LONDON, UK: Zenith Energy, a Canadian oil and gas company, has announced a deal to buy 50% of Devonian Petroleum Limited, a UK-based private oil company with exploration rights in Kazakhstan, for about $5 million.

Devonian owns 99% of DP Energy, a local subsidiary that holds a joint exploration and production contract for the Akkudukski block in the Precaspian Basin, one of the most prolific oil regions in the world.

The block covers 1,094 km2 and excludes the Akkuduk Jurassic oilfield, which belongs to the Kazakh national oil company.

The deal is subject to legal and technical due diligence, regulatory approvals, and the drilling of a new well in the block, which will target either Triassic or Jurassic sandstone reservoirs. Zenith will transport its own drilling rig from Georgia to Kazakhstan for this purpose.

Zenith said the deal is its sole focus in Kazakhstan and that it has stopped all other negotiations in the country. Devonian was the first UK company to win a block in Kazakhstan under the new subsoil code, which aims to attract more foreign investment in the oil sector.

Andrea Cattaneo, Chief Executive Officer of Zenith Energy, commented: “We are delighted to have agreed terms for the acquisition of Devonian Petroleum, representing our first acquisition in the Republic of Kazakhstan.

The Company’s management has been able to appreciate the significant development potential of the Akkudukski Block, specifically the highly material recoverable reserves contained therein.

The ownership of our drilling equipment, when viewed in consideration of the size and range of geological opportunities to be found within the Akkudukski Block, presents an attractive opportunity to drill “in succession” with the objective of maximising production revenue and profitability during a time of favourable energy prices.

We look forward to benefitting from the technical knowledge and geological expertise of the Devonian Petroleum team in respect of the Akkudukski Block and to commencing our operational journey in Kazakhstan.”

Alastair Murray, Chief Executive Officer of Devonian Petroleum, commented: “The deal with Zenith Energy is of great importance because it should enable the successful migration through to production of the potentially transformational reserves contained within the Akkudukski Block.

We identified the unexploited value potential of the Akkudukski Block from as early as 2017, following significant geological investigation, and we were successfully awarded our current licence following a highly competitive bid round involving more than ten other companies in 2018/19.

Our first phase of technical work will be the selection of a low-risk drilling location in one of the already discovered structures, as well as remapping the Jurassic discovery in the south of the Akkudukski Block, targeting approximately 40-80 million barrels in recoverable oil reserves.

We expect this technical work will be completed by summer 2024, creating an exciting ‘drilling pipeline’ for the ZEN-260 rig being mobilised from Georgia as part of what we expect to be a long-term and mutually successful partnership between Zenith Energy and Devonian Petroleum.”

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