REG - Block Energy PLC - Corporate Update

Block EnergyAnnouncement

22/12/2023 07:00

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RNS Number : 6952X  Block Energy PLC  22 December 2023

22 December 2023

 

Block Energy plc

("Block" or the "Company")

Corporate Update and Project III Farm Out Process

 

Block Energy plc, the development and production company focused on Georgia,
is pleased to provide the following corporate update.

Background

The Company's four-part project strategy is evolving to accelerate the
significant commercial opportunity offered by Project III, focused on the
multi-TCF undeveloped gas resource within the Lower Eocene and Upper
Cretaceous reservoirs of Blocks XIB and XIF to which internal estimates
attribute 984 BCF 2C Contingent Resources.

Following continued development during 2023, Project III was declared a gas
resource of strategic importance by the State of Georgia, and Block has
concluded it is now ready to support a farm-out at the asset level. Until now
the Project has been funded organically through cashflows from Project I. The
accelerated development of Project III has a good chance of success and
promises to have a material impact on its Net Asset Value.

 

The disciplined implementation of Project I during 2023, and Block's focus on
improving its overall margin through reducing its operational cost structure
ensures the Company will be well funded to execute this high-impact strategy
through 2024, based on current production, oil prices and expected natural
decline rates. Block will, however, consider drilling additional Project I
wells next year as the Company progresses its farm-out strategy.

 

Project III update

 

During 2023, the Company completed an integrated full field development study
of the Lower Eocene and Upper Cretaceous reservoirs, identifying gas-bearing
natural fracture systems of one and a half kilometres thick, spanning the
Company's XIB and XIF blocks across three fields, which included
reinterpreting two 3D seismic surveys, well design and planning, third-party
conceptual development engineering and cost estimation of a pilot scheme and
full field processing facilities. Block also signed an MoU with the State of
Georgia to support commercialisation of the Company's Project III gas
resources. The Company is also currently completing a study on what promises
to be a world-class Carbon Capture and Storage (CCS) project throughout XIB,
integrated into Project III development plans, thus supporting the Company's
longer-term sustainability goals.

 

Project III Farmout process

 

Work undertaken in 2023 has informed the design of a staged appraisal and
development plan which is being used to facilitate discussions with possible
partners regarding the broader development of our assets in Georgia, including
a farm-out of Project III. These discussions, supported by the Government of
Georgia, are taking place within the context of Georgia's continued
integration with the global economic community this year, including the
country's acceptance as an EU candidate nation and its entry into a strategic
partnership with China.

 

Growing industry interest in Georgia is also spurring an increase in
exploration activity. OMV is planning to acquire 3D seismic in the Black Sea,
and China's commitment to the country has been underlined by the presence of a
private Chinese firm using services supplied by CNPC, the Chinese state-owned
integrated energy group, in an onshore location between the Black Sea and
Block's Project III.

 

CNPC has been contracted to deliver a firm work programme comprising two deep
wells, using a modern rig and a full suite of integrated services. Positive
results from this work programme would have an instant read-through to the
value of Project III, which stands to benefit from access to a drilling rig
and integrated services capable of drilling deep directional wells promising
to reduce mobilisation and demobilisation time and costs.

 

 

Reporting process:

 

Given Block's strategy has evolved in-line with the development of its assets,
the Company is revising its reporting process. Rather than providing updates
each quarter Block will publish shareholder updates in-line with specific news
on strategic and operating activity, and to observe financial reporting
requirements. The Company believes news of its initiatives and operating
developments no longer conform to a quarterly news cycle and therefore risk
compromising strategic and commercial discussions with potential farm-in
candidates.

Block Energy plc's Chief Executive Officer, Paul Haywood, said:

"I would like to thank the entire Block team for their continued effort and
focus, which has supported the safe delivery of this year's plan and ensured
we remained cashflow positive while allocating capital to advance our
high-impact Projects III and IV.

"Our strategy is now evolving to accelerate the delivery of value from the
Company's high-impact projects which, in addition to Projects III and IV,
include Project II, where the team continues to advance plans for secondary
recovery that promise to trigger yet another high-impact and near-term CF
farm-out process, supported by a CCS pilot programme. This shift in
focus also allows us to restructure our cost base and set our Project I
programme within the context of our wider strategy.

"The Company remains focussed on delivering a quantum leap for our
shareholders and has an extremely busy first quarter planned in 2024, when we
will continue to implement our strategy, which is being funded by current
cashflows. In the meantime, I wish you all a Merry Christmas and look forward
to reporting on our progress early in the New Year".

 

Stephen James BSc, MBA, PhD (Block's Subsurface Manager) has reviewed the
reserve, resource and production information contained in this
announcement. Dr James is a geoscientist with over 40 years of experience in
field development and reservoir management.

 **ENDS**

THIS ANNOUNCEMENT CONTAINS INFORMATION PREVIOUSLY DEEMED BY THE COMPANY TO BE
INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE
REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN
(WITHDRAWAL) ACT 2018, AS AMENDED.  WITH THE PUBLICATION OF THIS ANNOUNCEMENT
VIA A REGULATORY INFORMATION SERVICE, SUCH INFORMATION IS CONSIDERED TO BE IN
THE PUBLIC DOMAIN.

For further information please visit http://www.blockenergy.co.uk/
(http://www.blockenergy.co.uk/)  or contact:

 Paul Haywood                                   Block Energy plc                 Tel: +44 (0)20 3468 9891

 (Chief Executive Officer)
 Neil Baldwin                                   Spark Advisory Partners Limited  Tel: +44 (0)20 3368 3554

 (Nominated Adviser)
 Peter Krens                                    Tennyson Securities              Tel: +44 (0)20 7186 9030

 (Corporate Broker)
 Philip Dennis / Mark Antelme / Ali AlQahtani   Celicourt Communications         Tel: +44 (0)20 7770 6424

 (Financial PR)

 

Notes to editors

Block Energy plc is an AIM-listed independent oil and gas company focused on
production and development in Georgia, applying innovative technology to
realise the full potential of previously discovered fields.

Block has a 100% working interest in Georgian onshore licence blocks IX and
XIB. Licence block XIB is Georgia's most productive block. During the
mid-1980s, production peaked at 67,000 bopd and cumulative production reached
100 MMbbls and 80 MMbbls of oil from the Patardzeuli and Samgori fields,
respectively. The remaining 2P reserves across block XIB are 64 MMboe,
comprising 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe.
(Source: CPR Bayphase Limited: 1 July 2015). Additionally, following an
internal technical study designed to evaluate and quantify the undrained oil
potential of the Middle Eocene within the Patardzeuli field, the Company has
estimated gross unrisked 2C contingent resources of 200 MMbbls of oil.

The Company has a 100% working interest in licence block XIF containing the
West Rustavi onshore oil and gas field. Multiple wells have tested oil and gas
from a range of geological horizons. The field has so far produced over 75
Mbbls of light sweet crude and has 0.9 MMbbls of gross 2P oil reserves in the
Middle Eocene. It also has 38 MMbbls of gross unrisked 2C contingent resources
of oil and 608 Bcf of gross unrisked 2C contingent resources of gas in the
Middle, Upper and Lower Eocene formations (Source: CPR Gustavson Associates: 1
January 2018).

Block also holds 100% and 90% working interests respectively in the onshore
oil producing Norio and Satskhenisi fields.

Project I is focused on developing oil production from the Middle Eocene
reservoir of the West Rustavi/Krtsanisi field.

Project II aims to redevelop the Middle Eocene reservoir of the Patardzeuli
and Samgori fields.

Project III is focused on the undeveloped gas-bearing natural fracture system
within the Lower Eocene and Upper Cretaceous reservoirs - each more than a
kilometre thick - spanning the XIB and XIF blocks.

Project IV is focused on exploring the full potential of our licences,
including licence IX and Didi Lilo where we have identified significant
prospectivity.

The Company offers a clear entry point for investors to gain exposure to
Georgia's growing economy and the strong regional demand for oil and gas.

Glossary

·    bbls: barrels. A barrel is 35 imperial gallons.

·    Bcf: billion cubic feet.

·    boe: barrels of oil equivalent.

·    boepd: barrels of oil equivalent per day.

·    bopd: barrels of oil per day.

·    Mbbls: thousand barrels.

·    Mboe: thousand barrels of oil equivalent.

·    Mcf: thousand cubic feet.

·    MD: measured depth.

·    MMbbls: million barrels.

·    MMboe: million barrels of oil equivalent.

·    MMcf: million cubic feet.

·    TVD: True Vertical Depth.

 

 

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