REG - Block Energy PLC - Operations Update

Block EnergyAnnouncement

02/11/2022 07:00

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RNS Number : 9846E  Block Energy PLC  02 November 2022

2 November 2022

 

Block Energy plc

("Block" or the "Company")

Operational Update

 

Block Energy plc, the exploration and production company focused on Georgia,
is pleased to provide the following operational update on its three-project
strategy.

JSR-01 DEEP (Project II)

As previously announced, well JSR-01 DEEP has been safely drilled and
completed below budget. It is the first of a series of Project II wells
targeting a wide range of opportunities designed to exploit large, undrained
areas of the deeper zones of the Middle Eocene reservoirs in Block XI(B) and
test contingent resources defined by Block's technical team of over
200 MMbbls.

The Company drilled the naturally fractured 600m vertical section of the
Middle Eocene in the Patardzeuli Oil Field with total losses of drilling
fluid, a drilling technique not previously employed in Georgia. This technique
was used deliberately to avoid wellbore damage from Lost Circulation Material.
During drilling, high losses (cumulative of 45,000 bbls of fluid) were
recorded, which is a positive indicator of highly transmissible natural
fractures. During the staged testing programme, both oil and gas have been
produced to the surface.

The ongoing JSR-01 DEEP testing programme has been designed to systematically
evaluate three independent intervals of the reservoir, with different fracture
characteristics and, as such, differs from the programmes used in the
Company's West Rustavi/Krtsanisi oil field. The primary objective of the
testing programme is the accurate definition of the oil-productive zones, to
support the optimal design of future horizontal wells in the Project II
full-field redevelopment.

West Rustavi/Krtsanisi (Project I)

In the Krtsanisi anticline of the West Rustavi/Krtsanisi oil field, the
development of the Middle Eocene reservoir will continue this month with the
side-track of well WR-B01, which will be an analogue to the successful well
JKT-01Z.

WR-B01 ST will be drilled some 500m to the west and up-dip of JKT-01Z. As with
JKT-01Z, WR-B01 ST will target a fracture system identified by a high density
of seismic attribute lineations but on the west side of the anticline. JKT-01Z
has already produced a cumulative volume of 64,000 boe over 11 months of
continuous production, providing an approximate 2.5x return on capex and
therefore supporting the Company's final investment decision, on Project I.
 

WR-B01 ST is the first new development well associated with the ERCE 2022
Competent Person's Report, which ascribed 3.01 MMbbl 3P reserves, and an NPV10
project value of US57MM, to just a portion of the West Rustavi/Krtsanisi
Middle Eocene reservoir. The Company's contingent resource report ascribes a
total of 19.5 MMbbl 2C contingent resources to the whole West
Rustavi/Krtsanisi Middle Eocene reservoir.

The Company is well placed to fund WR-B01 ST from cash reserves and ongoing
cashflows, enabling Project I to commence. Discussions relating to
non-dilutive financing for Project I remain ongoing. Given Georgia's strategic
location and close links to European energy markets, there remains strong
interest in the petroleum potential of the region.

Gas development (Project III)

Whilst Block's immediate focus is on developing cash flow from Project I and
defining potential company-making reserves in Project II, the Company is also
laying the foundations for Project III.

Project III seeks to appraise and monetise the 860 BCF of contingent
resources, identified by Block's technical team, across licences XI(F) &
XI(B).  Natural gas produced from a successful Project III development will
support Georgia's growing domestic energy market and be suitable for export to
Europe via Turkey.

The work programme for Project III includes 3D seismic interpretation and
correlation of seismic attribute lineations with legacy production test data.
The Company has upgraded its service rig to support the advancement of Project
III with low-cost drilling and workover activities. Project III workover and
retest candidates are being selected. An update will follow when operations
commence.

Commenting, Paul Haywood, Chief Executive Officer of Block Energy plc, said:

"The JSR-01 DEEP testing programme continues and it's pleasing to announce the
commencement of Project I with the spudding of well WR-B01 ST later this
month. I am encouraged by the positive support received from government
agencies in Georgia whilst our Company remains active on many fronts. All of
which underpin the strategy we communicated earlier this year of offering our
valued stakeholders direct exposure to multiple high-impact events. We look
forward to providing further updates as additional progress is made."

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' of 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/
(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.

 

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