Zenith Ends Bid for Italian Fields
Canadian junior Zenith Energy has dropped its bid to buy seven gas concessions in Italy from London-based Coro Energy, the companies said on July 31, in light of the collapse in European gas prices triggered by the Covid-19 pandemic.
Zentih agreed in December on the purchase, which would have expanded its footprint in Italy considerably. It was to pay £402,000 ($528,000) 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.
The deal was conditional Italian regulatory approval arriving by July 31, but Zenith said this deadline would not be met. It is therefore unlikely to be finalised by October 31, and the pair therefore have decided to terminate the agreement.
Zenith added it had taken this course because the assets now had "negative profitability" as a result of the Covid-19 crisis. The company has also shifted its focus to Africa, where it has recently struck deals to enter Tunisia and Congo-Brazzaville.
This is not first deal Zenith has scuppered, with the company abandoning plans in December to buy Norwegian minnow Nordic Petroleum, a company with non-producing Canadian heavy oil assets which it had hoped to use as a springboard for acquisitions in Norway.
Zenith produces small amounts of gas across Italy and had been extracting oil in Azerbaijan until March, when it handed over its producing wells to state-owned Socar in March.