REG - Block Energy PLC - Q4 Operational Update

Block EnergyAnnouncement

11/01/2022 07:05

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RNS Number : 9976X  Block Energy PLC  11 January 2022

11 January 2022

 

Block Energy plc

("Block" or the "Company")

Q4 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
December 2021.

Highlights

·    Over 110,000 operational man-hours worked in Q4 2021, with no LTIs

·    Drilling of well JKT-01Z reached target depth ("TD") of 2,565m
measured depth ("MD")

·    Significant mud losses observed relative to the WR-B1 well,
indicating initial geological objectives have been achieved

·    Q4 production of 34.6 Mboe (Q3: 34.6 Mboe) or an average of 376 boepd

·    Q4 revenue of $2,550,000 (Q3: $901,000)

o  oil revenue of $2,441,000 (Q3: $742,000)

o  gas revenue of $109,000 (Q3: $159,000)

 

Health and Safety

 

Over 110,000 operational man-hours have been worked by staff and contractors
in Q4, and over 399,000 in the twelve months ended 31 December 2021, with no
lost-time incidents.

 

Drilling Operations

 

Following the end of Q4, in early January 2022, well JKT-01Z reached TD at
2,565m MD. Considerable mud losses were encountered during drilling,
suggesting the well has intersected multiple open fractures. Completion
operations are now underway and will be followed by clean-up operations to
unload the mud losses, ahead of the well being put on test.

 

JKT-01Z is the second well in the current two-well drilling programme. To
support effective management of costs and minimise drilling time, whilst
maintaining the same exposure to an oil-in-place of approximately 8 MMbbls,
the well has been drilled via a sidetrack from a vertical well drilled in 2011
by a previous operator.

Located in Block XI(B), JKT-01Z is close to and targets the same area of the
Middle Eocene reservoir as KRT-39, which has been a sustained producer of oil
and gas for over 20 years. Unlike KRT-39, JKT-01Z has been drilled as a
horizontal well, to maximise the chance of intersecting fractures.

The trajectory and horizontal nature of JKT-01Z benefitted from data gathered
from the drilling of previous wells, which enabled a recalibration of the
high-quality 3D-seismic data acquired in 2019. The well has also benefitted
from refinement of our geomechanics model and horizontal drilling practices.

 

Additionally, JKT-01Z has been tied into the recently installed gas
infrastructure at KRT-39, which will enable the rapid monetisation of the gas
production from JKT-01Z.

 

Oil and Gas Production

 

During Q4, gross production (including the state of Georgia's share) was 34.6
Mboe (Q3: 34.6 Mboe), comprising 24.9 Mbbls of oil (Q3: 21.0 Mbbls) and
9.7 Mboe of gas (Q3: 13.6 Mboe). The average gross production rate for Q4
remained the same as the previous quarter at 376 boepd. Production in Q4
included the first production from WR-B01, which was brought online in late
October. It also benefitted from the addition of gas production from well
KRT-39 in late November. Production was further supported by the production
enhancement programme, which entailed wellbore cleaning using nitrogen and
foam, tubing repairs and the replacement of rod pumps.

 

During 2021, gross production (including the state of Georgia's share) was 156
Mboe (2020: 25 Mboe), comprising 101 Mbbls of oil (2020: 25 Mbbls) and
55 Mboe of gas (2020: nil Mboe).

 

Oil Sales

 

In Q4 2021, the Company sold 33.6 Mbbls of oil (Q3: 11.2 Mbbls) for
$2,441,000 (Q3: $742,000), resulting in a weighted average price of
approximately $73 per barrel (Q3: $66 per barrel), which represents a 10%
increase in the realised price in Q4 compared with Q3.

 

During 2021, the Company sold 86.7 Mbbls of oil (2020: 34.4 Mbbls) for
$5,519,000 (2020: $1,255,000), resulting in a weighted average price of
approximately $64 per barrel (2020: $36 per barrel), which represents a 75%
increase in the realised price in 2021 compared with 2020.

 

Gas Sales

 

In Q4 2021, the Company sold 36.1 MMcf of gas (Q3: 52.4 MMcf) for $109,000
(Q3: $159,000), resulting in a weighted average price of approximately
$3.03/Mcf (Q3: $3.03/Mcf).

 

During 2021, the Company sold 191 MMcf of gas (2020: nil MMcf) for $596,000
(2020: $nil), resulting in a weighted average price of approximately $3.11/Mcf
(2020: n/a).

 

Cash Position

 

As at 31 December 2021, the Company had $1.2 million cash at bank (30
September 2021: $2.7 million).

As at 6 January 2022, Block had an estimated oil inventory of over 19,000
bbls, which at the current Brent price is worth over $1.4 million to the
Company. The Company's next oil sales are expected to occur in January and
February.

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

"We are pleased with the progress being made at JKT-01Z. Having encountered
hydrocarbons and experienced significant mud losses whilst drilling, the early
signs are encouraging. If JKT-01Z proves to be successful, side-track
operations funded by production revenue will be initiated back at WR-B01,
adopting the same geological approach employed at JKT-01Z. Strong sales,
stable production and the ability to take advantage of enhanced sales pricing
during the quarter, combined with encouraging initial signs from JKT-01Z, all
add to the Board's confidence in the Company's ability to improve performance
as we look to the year ahead".

 

Jonathan Bedford (Block's Technical Manager) has reviewed the reserve,
resource and production information contained in this announcement. Mr
Bedford has an MSc in Petroleum Geoscience from the University of
Aberdeen and is a petrophysicist.

 

**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, with 2P oil
and gas reserves of 64 MMboe, comprising 2P oil reserves of 36 MMbbls and 2P
gas reserves of 28 MMboe (Source: CPR Bayphase
Limited: 1 July 2015) and historical production of over 180 MMbbls of oil
from the Middle Eocene, peaking in the mid-1980s at 67,000 bopd.

The Company has a 100% working interest in the highly prospective West Rustavi
onshore oil and gas field with multiple wells that have tested oil and gas
from a range of geological horizons. The field has so far produced 50 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

1.    bbls: barrels. A barrel is 35 imperial gallons.

2.    Bcf: billion cubic feet.

3.    boe: barrels of oil equivalent.

4.    boepd: barrels of oil equivalent per day.

5.    bopd: barrels of oil per day.

6.    LTI: lost-time incident.

7.    Mbbls: thousand barrels.

8.    Mboe: thousand barrels of oil equivalent.

9.    MMbbls: million barrels.

10.  MMboe: million barrels of oil equivalent.

 

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