REG - Block Energy PLC - Half-year Report
29/09/2023 07:00
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RNS Number : 0627O Block Energy PLC 29 September 2023
29 September 2023
Block Energy Plc
("Block" or the "Company")
Interim Results for the Six Months Ended 30 June 2023
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 2023.
Highlights:
· 283,176 operational man-hours worked (1H 2022: 184,000 man-hours)
with one lost time incident (1H 2022: none).
· Achieved record production rates in Q2 2023 of 664 boepd,
significantly above corporate breakeven rate.
· Safely drilled WR-B01Za establishing good production rates from the
well, which commenced stable production on 25 March.
· Spud well WR-34Z, with the well being completed to plan, on time and
within budget in August 2023. The well was handed over to production with all
hydrocarbons being monetised.
· Completed Project III gas resource evaluation across XIB and XIF
Lower Eocene and Upper Cretaceous reservoirs using newly re-interpreted
seismic.
· Signed MoU with the Ministry of Economy and Sustainable Development
of Georgia, supporting the concept of long-term gas offtake of resources
associated with Project III.
· Completed farm-out of part of XIB to Georgian Oil and Gas limited and
received initial seismic results confirming the prospectivity of the new
Project IV area.
· Undertook 11 workovers and wellbore interventions, including the
installation of an Electrical Submersible Pump ("ESP") on well WR-38Z, which
significantly reduced non-performing time on the well.
· Secured $2.0 million in non-dilutive debt financing with support from
existing shareholders and senior management.
· Strong & consistent production performance during the period:
o Total production of 96.4 Mboe, comprising 75.3 Mbbls of oil and 21.1 Mboe
of gas (1H 2022: 93.3 Mboe, comprising of 64.9 Mbbls of oil and 28.4 Mboe of
gas).
o Average daily production of 533 boepd (1H 2022: 515 boepd).
o Stable production from WR-B01Za was achieved on 25 March.
· Oil sales of 51.4 Mbbls with revenue of $3.45 million, representing a
weighted average price of $67 per barrel (1H 2022: Oil sales of 45.6 Mbbls
with revenue of $4.16 million, representing a weighted average price of $91
per barrel).
· Gas sales of 88.0 MMcf with revenue of $0.48 million, representing a
weighted average price of $5.4/Mcf (1H 2022: 106.8 MMcf with revenue of $0.43
million, representing a weighted average price of $4.02/Mcf).
· Oil in inventory net to the Company at the end of the period was 11.7
Mbbls.
· Loss for the period from continuing operations of $432,000 (1H 2022:
profit of $627,000).
· Cash position of $882,000 as at 30 June 2023 (31 December 2022:
$450,000).
Post period events:
There were no post period events.
Block Energy plc's Chief Executive Officer, Paul Haywood, said:
"I would like to start by thanking the Block Energy team for their continued
efforts across many fronts whilst delivering on the plan safely and
efficiently.
"Performance throughout the period has delivered strong production and
positive cashflows and even though H1 2023 suffered from lower-than-average
oil prices, as of today, the Company remains on track to deliver its best
full-year financial results in history. This is a testament to the team's
enhanced operational performance and rigorous capital discipline, supported by
strong H2 2023 Brent pricing. With WR-34Z now handed over to production, the
remainder of this year promises to be an exciting time for the Company as we
seek to further increase production with the drilling of KRT-45Z and advance
the high-impact Project III multi-Tcf gas opportunity. I look forward to
providing further updates, in due course."
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 / Ali AlQahtani Celicourt Communications Tel: +44 (0)20 7770 6424
(Financial PR)
Notes to editors
Block Energy plc is an AIM-quoted independent oil and gas company focused on
production and development in Georgia, applying innovative technology to
realise the full potential of previously discovered fields.
Block has a 100% working interest in Georgian onshore licence blocks IX and
XIB. Licence block XIB is Georgia's most productive block. During the
mid-1980s, production peaked at 67,000 bopd and cumulative production reached
100 MMbbls and 80 MMbbls of oil from the Patardzeuli and Samgori fields,
respectively. The remaining 2P reserves across block 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 the West Rustavi onshore oil and
gas field in licence blocks XIB & XIF. 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.
· MMbbls: million barrels.
· MMboe: million barrels of oil equivalent.
· MMcf: million cubic feet.
Notes to editors
Block Energy plc is an AIM-quoted independent oil and gas company focused on
production and development in Georgia, applying innovative technology to
realise the full potential of previously discovered fields.
Block has a 100% working interest in Georgian onshore licence blocks IX and
XIB. Licence block XIB is Georgia's most productive block. During the
mid-1980s, production peaked at 67,000 bopd and cumulative production reached
100 MMbbls and 80 MMbbls of oil from the Patardzeuli and Samgori fields,
respectively. The remaining 2P reserves across block 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 the West Rustavi onshore oil and
gas field in licence blocks XIB & XIF. 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.
· 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 2023
Notes 6 months ended 6 months ended
30 June 2023 30 June 2022
Unaudited Unaudited
$'000 $'000
Continuing operations:
Revenue 3,926 4,589
Cost of sales:
Direct costs (1,839) (1,729)
(Decrease) / increase in inventory (135) 519
Depreciation and depletion of oil and gas assets 6 (827) (951)
(2,801) (2,161)
Gross profit 1,125 2,428
Administrative expenses (1,059) (1,375)
Share based payments (402) (652)
Foreign exchange movements 10 (34)
(1,451) (2,061)
Operating (loss)/profit (326) 367
Other income 4 240
Finance income - 20
Finance expense 4 (110) -
(Loss)/profit for the period before taxation (432) 627
Taxation - -
(Loss)/profit for the period from continuing operations (attributable to the (432) 627
equity holders of the parent)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
17 286
Total comprehensive (loss)/profit for the period attributable to the equity (415) 913
holders of the parent
(Loss)/profit per share (basic) 5 (0.06)c 0.10c
(Loss)/profit per share (diluted) 5 (0.05)c 0.08c
Condensed Consolidated Statement of Financial Position
As at 30 June 2023
Notes 30 June 31 December 2022
2023
Unaudited Audited
$'000 $'000
Non-current assets
Intangible assets 50 -
Property, plant and equipment 6 25,151 24,815
25,201 24,815
Current assets
Inventory 4,431 4,791
Trade and other receivables 1,585 560
Cash and cash equivalents 882 450
Total current assets 6,898 5,801
Total assets 32,099 30,616
Equity and liabilities
Capital and reserves attributable to equity holders of the Company:
Share capital 7 3,593 3,565
Share premium 34,785 34,765
Other reserves 4,825 4,525
Foreign exchange reserve 711 694
Accumulated deficit (16,651) (16,349)
Total equity 27,263 27,200
Non-current liabilities
Borrowings 4 1,936 -
Current liabilities
Trade and other payables 1,177 1,693
Provisions 1,723 1,723
Total current liabilities 2,900 3,416
Total liabilities 4,836 3,416
Total equity and liabilities 32,099 30,616
Condensed Consolidated Interim Statement of Cash Flows
For the six months period ended 30 June 2023
Notes 6 months ended 6 months ended
30 June 2023 30 June 2022
Unaudited Unaudited
$'000 $'000
Operating activities
(Loss)/profit for the period before income tax (432) 627
Adjustments for:
Finance income - (20)
Finance expense 4 110 -
Depreciation and depletion 6 827 950
Share based payments expense 402 652
Foreign exchange movement (21) 34
Net cash flows from operating activities before changes in working capital 886 2,243
(Increase)/decrease in trade and other receivables (1,009) 161
Decrease in trade and other payables (516) (767)
Decrease/(increase) in inventory 360 (675)
Net cashflows (used in)/from operating activities (279) 962
Investing activities
Expenditure in respect of intangible assets (50) -
Expenditure in respect of PP&E (1,173) (1,076)
Cash used in investing activities (1,223) (1,076)
Financing activities
Interest paid 4 (86) -
Proceeds from borrowings 4 2,000 -
Net cash flows from financing activities 1,914 -
Net increase/(decrease) in cash and cash equivalents 412 (114)
Cash and cash equivalents at start of period 450 1,244
Effects of foreign exchange rate changes on cash and cash equivalents 20 280
Cash and cash equivalents at end of period 882 1,410
Consolidated Statement of Changes in Equity
As at 30 June 2023
Share Share premium Accumulated deficit Other reserve Foreign exchange reserve Total equity
capital
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 30 June 2022 (unaudited) 3,501 34,650 (20,774) 10,752 532 28,661
Loss for the period - - (2,235) - - (2,235)
Exchange differences on translation of operations in foreign currency - - - 162 162
-
Total comprehensive loss for the period - - (2,235) - 162 (2,073)
Shares issued 21 115 - - - 136
Share based payments - - - 420 - 420
Options exercised 43 - - 13 - 56
Options relinquished - - 6,389 (6,389) - -
Options expired - - 271 (271) - -
Total transactions with owners 64 115 6,660 (6,227) - 612
Balance at 31 December 2022 (audited) 3,565 34,765 (16,349) 4,525 694 27,200
Profit for the period - - (432) - - (432)
Exchange differences on translation of operations in foreign currency - - - - 17 17
Total comprehensive profit for the period - - (432) - 17 (415)
Shares issued 21 20 - - - 41
Share based payments
- - - 402 - 402
Warrants issued - - - 35 - 35
Options exercised 7 - 99 (106) - -
Warrants expired - - 31 (31) - -
Total transactions with owners
28 20 130 300 - 478
Balance at 30 June 2023 (unaudited)
3,593 34,785 (16,651) 4,825 711 27,263
Notes to the Condensed Consolidated Interim Financial Statements
For the six months period ended 30 June 2023
1. General information
Block Energy Plc, (the "Company") is a company registered in England and Wales
(05356303), with its registered office at Eccleston Yards, 25 Eccleston Pace,
London SW1W 9NF.
The Condensed Consolidated Interim Financial Statements of the Group, which
comprises Block Energy plc and its subsidiaries (the "Group"), for the
six-month period from 1 January 2023 to 30 June 2023, were approved by the
Directors on 26 September 2023. The Group's principal activity is oil and
gas exploration, development and production.
The Company's shares are traded on AIM and the trading symbol is BLOE.
These condensed interim financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2022 were approved by the
Board of Directors on 10 May 2023 and delivered to the Registrar of Companies.
The auditor's report on those financial statements was unqualified but did
include a reference to the material uncertainty surrounding going concern, to
which the auditors drew attention by way of emphasis of matter and did not
contain a statement under s498 (2) - (3) of Companies Act 2006.
The Company's auditors have not reviewed these condensed interim financial
statements.
2. Basis of preparation
Management has prepared these interim accounts in accordance with IFRS
accounting policies as applied at 31 December 2022 (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 2022 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 comparatives are the six-month period ended 30 June 2022, except for the
Condensed Consolidated Statement of Financial Position, where the comparatives
are as at 31 December 2022.
The accounting policies adopted in this half-yearly financial report are the
same as those adopted in the 2022 Annual Report and Financial Statements,
except as shown below. There were no new or amended accounting standards that
required the Group to change its accounting policies. The Directors also
considered the impact of standards issued but not yet applied by the Group and
do not consider that there will be a material impact of transition on the
financial statements.
Additional accounting policy - Borrowings
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings.
Borrowing costs are expensed in the period in which they are incurred.
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results might differ from these estimates.
In preparing these condensed interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the financial statements for the year ended 31 December 2022.
Going concern
The Directors have prepared cash flow forecasts for a period of 12 months from
the date of signing these Condensed Consolidated Interim 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. 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 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.
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. Borrowings/ Finance expense
On 1 February 2023, the Company entered into a senior secured loan facility of
up to $2 million. $1.06 million was drawn down on the 2 February 2023 with
the remaining being drawn down on 10 May 2023.
The Loan Facility is for a term of 18 months, commencing 2 February 2023, at
which point the principal is repayable in full. The loan carries an interest
rate of 16% p.a., payable quarterly in arrears in cash. The Company can
elect to repay amounts outstanding under the Loan at the end of each quarter,
in part or in full, subject to a 2% early repayment fee.
Each lender received warrants exercisable at any point during the three years
from the Closing Date. The exercise price of each warrant is 1.7 pence per
ordinary share for the initial tranche and 1.92 pence per ordinary share for
the second tranche. The number of warrants to be issued to each lender
corresponds to an exercise value equal to 50% of their respective loan
commitment under the Loan Facility ("Warrant Value"). Therefore, the number of
warrants to be issued to lenders as part of the $2.0 million loan
in aggregate is 44,682,643.
A debenture has been provided by the Company to the lenders as security,
providing a fixed and floating charge over the Company's property and assets.
The fair value of non-current borrowings are not materially different from
their carrying amounts, since the interest payable on those borrowings is
either close to current market rate or the borrowings are of a short-term
nature (18 months). The transaction costs were recorded as $53,000 as the
cost of arranging part of the facility and $35,000 was calculated as the
Warrant Value in reference to the warrants issued to the lenders.
Finance expense 6 months ended 6 months ended
30 June 2023 30 June 2022
$'000 $'000
Interest paid 86 -
Unwinding of transaction costs 24 -
110 -
5. Earnings per share
The calculation of earnings per share for the six months ended 30 June 2023 is
based on the loss for the period attributable to ordinary shareholders of
$432,000 and the weighted average number of shares of 687,068,781 and is
(0.06) cents from continued operations.
The calculation of loss 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 fully diluted earnings per share for the six months ended
30 June 2023 is based on the loss for the period attributable to ordinary
shareholders of $432,000 and the weighted average number of shares of
687,068,781 plus warrants outstanding of 54,241,837 and options outstanding of
114,198,627 at period end and is (0.05) cents from continued operations.
The calculation of fully diluted earnings 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 period end and is 0.08 cents from continued operations.
6. Property, plant and equipment
Unaudited Development & PPE/Computer/ Total
Production Assets Office equipment/ Vehicles
Cost $'000 $'000 $'000
At 1 January 2023 29,115 2,072 31,187
Additions 1,111 62 1,173
Disposals - (35) (35)
Foreign exchange movements 2 11 13
At 30 June 2023 30,228 2,110 32,338
Accumulated depreciation and impairment
At 1 January 2023 5,711 661 6,372
Charge 682 145 827
Disposals - (14) (14)
Foreign exchange movements (1) 3 2
At 30 June 2023 6,392 795 7,187
Carrying amount
At 30 June 2023 23,836 1,315 25,151
At 31 December 2022 23,404 1,411 24,815
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
At 30 June 2022 4,849 520 5,369
Carrying amount
At 30 June 2022 22,867 1,362 24,229
No impairment was recognised in the six months ended 30 June 2023 (2022: Nil).
7. 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 2023, the Company's share capital consisted of 689,551,104 Ordinary
Shares (30 June 2022: 658,669,945) and 2,095,165,355 Deferred Shares (30 June
2022: 2,095,165,355).
8. Related party transactions
The Company's Chief Executive Officer, Paul Haywood has
provided $105,000 of the Loan referred to above, and the former Board
Director, Ken Seymour, has provided $125,000 of the Loan. $6,376 and $7,025
has been paid in interest to these respective related parties as at 30 June
2023.
Mr Haywood and Dr Seymour are each treated as a related party of the
Company pursuant to the AIM Rules. Consequently, the participation of Mr
Haywood and Mr Seymour in the provision of the Loan Facility constitutes a
related party transaction for the purposes of AIM Rule 13.
9. 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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