REG - Block Energy PLC - Trading Statement

Block EnergyAnnouncement

31/07/2024 07:00

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RNS Number : 4693Y  Block Energy PLC  31 July 2024

 

31 July 2024

 

Block Energy plc

("Block" or the "Company")

Trading Update

Secured Loan Facility & Related Party Transactions

 

Block Energy plc, the production and development company focused on Georgia,
is pleased to provide the following trading update and announces the extension
of its current $2.0 million senior secured loan ("Loan") on substantially
similar terms to those previously announced on 12 May 2023.

Asset Performance:

-     Production has performed above forecast and the Company's average
production rate for July 2024 was 534 boepd, primarily driven by good
performance from Project I wells.

-    The restructure which commenced in January 2024 was completed,
resulting in efficiencies across the Georgian cost base at the end of Q1 2024.

-     The Company has remained cashflow positive throughout 2024.

-     Operations continue safely.

Project I Update:

-   Production has remained robust from Project I, with select operational
investments undertaken to maximise netbacks.

-   Significant engineering work on drilling technologies has been undertaken
which potentially provide material savings on single well capex requirements
and expand the Company's suite of available donor wells for sidetracks.

-    The Company remains ready to drill additional Project I wells when
appropriate to ensure that cashflow remains positive and it can effectively
execute its four project strategy.

Project II Update:

-     A technical review of the existing well stock and workover proposals
from an engineering and subsurface perspective aimed at increasing incremental
oil production from Project II has been completed.

-     The Company is studying various technologies for enhanced oil recovery
on the Patardzueli field including water shut-off, infill drilling, jet
drilling and polymer flood amongst other alternatives. These studies involve
discussions with a range of vendors and potential investors around providing
capital and or services for these programmes.

Project III Update:

-    The farm-out process, led by LAB Energy, continues to attract interest
with multiple parties entering the data room.

-    As discussions with potential partners continue, the Company looks
forward to updating shareholders in due course.

Project IV Update:

-     The operator, Georgia Oil and Gas, continues to lead a farm-out
process associated with this high-impact exploration project.

-      Several parties are in the data room and discussions continue.

CCS Update:

-      Stage 2 studies, with the aim of developing a costed engineering
solution and commercialisation strategy, of a pilot CO(2) injection scheme are
progressing well.

-     The studies are expected to take approximately 14 weeks, after which
the Company will be in a position, subject to agreements on cost sharing, to
undertake injection of CO(2) on its storage project.

Loan Facility:

The $2.0 million Loan facility ("Loan Facility") previously announced on 2
February 2023 (and amended and announced on 12 May 2023) has been amended
further. This amendment has the effect of extending the Loan Facility for a
further 18 months (to 2 February 2026), and has been agreed by all parties to
the Loan Facility.  Extending the facility supports the Company's working
capital position, providing additional headroom for reinvesting cashflows into
the Company's extensive portfolio of opportunities, generating future value
and returns for shareholders.

The terms of the extended Loan remain substantially the same as the previous
loan: carrying an interest rate of 16% p.a., payable quarterly in arrears in
cash.  The Company can continue to 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.

The debenture provided by the Company to the lenders as security, providing a
fixed and floating charge over the Company's property and assets, is also
extended for the same period as the Loan.

Lending parties associated with management and the Company have agreed to
subordinate their position to the two institutional lenders in the Loan
Facility in the event of default.

Each lender will receive further warrants ("New Warrants") exercisable at any
point up until 30 July 2027. The exercise price of each warrant shall be 0.85
pence per ordinary share. The number of New Warrants to be issued to each
lender shall correspond to an exercise value equal to 50% of their
respective loan commitment under the Loan Facility. Therefore, the number of
New Warrants to be issued to lenders as part of the extension of the $2.0
million Loan in aggregate is 91,185,133.

No fees or commissions were paid by the Company as part of the extension of
the Loan.

Related Party Transactions

Paul Haywood, Chief Executive Officer, has previously lent to the Company
$115,000 in aggregate under the Loan Facility (as announced on 2 February 2023
and 12 May 2023.) Fergus Robson, Commercial Manager (and PDMR) has previously
lent to the Company $20,000 (via Covalent Commercial Limited).

Messrs Haywood and Robson will receive 5,243,145 and 911,851 New Warrants,
respectively as a result of the amended Loan agreement.

The Independent Directors (being Jeremy Asher and Philip Dimmock), consider,
having consulted with SPARK Advisory Partners Limited, the Company's nominated
adviser, that the terms of the amended Loan Facility, to which Paul Haywood
and Fergus Robson are party, are fair and reasonable insofar as shareholders
are concerned.

Commenting, Phil Dimmock, Chairman of Block Energy plc, said:

"Block is currently generating positive cashflows and remains financially
strong, thanks to continued robust production and reservoir management
initiatives across Project I. Project II has also seen progress, including a
detailed review of existing wells and workover proposals aimed at increasing
oil production, with work focused on production engineering solutions to
unlock this resource. We are making significant progress in our farm-out
campaigns for Projects III and IV, with several interested parties actively
engaged in our data room.

"On our Europe-leading CCS project, we are conducting a second study to
develop a comprehensive engineering solution and commercialization strategy
for a pilot CO(2) injection scheme. Furthermore, the extension of the loan
facility provides Block with financial flexibility, allowing the Company to
make strategic near-term investments that are expected to enhance shareholder
value.

"Looking ahead, we remain committed to driving growth and delivering value. We
extend our gratitude to our shareholders for their continued support and
confidence in our vision."

 

 

**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 7770 6424

 (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 1.07 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, ERCE 2022).

In 2022, a Competent Person's Report provided by ERCE, ascribed 3P reserves of
3.01 million barrels, with an NPV project value of $57 million, to just a
portion of the West Rustavi/Krtsanisi Middle Eocene reservoir.

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.

 

 

 

 

 

 

Notification and public disclosure of transactions by persons discharging
managerial responsibilities ("PDMRs") and persons closely associated ("PCA")
with them.

 

 

 

 1   Details  of  the  person  discharging  managerial  responsibilities  /  person  closely
     associated
 a)  Name                                                                                             Paul Haywood
 2   Reason for notification
 a)  Position / status                                                                                CEO
 b)  Initial notification                                                                             Initial notification

     /Amendment
 3   Details of the issuer,  emission allowance market participant, auction platform,
     auctioneer or auction monitor
 a)  Name                                                                                             Block Energy plc
 b)  LEI                                                                                              213800E2J8QA1J6KN415
 4   Details of the transaction(s):
     section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
 a)  Description of the financial instrument, type of instrument                                      Issue of warrants to acquire ordinary shares in Block Energy plc

     Identification code                                                                              ISIN GB00BF3TBT48
 b)  Nature of the transaction                                                                        Grant of New Warrants in relation to amendment to Loan Facility agreement
 c)  Price(s) and volumes(s)

Price(s)  Volumes
                                                                                                      0.85p     5,243,135
 d)  Aggregated information                                                                           n/a
 e)  Date of the transaction                                                                          31 July 2024
 f)  Place of the transaction                                                                         Outside a trading venue

d)

Aggregated information

n/a

e)

Date of the transaction

31 July 2024

f)

Place of the transaction

Outside a trading venue

 

Notification and public disclosure of transactions by persons discharging
managerial responsibilities ("PDMRs") and persons closely associated ("PCA")
with them.

 

 1   Details  of  the  person  discharging  managerial  responsibilities  /  person  closely
     associated
 a)  Name                                                                                             Fergus Robson

 2   Reason for notification
 a)  Position / status                                                                                Commercial Manager (PDMR)
 b)  Initial notification                                                                             Initial notification

     /Amendment
 3   Details of the issuer,  emission allowance market participant, auction platform,
     auctioneer or auction monitor
 a)  Name                                                                                             Block Energy plc
 b)  LEI                                                                                              213800E2J8QA1J6KN415
 4   Details of the transaction(s):
     section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
 a)  Description of the financial instrument, type of instrument                                      Warrants to acquire ordinary shares in Block Energy plc

     Identification code

                                                                                                      ISIN GB00BF3TBT48
 b)  Nature of the transactions                                                                       Grant of New Warrants in relation to amendment to Loan Facility agreement
 c)  Price(s) and volumes(s)

Price(s)  Volume
                                                                                                      0.85p     911,851

 

 d)  Aggregated information                                                                           n/a
 e)  Date of the transactions                                                                         31 July 2024
 f)  Place of the transactions                                                                        Outside a trading venue

 

 

d)

Aggregated information

n/a

e)

Date of the transactions

31 July 2024

f)

Place of the transactions

Outside a trading venue

 

 

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