Zenith Energy Ltd (LON:ZEN) (CVE:ZEE) has sold its operations in Argentina following the suspension of oil production at fields in the Comodoro Rivadavia area.
The Canadian oil and gas company, which started trading on AIM last month, said it has offloaded the assets to a group of local energy investors but did not disclose the buyers' identity. The assets include the Don Ernesto and Don Alberto fields, which Zenith acquired in July 2010.
Zenith said the investors will pay a nominal sum in recognition of the costs the new owner is expected to incur to return the fields to production.
Production at Zenith’s Argentine operations has been suspended since August 2015 after the collapse of a storage tank owned by Yacimientos Petrolíferos Fiscales (YPF), the national oil company. The tank’s breakdown meant oil production could no longer be transported through YPF’s pipelines.
The issues affecting the transportation of oil have still not been resolved, leading Zenith to “reconsider its operational involvement in Argentina”.
Chief executive Andrea Cattaneo said the disposal of activities in Argentina was a strategic move.
“This will enable the company to positively recalibrate its operational footprint in a way that coherently reaffirms our Italian energy production interests and specifically the primary importance of our transformational opportunity in Azerbaijan,” Cattaneo said.
“The risk of overstretching where the management team is active on too many fronts is now reduced.”
He added that the group's primary objectives were to achieve incremental production increases in Azerbaijan and to continue stable energy production activities in Italy.