Zenith Energy Ltd. Filing of Quarterly Results

February 16, 2018

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon publication of this announcement via a regulatory information service ("RIS"), the inside information contained in this document is now considered to be in the public domain.

ZENITH ENERGY LTD.

("Zenith" or the "Company")

Filing of Quarterly Results

Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN; TSX.V: ZEE), the dual listed international oil & gas production company operating the largest onshore oilfield in Azerbaijan, is pleased to announce the filing of its consolidated quarterly results for the three and nine months ended December 31, 2017.

In accordance with Canadian securities laws, the Company's quarterly results were filed on SEDAR on February 15, 2018.

Highlights for the three and nine months ended December 31, 2017 include the following:

-During the three and nine months ended December 31, 2017, the Company produced 22,317 and 70,271 barrels of oil from its assets in Azerbaijan.

Production from a number of the Company's wells in Azerbaijan was suspended during Q3 as a result of field rehabilitation operations, specifically the installation of electrical submersible pumps and well interventions. Daily production from the field was also affected as a result of the Company receiving faulty chemical to treat its oil production from an international chemical supplier. Zenith is now seeking to have the faulty chemical replaced and has ordered new chemical supplies to avoid similar problems being incurred in future.

-During the three and nine months ended December 31, 2017, the Company sold 3,578 and 13,199 mcf of natural gas production from its Italian assets.

-During the three and nine months ended December 31, 2017, the Company sold 295 and 782 barrels of condensate production from its Italian assets.

-During the three and nine months ended December 31, 2017, the Company sold 1,922 and 7,185 MWh of electricity production from its Italian assets.

-On November 1, 2017 the Company announced that it had signed a commitment letter with Olieum Services WLL ("Olieum"), an integrated oilfield services and equipment joint venture based in Bahrain, for the procurement of a Genesis BQ500 onshore drilling rig. Olieum has worked closely with the Company to structure a unique lease arrangement that aligns Zenith's targeted growth plans and cash flows with its future equipment requirements.

The Genesis BQ500 is the latest generation, automated onshore hydraulic drilling rig to be manufactured by B Robotics W S.R.L, a founding partner in Olieum, and a leading Italian oil and gas innovation company specialising in the design and manufacture of advanced oil and gas drilling equipment. The rig is expected to deliver enhanced automation, efficiency and safety to the Company's drilling operations, whilst driving down costs and time-to-production. This has largely been achieved through extensive research and development in modular rig design, and in key components including the monkey board, slips, lay-up and down machine, pipe containers, roughneck, subs and bits loader, and all the working floor tools.

Manufacturing of the Genesis BQ500 is scheduled to begin upon the fulfilment of the preliminary conditions detailed in the commitment letter. This is expected to take place in early 2018, with delivery anticipated in late 2018.

-The Company recorded revenues of CAD$1,620k for its production during the three months ended December 31, 2017.

-The Company incurred CAD$3,418k of capital expenditures in the nine months ended December 31, 2017, primarily resulting from the field rehabilitation programme underway in Azerbaijan.

Zenith Chief Executive Officer, Andrea Cattaneo, commented:

"Although we have faced some operational challenges in recent months, I believe these are now being successfully addressed and the Company has a very exciting development journey ahead, coupled with potential transactions to enhance the portfolio and broaden the risk profile of our assets. Accordingly, I look forward to announcing increased production revenue in the next set of quarterly results as we improve well performance and look to grow our daily production levels."

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Consolidated Statement of Comprehensive Income
Continuing operations		Nine months ended
		31 December 2017	31 December 2016
		Unaudited	Unaudited
	Note	CAD $'000	CAD $'000
Revenue	22	4,402	2,984
Royalties		-	(7)

Cost of Sales
Production costs		(1,959)	(1,804)
Depletion and depreciation	7	(976)	(523)
Gross Profit / (Loss)		1,467	650

Administrative expenses	4	(962)	(3,697)
Gain on business acquisition		-	771,189
Operating Profit / (Loss)		505	768,142

Fair value movements		-	(40)
Gain (loss) on sale of marketable securities		-	4
Foreign exchange		-	221
Net Interest expense	5	64	(570)

Profit/(Loss) for the period before taxation		569	767,757

Taxation	6	-	(153,044)

Profit/(Loss) for the period from continuing operations		569	614,713

(Loss)/Profit from discontinued operations, net of tax		-	-

Profit/(Loss) for the period		569	614,713

Other Comprehensive Income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations, net of tax		68	(8,428)

Total Comprehensive Income for the period attributable to equity holders for the parent company		637	606,285

Earnings per share (CAD$)	20
Basic from profit / (loss) for the period		0.01	10.59
Diluted from profit / (loss) for the period		0.01	5.90
From continuing operations - basic		0.01	10.59
From continuing operations - diluted		0.01	5.90
From discontinued operations - basic and diluted		0.01	5.90

Consolidated Statement of Financial Position					Nine months ended
					31 December 2017		31 December 2016
					Unaudited		Unaudited
ASSETS				Note	CAD $'000		CAD $'000
Non-current assets
	Property, plant and equipment			7	1,075,743		1,066,398
	Capitalised expenses			8	2,378		-
	Other financial assets			9	430		161
					1,078,551		1,066,559
Current Assets
	Inventory			19	296		322
	Trade and other receivables			22	1,912		1,956
	Financial instruments at fair value through profit or loss			12	0		-
	Cash and cash equivalents				2,358		315
					4,566		2,593
TOTAL ASSETS					1,083,117		1,069,152
EQUITY AND LIABILITIES
Equity attributable to equity holders for the parent company
	Share capital			10	20,867		11,456
	Share warrants and option reserve			11	1,172		1,800
	Contributed surplus				2,232		2,231
	Retained earnings / (deficit)				554,646		590,687
	Total equity				578,917		606,174
Non-current liabilities
	Borrowings			13	2,339		2,376
	Deferred consideration payable			15	484,034		287,044
	Convertible loans			14	-		1,309
	Decommissioning provision			16	7,980		9,704
	Deferred tax liabilities			6	2,398		153,927
	Total non-current liabilities				496,751		454,360
Current Liabilities
	Trade and other payables			22	3,857		4,893
	Oil share agreement				-		1,063
	Borrowings			13	2,771		1,946
	Deferred consideration payable			15	440		502
	Convertible loans			14	381		214
	Total current liabilities				7,449		8,618
TOTAL EQUITY AND LIABILITIES					1,083,117		1,069,152


Consolidated Statement of Changes in Equity		Share capital	Warrants and share option reserve		Contributed surplus	Retained earnings / (deficit)		Total
		CAD$'000	CAD$'000		CAD$'000	CAD$'000		CAD$'000
Balance as at 1 April 2016		9,578	1,510		2,231	(15,598)		(2,279)
Income/(loss)		-	-		-	606,285		606,285
Other comprehensive income		-	-		-	-		-
Total comprehensive income		-	-		-	606,285		606,285
Share issue net of costs - conversion of loan notes		300	-		-	-		300
Share issue net of costs - debt settlement		45	-		-	-		45
Share issue net of costs - private placement		1,533	-		-	-		1,533
Value of options issued		-	290		-	-		290
Expired options		-	-		-	-		-
Total transactions with owners recognised directly in equity		1,878	290		-	-		2,168
Balance as at 31 December 2016		11,456	1,800		2,231	590,687		606,174

Consolidated Statement of Changes in Equity		Share capital	Warrants and share option reserve		Contributed surplus	Retained earnings / (deficit)		Total
		CAD$'000	CAD$'000		CAD$'000	CAD$'000		CAD$'000
Balance as at 1 April 2017		17,229	1,877		2,332	554,009		575,447
Income/(loss)		-	-		-	637		637
Other comprehensive income		-	-		-	-		-
Total comprehensive income		-	-		-	637		637
Share issue net of costs - conversion of loan notes		-	-		-	-		-
Share issue net of costs - debt settlement		15	-		-	-		15
Share issue net of costs - private placement		1,343	-		-	-		1.343
Share issue net of costs - exercise of options		2,280	(685)		(100)	-		1,495
Expired options		-	(20)		-	-		(20)
Total transactions with owners recognised directly in equity		3,638	(705)		(100)	-		2,833
Balance as at 31 December 2017		20,867	1,172		2,232	554,646		578,917

Reserve Description and purpose

Share capital Amount subscribed for share capital

Warrants and share Relates to possible increase in equity for options issued option reserve

Combined surplus Cumulative earning from non-operational sources

Retained earnings (deficit) Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income.

Consolidated statement of cash flows		Nine months ended
		31 December 2017	31 December 2016
OPERATING ACTIVITIES	Note	CAD $'000	CAD $'000
Profit/(Loss) for the year before taxation		569	614,714
Items not involving cash:		-	-
Shares issued for services		15	131
Shares issued for accrued interest		-	-
Options issued		685	290
Options expired		(20)	-
Gain (loss) on sale of marketable securities		-	(4)
Fair value adjustment on marketable securities		-	40
Foreign exchange		68	61
Gain on business acquisition		-	(771,189)
Deferred taxation		-	153,044
Gain on conversion of convertible notes		-	-
Fair value adjustment on derivative liability		-	-
Depletion and depreciation		976	523
Impairment of property and equipment		-	2
Other expense		-	-
Finance expense		(64)	194
Change in working capital	18	546	285
Net cash used in operating activities		2,775	(1,909)
INVESTING ACTIVITIES
Proceeds on sale of marketable securities		-	11
Cash on disposal of subsidiary		-	-
Investments in subsidiaries		(3,996)	-
Purchases of property, plant and equipment		(3,418)	(103)
Change in working capital	18	-	11
Net cash used in investing activities		(7,414)	(81)
FINANCING ACTIVITIES
Repayment of notes payable		-	-
Proceeds from issue of shares, net of transaction costs		1,343	1,325
Proceeds from exercise of options	10	2,280	-
Proceeds from issue of bonds		-	191
Repayments of loans		(550)	-
Proceeds from loans		-	360
Net cash generated from financing activities		3,073	1,876
Net increase/(decrease) in cash		(1,566)	(114)
Foreign exchange effect on cash held in foreign currencies		-	(5)
Cash at beginning of nine-month period		3,924	138
Cash at end of nine-month period		2,358	19

For more information please visit: www.sedar.com

For further information, please contact:

Zenith Energy Ltd.

Andrea Cattaneo	Luca Benedetto
Chief Executive Officer	Chief Financial Officer
Email: info@zenithenergy.ca

Telephone: +1 (587) 315 9031

Vigo Communications - PR Adviser

Patrick d'Ancona

Chris McMahon

Kate Rogucheva

Tel: +44 (0) 20 7830 9700

Beaufort Securities Limited - (Joint Broker)

Jon Belliss

Telephone: +44 (0) 207 382 8300

Daniel Stewart & Company Plc - (Joint Broker)

Robert Emmet- Corporate Broking

Nikhil Varghese- Corporate Finance

Telephone: + 44 (0) 207 776 6550

Optiva Securities - (Joint Broker)

Christian Dennis

Telephone: + 44 (0) 203 137 1903

Allenby Capital Limited - (Financial Adviser)

Nick Harriss

Nick Athanas

Telephone: + 44 (0) 203 328 5656