Zenith Energy Ltd on Monday said it signed an accord with an Kazakh-incorporated firm, entitling Zenith a period of exclusivity of 90 days to evaluate a potential acquisition.

Calgary, Canada-based energy firm Zenith, which has production, exploration and development assets across Africa and Europe, said the seller has a 100% interest in an oil production asset in the Atyrau region of Kazakhstan.

The purpose of the memorandum of understanding is to formalise a framework whereby Zenith’s interest in the potential acquisition may be completed, Zenith said, subject to the completion of ‘a rigorous technical and financial due diligence’.

Zenith said the potential acquisition asset formerly produced at a rate of approximately 600 barrels of oil per day prior to the onset of the Covid-19 pandemic, with production currently suspended.

Commercial terms for the potential acquisition would need to be formalised via a share purchase agreement on or before November 30, Zenith said, according to the terms of the accord.

Zenith said the 2P proven and probable reserves of the potential acquisition are estimated at around 4 million barrels of oil.

‘The potential acquisition in Kazakhstan represents an exciting opportunity for Zenith to potentially acquire an asset with significant revenue generation potential in a new jurisdiction, widely regarded as favourable for junior energy production and development companies. Our management team is now concentrated on completing a comprehensive technical, financial, and legal due diligence,’ said Chief Executive Officer Andrea Cattaneo.

‘The potential acquisition is expected to complement our business development activities in the US, which are advancing at pace, and evidence our consistent strategic focus on production and development opportunities in stable jurisdictions. It is important to underline that we have no plans to issue equity to fund the potential acquisition, or its immediate development in the event a transaction is successfully completed.’

Zenith said it will provide further updates on the potential acquisition and other business development activities ‘in due course’.

Earlier Tuesday, Zenith also said it terminated a share purchase agreement with OMV Exploration & Production GmbH, announced at the start of 2023, for the acquisition the acquisition of 100% of the outstanding share capital of OMV (Yemen Block S 2) Exploration GmbH, OMV Jardan Block 3 Upstream GmbH and OMV Block 70 Upstream GmbH - collectively known as OMV Yemen.

Zenith said this was due to the conditions required for completion of the SPA not being satisfied. OMW has refunded the deposit of $4.3 million plus accrued interest to Zenith.

Zenith has also terminated its share purchase agreement with Hingbo Industries Company Ltd for the sale of a 51% interest in its fully owned subsidiary Zenith Energy Netherlands BV.

Also originally announced at the start of 2023, Zenith said it made this move ‘in view of the termination of the SPA with OMV Yemen’.

Shares in Zenith were quoted at 0.38 pence in London on Monday afternoon. It is down 63% over the last 12 months.

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