Zenith (LON:ZEN) is current redeveloping the Muradkhnali, Jafarli and Zardab oil fields, which form the largest onshore oilfield of Azerbaijan. The fields were discovered and brought to production in the 1970s; Zenith intends to apply new technology to recover some 33 MMbbl of additional oil reserves potential (Figure 1).
Our valuation of 41p remains unchanged. However, we do believe that demonstrating continuing successful progress will be essential to secure the necessary financing to ramp up operations in the near future, as per the development plan. We identified a financing gap of $35M from the cash flow projections in the CPR, which will need to be financed, most likely through a mix of equity and debt. We reckon that such success enable both existing and potential investors in Zenith to gain increased confidence in the ability of the Company to manage what is a significant undertaking.
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