Excellent initial production results from Norio
Block Energy Plc | Index: AIM ctor: Oil and Gas
14 January 2019
Block Energy Plc ('the Company', 'Block' or 'the Group'):
Excellent initial production results from Norio field
Highlights
· 45 barrels of oil recovered during a five hour period at Norio well 44
· Follows first application of specialist perforation tool which is to be used on multiple wells, as part of fully funded workover programme
· Highly encouraging progress towards target of 25-fold increase in production at Norio field to 250 bopd by end of H1 2019
· 250 bopd target at Norio is in addition to the 650 bopd being targeted at Block's West Rustavi field by end of Q1 2019 via an initial two well sidetrack drilling programme
· At 900 bopd Block's estimated annual revenues of ~£13million (based on current oil prices) will provide a highly cash generative platform to build a leading independent
Block Energy Plc, the exploration and production company focused on the Republic of Georgia, is pleased to announce that, as part of a fully-funded multi-well workover programme at its 100% owned Norio field, 45 barrels of sweet crude oil were recovered during a five hour period from the first well to which a specialist enhanced perforation tool was applied. The work programme at Norio, which consists of eight workovers and one sidetrack, is targeting a 25-fold increase in production to 250 bopd by H1 2019. Norio has gross oil reserves of 1.631 million barrels (Source: CPR completed by Gustavson Associates, 1 January 2018).
The recovery, made while perforating the first of three intervals from the field's well Norio 44 ('Norio 44' or 'the Well'), highlights the potential of the micro-drilling tool, which is being deployed in eastern Europe for the first time, to penetrate Norio's oil bearing formations, and offers positive indications for the Well's stable production rate, which will be announced when available. The Company's internal forecast for the Well, which has now been put on pump, was 13 bopd. Block plans to use the tool to drill additional holes in Norio 44, if production results demonstrate its effectiveness.
A nearby well, Norio 39, is also being put on pump, with daily production rates expected to be available shortly: the internal forecast for this well is 15 bopd. Conventional perforation was applied to Norio 39 as wellbore conditions did not permit the application of the specialist tool.
The Company believes that Norio 44 and 39 represent a good test case for comparing the effectiveness of the micro-drilling tool with conventional perforation technology: the wells are within 1,000 feet of each other and are completed in the same geological formation. Block is preparing three more Norio wells for application of the specialist tool next month. In parallel with this, the Company is upgrading the Norio field's central production facility to industry standards to improve reliability and safety. Much of the refurbishment work has been completed, bringing most of the facility back to service. The Company plans an oil sale from the facility later this month.
In addition to the Norio programme, the Company is preparing to drill two horizontal sidetracks at wells 16a and 38 on its West Rustavi field, targeting a combined gross production of 650 bopd by the end of Q1 2019. Block holds a 25% participating interest in West Rustavi as part of an agreed earn-in to a 75% interest in the permit which holds 37.9 MMbbls of 2C gross oil resources (Source: CPR). Following the confirmation of the presence of pressure and reserves at the wells, as announced on 14 December 2018, a ZJ40 drilling rig has been mobilised to the drill site. An initial workover has removed some old equipment from the wellbore, and a subsequent logging programme and pressure test has confirmed the wellbore condition is ready for the horizontal sidetrack operation. The target reservoir is at a depth of approximately 6,900 feet and is believed to have had an original oil column up to 600 feet thick.
Block is also preparing to test a legacy gas discovery in the Lower Eocene at West Rustavi, which, according to the well passport the Company received on acquiring its interest in the field, flowed at rates up to 29,000m3/d when originally tested in 1988. This well is on trend with the same play being targeted by Schlumberger in neighbouring fields.
Chief Executive Officer Paul Haywood said: "We're delighted to announce such an excellent initial recovery at Norio as we work towards our target of producing 250 bopd from the field by the end of H1 2019. If production results continue to be positive we look forward to making increasingly effective use of the specialist perforation tool at Norio 44 and three further wells. We're beginning to witness the fruits of our work in building our Georgian infrastructure and workforce, which now engages some 80 employees and contractors.
"Having raised £5 million by the time of our IPO, we are fully funded to undertake our work programmes at Norio and West Rustavi. With our existing production at Norio selling for Brent minus US$10, a combined rate of production at Norio and West Rustavi of 900 bopd would have the potential to generate circa US$13 million in annual revenues at current oil prices, a level that far outstrips our current £7 million market valuation, and one that would enable the Company to both grow organically, and to seek out further low cost, high potential production opportunities. We look forward to providing further updates, as we press ahead with our strategy to build a leading independent oil and gas company in Georgia, and in the process generate signficant value for our shareholders."
Further Information on the Norio Workover Programme
The Norio workover programme - with the exception of the sidetrack - is being carried out using an A50 workover rig. Preparation work includes the cleaning of each well to allow a scraper tool to be run down to total depth to ensure a clear pathway for wireline-deployed caliper and Pulsed Neutron-Neutron ('PNN') logs. The caliper logs give indications regarding suitable casing dimensions for the micro-drilling system and the PNN logs indicate highly prospective hydrocarbon bearing zones for recompletion. In light of the caliper logs so far recorded, the Company now plans to rig in rotary capability to each workover to mill out identified wellbore restrictions, thereby ensuring a clear wellbore for the subsequent deployment of the enhanced perforating system. With better wellbore conditions more holes can be drilled with higher reliability and repeatability, facilitating increased production.
Roger McMechan, Technical Director, has reviewed the reserve, resource and production information contained in this announcement. Mr McMechan has a BSc in Engineering from the University of Waterloo, Canada and is a Professional Engineer registered in Alberta.
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) 203 053 3631 |
|
Neil Baldwin (Nominated Adviser) |
Spark Advisory Partners Limited |
Tel: +44 (0) 203 368 3554 |
|
Craig Fraser (Joint Corporate Broker) |
Baden Hill LLP |
Tel: +44 (0) 207 933 8731 |
|
Colin Rowbury (Joint Corporate Broker) |
Novum Securities Ltd |
Tel: +44 (0)207 399 9427 |
|
Frank Buhagiar/Juliet Earl (Financial PR) |
St Brides Partners Ltd |
Tel: +44 (0) 207 236 1177 |
Notes
Block Energy (BLOE.L) is an AIM quoted oil and gas company with a growing portfolio of production, development and exploration assets in the Republic of Georgia. Block holds a 100% Working Interest in the producing Norio licence, a 90% interest in the producing Satskhenisi licence and a 25% interest in the West Rustavi licence with the right to farm-in to up to a 75% interest.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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