The Torrente Cigno concession is located in the Province of Campobasso in the central Italian region of Molise.
Geologically, the concession is located within the Molisano-Pugliese foredeep.
Zenith’s Italian subsidiary acquired a working interest of 45% in 2013 and is the operator of the concession.
Historically, 23 wells were drilled in this concession with commercial natural gas production achieved in 3 of these wells. At present one well, Masseria Vincelli 1, is in production, and began producing in 2002. The reservoir of this well, named ‘Bolognano’, is considered one of the most productive reservoirs in the region.
The Company is evaluating plans to sidetrack the Masseria Vincelli 1 well and create a second well named Masseria Vincelli 2. According to the Company’s third-party CPR, this well could produce 1000 MCF/d (167 BOE/d) with a net cost of US$1.5 million. A successful sidetrack would also increase the Company’s existing production of natural gas condensate to 9.1 b/d.
The Torrento Cigno concession is Zenith’s most profitable asset in Italy and is one of the most valuable in terms of reserves.
The natural gas produced at this concession is low-grade acid gas with a CO2 content of 19% and unsuitable for transmission through the national pipeline network. Until recently, it was sold at price €0.035 per m3 of natural gas which is significantly below the Italian natural gas price benchmark.
Zenith’s decision in 2015 to acquire four turbo gas powered electricity generation engines has resulted in a significant increase in the profitability of production revenue at this concession. The conversion of Zenith’s 45% share of the concession’s low-grade natural gas production to electricity, with an approximate return of 3 kW per cubic metre of natural gas, has increased the value of production to approximately €0.135 per cubic metre, supported by strong local electricity prices of approximately €45.00 per MWh. All electricity generated at Torrente Cigno is sold directly into the local grid.
|Location||Campobassa Province, Molise region|
|Expiry||2019 (Application submitted in March 2017 for ten-year extension)|
|Working interest||Zenith Energy (Operator)||45%|
|Gas Plus Italiana||55%|
|Production||Low grade natural gas used to produce electricity and natural gas
|Net Value1||€37.41 million|
|Reserves (2P)||14.92 BCF|