Further Response to Req'n Notice - replacement
This announcement replaces RNS No 7703J which was released at 11:55 a.m. on Wednesday 25 August 2021. The first two sentences in the ninth " Key Points" paragraph concerning the justification for the forensic investigation have been replaced with one sentence. All other details remain unchanged. The full amended text is shown below:
25 August 2021
Block Energy plc
("Block" or the "Company")
Further Response to Requisition Notice
Shareholders Urged to Vote Against Resolution
Further to the Notice of a General Meeting dated 13 August 2021 (the " Notice of GM ") relating to the General Meeting to be held on 1 September 2021 , Block Energy plc, the development and production company focused on Georgia, continues to urge shareholders to vote against the Resolution proposed in the latest Requisition Notice from Forest Nominees Limited (on behalf of G.P. (Jersey) Limited) ( " GP Jersey ") .
Terms defined in the Notice of GM shall have the same meaning in this announcement. A copy of the Notice of GM (including the recommendation of the Board to vote against the Resolution proposed) can be found here: https://www.blockenergy.co.uk/wp-content/uploads/2021/08/261808-Block-Notice.pdf .
Key Points:
Ø Block Energy's operational and governance framework is of an appropriate standard and adherence to this framework has wrongly been called into question by GP Jersey.
Ø Board and management time and effort, and the Company's money, should not be diverted from creating further value for its shareholders, particularly at this critical time in the current, potentially Company-transforming drilling campaign.
Ø The Board has previously stated its opinion that the Requisition Notice was served to create nuisance and appears ill-conceived in asking the Company to spend an amount that could exceed £2 million on a forensic investigation.
Ø The Shareholder Group (including GP Jersey) is now proposing material changes to the Resolution, with the Shareholder Group stating on its website they will meet the costs of the investigation. At this stage, it is not possible or appropriate to vary the Resolution, as the Company has already posted the Notice of GM containing the Resolution pursuant to GP Jersey's Requisition Notice and the material changes proposed by GP Jersey would not be within the scope of the General Meeting.
Ø Had GP Jersey genuinely wished to revise the Resolution it could have followed due process and withdrawn the Requisition Notice, as requested by the Company, before the Company called the General Meeting on 13 August 2021, and submitted a revised resolution.
Ø Even if the Shareholder Group were to fund the cost of any investigation, which is not what the proposed Resolution states, the Board remains opposed to undertaking an investigation that would be a significant drain on the time of the few members of the Company's management team.
Ø GP Jersey's overall approach shows that the Shareholder Group has a disregard for the Company's and Shareholders' funds and effective use of management time, and prefers to act as if it were a de facto regulator of the Company or to further its own agenda rather than to support the growth of the business. Over and above the huge drain on management time dealing with each requisitioned general meeting, the cash cost to the Company and its shareholders of the General Meeting held on 11 August 2021 (requisitioned by GP Jersey on 2 July 2021) was approximately £100,000.
Ø GP Jersey continues to wrongly imply that the Company has something to hide. The Board is aware of its corporate governance responsibilities and conducts its duties accordingly. As specified in the Notice of GM, the Company's Nominated Adviser guides and advises the Company on its responsibilities to ensure compliance with the AIM regulatory regime and, each year, BDO LLP (the fifth-ranked UK audit firm) audits the Company's accounts.
Ø GP Jersey implies that the resignations of Chris Brown and David Sandroshvili are a justification for a full-scale forensic investigation into the affairs of the Company over the previous three years, but the Company does not agree with this. The Company has recently announced the appointment of Jeremy Asher as an independent non-executive director and is in the process of appointing an additional independent non-executive director and expects to make an announcement about this in due course.
Ø The Board sees no good reason to criticise the Company's operational management. The current Board and management team have a track record of delivering value since the Company's listing in June 2018. This includes net asset value having increased by over 200% from $9.2 million as of 30 June 2018 to $29.7 million as of 31 December 2020, and 2P reserves having increased by more than 40-fold over the same period, despite the impact of Covid-19. Furthermore, the Company has a clear strategy to unlock the full potential of the Company's significant asset portfolio in Georgia. This strategy was clearly mandated by Shareholders, with 99.9% of votes cast in favour of the fundraising to fund the work programme, at the Company's General Meeting held on 30 December 2020.
Ø The Board notes that most of the allegations made by the Shareholder Group have already been answered comprehensively during the discussion (and rejection) of the previous resolutions proposed by GP Jersey, including, for example, the disclosure of a change in the mechanism for calculating the gas price for a small proportion of the Company's overall revenue. A new allegation made by the Shareholder Group questions the recent appointment of Jeremy Asher as an independent Non-Executive Director, a well-respected, senior industry figure, grasping at the fact that he is known to the Company's Chairman and CFO - which could be said of many industry figures operating in the AIM oil and gas sector. The important point is that the Company moved quickly to appoint a new non-executive director, always following the correct regulatory processes, precisely to ensure it complied with its corporate governance responsibilities.
Ø Institutional Shareholder Services Inc ("ISS") recommends the Company's shareholders vote against the Resolution proposed by GP Jersey, citing that "the Dissident has not offered any compelling rationale to commence an investigation".
Ø After previous repeated attempts to forge a constructive working relationship with the Shareholder Group, the Company concludes that their interests are not aligned with most shareholders who genuinely wish to see the recovery of the Company's share price and building of shareholder value, and who have no other agenda.
Recommendation:
For the reasons noted above, the Board reiterates its unanimous position that the Resolution is not in the best interests of the Company and its Shareholders and, therefore, strongly recommends that Shareholders vote AGAINST the Resolution proposed at the General Meeting.
**ENDS**
For further information please visit http://www.blockenergy.co.uk/ or contact:
|
Paul Haywood (Chief Executive Officer) |
Block Energy plc |
Tel: +44 (0)20 3468 9891 |
|
Neil Baldwin (Nominated Adviser) |
Spark Advisory Partners Limited |
Tel: +44 (0)20 3368 3554 |
|
Peter Krens (Corporate Broker) |
Tennyson Securities |
Tel: +44 (0)20 7186 9030 |
|
P hilip Dennis / M ark Antelme (Financial PR) |
Celicourt |
Tel: +44 (0)20 8434 2643 |
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, with 2P oil and gas reserves of 64 MMboe, which is comprised 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe (Source: CPR Bayphase Limited: 1 July 2015) and historic 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. boe: barrels of oil equivalent.
3. bopd: barrels of oil per day.
4. Mbbls: thousand barrels.
5. MMbbls: million barrels.
6. MMboe: million barrels of oil equivalent.
7. Bcf: billion cubic feet.
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