Zenith announces three-pronged rehabilitation programme at Azerbaijan asset

Azerbaijani oil and gas producer Zenith Energy said its various recent and ongoing rehabilitation activities would stabilise base production and could increase production and help identify multiple new drilling locations as part of its efforts to re-evaluate the country's neglected onshore oilfields.

Zenith, which said its current rate of production in Azerbaijan has averaged 350boe per day, plans to upgrade submersible pumps, carry out high impact work-overs to wells in the Zardab field and perforation of new wells within the productive zones that seem to offer unexploited potential.

The electrical submersible pump upgrade programme would see a progressive replacement of obsolete and unreliable pumps across 11 wells and was anticipated to create an increase of roughly 219 barrels of oil equivalents per day after completion in November.

Rehabilitation efforts at Zardab, the least developed oil field in the area, will be focused on two wells, with the possibility of a third if either of the first two were successful.

The two wells produced in excess of 500boe per day for a short period of under previous operators before they were plugged-up with sand and production ceased - Zenith noted: "no significant well interventions have taken place in this field during the last 20 years".

Preparatory work had commenced on the third phase the firm's rehabilitation plan, with road construction and transport of equipment set to begin in the near future as Zenith look to determine the likelihood of commercially viable volumes of oil available for production before 31 March 2018.

Mike Palmer, chief operating officer of Zenith Aran, the company's Azerbaijan-based subsidiary, said "The ESP installations will stabilise our base production. The work in Zardab, if successful, would not only significantly increase our production but also help to identify multiple new drilling locations, as Zardab is sparsely drilled.

"The search for new productive zones is a successful strategy that has been used in other rehabilitation projects in Azerbaijan and is an economic way to utilise our existing wellbores. However, such work has never been done in our fields."

As mid afternoon on Wednesday Zenith shares had lost more than 3% to 7p.