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The City’s No 1 oil analyst Zac “the knife” Phillips of SP Angel shows no mercy. Today’s victim is Zenith Energy (ZEN) which claims to have good news. Zac is damning and opines:
Zenith Energy (3.35p) – Not Enough is Known:
Today’s news that the Company has secured a B+ rating for a bond (outlook positive) is positive on the one hand, but for Zenith, we feel that this is a false flag. The Company has failed to approach its development properly, which, as has been seen, given rise to missed targets and a belated geological study. What is required, to complete the job is to undertake an integrated engineering study, arrive at a hypothesis for the development of the field and then undertake a pilot study.
None of this, to our knowledge, has been completed. Of course, the bond rating is one thing, the ability to attract bond investors is another. While the financing may be non-dilutive, the failure to undertake the most basic of studies and eliminate the risk within the portfolio, as is the case currently, means that the risk of getting it wrong is nominally complete investor wipe-out, just look at Gulf Keystone.
The risks have not been eliminated, and a debt instrument runs the risk of loss of the asset completely.
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