TIDMBLOE
RNS Number : 4568K
Block Energy PLC
14 December 2018
Block Energy Plc / Index: AIM / Epic: BLOE.L / Sector: Oil and
Gas
14 December 2018
Block Energy Plc ("the Company", "Block" or "the Group")
Positive Flow and Pressure Test Results at West Rustavi field,
Georgia,
and Board and Other Management Changes
Highlights
-- 200 barrels of oil recovered during a 10 hour flowback on legacy well 16a at West Rustavi
-- Achieved key milestone by mobilising and rigging up ZJ40
drilling rig at well 16a as part of the initial stage of a two well
sidetrack drilling programme beginning in January targeting 650
bopd by Q1 2019
-- Part of dual focused strategy at West Rustavi to restart oil
production and re-test a legacy gas well that flowed up to 0.9
MMCF/D from the same geological formation being targeted by
Schlumberger on neighbouring field
-- Preparation of wellsite equipment to enable production and
oil sales to commence as soon as drilling and completions
operations at the first sidetrack have been completed
-- The 650 bopd targeted at West Rustavi is in addition to the
250 bopd focus at Block's Norio field through an ongoing multi-well
workover and sidetrack programme
Block Energy Plc, the exploration and production company focused
on the Republic of Georgia, is pleased to announce that more than
200 barrels of oil were recovered from the legacy vertical well 16a
at its West Rustavi permit during a 10 hour flow period. An
additional 300 barrels of light oil flowed to a temporary wellsite
production facility over the following days. The results of the
test confirm the well lies in an active hydrocarbon system and that
the previously producing Middle Eocene reservoir still contains
reserves and remains pressurised. The Company will now move forward
with its programme to restart production at the field via the
drilling of two initial horizontal sidetracks in West Rustavi wells
16a and 38, targeting a combined gross production of 650 bopd by Q1
2019.
Block holds a 25% interest in West Rustavi as part of an agreed
earn-in to 75%. In addition to holding 38 MMbbls of gross
contingent resources ('2C') of oil, West Rustavi holds estimated
gross 2C contingent gas resources of 606 BCF which it plans to test
in 2019 by re-entering up to two wells that previously flowed gas.
West Rustavi is one of three licences Block holds in Georgia, the
others being a 100% interest in the producing Norio field, which
has gross proven ('2P') oil reserves of 1.631 million barrels, and
where a workover and sidetrack programme is underway targeting 250
bopd by Q1 2019; and a 90% interest in the Satskhenisi field, which
has estimated 28 MMbbls of gross 2C contingent resources.
Block Energy Chief Executive Officer Paul Haywood said: "The
recovery of more than 500 barrels of oil from the legacy vertical
wellbore at West Rustavi 16a is highly encouraging and bodes well
for our horizontal sidetrack programme at the field which is due to
begin early next year. Having raised GBP5 million by the time of
our IPO we are fully funded to undertake our work programmes at
West Rustavi and Norio, which together target a combined 900 bopd
net to Block by Q1 2019. With our existing production at Norio
selling for Brent minus US$10, a production rate of 900 bopd has
the potential to generate circa US$13 million in annual revenues at
current oil prices, a level that far outstrips our existing GBP7
million market valuation. And we do not intend to stop at 900 bopd.
With four more existing wells identified as suitable sidetrack
opportunities at West Rustavi, an inventory of historic wells at
Norio, and a potential 28 MMbblof contingent resources at
Satskhenisi, the opportunity to significantly scale our cash flow
further is clear.
"Block is not just focused on oil production. West Rustavi also
holds an estimated 606 BCF of gross 2C contingent gas resources
which we plan to test in 2019. With operating netbacks of around
US$2.6/Mcf at current Georgian gas prices of US$5.5/Mcf, and
assuming a first phase of gas development producing gross 30
MMCF/D, gas production at West Rustavi has the potential to deliver
net annual cash flows of more than US$20 million."
Further Information
Following confirmation of the presence of oil and pressure at
West Rustavi 16a, the ZJ40 drilling rig has been mobilised and
rigged up at the drill site. The rig, which has undergone a
comprehensive inspection and upgrade, is expected to spud the
Company's first horizontal sidetrack in early Q1 2019. Wellsite
production equipment is currently being prepared to ensure rapid
oil production once drilling and completion operations at 16a have
been carried out. With all relevant permissions already in place,
16a is forecast to commence production as early as Q1 2019, subject
to positive results from the sidetrack.
Civil works are already underway at West Rustavi 38, the second
of the field's wells to be sidetracked. Four other wells have been
identified as suitable for re-entry and sidetracking, each of which
has the potential to produce at a rate of more than circa 325 bopd.
The Company also plans to acquire 3D seismic data for the licence
area to identify additional drilling targets in both the
oil-bearing Middle Eocene and the gas bearing Lower Eocene and
Upper Cretaceous. Preliminary 3D seismic acquisition design has
been completed and will go to tender next year.
In tandem with the sidetrack programme at West Rustavi, the
Company is planning to workover two of the field's other wells in
order to test the potential of the Lower Eocene gas zones. Previous
well tests achieved rates of up to 0.9 MMCF/d from the Lower Eocene
and 1.6 MMCF/d from the Upper Cretaceous. Subject to the results of
the tests, the Company will aim to swiftly finalise a field
development plan and gas sales contracts and install a gas
production infrastructure.
Board and other management changes
The Company also announces that Serina Bierer will be stepping
down as Finance Director and from the Board of the Company as of
June 2019. The Board has appointed Orana Corporate ('Orana'), a
London based outsourced finance company to strengthen the finance
function and to report to the Board. Orana will cover Block's
London headquarters and also the finances of its operations in
Georgia. Serina will be assisting Orana during the handover
process. The Board would like to thank Serina for her work during
the IPO process and wish her well for the future.
Roger McMechan, Technical Director, has reviewed the reserve,
resource and production information contained in this announcement.
Mr McMechan is a BSc, 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.
**ENDS**
For further information visit www.blockenergy.co.uk or
contact:
Paul Haywood Block Energy Plc Tel: +44 (0) 20
Chief Executive Officer 3053 3631
Neil Baldwin Spark Advisory Partners Tel: +44 (0) 203
(Nominated Adviser) Limited 368 3554
Craig Fraser Baden Hill, a trading Tel: +44 (0) 20
(Joint Corporate Broker) name of Northland Capital 7933 8731
Partners ltd.
Colin Rowbury Novum Securities Ltd Tel: +44 (0)207
(Joint Corporate Broker) 399 9427
Frank Buhagiar / Juliet St Brides Partners Ltd Tel: +44 (0) 20
Earl 7236 1177
(Financial PR)
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 ('WI') in the producing Norio licence, a 90% WI in the
producing Satskhenisi licence and a 25% WI in the West Rustavi
licence with the right to farm-in to up to a 75% WI. Block's three
licences lie in the heart of Schlumberger's 100% held position in
the Kura basin, which at its peak produced circa 70,000 bopd in
Georgia and is estimated to hold over seven billion barrels of
proven reserves in Azerbaijan and North Caucasus (Russia).
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.
END
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