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Block Energy PLC - Operational and Corporate Update

RNS Number : 9418Z
Block Energy PLC
24 September 2020
 

24 September 2020

Block Energy Plc

("Block", the "Company" or the "Group")

Operational and Corporate Update

Block Energy plc, the exploration and production company focused on Georgia, is pleased to announce the following operational and corporate update. Significant operational progress has been made at the Company's Early Production Facility ("EPF") with first gas on schedule for Q4 2020, with the acquisition of Schlumberger Rustaveli Company Limited ("SRCL") continuing towards completion. Block also announces the intention of Mr Roger McMechan to step down from the board of directors, and the initiation of a search for a senior independent director and an independent non-executive director to join the Company's board.

West Rustavi

The Group's EPF, a key component in enabling the Company to process and sell gas from its West Rustavi field, arrived on site from Canada in June. Since then, and despite COVID-19 restrictions affecting both international and domestic travel, the EPF has been installed on the WR-16aZ well site. The WR-16aZ well has been connected to the EPF's inlet manifold and the EPF has been commissioned with continuous production of dry gas for 25 hours.

Construction of the gathering line between the EPF and WR-38Z commenced on 11 September 2020 and is due to be completed by the end of October 2020. The steel flowline has an internal diameter of 75mm and will be buried for its full length of 3.5 km. Once the WR-38Z well has been tied into the facility, the EPF will then be ready to process oil and gas from the two West Rustavi wells. The EPF is currently rated to handle up to 3 MMCF/d, but can be expanded and it has inlets for four additional wells.

As announced on 7 April 2020, Block suspended production from its two West Rustavi wells in response to the low oil price, COVID 19 restrictions and to conserve valuable gas reserves. Bago is completing the final stages of the permitting process to enable it to construct its gas sales pipeline. Bago expects to have the pipeline completed in Q4, enabling gas sales to commence before the end of this year.

Norio and Satskhenisi

The Company continues to produce oil from its Norio and Satskhenisi licences and, during August 2020, it sold crude oil from its West Rustavi, Norio and Satskhenisi licences for net proceeds of approximately US$570,000.

Acquisition of SRCL

Block continues to work with Schlumberger on completion of the acquisition of SRCL, which was announced on 26 March 2020. Some conditions necessary for completion have been fulfilled, such as the of receipt of approval from the State Agency of Oil and Gas, but, owing to COVID-19 travel restrictions, an agreed shadowing period has not yet been possible. We look forward to updating the market in due course. In the meantime, subsurface technical study work on the SRCL assets continues, yielding economically attractive short and medium-term opportunities that will be presented to the market following the completion of the acquisition.

Directorate Change

Following the successful commissioning of the EPF, Mr Roger McMechan has expressed his intention to stand down from the Board on 30 September 2020. The Company is pleased to announce that Roger, as a consultant, will continue to make his extensive expertise on the sub-surface and operations in Georgia available to the Company.

Block continues to give significant focus to its internal corporate governance standards and has initiated a search through a leading energy executive search firm for a senior independent director and an independent non-executive director. Block will update the market further when it has appointed suitable candidates for these roles.

Block has recently consulted with its major shareholders, who have confirmed their continued support of the Company and its directors.

Interim Results

Block expects to release its interim results for the 6 months ended 30 June 2020 by 30 September 2020.

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

"I am extremely pleased with the progress we are making with our EPF at West Rustavi, despite the challenges of COVID-19 and low oil prices. We remain focused on completing the remaining work in order to commence gas sales towards the end of Q4. Gas sales will not only provide an additional revenue stream to Block but will also diversify the Group's resources and provide a clear path to commercialisation of future gas developments and discoveries. Our acquisition of Schlumberger's Georgian upstream business is also progressing well, opening up a raft of mature opportunities for Block."

Block Energy plc Chairman, Philip Dimmock, said:

"After the period of restricted operational activity caused by the COVID-19 pandemic, I am delighted we can announce the progress we have made towards being able to turn the West Rustavi wells back on and commence gas sales. I thank Roger for his contribution to the Board and am delighted that he continues to make his expertise available to the Company."

 

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.

For further information please visit http://www.blockenergy.co.uk/ or contact:

Paul Haywood

(Chief Executive Officer)

Block Energy Plc

Tel: +44 (0)20 3980 6250

Neil Baldwin

(Nominated Adviser)

Spark Advisory Partners Limited

Tel: +44 (0)20 3368 3554

Peter Krens

(Corporate Broker)

Mirabaud Securities Limited

Tel: +44 (0)20 3167 7221

Billy Clegg / Owen Roberts / Violet Wilson

(Financial PR)

Camarco

Tel: +44 (0)20 3757 4980

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.

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 in the onshore oil producing Norio and Satskhenisi fields. In March 2020, it entered into a conditional sale and purchase agreement to acquire a company that owns Georgian onshore licence Block IX and XIB.

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.   Mbbls: thousand barrels.

3.   MMbbls: million barrels.

4.   MMCF/d: million cubic feet per day.

5.   BCF: billion cubic feet.

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Price: 3.255

Market: AIM
Market Cap: £14.26 m
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