REG - Block Energy PLC - Half-year Report
30/09/2022 07:01
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RNS Number : 2551B Block Energy PLC 30 September 2022
30 September 2022
Block Energy Plc
("Block" or the "Company")
Interim Results for the Six Months Ended 30 June 2022
Block Energy plc, the development and production company focused on Georgia,
is pleased to announce the interim results for Block Energy plc and its
subsidiaries (the "Group") for the six months ended 30 June 2022.
Highlights:
· 184,000 operational man-hours worked (1H 2021: 170,000 man-hours)
with no lost time incidents (1H 2021: none).
· Safely drilled well JKT-01Z, on plan, time and budget and tied into
production facilities.
· Completed well engineering for the PAT-E1 Lower Eocene sidetrack,
designed to appraise up to 864 Bcf contingent gas resources.
· Procured long-lead items for up to two wells, to support a
back-to-back drilling campaign across blocks XI(B) and XI(F).
· Completed over 23 workovers, across multiple fields, on production
wells.
· Strong and consistent production performance during the period:
o Total production of 93.3 Mboe, comprising 64.9 Mbbls of oil and 28.4 Mboe
of gas (1H 2021: 87.0 Mboe, comprising 55.5 Mbbls of oil and 31.5 Mboe of
gas).
o Average daily production of 515 boepd (1H 2021: 481 boed).
o Production increase was driven by the success of well JKT-01Z, which more
than offset the production decline of other wells.
· Oil sales of 45.6 Mbbls (1H 2021: 41.9 Mbbls), with revenue of
$4.16 million (1H 2021: $2.33 million), representing a weighted average
price of $91 per barrel (1H 2021: $56 per barrel).
· Gas sales of 106.8 MMcf (1H 2021: 103.0 MMcf), with revenue of
$429,000 (1H 2021: $328,000), representing a weighted average price of
$4.02/Mcf (1H 2021: $3.18/Mcf).
· Negotiated with the existing buyer a gas sales price increase of over
30%.
· Profit for the period from continuing operations of $627,000
(1H 2021: loss of $2,051,000).
· Cash position of $1.4 million as at 30 June 2022 (30 June 2021:
$5.5 million).
Post period events:
· Completed an internal contingent resource study of the Middle Eocene
reservoirs across the Samgori and Patardzeuli oil fields.
· Developed, and prepared to execute, a three-project strategy designed
to produce proven oil and gas reserves and evaluate significant contingent oil
and gas resources across the portfolio.
· Independently verified internal technical work and plans for the
initial phase of Project I following completion of a Competent Person's Report
("CPR") across the Krtsanisi Anticline, West Rustavi/Krtsanisi Field.
· Initiated Project II with the successful deepening of well JSR-01,
safely, on plan, and below budgeted cost.
CHIEF EXECUTIVE OFFICER'S STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2022:
Dear Shareholder
The first half of the year has been a period of solid progress operationally,
and during this period and in the three months since the interim accounts date
we have also made considerable process in defining and beginning to implement
our three-project strategy, to produce proven oil and gas reserves and
evaluate significant contingent oil and gas resources across the portfolio.
We have seen a material increase in revenue and cash generated from operations
in the first half of this year, thanks to good production performance, robust
capital discipline and higher oil prices. Production for the period was driven
by an active drilling and workover programme, including the successful JKT-01Z
well. We have also commenced seismic re-interpretation and fracture attribute
analysis across the XI(B) licence.
Revenue from production has been carefully managed to maximise our capital
allocation towards increasing oil and gas production and advancing Projects I,
II and III, and we also continue to pursue discussions for debt or debt-type
financing to accelerate those projects. As we explained in our recent
announcements, the projects comprise:
o Project I - the development of the Middle Eocene oil reservoir in the West
Rustavi / Krtsanisi field, initially comprising three sidetracks and two new
wells;
o Project II - self-funded infill development of the Middle Eocene oil
reservoir in the prolific Patardzeuli field; and
o Project III - the evaluation and development of the substantial natural gas
resource throughout the Eocene in Blocks XI(F) and XI(B)
Our technical and operational performance continues to go from strength to
strength, as demonstrated by the recently announced CPR, and reflected in the
successful self-funded deepening of the well JSR-01, and we look forward to
further progressing and updating shareholders on our three-project strategy.
In summary, Block is better placed than ever to realise the material value
opportunity that exists across its portfolio.
Paul Haywood
Chief Executive Officer
30 September 2022
Stephen James BSc, MBA, PhD (Block's Subsurface Manager) has reviewed the
reserve, resource and production information contained in this
announcement. Dr James is a geoscientist with over 40 years' experience in
field development and reservoir management.
**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 / Mark Antelme Celicourt Communications Tel: +44 (0)20 8434 2643
(Financial PR)
Notes to editors
Block Energy plc is an AIM-listed independent oil and gas company focused on
production and development in Georgia, applying innovative technology to
realise the full potential of previously discovered fields.
Block has a 100% working interest in Georgian onshore licence blocks IX and
XI(B). Licence block XI(B) is Georgia's most productive block. During the
mid-1980s, production peaked at 67,000 bopd and cumulative production reached
100 MMbbls and 80 MMbbls of oil from the Patardzeuli and Samgori fields,
respectively. The remaining 2P reserves across block XI(B) are 64 MMboe,
comprising 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe.
(Source: CPR Bayphase Limited: 1 July 2015). Additionally, following an
internal technical study designed to evaluate and quantify the undrained oil
potential of the Middle Eocene within the Patardzeuli field, the Company has
estimated gross unrisked 2C contingent resources of 200 MMbbls of oil.
The Company has a 100% working interest in licence block XI(F) containing the
West Rustavi onshore oil and gas field. Multiple wells have tested oil and gas
from a range of geological horizons. The field has so far produced over
75 Mbbls of light sweet crude and has 0.9 MMbbls of gross 2P oil reserves in
the Middle Eocene. It also has 38 MMbbls of gross unrisked 2C contingent
resources of oil and 608 Bcf of gross unrisked 2C contingent resources of gas
in the Middle, Upper and Lower Eocene formations (Source: CPR Gustavson
Associates: 1 January 2018).
Block also holds 100% and 90% working interests respectively in the onshore
oil producing Norio and Satskhenisi fields.
The Company offers a clear entry point for investors to gain exposure to
Georgia's growing economy and the strong regional demand for oil and gas.
Glossary
· bbls: barrels. A barrel is 35 imperial gallons.
· Bcf: billion cubic feet.
· boe: barrels of oil equivalent.
· boepd: barrels of oil equivalent per day.
· bopd: barrels of oil per day.
· Mbbls: thousand barrels.
· Mboe: thousand barrels of oil equivalent.
· Mcf: thousand cubic feet.
· MMbbls: million barrels.
· MMboe: million barrels of oil equivalent.
· MMcf: million cubic feet.
Notes to editors
Block Energy plc is an AIM-listed independent oil and gas company focused on
production and development in Georgia, applying innovative technology to
realise the full potential of previously discovered fields.
Block has a 100% working interest in Georgian onshore licence blocks IX and
XI(B). Licence block XI(B) is Georgia's most productive block. During the
mid-1980s, production peaked at 67,000 bopd and cumulative production reached
100 MMbbls and 80 MMbbls of oil from the Patardzeuli and Samgori fields,
respectively. The remaining 2P reserves across block XI(B) are 64 MMboe,
comprising 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe.
(Source: CPR Bayphase Limited: 1 July 2015). Additionally, following an
internal technical study designed to evaluate and quantify the undrained oil
potential of the Middle Eocene within the Patardzeuli field, the Company has
estimated gross unrisked 2C contingent resources of 200 MMbbls of oil.
The Company has a 100% working interest in licence block XI(F) containing the
West Rustavi onshore oil and gas field. Multiple wells have tested oil and gas
from a range of geological horizons. The field has so far produced over
75 Mbbls of light sweet crude and has 0.9 MMbbls of gross 2P oil reserves in
the Middle Eocene. It also has 38 MMbbls of gross unrisked 2C contingent
resources of oil and 608 Bcf of gross unrisked 2C contingent resources of gas
in the Middle, Upper and Lower Eocene formations (Source: CPR Gustavson
Associates: 1 January 2018).
Block also holds 100% and 90% working interests respectively in the onshore
oil producing Norio and Satskhenisi fields.
The Company offers a clear entry point for investors to gain exposure to
Georgia's growing economy and the strong regional demand for oil and gas.
Glossary
· bbls: barrels. A barrel is 35 imperial gallons.
· Bcf: billion cubic feet.
· boe: barrels of oil equivalent.
· boepd: barrels of oil equivalent per day.
· bopd: barrels of oil per day.
· Mbbls: thousand barrels.
· Mboe: thousand barrels of oil equivalent.
· Mcf: thousand cubic feet.
· MMbbls: million barrels.
· MMboe: million barrels of oil equivalent.
· MMcf: million cubic feet.
Condensed Consolidated Interim Statement of Comprehensive Income
For the six months period ended 30 June 2022
6 months ended 6 months ended
30 June 2022 30 June 2021
Unaudited Unaudited
$'000 $'000
Continuing operations
Revenue 4,589 2,663
Cost of sales (2,161) (2,535)
Gross profit 2,428 128
Administrative expenses (2,061) (2,133)
Operating profit/(loss) 367 (2,005)
Other income 240 -
Finance income 20 -
Finance expense - (46)
Profit/(loss) for the period before taxation 627 (2,051)
Taxation - -
Profit/(loss) for the period from continuing operations (attributable to the 627 (2,051)
equity holders of the parent)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
286 73
Total comprehensive profit/(loss) for the period attributable to the equity 913 (1,978)
holders of the parent
Profit/(loss) per share (basic) 4 0.10c (0.33)c
Profit per share (diluted) 4 0.08c -
Condensed Consolidated Statement of Financial Position
As at 30 June 2022
30 June 2022 31 December 2021
Unaudited Audited
$'000 $'000
Non-current assets
Property, plant and equipment 5 24,229 24,345
24,229 24,345
Current assets
Inventory 5,260 4,585
Trade and other receivables 591 752
Cash and cash equivalents 1,410 1,244
Total current assets 7,261 6,581
Total assets 31,490 30,926
Equity and liabilities
Capital and reserves attributable to equity holders of the Company:
Share capital 6 3,501 3,482
Share premium 34,650 34,625
Other reserves 10,752 10,260
Foreign exchange reserve 532 246
Accumulated deficit (20,774) (21,548)
Total Equity 28,661 27,065
Liabilities
Trade and other payables 790 1,556
Provisions 2,039 2,305
Total current liabilities 2,829 3,861
Total equity and liabilities 31,490 30,926
Consolidated Statement of Changes in Equity
As at 30 June 2022
Share Share premium Accumulated deficit Other reserve Foreign exchange reserve Total equity
capital
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 30 June 2021 (unaudited) 3,387 34,549 (19,108) 10,056 117 29,001
Loss for the period - - (2,732) - - (2,732)
Exchange differences on translation of operations in foreign currency - - - - 129 129
Total comprehensive loss for the period - - (2,732) - 129 (2,603)
Shares issued 23 76 - - - 99
Share based payments - - - 553 - 553
Options exercised 72 - 210 (267) - 15
Options expired - - 82 (82) - -
Total transactions with owners 95 76 292 204 - 667
Balance at 31 December 2021 (audited) 3,482 34,625 (21,548) 10,260 246 27,065
Profit for the period - - 627 - - 627
Exchange differences on translation of operations in foreign currency - - - - 286 286
Total comprehensive profit for the period - - 627 - 286 913
Shares issued 6 25 - - - 31
Share based payments
- - - 652 - 652
Options exercised 13 - - (13) - -
Options expired - - 147 (147) - -
Total transactions with owners
19 25 147 492 - 683
Balance at 30 June 2022 (unaudited)
3,501 34,650 (20,774) 10,752 532 28,661
Condensed Consolidated Interim Statement of Cash Flows
For the six months period ended 30 June 2022
6 months ended 6 months ended
30 June 2022 30 June 2021
Unaudited Unaudited
$'000 $'000
Operating activities
Profit/(loss) for the period before income tax 627 (2,051)
Adjustments for:
Finance income (20) -
Depreciation and depletion 5 950 1,193
Increase in provisions - 45
Share based payments expense 652 941
Foreign exchange movement 34 (53)
Net cash flows from operating activities before changes in working capital 2,243 75
Decrease/(increase) in trade and other receivables 161 (332)
Decrease in trade and other payables (767) (345)
Increase in inventory (675) (840)
Net cashflows from/(used in) operating activities 962 (1,442)
Investing activities
Cash received from acquisition of BRL - 278
Expenditure in respect of PP&E (1,076) (1,063)
Cash used in investing activities (1,076) (785)
Financing activities
Proceeds from issue of equity - 1,314
Proceeds from exercise of options - 152
Net cash flows from financing activities - 1,466
Net decrease in cash and cash equivalents (114) (761)
Cash and cash equivalents at start of period 1,244 6,331
Effects of foreign exchange rate changes on cash and cash equivalents 280 (62)
Cash and cash equivalents at end of period 1,410 5,508
Notes to the Condensed Consolidated Interim Financial Statements
For the six months period ended 30 June 2022
1. Interim Financial Statements
The Condensed Consolidated Interim Financial Statements of the Group, which
comprises Block Energy plc and its subsidiaries, for the six-month period from
1 January 2022 to 30 June 2022, were approved by the directors on 28 September
2022.
The Condensed Consolidated Interim Financial Statements have not been reviewed
by the Group's auditors.
The Company's shares are traded on AIM and the trading symbol is BLOE.
2. Summary of significant accounting policies
Management has prepared these interim accounts in accordance with IFRS
accounting policies as applied at 31 December 2021 (without the disclosure
requirements of IFRS). They do not include all of the information required in
annual financial statements, and should be read in conjunction with the
consolidated financial statements for the year ended 31 December 2021 and any
public announcements made by Block Energy Plc during the interim reporting
period. All amounts presented are in thousands of US dollars unless otherwise
stated.
The comparative information relates to the six-month period ended 30 June
2021, except in the Condensed Consolidated Statement of Financial Position,
where the comparisons are to the amounts as at 31 December 2021.
The accounting policies adopted in this half-yearly financial report are the
same as those adopted in the 2021 Annual Report and Financial Statements,
other than the implementation of new IFRS reporting standards as set out
below.
Going concern
The directors have prepared cash flow forecasts for a period of 15 months from
the date of signing these financial statements for the Company and the Group.
The forecasts indicate the Group has sufficient funds to meet its liabilities
as they fall due until December 2023. If the wells in the current drilling
campaign do not produce commercial quantities of oil or gas, the Group would
revisit its plans to drill subsequent wells in the prevailing market
environment and in light of the success of other drilling, and would still aim
to ensure that the Company and the Group can continue to meet their
liabilities and commitments through to December 2023.
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 risen rapidly during the past
twelve months due, in part, to recent global political uncertainty, and could
rise further but could also fall in the year ahead, and that future production
levels depend in part on the success of future drilling. As part of their
going concern assessment, the directors have performed a reverse stress test
on a low oil price scenario in which future drilling is inhibited or
unsuccessful, and have concluded that it remains possible that future revenues
in such a scenario 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 and/or raising finance when 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.
Adoption of new and revised accounting standards
During the current period the Group adopted all the new and revised standards,
amendments and interpretations that are relevant to its operations and are
effective for accounting periods beginning on 1 January 2022. This adoption
did not have a material effect on the accounting policies of the Group.
New standards, amendments and interpretations not yet adopted by the Group.
The standards and interpretations that are relevant to the Group, issued, but
not yet effective, up to the date of these interim accounts have been
evaluated by the Directors and they do not consider that there will be a
material impact of transition on the financial statements.
3. Operating segments
The Group is engaged in the appraisal and development of oil and gas resources
in Georgia and is therefore considered to operate in a single geographical and
business segment.
4. Profit/loss per share
The calculation of profit per share for the six months ended 30 June 2022 is
based on the profit for the period attributable to ordinary shareholders of
$627,000 and the weighted average number of shares of 656,329,007 and is 0.10
cents from continued operations. The calculation of loss per share for the six
months ended 30 June 2021 is based on the loss for the period attributable to
ordinary shareholders of $2,051,000 and the weighted average number of shares
of 621,445,266 and is 0.33 cents from continued operations.
The calculation of fully diluted profit per share for the six months ended 30
June 2022 is based on the profit for the period attributable to ordinary
shareholders of $627,000 and the weighted average number of shares of
656,329,007 plus warrants outstanding of 10,809,194 and options outstanding of
104,274,756 at year end and is 0.08 cents from continued operations. (No
prior year figure has been calculated as in the opinion of the directors, all
the outstanding share options and warrants are anti-dilutive and hence, basic
and fully diluted loss per share are the same.)
5. Property, plant and equipment
Unaudited Development & PPE/Computer/ Total
Production Assets Office equipment/ Vehicles
Cost $'000 $'000 $'000
At 1 January 2022 26,962 1,802 28,764
Additions 998 78 1,076
Reduction of baseline oil asset /Disposals
(244) (6) (250)
Foreign exchange movements - 8 8
At 30 June 2022 27,716 1,882 29,598
Accumulated depreciation and impairment
At 1 January 2022 4,029 390 4,419
Charge 820 130 950
Foreign exchange movements - - -
At 30 June 2022 4,849 520 5,369
Carrying amount
At 30 June 2022 22,867 1,362 24,229
Unaudited Development & PPE/Computer/ Total
Production Assets Office equipment/ Vehicles
Cost $'000 $'000 $'000
At 1 January 2021 22,096 777 22,873
Reclassification (780) 780 -
Additions 844 219 1,063
Reduction of baseline oil asset /Disposals (392) - (392)
Foreign exchange movements - (43) (43)
At 30 June 2021 21,768 1,733 23,501
Accumulated depreciation and impairment
At 1 January 2021 1,457 105 1,562
Reclassification (92) 92 -
Charge 1,083 110 1,193
Foreign exchange movements - (45) (45)
At 30 June 2021 2,448 262 2,710
Carrying amount
At 30 June 2021 19,320 1,471 20,791
No impairment was recognised in the six months ended 30 June 2022 (2021: Nil).
6. Share capital
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.
On 30 June 2022, the Company's share capital consisted of 658,669,945 Ordinary
Shares (30 June 2021: 624,623,513) and 2,095,165,355 Deferred Shares (30 June
2021: 2,095,165,355).
7. Other matters
A copy of this report is available from the Group's website,
www.blockenergy.co.uk (http://www.blockenergy.co.uk)
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