REG - Block Energy PLC - Q1 Operational Update

Block EnergyAnnouncement

17/04/2023 07:00

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RNS Number : 3413W  Block Energy PLC  17 April 2023

17 April 2023

 

Block Energy plc

("Block" or the "Company")

Q1 Operational Update

Block Energy Plc, the exploration and production company focused on Georgia,
is pleased to announce its operations update for the three months ended 31
March 2023.

Highlights

·    Over 106,976 operational man-hours worked in Q1 2023, with one minor
Lost Time Incident ('LTI').

 

·    As announced after the quarter end, drilling operations on well
WR-B01Za proved successful, providing back-to-back drilling successes on
Project I.

 

·    Completion of farmout of non-core areas of licence XIB in exchange
for work programme valued at c. US$3m gross to Georgia Oil and Gas Limited.

 

·    As announced after the quarter end, an MOU signed with the Ministry
of Economy and Sustainability.

 

·    Q1 production of 36.0 Mboe (Q4: 34.4 Mboe) or an average of 400 boepd
(Q4: 374 boepd).

 

·    Q1 revenue of US$1,190,000(1) (Q4: US$1,840,000).

 

·    Secured senior loan facility of US$2.0m with US$1.06 million drawn.

 

(1)  Oil Revenue of c. US$ 1.0 million not included in this quarterly report
as sales happened after quarter end.

 

Health, Safety & Emissions

 

Over 106,976 operational man-hours were worked by staff and contractors in Q1,
with one minor LTI and no serious incidents.

 

The Company again sought to minimise emissions, in-line with its commitments,
but needed to flare 60,656 m(3) of gas due to unplanned shutdowns and WR-B01Za
testing operations.

 

Operations

 

As planned, the WR-B01Za trajectory penetrated and followed  a seismic
lineation running parallel to and around 500m to the west of the lineation
penetrated by JKT-01Z. The well crossed a fault immediately before entering
the productive part of the fracture system, which caused unstable wellbore
conditions. The Company's drilling team conducted a successful low-cost
wellbore intervention resulting in a production rate of 269 boepd (241 bopd
oil & 4,800 m3/d gas), as notified on 3 April 2023. Following this
reporting period, the well was handed over to the production team and remains
on production.

 

 

The results of JKT-01Z followed by WR-B01Za provide back-to-back drilling
success, further validating the Company's reservoir understanding and
confirming its ability to accurately place horizontal wells in areas of good
productivity.

 

Total production from Project I sidetrack wells exceeds 250,000 boe gross to
date.

 

Corporate

 

The Company has completed the previously announced agreement for a 50%
farm-out of non-core areas of Licence XIB to Georgia Oil & Gas Limited, in
exchange for a work programme with an estimated value of $3m gross, comprising
$2.5m for 2D seismic acquisition and $0.5m for seismic reprocessing ("Project
IV").

 

As announced on 9(th) March 2023 (https://bit.ly/409ej7i
(https://bit.ly/409ej7i) ), the farmout provides the Company with direct
exposure to a high-impact exploration play, targeting prospective resource
volumes of 3.1 TSCF gas and 1,400 MMbbl oil, which is benefiting from a
material work programme at no cost to the Company. None of the existing
fields, current production nor future development plans associated with
Projects I, II and III, within Licence XIB, are subject to the farm-out.

 

Additionally, the Company secured a senior loan facility of US $2.0m, of which
US$ 1.06 million has been drawn down. The funds provide Block with the
resources to accelerate its Project I development programme, which includes
the recent successful drilling of well WR-B01Za.

 

Oil and Gas Production

 

During Q1, gross production (including the state of Georgia's share) was 36.0
Mboe (Q4: 34.4 Mboe), comprising 26.8 Mbbls of oil (Q4: 27.4 Mbbls) and
9.2 Mboe of gas (Q4: 7.0 Mboe). The average gross production rate for Q1
was 400 boepd (Q4: 374 boepd).

 

Oil Sales

 

In Q1 2023, the Company sold 13.3 Mbbls of oil (Q4: 21.3 Mbbls) for US$
999,000 (Q3: US$ 1,691,000), at a weighted average price of US$75 per barrel
(Q4: US$ 79 per barrel).  The decrease in sales, compared to production,
relates to the timing of liftings.

 

As of 31 March 2023, the Company had c. 12,500 bbls of oil in storage, which
is expected to be sold in April, generating approximately US$1.0m in revenue
at the current Brent price and therefore falls into the next reporting period.

 

Gas Sales

 

In Q1 2023, the Company sold 37.7 MMcf of gas (Q4: 27.3 MMcf) for US$ 194,900
(Q4: US$ 149,000), resulting in a weighted average price of approximately US$
5.57/Mcf (Q4: US$ 5.45/Mcf).

 

 

Block Energy plc's Chief Executive Officer, Paul Haywood, said:

"The first quarter of 2023 saw a robust start to the year. The Company
continued to deliver on its successful drilling and asset development
programme, with the results of WR-B01Za leading to record group production
levels being realised outside this reporting period.

 

"Our focus on operational excellence and cost discipline has allowed us to
deliver good results this quarter, further demonstrating our resilience and
ability to create value for our shareholders. We remain busy on many fronts,
and look forward to providing further updates on our progress 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 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 / Ali AlQahtani   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
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 XIB 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 XIF 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.

·    MD: measured depth.

·    MMbbls: million barrels.

·    MMboe: million barrels of oil equivalent.

·    MMcf: million cubic feet.

·    TVD: True Vertical Depth.

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