Block Energy PLC Resumption of Production at West Rustavi (7912G)
July 26 2019 - 1:00AM
UK Regulatory
TIDMBLOE
RNS Number : 7912G
Block Energy PLC
26 July 2019
Block Energy Plc | Index: AIM | Epic: BLOE.L | Sector: Oil and
Gas
Resumption of Production at West Rustavi
26 July 2019
Block Energy Plc ('the Company' or 'Block'), the exploration and
production company focused on the Republic of Georgia, is pleased
to announce the resumption of production at well 16aZ ('the Well')
at its flagship West Rustavi field ('West Rustavi' or 'the Field').
Production resumed on 11 July and since testing began the Well has
produced at an average rate of approximately 360 boepd (295 bopd
plus 390 Mcf/d) on varying choke sizes, with an average water cut
of 25%, considered to be mainly returned drilling fluid.
A minimum of 1,200 barrels of drilling fluid were lost to the
Well during drilling and completion operations, a considerable
amount indicative of the high productivity of the fractures system.
Estimates of the volume of water produced and observations of
polymer and other drilling fluid chemicals indicate that the Well
continues to clean up lost drilling fluid and stabilise.
The Company is adopting a prudent approach, gradually increasing
production to establish a sustainable flow rate as the Well cleans
up. Produced oil is being transported to storage leased by Block at
a facility owned by the Georgian Oil and Gas Corporation ('GOGC'),
the state-owned national oil company of Georgia, near the town of
Sartichala, some 30km along the Khakheti motorway from West
Rustavi. Block entered into an agreement with GOGC last month (RNS:
https://bit.ly/323XWfy) allowing access to 90,000 bbls storage
capacity.
Bringing well 16aZ onto production is a significant step in
Block's fully-funded GBP12m programme to realise West Rustavi's
potential (RNS: https://bit.ly/2WYyx8e), which was demonstrated by
the exceptional test production rates of 1,100 bbl/d - more than
three times pre-drill expectations - recorded at the Well on 1
April this year (RNS: https://bit.ly/2YfdI50). Preparations are
well advanced for the horizontal side tracking this summer of well
38Z, analogous, adjacent and updip to well 16aZ, and targeting the
same Middle Eocene formation. Well 38Z is one of four wells the
Company plans to sidetrack across the Field - in which Block now
holds a 100% Working Interest ('WI') - during its 2019/2020
back-to-back drilling campaign. The award of the contract for
Block's planned 3D seismic survey of the Field is also imminent.
The processing and interpretation of this survey by the latest
techniques will enable the Company to pinpoint optimal drilling
locations.
In parallel with its operations at West Rustavi, Block continues
to produce oil at its Norio (100% WI) and Satskhenisi (90% WI)
licences, at a cumulative average production rate of 26 bopd.
Paul Haywood, Block Energy Chief Executive Officer, said: 'We
are pleased to resume production at well 16aZ and look forward to
establishing with due caution a stable production rate for our best
performing well to date. The Well produced exceptional test rates
earlier this year and offers excellent netbacks of $35/bbl at
$65/bbl Brent.
'With the resumption of production at well 16aZ our fully-funded
back-to-back multi-well drilling programme continues to gather
momentum. We now keenly anticipate ramping up production with the
sidetracking this summer of well 16aZ's neighbouring well, 38Z.
Three of West Rustavi's other wells will also be sidetracked in the
Middle Eocene structure, and two of them tested for their historic
gas discoveries in the Lower Eocene. We also look forward to
acquiring a 3D seismic survey that will identify optimal locations
for new horizontal oil and gas wells across the Field and support
an upgrade of the Company's CPR, prepared back in January
2018.'
'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.
**ENDS**
Further information
For further information please visit
http://www.blockenergy.co.uk/ or contact:
Paul Haywood Block Energy Plc Tel: +44 (0)20 7997
(Chief Executive Officer) 6136
Neil Baldwin Spark Advisory Partners Tel: +44 (0)20 3368
(Nominated Adviser) Limited 3554
Peter Krens Mirabaud Securities Tel: +44 (0)20 3167
(Corporate Broker) Limited 7221
Frank Buhagiar/Juliet St Brides Partners Tel: +44 (0)20 7236
Earl Ltd 1177
(Financial PR)
Glossary
1. West Rustavi has an estimated 0.9 MMbbls 2P oil reserves, 38
MMbbls of gross unrisked 2C contingent resources of oil in the
Middle, Upper and Lower, Eocene and 608 BCF of legacy gross
unrisked 2C contingent resources of gas in the Eocene and
Cretaceous (Source: CPR Gustavson Associates : 1 January 2018).
2. bbls; bbl/d: Barrels; barrels per day. A barrel is 35 imperial gallons.
3. boepd: Barrels of oil equivalent per day.
4. Updip: Located up the slope of a dipping plane or surface.
5. Well 16aZ has been referred to as well 16a in previous
updates. The Company is now referring to the well as 16aZ to
reflect the addition of the horizontal sidetrack to the vertical
well.
6. CPR: Competent Persons Report
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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