REG - Block Energy PLC - Binding Framework Agreement - Project III Farm Out

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RNS Number : 2849A  Block Energy PLC  14 April 2026

This announcement contains inside information for the purposes of the UK
Market Abuse  Regulations ('UK MAR'). Upon publication of this announcement,
this inside information (as defined in UK MAR) is now considered to be in the
public domain. The person responsible for arranging the release of this
announcement on behalf of the Company is Phil Dimmock, Non-Executive
Chairman.

 

14 April 2026

Block Energy plc

("Block" or the "Company")

Binding Framework Agreement for Project III Farm Out

Block Energy plc, the development and production company focused on Georgia,
is pleased to announce that it has executed a binding Framework Agreement with
Zhijiang Sanning Energy Co. Ltd ("Sanning") for the farm-out of Project III.

Highlights:

 ·   Milestone Framework Agreement executed for the farm-out of Project III to
     Sanning.
 ·   Up to USD 75 million carry comprising appraisal drilling and early facilities
     construction based on current estimates for the Project III fields.
 ·   Sanning to acquire 51% of Project III, with Block holding 49% and retaining
     operatorship throughout the appraisal programme.
 ·   Block retains 100% of Projects I, II, IV and CCS as well as 100% of existing
     oil and gas production.
 ·   The transaction sees the Project III 2.77 TCF 2C Contingent Resource (Block
     Energy, 2024) appraised through a multi-well programme initially focused on
     Patardzueli-Samgori.
 ·   Estimated Project III 2C gross success case NPV10 of USD 2.2 billion.
 ·   Sanning is the upstream affiliate of Hubei Sanning Chemical Industry Co. Ltd
     ("Sanning Chemical"), one of China's leading chemical companies producing over
     11.5 million tons of chemical products and delivering revenues in excess of
     USD 2.8 billion in 2025.

 

Framework Agreement

Under the Framework Agreement, between Block and Sanning ("the Parties"),
Sanning will acquire a 51% Participating Interest in Project III (being the
Lower Eocene and deeper horizons) of the XIB and XIF Production Sharing
Contracts*¹ ("PSCs"). In exchange, Sanning commits to carry Block on all
capital and operating costs, currently estimated at USD 13 million, for the
appraisal of the Patardzueli-Samgori field.

Subject to successful appraisal results and the triggering conditions to be
set out in the Transaction Documents, Sanning shall carry Block on all costs
of procuring and installing an early gas processing facility and associated
pipeline infrastructure, up to an additional estimated commitment of USD 12
million.

At Sanning's election, Sanning may carry an optional work programme for the
appraisal of the Rustavi and Teleti fields. If Sanning proceeds, Sanning shall
carry Block through appraisal (a) drilling two new deviated appraisal wells
targeting the Lower Eocene and/or Upper Cretaceous horizons; and (b)
installing associated facilities where required. The scope, sequencing and
cost allocation may be adjusted by mutual agreement.

Sanning also has the option to participate in and carry Block on drilling and
production facilities across Rustavi and Teleti fields, currently estimated at
USD 50 million.

Block will retain a 49% Participating Interest in Project III, and remain
operator throughout the appraisal programme. The Company will retain 100%
ownership of Projects I, II, IV and CCS as well as all existing oil and gas
production.

If Sanning does not complete the target work programme for the firm and
contingent work plan, there shall be a corresponding dilution of the rights
and interests it has obtained.

The Parties intend to finalise a farmout agreement, an assignment agreement
and a joint operating agreement (together, the "Transaction Documents") in H2
2026. Completion of the proposed transaction remains subject to execution and
delivery of the Transaction Documents, receipt of all necessary governmental
approvals in Georgia and China, shareholder and regulatory approvals as
required under the AIM Rules for Companies, and the absence of any material
adverse change affecting the parties or the relevant PSCs. The Board believes
the transaction represents a major milestone for Block, securing substantial
third-party capital for the appraisal of Project III, and offering significant
upside for shareholders.

Project III

Project III comprises the Lower Eocene and Upper Cretaceous gas discoveries
across Block's XIB and XIF licences in central Georgia, including the
Patardzueli-Samgori, Rustavi and Teleti fields and the South Dome prospect.
Gas has been tested in legacy wells on each of the fields with a methane
concentration greater than 95% and no Hydrogen sulfide. The XIB and XIF areas
benefits from 3D seismic.

Project III is a low capex, short-cycle, gas appraisal and development
opportunity supported by existing wells and infrastructure. The fields are
located within 15 miles of the South Caucasus Pipeline, which transports gas
to Turkey and Europe.

Block will operate the appraisal programme, drawing on the Company's extensive
experience of operating the fields at the shallower, oil producing, Upper and
Middle Eocene horizons.

Total 2C Contingent resources are 2.77 TCF (Block Energy, 2024), with a
further 574 BCF 2U Prospective Resources (Block Energy, 2024).

Project III was declared strategic by Georgia's Ministry of Economy and
Sustainable Development in 2023.

 (Map showing Project III location and field schematic at Lower Eocene
 reservoir interval)

 

Patardzueli-Samgori Appraisal Programme

The Patardzueli-Samgori appraisal programme will appraise the Lower Eocene
reservoir interval through a re-test and side-track drilling programme, and
test the Upper Cretaceous interval for further evaluation.

The programme is designed to acquire the reservoir data required to advance
resources to reserves and to support full field development planning. Backed
by a firm commitment of USD 13.0 million, the programme comprises

 ·   Re-entry and testing of the SAM-202 well in existing and previously untested
     Lower Eocene intervals;
 ·   Re-entry and testing of SAM-201 in existing and previously untested Lower
     Eocene intervals;
 ·   A long-reach, highly inclined, sidetrack of SAM-201, the first directional
     well in the reservoir, targeting the Lower Eocene fracture zones;
 ·   Re-entry and re-test of PAT-E1 in the Upper Cretaceous in the Patardzueli
     Field. This well previously tested gas but is believed to have suffered issues
     relating to hole stability;
 ·   A long-reach, highly inclined, sidetrack of PAT-E1, the second directional
     well in the reservoir, targeting untested Lower Eocene fracture zones.

 

Each operation will include extensive data collection and well tests to
determine the long-term production profiles and number of wells required to
recover the resource.

If tested successfully the wells will be converted to producers, targeting an
initial production of 20 MMCF/d (c. 3,300 boepd) in the 2C case. They will be
monetised through the rapid construction of an early gas processing facility
and associated intra-field and sales gas pipelines.

Patardzueli-Samgori contains 1,074 BCF 2C Contingent Resources (Block Energy,
2024).

 

 (Top Lower Eocene Depth Structure Map with planned appraisal activities)

 

 

Production and Development Pathway

Block has developed a full appraisal and early gas monetisation plan for each
of the Patardzueli-Samgori, Rustavi and Teleti fields, together with
conceptual full-field development plans and associated production profiles.

The fields are expected to be appraised and developed in phases, with initial
investment in testing and drilling followed by early gas production facilities
to reduce overall development capital requirements, and thereafter a staged
ramp-up in production to a plateau of up to 500 MMCF/d (c. 83,000 boepd) in
the 2C case across Project III.

Georgia's robust investment and operating environment supports accelerated
appraisal and development, with the potential to ramp up production quickly in
a success case.

 

 

About Sanning

Zhijiang Sanning Energy Co. Ltd ("Sanning Energy") is the upstream affiliate
of Hubei Sanning Chemical Industry Co. Ltd ("Sanning Chemical").

Sanning Chemical is one of China's leading chemical companies and is privately
held. Production of fertiliser and chemical products exceeded 11.5 million
tons in 2025, delivering revenues in excess of USD 2.8 billion. Sanning
Chemical, with operations primarily based in Hubei province and Shanghai, has
been named a leading National High-Tech Enterprise.

Sanning Energy is focused on upstream investments in energy, particularly
natural gas, as it aims to reduce its environmental footprint and improve
overall efficiency.

Transaction Next Steps

Next steps in the Transaction include negotiation, finalisation and completion
of definitive Transaction Documents and approvals from both the Georgian and
Chinese governments. Under the Framework Agreement the documents are expected
to be executed in H2 2026, and should a successful transaction be concluded in
this time frame, operations will commence 1H 2027.

Commenting, Mr. Tatishvili, Head of the State Agency of Oil and Gas commented;
 

"Project III is strategically important for Georgia and, if successfully
appraised and developed, has the potential to make a meaningful contribution
to domestic gas supply, foreign direct investment, job creation and
longer-term energy security. The proposed entry of Sanning is encouraging and
reflects both the quality of the project and growing international interest in
Georgia as an energy investment destination."

Commenting, Mr. Haywood, Chief Executive Officer of Block Energy plc
commented;

"This is a major step forward for Block and a defining milestone for Project
III. The agreement provides a clear pathway to secure substantial third-party
capital for appraisal and early gas monetisation, whilst preserving
significant upside for our shareholders through our retained interest and
continued operatorship.

Just as importantly, we see this as the foundation of a broader strategic
partnership. Block brings upstream capability, while Sanning brings downstream
demand, infrastructure ambition and commercial depth. We believe this
partnership has the potential to extend beyond Georgia as we continue to
expand our new ventures strategy."

Commenting, Mr. Xiong, Chief Executive Officer of Sanning commented;

"We are pleased to enter into this agreement with Block Energy in relation to
Project III. The project represents an attractive gas appraisal and
development opportunity with meaningful scale and strong strategic relevance
to Sanning's core business and expansion plans.

We have been impressed by the quality of Block's technical work and its
upstream capability. We look forward to working closely together with Block,
to advance the appraisal programme and to exploring broader opportunities
beyond Georgia."

 

**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.

 

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 8434 2643

 Philip Dennis

 (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 4,256 km2, 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.
 ·   bopd: barrels of oil per day.
 ·   Mbbls: thousand barrels.
 ·   MMbbls: million barrels.
 ·   MMboe: million barrels of oil equivalent.
 ·   MMCF/d: millions of cubic feet of gas per day.

 

*¹ the PSCs are held by Block's subsidiaries, Block Rustaveli Limited and
Georgia New Ventures Limited

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