REG - Block Energy PLC - Half-year Report
30/09/2024 07:00
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RNS Number : 1256G Block Energy PLC 30 September 2024
30 September 2024
Block Energy Plc
("Block" or the "Company")
Interim Results for the Six Months Ended 30 June 2024
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 2024.
Highlights:
· 144,072 operational man-hours worked (1H 2023: 283,176 man-hours)
with one lost time incident (1H 2023: one).
· Completed an independent engineering report on the
Patardzueli-Samgori Lower Eocene and Upper Cretaceous reservoirs (Project
III), ascribing 1,074 BCF 2C contingent resources to the field, and
subsequently announced a further 1,700 BCF 2C contingent resources in the
Rustavi and Teleti fields for total Project III 2C contingent resources of
2,774 BCF. The Company launched a farm-out campaign following these
announcements.
· Signed an MoU with JSC Rustavi Azot, a subsidiary of Indorama
Corporation Pte, one of Asia's largest chemicals companies, and operator of
the Rustavi fertiliser factory with the most significant potential demand for
carbon capture and storage.
· Remained cashflow positive throughout the period.
· EBITDA of $645,000 (1H 2023: $491,000).
· Profit for the period of $2,000 (1H 2023: loss of $432,000).
· Total production of 82.8 Mboe comprising 61.3 Mbbls of oil and 21.5
Mboe of gas (1H 2023: 96.4 Mboe, comprising 75.3 Mbbls of oil and 21.1 Mboe of
gas).
o Average daily production of 455 boepd (1H 2023: 533 boepd).
o Well WR-34Z underperformed expectations in the first half, but good
production performance was achieved following a workover.
o Average daily production from 1 July to 27 September (being the last
practicable date prior to this report) was 527 boepd.
· Oil sales of 46.6 Mbbls with revenue of $3.3 million, representing a
weighted average price of $71 per barrel (1H 2023: Oil sales of 51.4 Mbbls
with revenue of $3.45 million, representing a weighted average price of $67
per barrel).
· Gas sales of 93.5 MMcf with revenue of $0.38 million, representing a
weighted average price of $4.1/Mcf (1H 2023: 88.0 MMcf with revenue of $0.48
million, representing a weighted average price of $5.4/Mcf).
· Oil in inventory net to the Company at the end of the period was 12.1
Mbbls (1H 2023: 11.7 Mbbls).
· Cash position of $656,000 as at 30 June 2024 (31 December 2023:
$713,000).
Post period events:
On 31 July 2024, the Company announced the extension of its $2.0 million loan
facility, with existing lenders, for a further 18 months (to 2 February 2026)
on substantially similar terms. The Company also granted a further 91,185,133
warrants in consideration for this loan extension. These warrants are
exercisable at any point up until 30 July 2027, and have an exercise price of
0.85 pence per ordinary share.
Block Energy plc's Chief Executive Officer, Paul Haywood, said:
"We continue to focus on the strategy we presented at the end of 2023 to
develop our high-impact assets through asset level finance, and to ensure the
underlying business remains cashflow positive.
We maintain positive EBITDA, which we have grown compared to the same period
last year. Production performance in the second half has improved following
the workover of WR-34Z, and we have met our goal of remaining cashflow
positive at current oil prices and production rates.
The farm-out of Project III, and its 2.77 TCF 2C contingent resources, is
progressing. We have hosted multiple interested parties in the data room, with
discussions continuing.
The development of our carbon capture storage project is well underway.
I look forward to updating shareholders on the developments in our portfolio
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 Celicourt Communications Tel: +44 (0)20 8434 2643
(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.
· 2C: the unrisked best estimate scenario of contingent resources.
· Contingent Resources: quantities of hydrocarbons which are estimated
to be potentially recoverable from known accumulations but are contingent on
technical or commercial factors not currently defined.
· Mbbls: thousand barrels.
· Mboe: thousand barrels of oil equivalent.
· MMbbls: million barrels.
· MMboe: millions of barrels of oil equivalent.
· MMcf: million cubic feet.
· Tcf: Trillion 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.
· 2C: the unrisked best estimate scenario of contingent resources.
· Contingent Resources: quantities of hydrocarbons which are estimated
to be potentially recoverable from known accumulations but are contingent on
technical or commercial factors not currently defined.
· Mbbls: thousand barrels.
· Mboe: thousand barrels of oil equivalent.
· MMbbls: million barrels.
· MMboe: millions of barrels of oil equivalent.
· MMcf: million cubic feet.
· Tcf: Trillion cubic feet.
Condensed Consolidated Interim Statement of Comprehensive Income
For the six months period ended 30 June 2024
Notes 6 months ended 6 months ended
30 June 2024 30 June 2023
Unaudited Unaudited
$'000 $'000
Continuing operations:
Revenue 3,690 3,926
Cost of sales:
Direct costs (1,618) (1,839)
Decrease in inventory (23) (135)
Depreciation and depletion of oil and gas assets 6 (590) (827)
(2,231) (2,801)
Gross profit 1,459 1,125
Administrative expenses (1,372) (1,059)
Share based payments (32) (402)
Foreign exchange movements (41) 10
(1,445) (1,451)
Operating profit/(loss) 14 (326)
Other income 3 4
Finance income 15 -
Finance expense (30) (110)
Profit/(loss) for the period before taxation 2 (432)
Taxation - -
Profit/(loss) for the period from continuing operations (attributable to the 2 (432)
equity holders of the parent)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 17
(113)
Total comprehensive loss for the period attributable to the equity holders of (111) (415)
the parent
Profit/(loss) per share (basic) 5 0.00c (0.06)c
Profit/(loss) per share (diluted) 5 0.00c (0.05)c
Earnings before interest, tax, depreciation and amortisation (EBITDA) 645 491
4
Condensed Consolidated Statement of Financial Position
As at 30 June 2024
Notes 30 June 31 December 2023
2024
Unaudited Audited
$'000 $'000
Non-current assets
Intangible assets 117 50
Property, plant and equipment 6 23,582 23,851
23,699 23,901
Current assets
Inventory 4,425 4,377
Trade and other receivables 1,098 971
Cash and cash equivalents 656 713
Total current assets 6,179 6,061
Total assets 29,878 29,962
Equity and liabilities
Capital and reserves attributable to equity holders of the Company:
Share capital 8 3,733 3,705
Share premium 34,879 34,856
Other reserves 5,104 4,766
Foreign exchange reserve 655 768
Accumulated deficit (18,387) (18,389)
Total equity 25,984 25,706
Non-current liabilities
Borrowings 7 2,000 2,000
Current liabilities
Trade and other payables 815 1,176
Provisions 1,079 1,080
Total current liabilities 1,894 2,256
Total liabilities 3,894 4,245
Total equity and liabilities 29,878 29,962
Condensed Consolidated Interim Statement of Cash Flows
For the six months period ended 30 June 2024
Notes 6 months ended 6 months ended
30 June 2024 30 June 2023
Unaudited Unaudited
$'000 $'000
Operating activities
Profit/(loss) for the period before income tax 2 (432)
Adjustments for:
Finance and other income (18) -
Finance expense 30 110
Depreciation and depletion 6 590 827
Share based payments expense 32 402
Creditors paid in shares 30 -
Foreign exchange movement 258 (21)
Net cash flows from operating activities before changes in working capital 924 886
Increase in trade and other receivables (127) (1,009)
Decrease in trade and other payables (363) (516)
(Increase)/decrease in inventory (48) 360
Net cashflows from/(used in) operating activities 386 (279)
Investing activities
Expenditure in respect of intangible assets (67) (50)
Expenditure in respect of PP&E (243) (1,173)
Cash used in investing activities (310) (1,223)
Financing activities
Interest paid (154) (86)
Interest and other income 18 -
Proceeds from borrowings - 2,000
Net cash flows from/(used in) financing activities (136) 1,914
Net (decrease)/increase in cash and cash equivalents (60) 412
Cash and cash equivalents at start of period 713 450
Effects of foreign exchange rate changes on cash and cash equivalents 3 20
Cash and cash equivalents at end of period 656 882
Consolidated Statement of Changes in Equity
As at 30 June 2024
Share Share premium Accumulated deficit Other reserve Foreign exchange reserve Total equity
capital
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 30 June 2023 (unaudited)
3,593 34,785 (16,651) 4,825 711 27,263
Loss for the period - - (1,781) - - (1,781)
Exchange differences on translation of operations in foreign currency - - - 57 57
-
Total comprehensive loss for the period - - (1,781) - 57 (1,724)
Shares issued 112 71 - - - 183
Share based payment as adjusted - - - (16) - (16)
Options expired - - 43 (43) - -
Total transactions with owners 112 71 43 (59) - 167
Balance at 31 December 2023 (audited) 3,705 34,856 (18,389) 4,766 768 25,706
Profit for the period - - 2 - - 2
Exchange differences on translation of operations in foreign currency - - - - (113) (113)
Total comprehensive profit for the period - - 2 - (113) (111)
Shares issued 28 23 - - - 51
Share based payments accrued in 2023, issued 2024 - - - 306 - 306
Share based payments in 2024 - - - 32 - 32
Total transactions with owners 28 23 - 338 - 389
Balance at 30 June 2024 (unaudited) 3,733 34,879 (18,387) 5,104 655 25,984
Notes to the Condensed Consolidated Interim Financial Statements
For the six months period ended 30 June 2024
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 Place,
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 2024 to 30 June 2024, were approved by the
Directors on 30 September 2024. 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 2023 were approved by the
Board of Directors on 22 May 2024 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 consolidated interim
financial statements.
2. Basis of preparation
Management has prepared these interim accounts in accordance with IFRS
accounting policies as applied at 31 December 2023 (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 2023 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 2023, except for the
Condensed Consolidated Statement of Financial Position, where the comparatives
are as at 31 December 2023.
The accounting policies adopted in this half-yearly financial report are the
same as those adopted in the 2023 Annual Report and Financial Statements.
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.
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.
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.
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. Adjusted EBITDA
Adjusted EBITDA 6 months ended 6 months ended
30 June 2024 30 June 2023
$'000 $'000
Oil and gas exploration - Georgia 1,349 1,291
Corporate and other (704) (800)
Total adjusted EBITDA 645 491
Adjusted EBITDA reconciles to operating profit before income tax as follows:
Total adjusted EBITDA 6 months ended 6 months ended
30 June 2024 30 June 2023
$'000 $'000
Depreciation and depletion (590) (827)
Finance and other income 18 4
Finance costs and foreign exchange (71) (100)
Profit/(loss) before income tax from continuing operations
2 (432)
5. Earnings per share
The calculation for profit/(loss) per Ordinary share (basic and diluted) is
based on the consolidated profit/(loss) attributable to the equity
shareholders of the Company is as follows:
6 months ended 6 months ended
30 June 2024 30 June 2023
Profit/(loss) attributable to equity Shareholders $ $2,000 $(432,000)
Weighted average number of Ordinary Shares 726,265,669 687,068,781
Profit/(loss) per Ordinary Share ($/cents)** 0.00 cents (0.06) cents
Weighted average number of Ordinary Shares, Warrants and Options in issue* 885,928,824 885,509,245
Diluted profit/(loss) per Ordinary Share(+) ($/cents) 0.00 cents (0.05) cents
*the Options in issue includes the 72,621,352 to be satisfied by shares
already issued to the Employee Benefit Trust
(**) Profit per ordinary share was 0.00028 cents
6. Property, plant and equipment
Unaudited Development & PPE/Computer/ Total
Production Assets Office equipment/ Vehicles
Cost $'000 $'000 $'000
At 1 January 2024 31,719 2,032 33,751
Additions* 287 80 367
Disposals - (30) (30)
Foreign exchange movements - (16) (16)
At 30 June 2024 32,006 2,066 34,072
Accumulated depreciation
At 1 January 2024 8,986 914 9,900
Charge 444 146 590
At 30 June 2024 9,430 1,060 10,490
Carrying amount
At 30 June 2024 22,576 1,006 23,582
At 31 December 2023 22,733 1,118 23,851
*This includes additions of $124,000 which relates to capitalised borrowing
costs
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
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
No impairment was recognised in the six months ended 30 June 2024 (2023: Nil).
7. Borrowings
During the prior year the Company entered into a $2 million loan with a simple
interest rate of 16% per annum becoming payable every quarter. The loan 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 was set at 18 months from the date of the drawdowns.
$124,000 of this interest charge was capitalised during the half-year to
reflect borrowing costs directly associated with assets at pre-commercial
production stage.
On 31 July 2024, the Company announced the extension of the loan for a further
18 months (to 2 February 2026) on substantially similar terms. The Company
also granted a further 91,185,133 warrants in consideration for this loan
extension. These warrants are exercisable at any time up until 30 July 2027
and have an exercise price of 0.85 pence per ordinary share.
No fees or commissions were paid by the Company as part of the extension of
the Loan.
8. 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 2024, the Company's share capital consisted of 733,395,937 Ordinary
Shares (30 June 2023: 689,551,104) and 2,095,165,355 Deferred Shares (30 June
2023: 2,095,165,355).
9. Related party transaction
The Company's Chief Executive Officer, Paul Haywood has
provided $115,000 of the Loan referred to above and has received a further
5,243,145 new Warrants for agreeing to the extension. $9,175 (2023: 1H 2023:
$6,376) has been paid in interest to Mr Haywood in the first half of 30 June
2024.
Mr Haywood is treated as a related party of the Company pursuant to the AIM
Rules. Consequently, the participation of Mr Haywood in the provision of the
Loan Facility constituted a related party transaction for the purposes of AIM
Rule 13.
10. 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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