LONDON, UK: Zenith Energy Netherlands B.V. has entered into a share purchase agreement (SPA) with OMV Exploration and Production GmbH (OMV) to acquire 100% of the outstanding share capital of OMV Yemen.

OMV Yemen comprises of Yemen Block S 2 Exploration GmbH, OMV Jardan Block 3 Upstream GmbH and OMV Block 70 Upstream GmbH, which are all companies incorporated and existing under the laws of Austria. Zenith Energy Ltd. (LSE: ZEN) holds a 49% interest in Zenith Energy Netherlands B.V.

Under the terms of the SPA, Zenith Netherlands will acquire 100% of OMV’s shares in OMV Yemen at completion for a total consideration of US$ 21.619 million. Zenith Netherlands has paid a deposit of US$ 4.324 million, which shall be credited by the Seller to Zenith Netherlands as part of the Purchase Price upon completion.

OMV Yemen is one of the largest oil producers in the country with a highly prospective portfolio including a balance of immediate production, as well as a balance of short and long-term growth opportunities.

Andrea Cattaneo, Chief Executive of Zenith, said: “The acquisition of OMV Yemen represents a very significant milestone for Zenith Energy.

The existing production from the asset and, more importantly, the near-term future oil and natural gas production indicated by the size of the reserves, position Zenith on an extremely exciting organic growth trajectory.”

Significant associated gas volumes have been recorded with oil production across OMV Yemen’s portfolio giving evidence of substantial natural gas production potential from S-2, Block 3, and Block 70.

A gas discovery has been made in Block 3, representing a major opportunity for the monetisation of OMV’s Yemen natural gas production, all of which is currently flared.

Several gas production offtake options are already under discussion including the possibility of a connection being made to a local power station or to Yemen LNG.

Zenith may also explore the construction of a ‘Gas-to-Power'(“GTP”) plant, as successfully carried out in Italy, to commercialize gas production and provide additional electricity supply to the local economy.

Gross total recoverable gas volumes have been estimated by OMV, across the OMV Yemen portfolio, to be approximately 571 BSCF.

“Finally, we look forward with enthusiasm to establishing ourselves in Yemen and contributing to the prosperity of the local economy. It is our belief that the country has extraordinary economic potential, especially in respect of its oil and gas industry, and we shall seek to maximise our relationship with the local authorities to achieve our development objectives,” Andrea Cattaneo said.