Q2 Operational Update; Change of Registered Office
05 July 2023
Block Energy plc
("Block" or the "Company")
Q2 Operational Update; Change of Registered Office
Block Energy plc, the development and production company focused on Georgia, is pleased to announce its operations update for the three months ended 30 June 2023.
Highlights
· Average production of 664 boepd during the quarter (Q1: 400 boepd)
· US$2.0m loan secured to ensure drilling momentum is maintained
· Planned spud of the next Project I well, this month
· Dr Ken Seymour moves to Senior Advisor, with Guram Maisuradze progressing to Chief Operations Officer ("COO")
· Termination of the Salary Sacrifice Scheme
Health, Safety & Emissions
Over 80,300 operational man-hours were worked by staff and contractors in Q2, with no LTIs.
The Company continues to minimise emissions, in-line with its commitments, flaring only 71,604 m3 of gas over the period as a result of facility shutdowns and maintenance.
Operations
Following the back-to-back success of drilling under Project I, the second quarter of the year saw Block deliver record production with an average rate of 664 boepd.
The success of wells JKT-01Z and WR-B01Za demonstrates the strength and ability of the Company's operating team in Georgia and has boosted the Company's confidence in drilling productive wells into the Middle Eocene reservoir. Consequently, the Company intends to advance its Project I, phase one strategy and drill two further side-tracks and a new well, potentially consisting of multi-lateral technology, targeting production rates some 2-3x those achieved in previous horizontal wells.
Corporate
The Company's financial position improved materially following the increase in production during the period, enabling the Board to terminate the Salary Sacrifice scheme from 1 April. The scheme was established in April 2020 to support the Company's financial position during the pandemic and collapse in crude oil price.
In April, Block entered a Memorandum of Understanding ("MoU") with the Ministry of Economy and Sustainable Development in Georgia. The MoU covers government support and initiatives to assist in the development of the Company's Project I, II, III, and IV plans through data sharing, cooperation, and the facilitation of meetings with national and regional large oil companies.
The MoU also envisages the concept of a long-term gas offtake agreement, which is an important element of delivering value from the 1 TCF of contingent resource identified by Block's subsurface team under Project III.
In order to maintain the drilling programme and avoid cash flow fluctuations associated with intermittent crude oil liftings, the Company secured a loan facility of US $2m, of which the entirety has been drawn down. These funds have enabled the Company to maintain momentum with drilling plans in pursuit of significantly enhancing total production by this year-end.
As part of the Company's career progression plan for its top performers, Guram Maisuradze is promoted to Chief Operating Officer, with Dr Ken Seymour transitioning to Senior Advisor, where he will focus on Block's medium and long-term projects. Guram has served the Company for five years, holding the role of Operations Manager, where, supported by the broader team in Georgia, he has been responsible for successfully planning and executing the drilling of new wells and for the overall management of production operations.
With effect from today, Block has also engaged Orana Corporate LLP to act as the Company's designated administrator and Company Secretary. The Company's registered office will also change to: Eccleston Yards, 25 Eccleston Place, London SW1W 9NF.
Oil and Gas Production
During Q2, gross production was 60.4 Mboe (Q1: 36.0 Mboe), comprising 48.5 Mbbls of oil (Q1: 26.8 Mbbls) and 11.9 Mboe of gas (Q1: 9.2 Mboe). The average gross production rate for Q2 was 664 boepd (Q1: 400 boepd).
Oil Sales
In Q2 2023, the Company sold 36.0 Mbbls of oil (Q1: 13.3 Mbbls) for US$2,568,000 (Q1: US$ 999,000).
As of 30 June 2023, the Company had c. 11.7 Mbbls of oil in storage.
Gas Sales
In Q2 2023, the Company sold 50.3 MMcf of gas (Q1: 37.7 MMcf) for US$ 266,000 (Q1: US$ 194,000).
Block Energy plc's Senior Advisor, Dr Ken Seymour, said:
"It is a pleasure to welcome Guram to his new COO role. It has been a joy working with him and achieving our 2023 objectives. Guram's leadership, knowledge and innovation have been critical success factors in reaching and sustaining record production. His knowledge of Georgian production operations is unsurpassed, and his promotion is well and truly deserved. I look forward to working with the Company's Executives by providing operational well assurance on our Project I, Middle Eocene Oil Development and developing longer-term strategic objectives."
Block Energy plc's Chief Executive Officer, Paul Haywood, said:
"The second quarter of the year is characterised by a significant increase in production. This saw the Company's financial position improve materially, providing the Company with additional investment funds to drive further value from its assets. Our next Project I well will spud later this month."
"I am delighted to welcome Guram to Block's leadership team. His knowledge of our operations and his experience within Georgia will prove invaluable as we progress our plans. I am also looking forward to continuing to work closely with Ken as he moves into his new role as Senior Advisor."
Stephen James BSc, MBA, PhD (Block's Subsurface Manager) has reviewed the reserve, resource and production information contained in this announcement. Dr James is a geoscientist with over 40 years of experience in field development and reservoir management.
**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/ 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 |
|
Philip Dennis / Mark Antelme / Ali AlQahtani (Financial PR) |
Celicourt Communications |
Tel: +44 (0)20 7770 6424 |
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. 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 XIB 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 XIF 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 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
· 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.
· MD: measured depth.
· MMbbls: million barrels.
· MMboe: million barrels of oil equivalent.
· MMcf: million cubic feet.
· TVD: True Vertical Depth.
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