The Court acknowledged several legal arguments presented by AAOGC but awarded only EUR 160,000 in compensation. At the same time, the Court ruled that a previously contested SMP invoice amounting to approximately EUR 630,000 remains payable due to procedural timing clauses in the contract. The decision is not subject to provisional enforcement, and Zenith has confirmed that an appeal has been initiated through its legal counsel, Charles Russell Speechlys Paris.

Analyst Group’s View on the Paris Court Decision

The original claim was increased to USD 9 million in 2023, reflecting extended operational and commercial damages resulting from SMP’s drilling activities in the Tilapia oilfield. In this context, the Paris Commercial Court’s decision to award only EUR 160,000 (approximately SEK 1.76M) constitutes a limited recovery and should be viewed as a disappointment in relation to the size of the original claim. While the Court acknowledged several of AAOGC’s legal arguments, the compensation awarded does not reflect the magnitude of the alleged damages. Importantly, the case relates to legacy events that predate Zenith’s acquisition of AAOGC in 2020 and is unrelated to the Company’s current operations or management. Since acquiring AAOGC, Zenith has acted to advance the claim, strengthen its legal position through the engagement of Charles Russell Speechlys Paris, and support its arguments with third-party technical expert reports. It is also worth noting that the legal cost of procedures appears to be largely offset by the EUR 30,000 in procedural costs (approximately SEK 330,500) awarded in favor of AAOGC and paid by SMP, following an earlier ruling by the Paris Court of Appeal in 2023. Taken together, the Paris Court’s decision currently has no financial or operational impact on the Company.

While the ruling acknowledged several of AAOGC’s legal arguments, the low compensation and the validation of SMP’s disputed invoice, based on a procedural clause rather than substantive merits, underline the mixed nature of the outcome. However, the Court’s decision is not subject to provisional enforcement, meaning there is no immediate cash outflow for Zenith, and the contested invoice is not payable while the appeal is ongoing.

Analyst Group has not included any financial upside from the SMP litigation in our valuation model. As such, any future positive outcome from the appeal process should be viewed as a legal option, rather than a valuation driver. Given the limited financial scale of the SMP case, especially in comparison to Zenith’s ongoing ICSID arbitration, where the Company is pursuing USD 572.65 million in damages under the UK–Tunisia Bilateral Investment Treaty, we do not consider the outcome of this ruling to materially affect Zenith’s investment case. It is also important to clarify that this case is fully independent of Zenith’s separate arbitration processes under the ICSID and ICC frameworks. These proceedings differ both in jurisdiction and legal substance, and the SMP ruling has no bearing on their trajectory or potential outcomes.

Read Analyst Group’s comment here

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