TIDMBLOE
RNS Number : 5933U
Block Energy PLC
07 April 2021
7 April 2021
Block Energy plc
("Block" or the "Company")
Q1 Operational Update
Block Energy plc, the development and production company focused
on Georgia, is pleased to announce an operational update and to
provide its 2021 objectives and drilling programme. Block is
currently producing at a production rate across all the Company's
licences (excluding WR-16aZ well, which is undergoing intervention)
of 555 boepd (30-day average).
Highlights
-- 2021 objectives set, including drilling two wells, each targeting 600 boepd
-- The first well at the WR-BA well site is expected to spud in
May/June 2021. The second well's location and timing will be
finalised based on the learnings from the WR-BA well
-- ZJ-40 drilling rig hired and rig inspection completed confirming rig readiness
-- Company-wide well intervention programme initiated, including
WR-16aZ and various Block XI(B) wells
-- Produced a combined total of 44,394 boe of oil and gas during 1Q 2021
-- Sold 26.3 Mbbls of oil during 1Q 2021 for $1.37m, resulting
in a weighted average price of $52/bbl
-- Commenced gas sales on 15 February 2021 and sold 38.4 MMcf of
gas during 1Q 2021 for $125k, resulting in a weighted average price
of $3.26/Mcf
-- Integration of Block Rustaveli Limited ("BRL") is
substantially completed with all 120 employees of the enlarged
Company in Georgia located at the newly renovated Lilo base
-- Intervention campaign on wells in BRL's Block XI(B) is bearing positive initial results
-- The Company has a strong liquidity position with $6.8 million cash at bank
2021 Objectives
Following the fund raise in December 2020, the expanded Board
set the key objectives for 2021 in relation to Block's operations.
First and foremost, a key focus for the Company is to continue to
operate safely with no major incidents (manhours of operations
currently stand at 92,056 for 2021 to date). By the end of the
year, Block aims to drill two wells, each targeting initial
production of 600 boepd, and spud a third well, whilst continuing
to apply strict capital discipline and drive efficiencies, both
corporately and operationally.
Drilling Programme
As part of building its in-house operational capability, Block
recently welcomed Andrew Moncur as its new Drilling Manager. After
starting in the North Sea with a variety of operators, Andrew has
spent the last 22 years managing drilling operations in the Middle
East, Caspian and the former FSU. Andrew's specific experience lies
in Enhanced Oil Recovery and re-entry drilling campaigns. He
supervised Georgia's first horizontal wells in the Ninotsminda
field, which resulted in a significant increase in oil and gas
production. The Ninotsminda field remains an important analogue for
the Company's drilling plans going forward.
Andrew has built a strong, experienced team, drawing on
expertise from around the region, including Georgia, and focusing
it on wellbore construction success and quality. Block's new team
of selected in-house specialists can deliver operations with
technical expertise in a range of disciplines, including well
design, construction, intervention, integrity, life extension and
will look to execute effectively focussing on HSE and service
quality.
After substantial analysis and research of the opportunities now
available to the Company, Block will commence its 2021 drilling
programme with a new horizontal well in West Rustavi, at WR-BA
location. This will be the first horizontal well to be designed
using the recent 3D-seismic survey. The well will target the top of
the Middle Eocene reservoir and the horizontal section will be
completed with an uncemented slotted liner. The well location is
close to the Early Production Facility, installed by the Company in
West Rustavi, meaning its tie-in will be low cost and fast. If
successful, Block has identified a number of options for the second
well in its work programme but will await results from the well at
WR-BA before making a final decision. In the success case with the
well at WR-BA, Block Energy will progress with the drilling of a
well at WR-BB location, which would access a further volume of oil
and gas in the West Rustavi Middle Eocene core area. Additional
locations for further drilling in this area have also been worked
up.
Before securing a third lease contract for the ZJ-40 drilling
rig, Block had it inspected to the American Petroleum Institute
Recommended Practice 4G Category IV standard, confirming its
readiness to drill. Furthermore, owing to the increased scale of
operations, the Company has enhanced its procurement process for
goods and services, enabling Block to assess service quality,
technical qualifications and commercial bids, thus ensuring a
robust supply chain and competitive pricing across the planned
drilling programme.
Workover Programme
The Company's first appraisal well, WR-16aZ, is suspended and is
currently undergoing an intervention. Once the intervention has
been completed, the results will be announced.
Elsewhere, the Company continues to execute a low-cost workover
programme in its newly acquired Block XI(B) oil fields. So far,
extra production has been gained, more than offsetting the natural
decline of the production in Block XI(B) .
Oil & Gas Production
Wells WR-38Z and WR-16aZ were returned to production on 28
January 2021 and 3 February 2021 respectively. During 1Q 2021, the
Company produced total of 29.8 Mbbls of oil and 14.6 Mboe of gas,
resulting in a combined total of 44.4 Mboe of oil and gas. The
average production rate for February and March 2021, after WR-38Z
had commenced production but excluding WR-16aZ (as the well is
currently suspended), was 573 boepd. This rate of production
generates sufficient revenue, at current oil and gas prices, to
cover over 95% of operating and administration costs and therefore
preserve almost all of the Company's existing cash for new wells
and facilities.
Oil Sales
During 1Q 2021, the Company sold 26.3 Mbbls of oil for $1.37m,
resulting in a weighted average price of approximately $52 per
barrel. The oil sales include sales of some of the inventory from
the Block Rustaveli Limited acquisition. Since the acquisition on
23 November 2020, Block has sold 30,603 bbls of processed Block
XI(B) crude oil, netting $1.54 million, effectively reducing the
cost to the Company of acquiring Blocks XI(B) and IX by a
significant amount and providing a cash injection to the Company's
balance sheet.
Gas Sales
During 1Q 2021, the Company achieved its first gas sales. For
the period from 15 February 2021 to 31 March 2021, it sold 38.4
MMcf of gas for $125k, resulting in a weighted average price of
$3.26/Mcf. The price of the gas sold is at a fixed discount to the
price of the last tender completed by the Georgian Oil and Gas
Corporation ("GOGC")(9) for the sale of its gas, as provided in a
revised Gas Sales Agreement signed with the buyer of the gas, Bago
LLC, in May 2020.
Cash Position
As of 31 March 2021, the Company had $6.8m cash at bank.
Block Rustaveli Limited Integration
Following the acquisition of BRL in November 2020, 55% of the
staff were retained and their successful integration into the Block
workforce has been completed. Block has renovated the base at Lilo,
which is located in the middle of Block XI(B) , and has moved the
original Block staff from its office in Tbilisi to the Lilo base,
resulting in all 120 of Block's employees being based together in a
single location. This co-location of staff is facilitating a more
collaborative and productive working environment and is more
cost-effective for the Company.
Block Energy plc's Chief Executive Officer, Paul Haywood,
said:
"I am very pleased to be able to announce a definitive set of
objectives that Block has set itself for the year, along with
detail of the drilling plans formulated to achieve these
objectives. The strengthening of Block's drilling team and the
objectives set by the Board has taken the Company's potential to
the next level and I look forward to kicking off our 2021 drilling
programme in May. We have several options to pursue in the West
Rustavi licence, each targeting approximately 600 boepd, and have
significant remaining reserves to access in Block XI(B) .
We enter the drilling campaign with a healthy balance sheet, as
our cash and ongoing oil and gas sales means we can plan a
sustainable growth strategy for the Company. 2021 will be a busy
year for the Company and Block is better positioned than ever to
meet shareholders' high expectations."
-Ends-
For further information please visit
http://www.blockenergy.co.uk/ or contact:
Paul Haywood Block Energy Plc Tel: +44 (0)20 3468
9891
(Chief Executive Officer)
Neil Baldwin SPARK Advisory Partners Tel: +44 (0)20 3368
Limited 3554
(Nominated Adviser)
Peter Krens Tennyson Securities Tel: +44 (0)20 7186
Limited 9030
(Corporate Broker)
Owen Roberts / Violet Camarco Tel: +44 (0)20 3757
Wilson 4980
(Financial PR)
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.
In November 2020, Block acquired a 100% working interest in
Georgian onshore licence blocks IX and XI(B) . Licence block XI(B)
is Georgia's most productive block, with 2P oil and gas reserves of
64 million boe 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. boepd: barrels of oil equivalent per day.
5. Mbbls: thousand barrels.
6. MMbbls: million barrels.
7. Mboe: thousand barrels of oil equivalent.
8. Bcf: billion cubic feet.
9. The Georgian Oil & Gas Corporation ("GOGC") holds public
tenders to sell its gas once volumes reach minimum quantities.
Minimum gas quantities and tender dates are variable each year. The
results of each tender are published in local papers.
10. $X.XXm: $X,XX0,000
11. $XXXk: $XXX,000
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