REG - Block Energy PLC - Final Results
22/05/2025 07:00
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RNS Number : 6838J Block Energy PLC 22 May 2025
22 May 2025
Block Energy Plc
("Block" or the "Company")
Audited Results for the Year Ended 31(st) December 2024
Block Energy plc, the production and development company focused on Georgia,
is pleased to announce its audited results for the year ended 31(st) December
2024.
Highlights:
Block continued to make progress in executing its four Project strategy in the
year ended 31 December 2024:
· Continued focus on strong Health, Safety, Environment and Social
("HSES") practices, with further updates to its HSES plans, training matrixes
and leadership development.
o Delivered 283,205 operational man-hours with one Lost Time Incident ("LTI");
(2023: 299,824 with one LTI).
· Improved cash position and stable overall financial performance:
o The Company remained cashflow positive, with the cash position again
improving to $1,136,000 ($713,000 in 2023 and $450,000 in 2022).
o Decrease in G&A and other costs, despite higher Project III, CCS and
Project IV related costs, reflecting ongoing cost and operational discipline
within the business.
o Strategic decision to pause Project I drilling in the year, based on strong
cash position, cash requirements and marginally lower than expected natural
production decline.
o Revenue of $7,533,000 (2023: $8,366,000) reflecting natural production
decline and marginally lower commodity pricing.
o Positive EBITDA of US$ 1.06 million (2023: US$ 1.47 million), in line with
expectation.
· Focus on high-impact projects saw continued good progress:
o Published an independent engineering report on the Patardzueli-Samgori field
(as part of Project III), ascribing 1,074 BCF 2C contingent resources to the
field and a project net present value (10) of US$ 501 million
o Published updated internal contingent resource reports on Rustavi and Teleti
Project III, supporting a combined Project III project net present value (10)
of US$1.67 billion.
o Launched the farm-out campaign for Project III, with good uptake from
potential industry partners with farm-out discussions and due diligence
activity ongoing.
o Published an independent evaluation of the carbon storage potential of the
Patardzueli-Samgori Middle Eocene as part of the CCS project.
o Signed a Memorandum of Understanding with JSC Rustavi Azot ("Rustavi Azot"),
a subsidiary of Indorama Corporation Pte Ltd with respect to pilot studies on
the CCS opportunity.
o Commenced Phase 2 studies on the CCS project.
o Completed work on the new 'slim hole' well engineering for Project I.
o Farmout of Project IV progressing.
· Robust production, better than expected and in-line with the 2022
ERCE reserve report:
o Total group production of 131,579 barrels of crude oil (2023: 151,184
barrels).
o Total Group gas production of 274 MMCF (2023: 283 MMCF).
o Average annual production of 485 boepd (2023: 543 boepd).
o Production reflected natural decline, which was marginally better than
expected, and the strategic decision to pause Project I drilling, to focus
financial & human resources on the high-impact projects.
Block Energy plc's Chief Executive Officer, Paul Haywood, said:
"The focus of 2024 was on advancing the Company's high-impact projects, which
each saw solid progress. These projects are in-line the Company's strategy to
focus on those opportunities which offer the greatest overall value potential
for shareholders, with each of these offering transformative potential. With
the advances made in 2024, the Company is at an inflection point, with several
material catalysts possibly coming to fruition over the coming year.
As part of that decision to focus on transformative projects, the Company
elected to pause Project I drilling, on the basis it remained cashflow
positive and allowed additional resources to be used in these high value
areas. The Company ended the year with a further improvement in its cash
position, despite the inevitably decrease in production from natural decline,
which was marginally less than expected".
**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)
Philip Dennis Celicourt Communications Tel: +44 (0)20 7770 6424
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.
Chairman's Statement
Dear Shareholder,
Last year was characterised by further progress in the delivery of the
Company's high impact strategy, underpinned by an improving cash position.
Realisation of value from high impact assets, such as those being developed by
Block, inevitably takes time. This can overshadow the progress being made
behind the scenes.
The Company is now at an inflection point, with several material catalysts
possibly coming to fruition over the coming year. These include the farmout of
Project III, commercialisation of the Company's CCS project, following the
pilot injection of carbon, and the farmout of project IV.
Reaching this point is a testament to the strategy in place, which has sought
to balance progress in the high impact projects, with a balance sheet able to
support these initiatives. It is also a reflection of the strength of the
management team, which has successfully adapted the business by streamlining
the Company and maintaining an unwavering focus on value.
Putting this in context, it is important to recognise that Block is delivering
on the back of internally generated cashflows and has not sought an injection
of additional equity capital for over 4 years. In the listed E&P space,
this places Block in a relatively unique position.
The team in Georgia should be congratulated for their hard work in driving the
Company's various projects forward while maintaining safety and protecting the
environment. Having spent time with them on the ground in Georgia, I have
witnessed their dedication first hand, and I would like to extend my thanks
for their effort and commitment.
Their success and progress are supported by close and productive relationships
with the Georgian authorities and commercial partners. These relationships are
invaluable, having been built over many years, creating a sense of mutual
trust and confidence.
Relationships aside, Georgia remains a positive environment in which to work
and invest. It is pro-business, and investment is underpinned by a
well-functioning political and legal system, which protects the right of
ownership, while encouraging risk investment and business development.
Georgia sits at a crossroads for energy distribution and trade between east
and west. It, as such, has easy market access, via established infrastructure,
that runs close to the Company's licences. That, combined with a strong and
positive culture, make it highly attractive to foreign investment. This is
reflected in the country's GDP growth, which has far outstripped that of the
wider EU.
The professionalism of the team is further reflected in the Company's safety
record. Safety remains the foremost priority for the Company at all levels. It
remains the first item on the agenda at all Board meetings and is based on a
clear system of responsibility and reporting, which starts on the ground each
day during the daily briefing.
The Board believes the strategy in place is the right one and that over time
it will deliver on the material value inherent within the Company's assets. It
is a strategy that is showing evident progress, while effectively balancing
the risk and reward profile for investors and Block. The Board looks forward
to continuing to support and guide the team in the year ahead and to updating
shareholders further on the Company's progress.
Philip Dimmock
Non-Executive Chairman
Chief Executive Officer's Statement
Dear Shareholder,
Block Energy PLC made substantial progress in 2024, successfully advancing our
multi-project strategy and delivering another year of positive cash flow. Our
unwavering commitment to safety, environmental stewardship, and proactive
community engagement continues to reinforce our reputation as a responsible
and sustainable energy company.
Health, Safety, and Sustainability remain fundamental pillars of our
operations. Despite an intensive operational schedule involving over 283,000
man-hours, we recorded only one minor Lost Time Incident (LTI) during the
year. This excellent safety performance is a direct result of our robust
management systems and deeply embedded safety culture. Additionally, we have
significantly strengthened ties with local communities through targeted
employment initiatives, comprehensive training programs, and collaborative
social projects.
Project III remains central to our strategic growth, highlighted by the
publication of an Independent Engineering Report (IER) in early 2024. This
report and Block's internal contingent resource estimates identified over 2.77
TCF of 2C contingent recoverable gas resources across the Patardzeuli-Samgori,
Rustavi, and Teleti fields, with an estimated Net Present Value of $1.65
billion. The ensuing farm-out process has attracted considerable industry
interest. The Company remains in active discussions and due diligence
processes with multiple parties around a potential farm-in to the Project III
fields.
Project IV, through licence XIQ, represents another compelling farm-out
opportunity, advanced by operator Georgia Oil and Gas Limited ("GOGL").
Ongoing discussions aim to secure a fully carried exploration programme,
encompassing 3D seismic acquisition and targeted exploration drilling. Block
Energy currently holds an initial 10% interest in XIQ, with an option to
increase this to 22%. The licence includes the highly prospective Martkopi
Terrace prospect, independently assessed to contain mean unrisked recoverable
prospective resources of 267.2 million barrels of oil, with total XIQ licence
resources estimated at 451.5 MMbbl of oil and 823.3 BCF of gas (DeGoyler
MacNaughton, 2023). Block has fully funded its current obligations under the
initial work programme and continues to actively pursue further unitisation
opportunities in the South Samgori area alongside GOGL.
Project II is emerging as a promising farm-out candidate complemented by the
significant remaining oil potential within the field of 235 MMbbl 2C resources
(Block Energy, 2022), prompting us to actively explore strategic partnerships
that will advance this project. The development of Project II further aligns
with our goal of diversifying revenue streams across our high-value asset
portfolio.
Our Carbon Capture and Storage (CCS) initiative, developed in partnership with
JSC Rustavi Azot, a subsidiary of Indorama Corporation, has made notable
advancements throughout the period. Early studies have affirmed our
reservoirs' exceptional capacity for large-scale carbon sequestration, placing
it among Eastern Europe's highest-ranking storage potentials. Current
workstreams are focused on establishing clear pathways toward commercial
viability within both mandatory and voluntary carbon markets, aiming to
position Block Energy as a pioneering force in regional carbon management.
Strategically, in 2024, we intentionally paused further drilling on Project I,
choosing to reallocate capital and human resources towards advancing
higher-value, transformative projects. Nevertheless, we remain prepared to
recommence drilling operations to sustain stable production levels above
corporate breakeven thresholds as needed. Our disciplined financial management
and rigorous approach to cost control continue to underpin this strategic
flexibility.
Financially, we improved our cash position year-on-year through prudent
financial and operational management, despite lower revenues received. We
anticipated production from Project I (and therefore revenue in the year) to
decline through the strategic decision to pause drilling and developed the
budget and 2024 objectives with this in mind. At year-end, we had US$ 1.14
million in cash (2023: US$ 0.71 million), oil inventory of 11.1 Mbbl (2023:
16.6 Mbbl) and delivered positive EBITDA in the year of US$ 1.06 million
(2023: US$ 1.47 million), which was in line with expectation.
To enhance our financial flexibility, we successfully extended our existing
US$ 2.0 million senior secured loan facility to February 2026, ensuring that
we have ample working capital to reinvest cashflows into our high-impact
projects in order to drive value creation for our shareholders. This was
achieved through spending on Projects III, CCS and II and the 2025 acquisition
of an interest in the XIQ PSC (Project IV).
We acknowledge prevailing market conditions have created a disconnect between
our intrinsic asset values and current market capitalisation. Independent
resource assessments, however, clearly highlight the considerable upside
within our portfolio. Our ongoing operational progress is explicitly aimed at
bridging this valuation gap and delivering substantial shareholder value.
Looking ahead to 2025, we anticipate several critical milestones, including
the advancement and commercialisation of Projects III and IV, alongside
meaningful progress on Project II and further developments in our CCS
initiatives. These opportunities offer material avenues for value creation,
and we approach each with measured optimism and strategic prudence.
We sincerely appreciate your continued support and look forward to providing
regular updates as we progress through a promising year.
Warm regards,
Paul Haywood
Chief Executive Officer
Block Energy PLC
Financial Review
Income Statement
The Group's revenue from oil and gas sales decreased to $7,533,000 (2023:
$8,366,000) primarily due to lower production levels from Project I. The
current year revenue from sales of crude oil of $6,678,000 (2023: $7,413,000)
comprised the sale of 97,961 barrels (2023: 106,000 barrels), which equated to
an average revenue per barrel of $68.20 (2023: $69.93).
During the year, the Group produced 131,579 barrels of crude oil (2023:
151,185 barrels). Gas production stood at 274 MMCF (2023: 282 MMCF). This
gross production figure includes the State of Georgia's share of production
before cost recovery and profit sharing.
The natural decline seen in Project I wells in the year was less than expected
and no new wells were drilled in 2024 as part of a focus on developing the
Company's high impact Projects including Project III and CCS. Production
performance remains in line (slightly biased to the upside) with the 2022 ERCE
reserve report type curves.
Strategically, the Company took the decision to pause drilling on Project I in
order to pursue its high-impact projects. The Company remained cashflow
positive and whilst not requiring any further external finance in the year,
the existing loan facility was extended until February 2026.
The Group had 11,060 barrels of crude oil inventory as at 31 December 2024 (31
December 2023: 16,611 barrels).
In the year, the Group sold gas to the value of $855,000 (2023: $953,000).
The total comprehensive loss for the year was $609,000 (2023: $2,213,000). The
improvement on prior year is primarily associated with the one-off $2,210,000
impairment charge in 2023, associated with the decision to fully impair Norio
and Satskhenisi, although both cost of sales and administrative costs
decreased in 2024 as compared to the prior year as the cost savings
initiatives were completed.
With respect to operating activities before impairment, the Group delivered a
loss of $202,000 (2023: profit of $74,000). EBITDA decreased to $1,061,000
(2023: $1,469,000) and this was mainly attributed to reduced revenues due to
lower production levels and a slight reduction in average oil and gas prices
over the year.
The Company continues to closely monitor costs, operational performance and
efficiency. Cost of sales (before depreciation and depletion of oil and gas
assets) fell by $308,000 (from $3,826,000 to $3,518,000). Other administrative
costs fell by $89,000 (from $2,657,00 to $2,568,000) and share based payments
also fell by $28,000 (from $414,000 to $386,000) in the year. These savings
were achieved even with increased spending on the development of Projects III
and CCS, as well as corporate activity associated with the Project III
farm-out, the unitisation of licences associated with Project IV and new
ventures activity.
Overall, in 2024, the Company's financial performance remained stable and
significant progress was made in the development of the high-impact projects,
which are seen as key catalysts for the growth in shareholder value.
Liquidity, Counterparty Risk and Going Concern
The Group monitors its cash position, cash forecasts and liquidity regularly
and has a conservative approach to cash management, with surplus cash held on
term deposits with major financial institutions.
The directors have prepared cash flow forecasts for a period of 12 months from
the date of signing these financial statements. The Group's forecasts are
reviewed regularly to assess whether any actions to curtail expenditure or cut
costs are required.
The Group's operations presently generate sufficient revenues to cover
operating costs and capital expenditures, supporting the continued preparation
of the Group's accounts on a going concern basis.
The directors are nevertheless conscious that oil prices have been volatile
during the past few years and could rise or fall in the year ahead, and that
future production levels depend on both depletion rates from existing wells
and the success of future drilling.
The directors also recognise that the outstanding $2.0 million secured loan is
due for full redemption in February 2026 and that there are scenarios in which
the Company may not be in a position to settle this liability on time.
Nonetheless, the directors remain confident that the loan can either be repaid
or renegotiated, or that new lenders could take a portion, or that other
financing options will become available to the Company, and therefore judge
that the Company retains sufficient flexibility and optionality around the
loan to prepare the accounts on a going concern basis.
As part of their going concern assessment, the directors have examined
multiple scenarios in which oil prices and/or future production levels fall
substantially and have concluded that it remains possible that future
revenues in at least some scenarios might not cover all operating costs and
planned capital expenditures, creating a material uncertainty that may cast
doubt over the Group's ability to continue as a going concern. Whilst
acknowledging this material uncertainty, the directors remain confident of
making further cost savings if required and, therefore, the directors consider
it appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include the adjustments that would result if
the Group were unable to continue as a going concern.
Impairment
There was no impairment recognised in the year (2023: $2,210,000).
Cash Generative Units
The Company currently reports on the basis of Cash Generative Units ("CGUs")
associated with West Rustavi, Rustaveli, Norio and Satskhenisi.
The Company continues to review the appropriateness of reporting on the basis
of these named CGUs given its well-communicated multi-project strategy. It is
expected that in 2025, based upon potential corporate development activity,
that the Company will either report on the basis of a singular CGU (owing to
the proximity of the licences and fields) or alternatively on a Projects basis
(owing to the different stage of development between Projects I, II, III, IV
and CCS).
Results and Dividends
The results for the year and the financial position of the Group are shown in
the following financial statements:
· The Group has incurred a pre-tax loss of $609,000 (2023: loss of
$2,213,000).
· The Group achieved positive EBITDA of $1,061,000 (2023: $1,469,000).
· The Group has net assets of $25,313,000 (2023: $25,706,000).
· The Directors do not recommend the payment of a dividend (2023:
$nil).
Financial Statements
Consolidated Statement of Consolidated Income for the Year Ended 31(st) December 2024
Note Year ended 31 December 2024 Year ended 31 December 2023
Continuing operations $'000 $'000
Revenue 4 7,533 8,366
Cost of sales 3 (3,518) (3,826)
Depreciation and depletion of oil and gas assets 5 (1,236) (1,374)
Total cost of sales (4,754) (5,200)
Gross profit 2,779 3,166
Other administrative costs 6 (2,568) (2,657)
Share based payments charge 22 (386) (414)
Foreign exchange movement (27) (21)
Results from operating activities before impairment (202) 74
Impairment on non-core oil and gas assets 12 - (2,210)
Total operating loss (202) (2,136)
Other income 8 35 26
Finance income 33 7
Finance expense 9 (475) (110)
(407) (77)
Loss for the year before taxation (609) (2,213)
Taxation 10 - -
Loss for the year from continuing operations (attributable to the equity (609) (2,213)
holders of the parent)
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations (135) 74
Total comprehensive loss for the year (attributable to the equity holders of (744) (2,139)
the parent)
Loss per share basic and diluted 11 (0.08)c (0.31)c
Earnings before interest, tax, depreciation and amortisation (EBITDA) 3a 1,061 1,469
All activities relate to continuing operations.
The notes on pages 52 to 75 form part of these consolidated financial
statements.
Consolidated Statement of Financial Position for the Year Ended 31(st) December 2024
31 December 2024 31 December 2023
Note $'000 $'000
Non-current assets
Intangible assets 268 50
Property, plant and equipment 12 22,976 23,851
Total non-current assets 23,244 23,901
Current assets
Inventory 13 4,299 4,377
Trade and other receivables 14 804 971
Cash and cash equivalents 15 1,136 713
Total current assets 6,239 6,061
Total assets 29,483 29,962
Equity and liabilities
Capital and reserves attributable to equity holders of the Parent Company:
Share capital 18 3,733 3,705
Share premium 19 34,879 34,856
Other reserves 20 5,066 4,766
Foreign exchange reserve 633 768
Accumulated deficit (18,998) (18,389)
Total equity 25,313 25,706
Non-current liabilities
Borrowings 16 2,000 -
Total non-current liabilities 2,000 -
Current liabilities
Trade and other payables 16 1,237 1,176
Borrowings 16 - 2,000
Provisions 17 933 1,080
Total current liabilities 2,170 4,256
Total liabilities 4,170 4,256
Total equity and liabilities 29,483 29,962
The financial statements were approved by the Board of Directors and
authorised for issue on 21 May 2025 and were signed on its behalf by:
Paul Haywood
Director
The notes on pages 52 to 75 form part of these consolidated financial
statement
Consolidated Statement of Changes in Equity for the Year Ended 31(st) December 2024
Share Capital Share Premium Accumulated Deficit Other Reserves Foreign Exchange Reserve Total Equity
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 31 December 2022 3,565 34,765 (16,349) 4,525 694 27,200
Loss for the year - - (2,213) - - (2,213)
Exchange differences on translation of foreign operations - - - - 74 74
Total comprehensive loss for the year - - (2,213) - 74 (2,139)
Issue of shares 133 91 - - - 224
Share based payments - - - 414 - 414
Options exercised 7 - - - - 7
Options expired - - 173 (173) - -
Total transactions with owners 140 91 173 241 - 645
Balance at 31 December 2023 3,705 34,856 (18,389) 4,766 768 25,706
Loss for the year - - (609) - - (609)
Exchange differences on translation of foreign operations - - - - (135) (135)
Total comprehensive loss for the year - - (609) (135) (744)
Issue of shares 28 23 - - - 51
Share based payments - - - 632 - 632
Shares held by EBT - - - (332) - (332)
Total transactions with owners 28 23 - 300 - 351
Balance at 31 December 2024 3,733 34,879 (18,998) 5,066 633 25,313
The notes on pages 52 to 75 form part of these consolidated financial
statements.
Consolidated Statement of Cashflows for the Year Ended 31(st) December 2024
Note Year ended Year ended
31 December 2024 31 December 2023
$'000 $'000
Cash flow from operating activities
Loss for the year before tax (609) (2,213)
Adjustments for:
Depreciation and depletion 5 1,236 1,374
Impairment 12 - 2,210
Finance charges 475 110
Disposal of PP&E at nil value 12 - 89
Finance income 9 (33) (7)
Other income and finance income 8 (35) (26)
Creditors paid in shares 31 108
Share based payments expense 7 386 414
Foreign exchange movement (47) 22
Operating cash flows before movements in working capital 1,404 2,081
Decrease/(increase) in trade and other receivables 167 (411)
Increase in trade and other payables (252) (516)
Decrease in inventory 78 414
Net cash flow from operating activities 1,397 1,568
Cash flow from investing activities
Income received 6 33
Expenditure in respect of Intangible assets (218) (50)
Expenditure in respect of PP&E 12 (445) (3,040)
Net cash used in investing activities (657) (3,057)
Cash flow from financing activities
Proceeds from borrowings 16 - 2,000
Interest paid 9 (311) (248)
Net cash (outflow)/inflow from financing activities (311) 1,752
Net increase in cash and cash equivalents in the year 429 263
Cash and cash equivalents at start of year 713 450
Effects of foreign exchange rate changes on cash and cash equivalents (6)
-
Cash and cash equivalents at end of year 1,136 713
The notes on pages 52 to 75 form part of these consolidated financial
statements.
Significant non-cash transactions
The only significant non-cash transactions were the issue of shares and share
options detailed in notes 18 and 22.
Notes Forming Part of the Consolidated Financial Statements
Corporate Information
Block Energy Plc ("Block Energy") gained admission to trading on AIM on 11(th)
June 2018, trading under the symbol of BLOE.
The Consolidated financial statements of the Group, which comprises Block
Energy Plc and its subsidiaries, for the year ended 31 December 2024 were
authorised for issue in accordance with a resolution of the Directors on 21
May 2025. Block Energy is a Company incorporated in the UK whose shares are
publicly traded. The address of the registered office is given in the officers
and advisers section of this report. The Company's administrative office is in
London, UK.
The nature of the Company's operations and its principal activities are set
out in the Strategic Report on pages 3 to 28 and the Report of the Directors
on pages 29 to 31.
1. Significant Accounting Policies
IAS 8 requires that management shall use its judgement in developing and
applying accounting policies that result in information which is relevant to
the economic decision-making needs of users, that are reliable, free from
bias, prudent, complete and represent faithfully the financial position,
financial performance and cash flows of the entity.
Basis of Preparation
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated. All
amounts presented are in thousands of US dollars unless otherwise stated.
Foreign operations are included in accordance with the policies set out below.
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards and as regards the Company
financial statements, as applied in accordance with the requirements of the
Companies Act 2006. The Financial Statements have also been prepared under the
historical cost convention, as modified by the revaluation of financial assets
at fair value through profit or loss.
The preparation of financial statements in accordance with UK-adopted
international accounting standards requires management to make judgements,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and factors that are
believed to be reasonable under the circumstances, the results of which form
the basis of making judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Changes in accounting estimates may be necessary if there are changes in the
circumstances on which the estimate was based, or as a result of new
information or more experience. Such changes are recognised in the period in
which the estimate is revised.
New and Amended Standards Adopted by the Group
There were no new or amended accounting standards that required the Group to
change its accounting policies for the year ended 31 December 2024 and no new
standards, amendments or interpretations were adopted by the Group.
New Accounting Standards Issued but not yet Effective
The standards and interpretations that are relevant to the Group, issued, but
not yet effective, up to the date of the Financial Statements are listed
below. The Group intends to adopt these standards, if applicable, when they
become effective.
Standard Effective date Overview
IFRS 18 Presentation and Disclosure in Financial Statements and 1 January 2027 IFRS 18 (replacing IAS 1) introduces new profit or loss presentation
requirements to enhance comparability. Early adoption is allowed, but UK/EU
IFRS 19 Subsidiaries without Public Accountability: Disclosures endorsement is pending (UK expected late 2025).
IFRS 19 allows eligible subsidiaries to apply IFRS with reduced disclosures,
simplifying group reporting. Early adoption is permitted, but special rules
apply if adopted before IFRS 18. UK/EU endorsement is also pending, with UK
considerations for FRS 101's framework.
Company size thresholds 6 April 2025 From 6 April 2025, UK company size thresholds will increase by ~50%, reducing
reporting requirements for some businesses. Obsolete directors' report rules
will be removed, and a 2025 consultation will explore further reporting
simplifications.
UK Sustainability Reporting Standards 1 January 2026 (expected no earlier) The UK Government's endorsement of ISSB's IFRS Sustainability Disclosure
Standards is expected in early 2025, with UK Sustainability Reporting
Standards (UK SRS) available by Q1 2025. The FCA may require UK-listed
companies to apply UK SRS, while the Government will decide on broader
mandatory disclosures. UK SRS will be effective no earlier than 1 January 2026
and align with existing TCFD-based regulations, aiming to avoid reporting
duplication.
The Directors have evaluated the impact of transition to the above standards
and do not consider that there will be a material impact of transition on the
financial statements.
Change in Crude Oil Inventory Valuation Policy
During the current financial year, the Group changed its accounting policy and
departed from IAS 2 Inventories for the valuation of its crude oil inventory.
Previously, inventories were valued at the lower of cost and net realisable
value. Under the new policy, inventories are now measured at their net
realisable value, which is Brent market price less the contracted discount.
The Company believe that this provides a more representative view of
realisable value, aligns more accurately with internal management reporting
and removes the judgemental approach of allocation of certain costs.
This change has been applied prospectively from 1 January 2024 and no
restatement of prior period figures has been made.
Management believes the new policy provides more relevant and reliable
information due to the active market and short turnover cycle of oil
products. This departure is made in accordance with IAS 1.20, as continued
compliance with IAS 2 was thought to be misleading.
Had IAS 2 been applied, inventory would have been $59,000 lower and profit
before tax $59,000 lower.
Basis of Consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the Company has the practical
ability to direct the relevant activities of the investee without holding the
majority of the voting rights. In determining whether de-facto control exists
the Company considers all relevant facts and circumstances, including:
· The size of the Company's voting rights relative to both the size and
dispersion of other parties who hold voting rights;
· Substantive potential voting rights held by the Company and by other
parties;
· Other contractual arrangements; and
· Historic patterns in voting attendance.
Business Combinations
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the
acquisition date. The difference between the consideration paid and the
acquired net assets is recognised as goodwill. The results of acquired
operations are included in the consolidated income statement from the date on
which control is obtained. Any difference arising between the fair value and
the tax base of the acquiree's assets and liabilities that give rise to a
deductible difference result in recognition of deferred tax liability. No
deferred tax liability is recognised on goodwill.
Acquisitions
The Group and Company measure consideration at the acquisition date as:
· The fair value of the consideration transferred; plus
· The recognised amount of any non-controlling interests in the
acquiree
· Plus, if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree; less the net recognised
amount (generally fair value) of the identifiable assets acquired and
liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately
in profit or loss.
Cost related to the acquisition, other than those associated with the issue of
debt or equity securities, that the Group incurs in connection with a business
combination, are expensed as incurred.
Asset Acquisition
Acquisitions of mineral exploration licences through the acquisition of
non-operational corporate structures that do not represent a business and
therefore do not meet the definition of a business combination, are accounted
for as the acquisition of an asset. An example of such would be increases in
working interests in licences.
The consideration for the asset is allocated to the assets based on their
relative fair values at the date of acquisition.
Going Concern
The directors have prepared cash flow forecasts for a period of 12 months from
the date of signing these financial statements. The Group's forecasts are
reviewed regularly to assess whether any actions to curtail expenditure or cut
costs are required.
The Group's operations presently generate sufficient revenues to cover
operating costs and capital expenditures, supporting the continued preparation
of the Group's accounts on a going concern basis.
The directors are nevertheless conscious that oil prices have been volatile
during the past few years and could rise further but could also fall back in
the year ahead, and that future production levels depend on both depletion
rates from existing wells and the success of future drilling.
The directors also recognise that the outstanding $2.0 million secured loan is
due for full redemption in February 2026 and that there are scenarios in which
the Company may not be in a position to settle this liability. Nonetheless,
the directors remain confident that the loan can either be repaid, or
renegotiated, or that new lenders could take a portion, or that other
financing options will be available to the Company and therefore judge that
the Company retains sufficient flexibility and optionality around the loan to
prepare the accounts on a going concern basis.
As part of their going concern assessment, the directors have examined
multiple scenarios in which oil prices and/or future production levels fall
substantially and have concluded that it remains possible that future
revenues in at least some scenarios might not cover all operating costs and
planned capital expenditures, creating a material uncertainty that may cast
doubt over the Group's ability to continue as a going concern. Whilst
acknowledging this material uncertainty, the directors remain confident of
making further cost savings if required and, therefore, the directors consider
it appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include the adjustments that would result if
the Group were unable to continue as a going concern.
Intangible Assets
Exploration and Evaluation costs
The Group applies the full cost method of accounting for Exploration and
Evaluation (E&E) costs, having regard to the requirements of IFRS 6
'Exploration for and Evaluation of Mineral Resources'. Under the full cost
method of accounting, costs of exploring and evaluating properties are
accumulated and capitalised by reference to appropriate cash generating units
("CGUs"). Such CGU's are based on geographic areas such as a licence area,
type or a basin and are not larger than an operating segment - as defined by
IFRS 8 'Operating segments.
E&E costs are initially capitalised within 'Intangible assets', such
E&E costs may include costs of licence acquisition, technical services and
studies, seismic acquisition, exploration drilling and testing, but do not
include costs incurred prior to having obtained the legal rights to explore an
area, which are expensed directly to the statement of comprehensive income as
they are incurred. Plant and equipment assets acquired for use in exploration
and evaluation activities are classified as property, plant and equipment.
However, to the extent that such an asset is consumed in developing an
unproven oil and gas asset, the amount reflecting that consumption is recorded
as part of the cost of the unproven oil and gas asset.
Exploration and unproven oil and gas assets related to each exploration
license/prospect are not amortised but are carried forward until the technical
feasibility and commercial feasibility of extracting a mineral resource are
demonstrated.
Impairment of Exploration and Evaluation assets
All capitalised exploration and evaluation assets and property, plant and
equipment are monitored for indications of impairment. Where a potential
impairment is indicated, assessment is made for the Group of assets
representing a cash generating unit.
In accordance with IFRS 6 the Group firstly considers the following facts and
circumstances in their assessment of whether the Group's exploration and
evaluation assets may be impaired, whether:
· the period for which the Group has the right to explore in a specific
area has expired during the period or will expire in the near future, and is
not expected to be renewed;
· unexpected geological occurrences render the resource uneconomic;
· a significant fall in realised prices or oil and gas price benchmarks
render the project uneconomic; or
· an increase in operating costs occurs.
If any such facts or circumstances are noted, the Group perform an impairment
test in accordance with the provisions of IAS 36.
The aggregate carrying value is compared against the expected recoverable
amount of the cash generating unit. The recoverable amount is the higher of
value in use and the fair value less costs to sell. An impairment loss is
reversed if the asset's or cash-generating unit's recoverable amount exceeds
its carrying amount. A reversal of impairment loss is recognised in the profit
or loss immediately.
Property, Plant and Equipment - Development and Production (D&P) Assets
Capitalisation
The costs associated with determining the existence of commercial reserves are
capitalised in accordance with the preceding policy and transferred to
property, plant and equipment as development assets following impairment
testing. All costs incurred after the technical feasibility and commercial
viability of producing hydrocarbons have been demonstrated are capitalised
within development assets on a field-by-field basis. Subsequent expenditure is
only capitalised where it either enhances the economic benefits of the
development asset or replaces part of the existing development asset (where
the remaining cost of the original part is expensed through the income
statement). Costs of borrowing related to the ongoing construction of
development and production assets and facilities are capitalised during the
construction phase. Capitalisation of interest ceases once an asset is ready
for production.
Depreciation
Capitalised oil assets are not subject to depreciation until commercial
production starts. Depreciation is calculated on a unit-of-production basis
in order to write off the cost of an asset as the reserves that it represents
are produced and sold. Any periodic reassessment of reserves will affect the
depreciation rate on a prospective basis. The unit-of-production depreciation
rate is calculated on a field-by-field basis using proved, developed reserves
as the denominator and capitalised costs as the numerator. The numerator
includes an estimate of the costs expected to be incurred to bring proved,
developed, not-producing reserves into production. Infrastructure that is
common to a number of fields, such as gathering systems, treatment plants and
pipelines are depreciated on a unit-of-production basis using an aggregate
measure of reserves or on a straight-line basis depending on the expected
pattern of use of the underlying asset.
Proven Oil and Gas Properties
Oil and gas properties are stated at cost less accumulated depreciation and
impairment losses. The initial cost comprises the purchase price or
construction cost including any directly attributable cost of bringing the
asset into operation and any estimated decommissioning provision.
Once a project reaches the stage of commercial production and production
permits are received, the carrying values of the relevant exploration and
evaluation asset are assessed for impairment and transferred to proven oil and
gas properties and included within property plant and equipment.
Proven oil and gas properties are accounted for in accordance with provisions
of the cost model under IAS 16 "Property Plant and Equipment" and are depleted
on unit of production basis based on the estimated proven and probable
reserves of the pool to which they relate.
Impairment of Development and Production Assets
A review is performed for any indication that the value of the Group's D&P
assets may be impaired such as:
· significant changes with an adverse effect in the market or economic
conditions which will impact the assets; or
· obsolescence or physical damage of an asset; or
· an asset becoming idle or plans to dispose of the asset before the
previously expected date; or
· evidence is available from internal reporting that indicates that the
economic performance of an asset is or will be worse than expected.
For D&P assets when there are such indications, an impairment test is
carried out on the CGU. CGUs are identified in accordance with IAS 36
'Impairment of Assets', where cash flows are largely independent of other
significant asset Groups and are normally, but not always, single development
or production areas. When an impairment is identified, the depletion is
charged through the Consolidated Statement of Comprehensive Income if the net
book value of capitalised costs relating to the CGU exceeds the associated
estimated future discounted cash flows of the related commercial oil reserves.
The CGU's identified by the company are Corporate along with West Rustavi,
Rustaveli, Satskhenisi and Norio given they are independent projects under
individual Production Sharing Contracts ("PSCs"). An assessment is made at
each reporting date as to whether there is any indication that previously
recognised impairment charges may no longer exist or may have decreased. If
such an indication exists, the Group estimates the recoverable amount. A
previously recognised impairment charge is reversed only if there has been a
change in the estimates used to determine the assets recoverable amount since
the last impairment charge was recognised. If this is the case the carrying
amount of the asset is increased to its recoverable amount, not to exceed the
carrying amount that would have been determined, net of depreciation
(javascript%3A;) , had no impairment charges been recognised for the asset in
prior years.
Property, Plant and Equipment and Depreciation
Property, plant and equipment which are awaiting use in the drilling
campaigns, and storage, are recorded at historical cost less accumulated
depreciation. Property, plant and equipment are depreciated using the
straight-line method over their estimated useful lives, as follows:
· PP&E - 6 years
The carrying value of Property, plant and equipment is assessed annually and
any impairment charge is charged to the Consolidated Statement of
Comprehensive income.
Leases
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets (such as tablets and
personal computers, small items of office furniture and telephones). For these
leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic benefits from the
leased assets are consumed.
Inventories
Crude oil inventories are stated at Brent less any contractual discounts. This
is adjusted if the sale of inventories after that date gives additional
evidence about its net realisable value at the balance sheet date.
The cost of crude oil is expensed in the period in which the related revenue
is recognised.
Inventories of drilling tubulars and drilling chemicals are valued at the
lower of cost or net realisable value, where cost represents the weighted
average unit cost for inventory lines on a line-by-line basis. Cost comprises
all costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition.
Decommissioning Provision
Provisions for decommissioning are recognised in full when wells have been
suspended, or facilities have been installed.
A corresponding amount equivalent to the provision is also recognised as part
of the cost of either the related oil and gas exploration and evaluation asset
or property, plant and equipment as appropriate. The amount recognised is the
estimated cost of decommissioning, discounted to its net present value, and
is reassessed each year in accordance with local conditions and requirements.
Changes in the estimated timing of decommissioning or decommissioning cost
estimates are dealt with prospectively by recording an adjustment to the
provision, and a corresponding adjustment to the related asset.
The unwinding of the discount on the decommissioning provision is included as
a finance cost.
Borrowing Costs
General and specific borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalised
during the period of time that is required to complete and prepare the asset
for its intended use or sale. Qualifying assets are assets that necessarily
take over one accounting period to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings,
pending their expenditure on qualifying assets, is deducted from the borrowing
costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
Taxation and Deferred Tax
Income tax expense represents the sum of the current tax and deferred tax
charge for the period.
The Group's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the reporting date.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial information and the corresponding tax
bases and is accounted for using the balance sheet liability method.
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
Judgement is applied in making assumptions about future taxable income,
including oil and gas prices, production, rehabilitation costs and expenditure
to determine the extent to which the Group recognises deferred tax assets, as
well as the anticipated timing of the utilisation of the losses.
Deferred tax is calculated at the tax rates that have been enacted or
substantively enacted and are expected to apply in the period when the
liability is settled, or the asset realised. Deferred tax is charged or
credited to the statement of comprehensive income, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies are
translated into US dollars at the rates of exchange prevailing at the
reporting date: $1.29 /£1 (2023: $1.27/£1). Transactions in foreign
currencies are translated at the exchange rate ruling at the date of the
transaction. Exchange differences are taken to the Statement of Comprehensive
Income.
The Company's functional currency is the pound sterling and its presentational
currency is the US dollar and accordingly the financial statements have also
been prepared in US dollars. The functional currencies of Block Norioskhevi
Ltd, Satskhenisi Limited, Georgia New Ventures Inc and Block Rustaveli Limited
are the US dollar and the functional currencies of their branches in Georgia
are the Georgian Lari.
Foreign Operations
The assets are translated into US dollars at the exchange rate at the
reporting date and income and expenses of the foreign operations are
translated at the average exchange rates. Exchange differences arising on
translation are recognised in other comprehensive income and presented in the
other reserves category in equity.
Determination of Functional Currency and Presentational Currency
The determination of an entity's functional currency is assessed on an entity
by entity basis. A company's functional currency is defined as the currency of
the primary economic environment in which the entity operates. The functional
currency of the Parent Company is the pound sterling, because it operates in
the UK, where the majority of its transactions are in pounds sterling. The
functional currencies of Block Norioskhevi Ltd, Satskhenisi Limited, Georgia
New Ventures Inc and Block Rustaveli Limited are the US dollar, because the
majority of their transactions by value is in US dollars, and the functional
currencies of their branches in Georgia are the Georgian Lari, because the
majority of their transactions by value is in Georgian Lari.
The presentational currency of the Group for year ended 31 December 2024 is US
dollars. The presentational currency is an accounting policy choice.
Revenue
Revenue from contracts with customers is recognised when the Group satisfies
its performance obligation of transferring control of oil or gas to a
customer. Transfer of control is usually concurrent with both transfer of
title and the customer taking physical possession of the oil or gas, which is
determined by reference to the oil or gas sales agreement. This performance
obligation is satisfied at that point in time.
The transaction price is agreed between the Group and the customer, with the
amount of revenue recognised being determined by considering the terms of the
Production Sharing Contract ("PSC") and the oil sales agreement for each oil
sale or the gas sales agreement for each gas sale.
Finance Income and Expenses
Finance costs are accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable. Finance expenses
comprise interest or finance costs on borrowings.
Financial Instruments
Financial assets and financial liabilities are recognised on the Group's
balance sheet when the Group becomes party to the contractual provisions of
the instrument.
Fair Value
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. All assets and liabilities, for which fair value is
measured or disclosed in the Financial Statements, are categorised within
the fair value hierarchy, described as follows, based on the lowest-level
input that is significant to the fair value measurement as a whole:
Level 1 - quoted (unadjusted) market prices in active markets for identical
assets or liabilities;
Level 2 - valuation techniques for which the lowest-level input that is
significant to the fair value measurement is directly or indirectly
observable; and
Level 3 - valuation techniques for which the lowest-level input that is
significant to the fair value measurement is unobservable.
Financial Assets
Financial assets are initially recognised at fair value, and subsequently
measured at amortised cost, less any allowances for losses using the expected
credit loss model, being the difference between all contractual cash flows
that are due to the Group in accordance with the contract and all the cash
flows that the Group expects to receive.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward-looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset.
For those where the credit risk has not increased significantly since initial
recognition of the financial asset, twelve month expected credit losses along
with gross interest income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be credit
impaired, lifetime expected credit losses along with interest income on a net
basis are recognised.
Financial Liabilities
Financial liabilities are classified as either financial liabilities at fair
value through profit and loss (FVTPL) or as other financial liabilities.
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged or cancelled, or they expire.
Financial liabilities are classified at FVTPL when the financial liability is
either held for trading or it is designated at FVTPL. A financial liability is
classified as held for trading if it has been incurred principally for the
purpose of repurchasing it in the near term or is a derivative that is not a
designated or effective hedging instrument.
Financial liabilities at FVTPL are measured at fair value, with any gains or
losses arising on changes in fair value recognised in profit or loss. The net
gain or loss recognised in profit or loss incorporates any interest paid on
the financial liability.
Other financial liabilities, including borrowings, are initially measured at
fair value, net of transaction costs and are subsequently measured
at amortised cost using the effective interest method, with interest expense
recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of
a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial
liability, or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
Share Based Payments
The fair value of options granted to Directors and others in respect of
services provided is recognised as an expense in the Statement of
Comprehensive Income with a corresponding increase in equity reserves - 'other
reserves'.
On exercise of, or expiry of unexercised share options, the proportion of the
share-based payment reserve relevant to those options is transferred from
other reserves to the accumulated deficit. On exercise, equity is also
increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the accounting
periods which the option becomes unconditional.
The fair value of options are calculated using the Black-Scholes model, taking
into account the terms and conditions upon which the options were granted.
Vesting conditions are non-market and there are no market vesting conditions.
These vesting conditions are included in the assumptions about the number of
options that are expected to vest. At the end of each reporting period, the
Company revises its estimate of the number of options that are expected to
vest. The exercise price is fixed at the date of grant and no compensation is
due at the date of grant. Where equity instruments are granted to persons
other than employees, the statement of comprehensive income is charged with
the fair value of the goods and services received.
Warrants issued for services rendered are accounted for in accordance with
IFRS 2 recognising either the costs of the service if it can be reliably
measured or the fair value of the warrant (using the Black-Scholes model).
The fair value is recognised as an expense in the accounting period that the
warrant is granted and there is no revision to this estimate in future
accounting periods.
Warrants issued as part of share issues have been determined as equity
instruments under IAS 32. Since the fair value of the shares issued at the
same time is equal to the price paid, these warrants, by deduction, are
considered to have been issued at nil value.
Employee Benefit Trust (EBT)
The Group has consolidated its Employee Benefit Trust in the current year as
it is under its control. Shares held by the EBT are recorded in equity as a
deduction in Other Reserves. When the Group issues shares to the EBT to
satisfy employee share-based payments, the shares are recorded at cost in
Other Reserves, consistent with the share-based payment expense recognised.
This accounting treatment aligns the issuance of shares with the associated
IFRS 2 charge recognised in equity.
2. Critical Accounting Judgments, Estimates and Assumptions
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continuously evaluated based on historical experiences and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
deviate from these estimates and assumptions. The key assumptions concerning
the future and other key sources of estimation uncertainty at the reporting
date that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year, are
described below.
Recoverable Value of Development & Production assets - Judgement,
Estimates and Assumptions
Costs capitalised in respect of the Group's development and production assets
are required to be assessed for impairment under the provisions of IAS 36.
Such an estimate requires the Group to exercise judgement in respect of the
indicators of impairment and also in respect of inputs used in the models
which are used to support the carrying value of the assets. Such inputs
include estimates of oil and gas reserves, production profiles, oil price, oil
quality discount, capital expenditure (including an allocation of salary
costs), inflation rates, and pre-tax discount rates that reflect current
market assessments of (a) the time value of money; and (b) the risks specific
to the asset for which the future cash flow estimates have not been adjusted.
The Directors concluded that there were no indications of impairment in the
current year.
Asset Decommissioning Provisions - Estimates and Assumptions
The Group's activities are subject to various laws and regulations governing
the protection of the environment. The Group recognises management's best
estimate of the asset decommissioning costs in the period in which they are
incurred. Such estimates of costs include pre-tax discount rates that reflect
current market assessments of (a) the time value of money; and (b) the risks
specific to the asset for which the future cash flow estimates have not been
adjusted. Actual costs incurred in future periods could differ materially from
the estimates.
Additionally, future changes to environmental laws and regulations, life of
development and production assets, estimates and discount rates could affect
the carrying amount of this provision. The Board assessed the extent of
decommissioning required as at 31 December 2024 and concluded that a provision
of $933,000 (2023: $1,080,000) should be recognised in respect of future
decommissioning obligations at Rustaveli, West Rustavi, Satskhenisi and Norio
(see note 17).
Share Options and Warrants - Estimates and Assumptions
Share options issued by the Group relate to the Block Energy Plc Share Option
Plan and warrants issued relates to the cost of borrowing. The grant date fair
value of such options and warrants is calculated using a Black-Scholes model
whose input assumptions are derived from market and other internal estimates.
The key estimates include volatility rates and the expected life of the
options, together with the likelihood of non-market performance conditions
being achieved (see note 22).
Impairment of Investments and Loans to Subsidiaries - Parent Company only
The Company assesses at each reporting date whether there is any objective
evidence that investments/receivables in subsidiaries are impaired. To
determine whether there is objective evidence of impairment, a considerable
amount of estimation is required in assessing the ultimate realisation of
these investments/receivables, including valuation, creditworthiness and
future cashflow. Although no impairment of investments was indicated at year
end the Company identified certain intercompany receivables as being impaired.
During the year the Company carried out an assessment of the expected credit
loss arising on intercompany receivables. This was calculated as a total loss
allowance of $8,402,000 (2023: $8,097,000) therefore an additional amount of
$305,000 (2023: $4,387,000) was provided for in the current year parent
company financial statements.
3. Segmental Disclosures
IFRS 8 requires segmental information for the Group on the basis of
information reported to the chief operating decision maker for decision making
purposes. The Company considers this role as being performed by the Board of
Directors. The Group's operations are focused on oil and gas development and
production activities (Oil and Gas Extraction segment) in Georgia and has a
corporate head office in the UK (Corporate segment). Based on risks and
returns the Directors consider that there are two operating segments that they
use to assess the Group's performance and allocate resources being the Oil and
Gas Extraction in Georgia, and the corporate segment including unallocated
costs.
The Board of Directors primarily uses a measure of adjusted earnings before
interest, tax, depreciation and amortisation (EBITDA), see below, to assess
the performance of the operating sectors.
3 a) Adjusted EBITDA
Adjusted EBITDA excludes discontinued operations and the effects of
significant items of income and expenditure which might have an impact on the
quality of earnings, such as restructuring costs, legal expenses, and
impairments where the impairment is the result of an isolated, non-recurring
event.
31 December 31 December
Adjusted EBITDA 2024 2023
$'000 $'000
Oil and Gas extraction - Georgia 2,758 3,331
Corporate and other (1,697) (1,862)
Total adjusted EBITDA 1,061 1,469
Adjusted EBITDA reconciles to operating profit before income tax as follows:
31 December 31 December
2024 2023
$'000 $'000
Total adjusted EBITDA 1,061 1,469
Depreciation and depletion (1,236) (1,374)
Impairment - (2,210)
Finance and other income 68 33
Finance costs and foreign exchange (502) (131)
Loss before income tax from continuing operations (609) (2,213)
3 b) Other profit and loss disclosures
Oil and Gas Corporate Group
Extraction and other Total
Year ended 31 December 2024 $'000 $'000 $'000
Revenue 7,533 - 7,533
Cost of sales (3,518) - (3,518)
Depreciation and depletion (1,235) (1) (1,236)
Administrative costs (944) (1,624) (2,568)
Share based payments (312) (74) (386)
Finance and other income 64 4 68
Net Finance costs and Forex (92) (410) (502)
Profit/(loss) from operating activities 1,496 (2,105) (609)
Total non-current assets 23,240 4 23,244
Year ended 31 December 2023 $'000 $'000 $'000
Revenue 8,366 - 8,366
Cost of sales (3,826) - (3,826)
Depreciation and depletion (1,373) (1) (1,374)
Impairment (2,210) - (2,210)
Administrative costs (1,209) (1,862) (3,071)
Finance and other income 19 14 33
Net Finance costs and Forex (69) (62) (131)
Loss from operating activities (302) (1,911) (2,213)
Total non-current assets 23,901 - 23,901
3 c) Segment assets and liabilities
31 December 2024 31 December 2023
Segmental Assets $'000 $'000
Oil extraction - Georgia 29,050 29,452
Corporate and other 433 510
29,483 29,962
Segmental Liabilities 31 December 2024 31 December 2023
$'000 $'000
Oil extraction - Georgia 1,514 1,522
Corporate and other 2,656 2,734
4,170 4,256
4. Revenue
Year ended Year ended
31 December
31 December
2024 2023
$'000 $'000
Crude oil revenue 6,678 7,413
Gas revenue 855 953
7,533 8,366
5. Depreciation and Depletion on Oil and Gas assets
Year ended Year ended
31 December
31 December
2024 2023
$'000 $'000
Depreciation of PP&E 311 307
Depletion of oil and gas assets 925 1,067
1,236 1,374
6. Expenses by nature
Year ended Year ended
31 December
31 December
2024 2023
$'000 $'000
Employee benefit expense 1,367 1,413
Share option charge 386 414
Professional and legal 557 465
Fees to Auditor in respect of the Group audit 115 97
Regulatory fees 28 30
Operating lease expense 79 68
Office and other costs 422 584
2,954 3,071
7. Directors and employees
Year ended Year ended
31 December
31 December
2024 2023
$'000 $'000
Employment costs (inc. Directors' remuneration):
Wages and salaries 1,637 1,286
Pensions 33 30
Social security costs 58 97
1,728 1,413
Share based payments 386 414
2,114 1,827
The share-based payments comprised the fair value of options granted to
Directors and employees in respect of services provided.
Wages and salaries include amounts that are recharged between subsidiaries.
Some of these costs are then capitalised as development and production assets
($193,000), reported within cost of sales ($168,000) and the remainder are
classified in administration expenses ($1,367,000).
The average monthly number of employees during 2024 was 114 (2023: 147) split
as follows:
Year ended Year ended
31 December
31 December
2024 2023
Management 5 8
Technical 94 110
Administration 15 29
114 147
Year ended Year ended
31 December
31 December
2024 2023
$'000 $'000
Amounts attributable to the highest paid Director:
Director's salary and bonus 581 466
Pension 28 15
Share based payments 24 67
633 548
Key management and personnel are considered to be the Directors.
8. Other income
Year ended Year ended
31 December
31 December
2024 2023
$'000 $'000
Other income 4 26
Impairment reversal 31 -
35 26
9. Finance Expense
Year ended Year ended
31 December 2024 31 December 2023
$'000 $'000
Interest paid and payable on borrowings (note 16) 311 248
Warrant cost of borrowings (note 244 125
21)
Arrangement fee - 55
555 428
Less borrowing costs capitalised (note 12) (124) (361)
431 67
Unwinding of decommissioning provision (note 17) 44 43
475 110
10. Taxation
Based on the results for the year, there is no charge to UK or foreign tax.
This is reconciled to the accounting loss as follows:
Year ended Year ended
UK taxation 31 December 31 December
2024 2023
$'000 $'000
UK Group loss on ordinary activities (609) (2,213)
Loss before taxation at the average UK standard rate of 25% (2023:23.5%) (143) (520)
Effect of:
Zero tax rate income (1,883) (1,966)
Disallowable expenses 89 125
Tax losses for which no deferred income tax asset was recognised 2,581 4,304
Current tax - -
The Group offsets deferred tax assets and liabilities if, and only if, it has
a legally enforceable right to offset current tax assets and current tax
liabilities and the deferred tax assets and deferred tax liabilities related
to corporation taxes levied by the same tax authority. Due to the tax rates
applicable in the jurisdictions of the Group's subsidiary entities (being 0%
in both years) no deferred tax liabilities or assets are considered to arise.
The Group has not recognised deferred income tax assets for tax losses carried
forward for entities in which it is not considered probable that there will be
sufficient future taxable profits available for offset. Unrecognised deferred
income tax assets relate to unused tax losses. The Company has UK corporation
tax losses available to carry forward against future profits of approximately
$ 7,307,000 (2023: $ 6,698,000 - estimated).
11. Loss Per Share
The calculation for loss per Ordinary Share (basic and diluted) is based on
the consolidated loss attributable to the equity shareholders of the Company
is as follows:
Year ended Year ended
31 December 2024 31 December 2023
Loss attributable to equity Shareholders ($'000) (609) (2,213)
Weighted average number of Ordinary Shares 729,860,105 702,875,778
Loss per Ordinary share ($/cents) (0.08)c (0.31)c
Loss and diluted loss per Ordinary Share are calculated using the weighted
average number of Ordinary Shares in issue during the year. Diluted share loss
per share has not been calculated as the options and warrants have no dilutive
effect given the loss arising in the year.
12. Property, Plant and Equipment
Development & Production Assets PPE/Computer / Office Equipment / Motor Vehicles Total
$'000 $'000 $'000
Cost
At 1 January 2023 29,115 2,072 31,187
Additions* 3,286 115 3,401
Disposals - (151) (151)
Change in decommissioning provision (686) - (686)
Foreign exchange movements 4 (4) -
At 31 December 2023 31,719 2,032 33,751
Additions* 408 161 569
Disposals - (27) (27)
Change in decommissioning provision (160) - (160)
Foreign exchange movements - (9) (9)
At 31 December 2024 31,967 2,157 34,124
Accumulated depreciation
At 1 January 2023 5,711 661 6,372
Disposals (3) (54) (57)
Charge for the year 1,067 307 1,374
Impairment 2,210 - 2,210
At 31 December 2023 8,985 914 9,899
Disposals - 5 5
Charge for the year 925 311 1,236
Foreign exchange movements (1) 9 8
At 31 December 2024 9,909 1,239 11,148
Carrying Amount
At 31 December 2023 22,733 1,118 23,851
At 31 December 2024 22,058 918 22,976
*This includes additions of $124,000 (2023: $361,000) which relates to
capitalised borrowing costs.
Carrying amount of property plant and equipment by cash generative unit (CGU):
Norio Satsk West Rustavi Corporate
henisi Rustaveli Total
$'000 $'000 $'000 $'000 $'000 $'000
Carrying amount:
8 - 16,530 5,952 486 22,976
At 31 December 2024
At 31 December 2023 14 28 16,967 439
6,403 23,851
The impairment charge in prior year of $2.2m arose on the production and
development assets held by Norio and Satskhenisi following a decision to
define these assets as non-core to the business operations. This was a result
of an extensive review of the cost of operations and decision not to allocate
additional capital for the further development of these CGUs. Following this
decision, the oil and gas assets at Norio and Satskhenisi were written down to
$nil. The remaining assets within this CGU relate to non-oil and gas assets
only.
13. Inventory
31 December 2024 31 December 2023
$'000 $'000
Spare parts and consumables 3,230 3,286
Crude oil 1,069 1,091
4,299 4,377
14. Trade and Other Receivables
31 December 2024 31 December 2023
$'000 $'000
Trade debtors 574 233
Other receivables 118 420
Prepayments 112 318
804 971
The fair value at amortised cost is considered to be equivalent to the book
value as none of these receivables are considered to be impaired.
15. Cash and Cash Equivalents
31 December 31 December 2023
2024
$'000
$'000
Cash and cash equivalents 1,136 713
Cash and cash equivalents consist of balances in bank accounts used for normal
operational activities. The vast majority of the cash was held in an
institution with a Standard & Poor's credit rating of A-1.
16. Trade and Other Payables
31 December 31 December
2024 2023
$'000 $'000
Trade and other payables 740 1,041
Accruals 497 135
1,237 1,176
Trade and other payables principally comprise amounts outstanding for
corporate services and operational expenditure.
In 2023, the Company entered into a $2,000,000 (2022: $nil) loan with a simple
interest rate of 16% becoming payable every quarter. This was drawn down in
two tranches, with $1,060,000 being drawn down on 1 February 2023 and the
remainder of $940,000 being drawn down on 10 May 2023. The maturity date of
this loan was set at 18 months from the date of the drawdowns and so has been
recognised as a short-term loan in the prior year accounts.
On 31 July 2024, the Company announced the extension of this loan facility for
a further 18 months to 2 February 2026, with each lender receiving further
warrants with an exercise price of 0.85p and expiry date of 30 July 2027.
91,185,133 warrants were issued which corresponds to an exercise value equal
to 50% of the total loan commitments under this facility. More details of
these warrants and their valuation are set out in note 21. The loan has been
reclassified into non-current liabilities in the current year to reflect this
extension.
The loan was advanced for the purpose of the drilling of side tracks and
associated works as part of the Company's Project development strategy in
relation to the development of the Middle Eocene reservoir within West
Rustavi/Krtsanisi (Project I).
17. Provisions
Decommissioning provision 31 December 31 December 2023
2024
$'000
$'000
Brought forward 1,080 1,723
Unwinding of discount on provision 44 43
Change in decommissioning provision in the year (191) (686)
Carried forward 933 1,080
Decommissioning provisions are based on management estimates of work and the
judgement of the Directors. By its nature, the detailed scope of work
required, and timing of such work is uncertain.
18. Share Capital
Called up, allotted, issued and fully paid No. Ordinary No. Deferred Nominal Value
$
Shares Shares
As at 31 December 2022 680,362,741 2,095,165,355 3,565,575
Issue of equity on 4 January 2023 764,340 - 2,353
Issue of equity on 6 February 2023 5,622,613 - 16,922
Issue of equity on 7 March 2023 924,997 - 2,855
Issue of equity on 5 April 2023 1,876,413 - 5,896
Issue of equity on 03 August 2023 35,124,708 - 111,798
As at 31 December 2023 724,675,812 2,095,165,355 3,705,399
Issue of equity on 28 May 2024 2,264,648 - 7,220
Issue of equity on 28 May 2024 6,455,477 - 20,580
As at 31 December 2024 733,395,937 2,095,165,355 3,733,199
On 28 May 2024, the Company issued 2,264,648 Ordinary Shares to two service
providers in lieu of cash settlement for services provided to the Company with
a total value of £24,000 ($30,604).
On 28 May 2024, the Company issued 6,455,477 Ordinary Shares to the Employee
Benefit Trust at par value.
---
On 4 January 2023, the Company issued 414,879 Ordinary Shares to two service
providers in lieu of cash settlement for services provided to the Company with
a total value of £5,145 ($6,335).
On 4 January 2023, the Company issued 349,461 Ordinary Shares to three
Non-Executive Directors, on exercise of their nil cost options.
On 3 February 2023, the Company issued 296,556 Ordinary Shares to three
Non-Executive Directors on exercise of their nil cost options.
On 6 February 2023, the Company issued 5,173,662 Ordinary Shares to the
Employee Benefit Trust at par value.
On 6 February 2023, the Company issued 152,395 Ordinary Shares to two service
providers in lieu of cash settlement for services provided to the Company with
a total value of £2,421 ($2,915).
On 7 March 2023, the Company issued 646,849 Ordinary Shares to two service
providers in lieu of cash settlement for services provided to the Company with
a total value of £7,783 ($9,608).
On 7 March 2023, the Company issued 278,148 Ordinary Shares to two
Non-Executive Directors, on exercise of their nil cost options.
On 5 April 2023, the Company issued 1,400,025 Ordinary Shares to two
Non-Executive Directors, on exercise of their nil cost options.
On 5 April 2023, the Company issued 476,388 Ordinary Shares to two service
providers in lieu of cash settlement for services provided to the Company with
a total value of £4,783 ($6,011).
On 3 August 2023, the Company issued 30,000,000 Ordinary shares to the
Employment Benefit Trust at par value.
On 3 August 2023, the Company issued 5,124,708 Ordinary shares to three
service providers in lieu of cash settlement for services provided to the
Company with a total value of £68,589 ($87,326).
---
The Ordinary Shares consist of full voting, dividend and capital distribution
rights and they do not confer any rights for redemption. The Deferred Shares
have no entitlement to receive dividends or to participate in any way in the
income or profits of the Company, nor is there entitlement to receive notice
of, speak at, or vote at any general meeting or annual general meeting.
19. Share Premium Account
$'000
Balance at 1 January 2024 34,856
Premium arising on issue of equity shares 23
Balance at 31 December 2024 34,879
$'000
Balance at 1 January 2023 34,765
Premium arising on issue of equity shares 91
Balance at 31 December 2023 34,856
20. Reserves
The following describes the nature and purpose of each reserve within owners'
equity.
Reserves Description and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium account Amount subscribed for share capital in excess of nominal value, less
attributable costs.
Other reserves The other reserves comprises the fair value of all share options and warrants
which have been charged over the vesting period, net of the amount relating to
share options which have expired, been cancelled and have vested. It also
comprises the shares issued to the EBT so their value is matched against the
options charged to this reserve. This movement has been shown in the
Consolidated Statement of the Changes in Equity and is also set out in the
table below
Foreign exchange reserve Exchange differences on translating the net assets of foreign operations
Accumulated deficit Cumulative net gains and losses recognised in the income statement and in
respect of foreign exchange.
Other Reserves $'000
Balance at 1 January 4,766
2024
Share based 320
payments
Share based payments - 2023 Bonus payments 312
Netting of EBT (332)
loan
Balance at 31 December 2024 5,066
Balance at 1 January 2023 4,525
Share based payments 414
Options movement (173)
Balance at 31 December 2023 4,766
The Employee Benefit Trust (EBT) loan has been netted off against reserves as
the shares held by the trust are considered part of the group and,
accordingly, have been treated like treasury shares for consolidation
purposes.
21. Warrants
Number of Warrants 31 December 2024 weighted average exercise price Number of Warrants 31 December 2023
weighted average exercise price
Outstanding at the beginning of the year 54,241,837 2.2p 10,809,194 4p
Granted in the year 91,185,133 0.85p 44,682,643 1.8p
Expired in the year - - (1,250,000) 4p
Outstanding at the end of the year 145,426,970 1.33p 54,241,837 2.2p
As at 31 December 2024, all warrants were available to exercise and were
exercisable at prices between 0.85p and 12.5p (31 December 2023: 1.7p and
12.5p). The weighted average life of the warrants is 2.0 years (31 December
2023: 2.1 years).
The warrants granted during the year related to the cost of borrowing and
therefore a fair value was calculated using the Black Scholes Model. This
resulted in fair value charge of $244,000 being assigned to the warrants
granted to the lenders. The inputs used for the model are shown below in
note 22.
22. Share Based Payments
During the year, the Group operated a Block Energy Plc Share Option Plan
(Share Option Scheme).
Under IFRS 2, an expense is recognised in the statement of comprehensive
income for share based payments, to recognise their fair value at the date of
grant. The application of IFRS 2 gave rise to a charge of $386,000 for the
year ended 31 December 2024. The equivalent charge for the year ended 31
December 2023 was $414,000. The Group recognised total expenses (all of which
related to equity settled share-based payment transactions) under the current
plans of:
Year ended Year ended
31 December 31 December 2023
2024
$'000 $'000
Share option scheme 386 414
386 414
Share Option Scheme
The vesting period varies between 0 days to 3 years. The options expire if
they remain unexercised after the exercise period has lapsed and have been
valued using the Black Scholes model.
The following table sets out details of all outstanding options granted under
the Share Option Scheme.
2024 2024 2023 2023
Options Weighted average exercise price Options Weighted average exercise price
Outstanding at beginning of year 99,785,841 $0.01 100,106,152 $0.02
Granted during the year 30,909,737 $0.01 26,701,508 $0.01
Exercised during the year - - 8,540,800 $0.00
Expired during the year 300,001 $0.02 18,481,019 $0.03
Outstanding at the end of the year 130,395,579 $0.01 99,785,841 $0.01
Exercisable at the end of the year 95,190,127 83,823,460
The weighted average exercise price of the share options exercisable at 31
December 2024 is $0.01 (31 December 2023: $0.01). The weighted average
contractual life of the share-based payments outstanding at 31 December 2024
is 9.44 years (31 December 2023: 9.16 years).
The estimated fair values of these share options, and the inputs used in the
Black-Scholes model to calculate those fair values are as follows:
Date of grant Number Estimated Share Exercise price Expected volatility Expected life Risk free rate Exp. dividends
of options fair value price
30 June 2017 1,200,000 $0.04 $0.01 $0.03 84% 5.5 years 1.16% 0%
6 April 2018 4,400,000 $0.05 $0.04 $0.03 84% 10 years 1.34% 0%
11 June 2018 18,098,332 $0.04 $0.05 $0.05 84% 10 years 1.23% 0%
21 October 2019 6,325,000 $0.05 $0.06 $0.15 109% 9.0 years 0.63% 0%
1 March 2021 10,800,00 $0.04 $0.04 $0.06 192% 9.5 years 0% 0%
8 April 2022 25,200,000 $0.01 $0.02 $0.02 105% 10 years 1.75% 0%
28 May 2024 8,301,887 $0.01 $0.013 $0.013 70.5% 10 years 4.55% 0%
Number
of warrants
31 December 2020 8,750,167 $0.04 $0.04 $0.04 190% 5 years 0% 0%
1 February 2023 25,330,249 $0.003 $0.012 $0.017 70.5% 3 years 3.76% 0%
10 May 2023 19,352,394 $0.003 $0.013 $0.019 70.5% 3 years 3.57% 0%
2 August 2024 91,185,133 $0.004 $0.009 $0.009 70.5% 3 years 3.71% 0%
All share-based payment charges are calculated using the fair value of
options.
For the options and warrants granted in 2023 and 2024, expected volatility was
determined by reviewing benchmark values from comparator companies. For the
options granted prior to 2023, expected volatility was determined by reference
to the volatility of historic trading prices of the Company's shares.
23. Financial Instruments
Capital Risk Management
The Company manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and the Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, foreign exchange and
other reserves and retained earnings as disclosed in the Consolidated
Statement of Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange and liquidity
risks. The management of these risks is vested to the Board of Directors.
The sensitivity has been prepared assuming the liability outstanding was
outstanding for the whole period. In all cases presented, a negative number in
profit and loss represents an increase in finance expense/decrease in interest
income.
Credit Risk
Credit risk is the risk that the Group will suffer a financial loss as a
result of another party failing to discharge an obligation and arises from
cash and other liquid investments deposited with banks and financial
institutions and receivables from the sale of crude oil.
For deposits lodged at banks and financial institutions these are all held
through a recognised financial institution. The maximum exposure to credit
risk is $1,136,000 (2022: $ 713,000). The Group does not hold any collateral
as security.
The carrying value of cash and cash equivalents and financial assets
represents the Group's maximum exposure to credit risk at year end. The Group
has no material financial assets that are past due.
The Company has made unsecured loans at a simple interest rate of 5% to its
subsidiary companies. The loans are repayable on demand. A small amount of
these loans have been made to subsidiaries which though revenue generating are
not profit making, therefore there is a risk that they will not be fully
recoverable. An assessment of the expected credit loss arising on intercompany
loans is detailed in note 6 to the parent Company financial statements.
Market Risk
Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices.
Market risk for the Company comprises of currency risk (discussed below) and
interest rate risk. Since there are no variable interest-bearing loans in
the Group (the Group Borrowings are set at a fixed rate of 16%), no risk is
therefore identified.
Currency Risk
Foreign currency risk can only arise on financial instruments that are
denominated in a currency other than the functional currency in which they are
measured. Translation-related risks are therefore not included in the
assessment of the entity's exposure to currency risks. Translation exposures
arise from financial and non-financial items held by an entity (for example, a
subsidiary) with a functional currency different from the Group's
presentational currency. However, foreign currency-denominated inter-company
receivables and payables which do not form part of a net investment in a
foreign operation would be included in the sensitivity analysis for foreign
currency risks; this is because, even though the balances eliminate in the
consolidated balance sheet, the effect on profit or loss of their revaluation
under IAS 21 is not fully eliminated.
A 10% increase in the strength of the pound sterling against the US dollar
would cause an estimated increase of $94,000 (2023: $221,000 increase) in the
loss after tax of the Group for the year ended 31 December 2024, with a 10%
weakening causing an equal and opposite decrease. The impact on equity is
the same as the impact on loss after tax.
The Group's cash and cash equivalents and liquid investments are mainly held
in US dollars, pounds sterling and Georgian Lari. At 31 December 2024, 1%
(2023: 16%) of the Group's cash and cash equivalents and liquid investments
were held in pounds sterling, 67% (2023: 78%) in Georgian Lari and 32% (2023:
6%) in US dollars.
Liquidity Risk
Liquidity risk arises from the possibility that the Group and its subsidiaries
might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. In addition to equity funding,
additional borrowings have been secured in the past to finance operations. The
Company manages this risk by monitoring its financial resources and carefully
plans its expenditure programmes. Financial liabilities of the Group comprise
trade payables which mature in less than twelve months.
Type <3 months 1-3months 1-2 years Total
$'000 $'000 $'000
Trade payables 1,237 - - 1,237
Borrowings - - 2,000 2,000
Total 1,237 - 2,000 3,237
24. Categories of Financial Instruments
In terms of financial instruments, these solely comprise of those measured at
amortised cost and are as follows:
31 December 2024 31 December 2023
$'000 $'000
Liabilities at amortised cost 740 1,042
Borrowings at amortised cost 2,000 2,000
2,740 3,042
Cash and cash equivalents at amortised cost 1,136 713
Financial assets at amortised cost 804 971
1,940 1,684
A fixed and floating charge has been placed over the assets owned by the Group
as security for the $2m borrowings taken out in the year. This will be
discharged in full on payment of these secured liabilities.
25. Subsidiaries
At 31 December 2023 and 2024, the Group consists of the following
subsidiaries, which are wholly owned by the Company.
Country of Incorporation Proportion of voting rights and equity interest
Company
Block Norioskhevi Ltd British Virgin Islands 100%
Satskhenisi Ltd Marshall Islands 100%
Georgia New Ventures Inc. Bahamas 100%
Block Operating Company LLC Georgia 100%
Block Rustaveli Limited British Virgin Islands 100%
Didi Lilo & Nakarala Limited British Virgin Islands 100%
Subsidiaries - Nature of business
The principal activity of Georgia New Ventures Inc, Satskhenisi Ltd, Block
Norioskhevi Ltd, Block Rustaveli Limited and Didi Lilo & Nakarala Limited
is oil and gas development and production.
The principal activity of Block Operating Company LLC is to be the operator of
the oil and gas licenses held in Georgia.
Registered office
The registered office of Georgia New Ventures Inc. is Bolam House, King and
George Streets, P.O. Box CB 11.343, Nassau, Bahamas.
The registered office of Satskhenisi Ltd is Trust Company Complex, Ajeltake
road, Ajeltake Island, Majuro, Marshall Islands MH96960.
The registered office of Block Rustaveli Limited, Block Norioskhevi Ltd and
Didi Lilo & Nakarala Limited is Aleman, Cordero, Galindo & Lee Trust
(BVI) Limited, 3rd Floor, Yamraj Building, Market Square, P.O. Box 3175, Road
Town, Tortola, British Virgin Islands.
The registered office of Block Operating Company LLC is 13A Tamarashvili
Street, Tbilisi 0162, Georgia.
26. Commitments
Commitments at the reporting date that have not been provided for were as
follows:
Operating lease commitment
At year end the total of future minimum lease payments under non-cancellable
operating leases for each of the following periods was:
31 December 31 December 2023
2024
$'000
$'000
Within 1 year 69 81
Between 1 and 5 years - -
Total 69 81
Short term leases are leases with a lease term of 12 months or less without a
purchase option and are recognised on a straight-line basis as an expense in
the profit or loss account.
27. Related Party Transactions
The Directors consider that there is no ultimate controlling party.
Key management personnel comprises of the Directors and details of their
remuneration are set out in Note 7 and the Remuneration Report.
The Company extended its $2m loan facility during the year with further
warrants granted to lenders. This included the following related parties,
who also received further warrants as set out below:
Paul Haywood - $115,000 loan facility
5,243,145 warrants at a fair value cost of $14,000
28. Events Occurring After Year End
On 7 February 2025, the Company announced the issue of bonus options and
shares for senior executives within the Company. These had been accrued in
the accounts at year end. The Remuneration Committee elected to settle the
bonuses by way of issue of 35,912,008 ordinary shares of 0.25p each ("Ordinary
Shares") and 10,548,289 nil-cost options over Ordinary Shares ("Options"). The
number of Ordinary Shares and Options has been determined by dividing the
respective bonus by the Volume Weighted Average Price ("VWAP") of the
Company's Ordinary Shares for January 2025 which equals 0.7385p per Ordinary
Share.
On 27 March 2025, the Company announced the acquisition of a 10% participating
interest in the XIQ Production Sharing Contract with an option to increase to
22%. The consideration was $1, with the Company being responsible for
contributing its share of the 2025 work programme which is $77,000. This was
acquired through the 100% acquisition of the subsidiary GOG SLADS Limited, a
company incorporated in the British Virgin Islands on 12 March 2020 under BVI
company number 2033094.
Copies of the Report & Accounts are available on the Company's website
http://www.blockenergy.co.uk/ (http://www.blockenergy.co.uk/) and have been
posted to shareholders.
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