Zenith Inks Deal Launching Its USA Expansion

Zenith Energy Ltd. is acquiring oil wells in Oklahoma state from Stateside Energy LLC, launching its expansion in the USA.

Stateside has agreed to sell its production wells to a special-purpose vehicle to be established by Zenith under the agreement. The resulting company, which will be wholly owned by Zenith and called Newco, will also serve as Zenith’s acquisition arm targeting petroleum assets in other parts of the USA, the Vancouver city-based buyer said in a press release Friday.

“Zenith will consider providing Stateside with the following incentive bonus structure based upon the Newco reaching the following incremental average production targets: 75, 125, 175 and 225 barrels of oil per day (the ‘Milestones’)”, the announcement stated.

“Upon the achievement of each Milestone Zenith will consider issuing Stateside certain amounts payable by way of issuing equity securities (the ‘Incentive Bonus Payments’)”. 

North Miami Beach city-based Stateside will also help Zenith find other vendors.

“It is planned that the Newco will negotiate the acquisition of approximately 70 oil production wells located on property leases totaling approximately 3,200 acres located in the State of Oklahoma for sale by a third-party identified by Stateside”, London- and Oslo-listed Zenith said.

“The Potential Vendor has indicated it also intends to sell certain oilfield service equipment including, inter alia, a pulling unit and a tank truck, for an amount to be agreed”.

Stateside’s divestment of its assets is subject to a due diligence assessment to be conducted by Zenith.

Zenith will invest about $2 million for “the acquisition of Targets to be introduced by Stateside”, subject to the result of the assessment, the release said.

Easy-Access Market

Zenith sees the USA as an easy-access market for its expansion, compared to other countries, in terms of the bureaucratic process.

“We are pleased to formally begin our expansion in the USA by way of the Agreement with Stateside. The advantages of operating in North America are readily apparent, and primarily include the speed of execution for transactions, with the resulting delivery of potential immediate oil production to Zenith, and the relatively conspicuous lack of bureaucratic delays and other detrimental impediments to corporate development seen elsewhere”, chief executive Andrea Cattaneo said.

The USA is seeing proposed laws seeking to accelerate the permitting process for energy projects and ease other regulatory hurdles. The Building American Energy Security Act and the Spur Permitting of Underdeveloped Resources Act have now reached the Senate’s Committee on Energy and Natural Resources after second readings.

Pending at the House of Representatives, the Lower Energy Costs Act meanwhile waives security-related clearances for the production of critical energy resources and narrows the scope of environmental reviews under the National Environmental Policy Act. The Republican proposal seeks to ensure continued fossil fuel development to boost production and lower the cost burden on consumers. It cancels taxation on natural gas, resumes onshore oil and gas leasing and bars the president from prohibiting hydraulic fracturing, among others.

Cattaneo said, “The Company is currently negotiating the potential acquisition of various oil production assets with significant development potential across the USA. 

“We look forward with enthusiasm to potentially completing these in an expeditious manner, subject to rigorous due diligence, by leveraging one of our strengths: deal-making”.

To contact the author, email jov.onsat@rigzone.com