Company has consulted with its French legal advisers and, having evaluated
the merits of the case and the significant potential compensation payment of at
least US$3.1 million, intends to zealously pursue AAOG Congo's Claim. To this
end, we plan to reach out to third party financing providers, specialised in
legal cases such as these, in order to avoid any cash burden being incurred by
the Company in pursuing the Claim going forward. 

I look forward to updating the market regarding further progress in the Republic
of the Congo in the period ahead." 


Further Information:
Zenith Energy Ltd 	
Andrea Cattaneo, Chief Executive Officer	Tel: [phone]
	E-mail:    [e-mail]

Allenby Capital Limited - Financial Adviser & Broker	
Nick Harriss
Nick Athanas	Tel: + 44 (0) 203 328 5656
 
Notes to Editors: 

Zenith Energy Ltd. is an international oil and gas production company, listed on
the London Stock Exchange (LSE:ZEN) and the Merkur Market of the Oslo Stock
Exchange (ZENA:ME).
Zenith's development strategy is to identify and rapidly seize value-accretive
hydrocarbon production opportunities in the onshore oil & gas sector,
specifically in Africa. The Company's board of directors and senior management
team have the experience and technical expertise to develop the Company
successfully.

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