REG - Block Energy PLC - Acquisition

Block EnergyAnnouncement

27/03/2025 07:15

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RNS Number : 3168C  Block Energy PLC  27 March 2025

27 March 2025

Block Energy plc

("Block" or the "Company")

Acquisition of Interest in Exploration Licence

Block Energy plc (AIM: BLOE), the production and development company focused
on Georgia, is pleased to announce the acquisition of a 10% participating
interest in the XIQ Production Sharing Contract ("PSC").

Highlights

·    Acquired a 10% participating interest in the XIQ PSC, with an option
to increase to 22%.

 

·    XIQ is highly prospective, with 451.5 MMbbl oil and 823.3 BCF gas
mean unrisked recoverable prospective resources (DeGolyer and MacNaughton,
June 2023).

 

·    Martkopi Terrace prospect is the key target, with 267.2 MMbbl mean
unrisked recoverable prospective resources.

 

·    First-year work programme includes Martkopi-10 well re-entry and an
environmental baseline study.

 

·    Farm-out discussions ongoing, with third parties considering
participation in a seismic and drilling work programme.

 

·    Transaction fully funded from existing cash resources, with
obligations under the Joint Operating Agreement ("JOA") fully met.

 

·    Company baseline production remains stable, and above Company
breakeven.

 

Paul Haywood, Chief Executive Officer of Block Energy plc, commented:

"We are delighted to acquire an interest in the highly prospective XIQ
licence, further strengthening our portfolio of strategic, high-impact assets.
The DeGolyer and MacNaughton resource report combined with the 22%
participating interest held by Georgia's national oil company underline the
quality of this opportunity. We look forward to supporting our partners at
GOGL as they progress discussions with potential farm-in partners.

"Meanwhile, our stable production base continues to underpin a strategy that
balances high-impact appraisal and exploration objectives with financial
discipline. This year is shaping up to be an exciting one for the Company, and
we look forward to providing further updates soon."

Background to the Acquisition

The XIQ licence is located north of Block's existing XIB PSC and contains
significant exploration potential, with an independent resource report by
DeGolyer and MacNaughton (2023) estimating mean unrisked recoverable
prospective resources of 451.5 million barrels ("MMbbl") of oil and 823.3
billion cubic feet ("BCF") of gas.

The XIQ PSC is operated by Georgian Oil and Gas Limited ("GOGL"), alongside
the State oil company of Georgia, Georgian Oil and Gas Corporation ("GOGC").
GOGL is currently in advanced discussions with multiple parties regarding a
potential farm-out of the licence.

 MAP 1: Regional Map Showing XIQ Licence Location in Relation to Block's
 Existing PSCs

As previously announced, in December 2022
(https://polaris.brighterir.com/public/block_energy/news/rns/story/w08vn6r) ,
Block farmed out portions of XIB, known as Didi Lilo and South Samgori, to
GOGL. Under the agreement, GOGL undertook a 210 km 2D seismic programme and
the reprocessing of 1,000 km of legacy seismic data. The transaction completed
in March 2023 following GOGL's fulfilment of these obligations.

In 2024, Block and GOGL determined that unitising multiple PSCs into an
enlarged single PSC, including XIC, XIK, XIM, XIN, XIQ, and Didi Lilo (the
"Combination Project"), would enhance commercial viability and strengthen
potential farm-in partner discussions. To support this, Block relinquished
Didi Lilo to facilitate the unitisation of these licences under a single PSC.

As part of this process, Block secured two back-in options:

·      Option 1: The right to acquire 10% of XIQ within 180 days of the
Combination Project's completion (now exercised). The consideration is USD 1;
however, Block is responsible for contributing its share of the 2025 work
programme which is USD 77,000.

·      Option 2: The right to acquire an additional 12% (for a total of
22%) within 365 days, or 90 days post farm-out, whichever is sooner. The
consideration for Option 2 will be aligned with third-party farm-in terms, or,
if no farm-out occurs, based on historical transactions involving GOGC.

Block has now exercised Option 1 and holds a 10% participating interest in the
XIQ PSC.

 MAP 2: PSC Map Highlighting XIQ and Adjacent Licences Involved in the
 Combination Project

 

XIQ PSC Overview

The XIQ PSC covers 1,260 km² and was awarded in 2022 with a 25-year term.
Following Block's acquisition, the participating interests are:

·      Georgian Oil and Gas Limited (Operator) - 68%

·      Georgian Oil and Gas Corporation (GOGC) - 22%

·      Block Energy plc - 10%

The first-year work programme includes: i) Environmental baseline study and
ii) Re-entry of the Martkopi-10 well to evaluate its suitability for deepening
or side-tracking. Block has already met its share of the first-year work
programme costs from its existing cash resources.

Martkopi Terrace - Key Exploration Prospect

The Martkopi Terrace prospect, located within the XIQ PSC, is Block's initial
exploration focus. It is a highly prospective Middle Eocene structure,
estimated to contain 267.2 MMbbl mean unrisked prospective recoverable oil
resources.

Martkopi Terrace is located 7 km north of the Patardzueli-Samgori oil field,
which historically produced 180 MMbbl. The Martkopi-10 well, drilled in the
1970s, did not reach the Middle Eocene target. The upcoming re-entry programme
will assess the well's condition and determine potential for deepening or
sidetracking.

 

 MAP 3: Structural Map of the Martkopi Terrace Prospect and Nearby Fields

 

Farm-Out Discussions

The Operator, GOGL, is in advanced negotiations with third parties regarding a
potential farm-out of XIQ. While no assurance can be given that a transaction
will conclude, discussions are focused on securing a carried exploration
programme, including 3D seismic acquisition and exploration drilling. Block
will update shareholders as appropriate.

Funding and Financial Position

Block has funded its share of the initial work programme using existing cash
resources and has met all obligations under the Joint Operating Agreement for
the next 12 months.

South Samgori - Further Opportunities

As part of Block's 2023 farm-out of XIB, a portion of the licence, known as
South Samgori, was also farmed out to GOGL (with Block and GOGL each holding
50% of South Samgori). Efforts to unitise multiple licences in this area are
ongoing in a similar transaction structure to the Didi Lilo/XIQ Combination
Project. Block retains two back-in options on any future enlarged PSC covering
South Samgori and continues to work alongside GOGL to advance the process.

ENDS

 

Summary of Map Placements

1.    Regional Map - Shows XIQ in relation to XIB and Block's broader
Georgian portfolio.

2.    PSC Map - Highlights XIQ and adjacent licences forming part of the
Combination Project.

3.    Structural Map - Displays the Martkopi Terrace prospect and nearby
producing fields.

 

**ENDS**

THIS ANNOUNCEMENT CONTAINS 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.  ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

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.

 

For further information please visit 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)
 Mark Antelme                Celicourt Communications         Tel: +44 (0)20 7770 6424

 Philip Dennis

 Ali AlQahtani

 (Financial PR Adviser)

 

Notes to editors

Block Energy plc is an AIM quoted independent oil and gas production and
development company with a strategic focus on unlocking the energy potential
of Georgia. With interests in seven Production Sharing Contracts in central
Georgia, covering an area of 5,516 km(2), including the XIB licence which has
over 2.77TCF of 2C contingent gas resources, with an estimated Net Present
Value 10 ("NPV") of USD 1.65 billion, in the Patardzueli-Samgori, Rustavi and
Teleti fields. (Source: IER, OPC 2024 & Internal estimates).

The Company has structured its operations around a four-project strategy.
These projects, characterized by development stage, hydrocarbon type, and
reservoir, are pursued concurrently to achieve multiple objectives. This
includes increasing existing production, redeveloping fields, discovering new
oil and gas deposits, and capitalizing on the substantial, yet untapped, gas
resource across its licences. The goal is to deliver on multi TCF gas assets,
strategically well located for the key EU market, supported by partner funding
and cash from existing producing assets.

Located near the Georgian capital of Tbilisi, Block Energy is well-positioned
to contribute significantly to the region's energy landscape. This proximity
facilitates seamless operations and underscores our commitment to the economic
and energy development of Georgia.

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.

·    MMbbls: million barrels.

·    MMboe: million barrels of oil equivalent.

·    MMcf: million cubic feet.

 

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