TIDMBLOE
RNS Number : 0627O
Block Energy PLC
29 September 2023
29 September 2023
Block Energy Plc
("Block" or the "Company")
Interim Results for the Six Months Ended 30 June 2023
Block Energy plc, the development and production company focused
on Georgia, is pleased to announce the interim results for Block
Energy plc and its subsidiaries (the "Group") for the six months
ended 30 June 2023.
Highlights:
-- 283,176 operational man-hours worked (1H 2022: 184,000
man-hours) with one lost time incident (1H 2022: none).
-- Achieved record production rates in Q2 2023 of 664 boepd,
significantly above corporate breakeven rate.
-- Safely drilled WR-B01Za establishing good production rates
from the well, which commenced stable production on 25 March.
-- Spud well WR-34Z, with the well being completed to plan, on
time and within budget in August 2023. The well was handed over to
production with all hydrocarbons being monetised.
-- Completed Project III gas resource evaluation across XIB and
XIF Lower Eocene and Upper Cretaceous reservoirs using newly
re-interpreted seismic.
-- Signed MoU with the Ministry of Economy and Sustainable
Development of Georgia, supporting the concept of long-term gas
offtake of resources associated with Project III.
-- Completed farm-out of part of XIB to Georgian Oil and Gas
limited and received initial seismic results confirming the
prospectivity of the new Project IV area.
-- Undertook 11 workovers and wellbore interventions, including
the installation of an Electrical Submersible Pump ("ESP") on well
WR-38Z, which significantly reduced non-performing time on the
well.
-- Secured $2.0 million in non-dilutive debt financing with
support from existing shareholders and senior management.
-- Strong & consistent production performance during the period:
o Total production of 96.4 Mboe, comprising 75.3 Mbbls of oil
and 21.1 Mboe of gas (1H 2022: 93.3 Mboe, comprising of 64.9 Mbbls
of oil and 28.4 Mboe of gas).
o Average daily production of 533 boepd (1H 2022: 515
boepd).
o Stable production from WR-B01Za was achieved on 25 March.
-- Oil sales of 51.4 Mbbls with revenue of $3.45 million,
representing a weighted average price of $67 per barrel (1H 2022:
Oil sales of 45.6 Mbbls with revenue of $4.16 million, representing
a weighted average price of $91 per barrel).
-- Gas sales of 88.0 MMcf with revenue of $0.48 million,
representing a weighted average price of $5.4/Mcf (1H 2022: 106.8
MMcf with revenue of $0.43 million, representing a weighted average
price of $4.02/Mcf).
-- Oil in inventory net to the Company at the end of the period was 11.7 Mbbls.
-- Loss for the period from continuing operations of $432,000 (1H 2022: profit of $627,000).
-- Cash position of $882,000 as at 30 June 2023 (31 December 2022: $450,000).
Post period events:
There were no post period events.
Block Energy plc's Chief Executive Officer, Paul Haywood,
said:
" I would like to start by thanking the Block Energy team for
their continued efforts across many fronts whilst delivering on the
plan safely and efficiently.
"Performance throughout the period has delivered strong
production and positive cashflows and even though H1 2023 suffered
from lower-than-average oil prices, as of today, the Company
remains on track to deliver its best full-year financial results in
history. This is a testament to the team's enhanced operational
performance and rigorous capital discipline, supported by strong H2
2023 Brent pricing. With WR-34Z now handed over to production, the
remainder of this year promises to be an exciting time for the
Company as we seek to further increase production with the drilling
of KRT-45Z and advance the high-impact Project III multi-Tcf gas
opportunity. I look forward to providing further updates, in due
course. "
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' experience in field development and reservoir
management.
**S**
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 AMED. 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 Block Energy plc Tel: +44 (0)20
(Chief Executive 3468 9891
Officer)
Neil Baldwin Spark Advisory Partners Tel: +44 (0)20
(Nominated Adviser) Limited 3368 3554
Peter Krens Tennyson Securities Tel: +44 (0)20
(Corporate Broker) 7186 9030
Philip Dennis Celicourt Communications Tel: +44 (0)20
/ Mark Antelme 7770 6424
/ Ali AlQahtani
(Financial PR)
Notes to editors
Block Energy plc is an AIM-quoted 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 XI(B) 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 the West Rustavi
onshore oil and gas field in licence blocks XIB & XIF. 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.
* MMbbls: million barrels.
* MMboe: million barrels of oil equivalent.
* MMcf: million cubic feet.
Condensed Consolidated Interim Statement of Comprehensive
Income
For the six months period ended 30 June 2023
Notes 6 months 6 months
ended ended
30 June 30 June
2023 2022
Unaudited Unaudited
$'000 $'000
Continuing operations:
Revenue 3,926 4,589
Cost of sales:
Direct costs (1,839) (1,729)
(Decrease) / increase in inventory (135) 519
Depreciation and depletion of oil
and gas assets 6 (827) (951)
---------- ----------
(2,801) (2,161)
Gross profit 1,125 2,428
Administrative expenses (1,059) (1,375)
Share based payments (402) (652)
Foreign exchange movements 10 (34)
---------- ----------
(1,451) (2,061)
Operating (loss)/profit (326) 367
Other income 4 240
Finance income - 20
Finance expense 4 (110) -
(Loss)/profit for the period before
taxation (432) 627
Taxation - -
(Loss)/profit for the period from
continuing operations (attributable
to the equity holders of the parent) (432) 627
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations 17 286
Total comprehensive (loss)/profit
for the period attributable to the
equity holders of the parent (415) 913
(Loss)/profit per share (basic) 5 (0.06)c 0.10c
(Loss)/profit per share (diluted) 5 (0.05)c 0.08c
Condensed Consolidated Statement of Financial Position
As at 30 June 2023
Notes 30 June 31 December
2023 2022
Unaudited Audited
$'000 $'000
Non-current assets
Intangible assets 50 -
Property, plant and equipment 6 25,151 24,815
---------- ------------
25,201 24,815
Current assets
Inventory 4,431 4,791
Trade and other receivables 1,585 560
Cash and cash equivalents 882 450
---------- ------------
Total current assets 6,898 5,801
---------- ------------
Total assets 32,099 30,616
---------- ------------
Equity and liabilities
Capital and reserves attributable
to equity holders of the Company:
Share capital 7 3,593 3,565
Share premium 34,785 34,765
Other reserves 4,825 4,525
Foreign exchange reserve 711 694
Accumulated deficit (16,651) (16,349)
---------- ------------
Total equity 27,263 27,200
---------- ------------
N on-current l iabilities
Borrowings 4 1,936 -
Current liabilities
Trade and other payables 1,177 1,693
Provisions 1,723 1,723
---------- ------------
Total current liabilities 2,900 3,416
---------- ------------
Total liabilities 4,836 3,416
---------- ------------
Total equity and liabilities 32,099 30,616
---------- ------------
Condensed Consolidated Interim Statement of Cash Flows
For the six months period ended 30 June 2023
Notes 6 months ended 6 months ended
30 June 2023 30 June 2022
Unaudited Unaudited
$'000 $'000
Operating activities
(Loss)/profit for the period before
income tax (432) 627
Adjustments for:
Finance income - (20)
Finance expense 4 110 -
Depreciation and depletion 6 827 950
Share based payments expense 402 652
Foreign exchange movement (21) 34
--------------- ---------------
Net cash flows from operating activities
before changes in working capital 886 2,243
(Increase)/decrease in trade and
other receivables (1,009) 161
Decrease in trade and other payables (516) (767)
Decrease/(increase) in inventory 360 (675)
--------------- ---------------
Net cashflows (used in)/from operating
activities (279) 962
Investing activities
Expenditure in respect of intangible
assets (50) -
Expenditure in respect of PP&E (1,173) (1,076)
--------------- ---------------
Cash used in investing activities (1,223) (1,076)
Financing activities
Interest paid 4 (86) -
Proceeds from borrowings 4 2,000 -
--------------- ---------------
Net cash flows from financing activities 1,914 -
Net increase/(decrease) in cash
and cash equivalents 412 (114)
Cash and cash equivalents at start
of period 450 1,244
Effects of foreign exchange rate
changes on cash and cash equivalents 20 280
--------------- ---------------
Cash and cash equivalents at end
of period 882 1,410
--------------- ---------------
Consolidated Statement of Changes in Equity
As at 30 June 2023
Share Share Accumulated Other Foreign Total
capital premium deficit reserve exchange equity
reserve
$ '000 $ '000 $ '000 $ '000 $ '000 $ '000
Balance at
30 June 2022
(unaudited) 3,501 34,650 (20,774) 10,752 532 28,661
Loss for the
period - - (2,235) - - (2,235)
Exchange differences
on translation
of operations
in foreign currency - - - - 162 162
--------- --------- ------------ --------- ---------- -------------
Total comprehensive
loss for the
period - - (2,235) - 162 (2,073)
Shares issued 21 115 - - - 136
Share based
payments - - - 420 - 420
Options exercised 43 - - 13 - 56
Options relinquished - - 6,389 (6,389) - -
Options expired - - 271 (271) - -
--------- --------- ------------ --------- ---------- -------------
Total transactions
with owners 64 115 6,660 (6,227) - 612
--------- --------- ------------ --------- ---------- -------------
Balance at
31 December
2022 (audited) 3,565 34,765 (16,349) 4,525 694 27,200
--------- --------- ------------ --------- ---------- -------------
Profit for the
period - - (432) - - (432)
Exchange differences
on translation
of operations
in foreign currency - - - - 17 17
--------- --------- ------------ --------- ---------- -------------
Total comprehensive
profit for the
period - - (432) - 17 (415)
Shares issued 21 20 - - - 41
Share based
payments - - - 402 - 402
Warrants issued - - - 35 - 35
Options exercised 7 - 99 (106) - -
Warrants expired - - 31 (31) - -
--------- --------- ------------ --------- ---------- -------------
Total transactions
with owners 28 20 130 300 - 478
--------- --------- ------------ --------- ---------- -------------
Balance at
30 June 2023
(unaudited) 3,593 34,785 (16,651) 4,825 711 27,263
--------- --------- ------------ --------- ---------- -------------
Notes to the Condensed Consolidated Interim Financial
Statements
For the six months period ended 30 June 2023
1. General information
Block Energy Plc, (the "Company") is a company registered in
England and Wales (05356303), with its registered office at
Eccleston Yards, 25 Eccleston Pace, London SW1W 9NF.
The Condensed Consolidated Interim Financial Statements of the
Group, which comprises Block Energy plc and its subsidiaries (the
"Group"), for the six-month period from 1 January 2023 to 30 June
2023, were approved by the Directors on 26 September 2023. The
Group's principal activity is oil and gas exploration, development
and production.
The Company's shares are traded on AIM and the trading symbol is
BLOE.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2022 were approved by the Board of Directors on 10 May
2023 and delivered to the Registrar of Companies. The auditor's
report on those financial statements was unqualified but did
include a reference to the material uncertainty surrounding going
concern, to which the auditors drew attention by way of emphasis of
matter and did not contain a statement under s498 (2) - (3) of
Companies Act 2006.
The Company's auditors have not reviewed these condensed interim
financial statements.
2. Basis of preparation
Management has prepared these interim accounts in accordance
with IFRS accounting policies as applied at 31 December 2022
(without the disclosure requirements of IFRS). They do not include
all of the information required in annual financial statements and
should be read in conjunction with the consolidated financial
statements for the year ended 31 December 2022 and any public
announcements made by Block Energy Plc during the interim reporting
period. All amounts presented are in thousands of US dollars unless
otherwise stated.
The comparatives are the six-month period ended 30 June 2022,
except for the Condensed Consolidated Statement of Financial
Position, where the comparatives are as at 31 December 2022.
The accounting policies adopted in this half-yearly financial
report are the same as those adopted in the 2022 Annual Report and
Financial Statements, except as shown below. There were no new or
amended accounting standards that required the Group to change its
accounting policies. The Directors also considered the impact of
standards issued but not yet applied by the Group and do not
consider that there will be a material impact of transition on the
financial statements.
Additional accounting policy - Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings. Borrowing costs
are expensed in the period in which they are incurred.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results might differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the financial statements for
the year ended 31 December 2022.
Going concern
The Directors have prepared cash flow forecasts for a period of
12 months from the date of signing these Condensed Consolidated
Interim Financial Statements. The Group's forecasts are reviewed
regularly to assess whether any actions to curtail expenditure or
cut costs are required. The Group's operations presently generate
sufficient revenues to cover operating costs and capital
expenditures, supporting the continued preparation of the Group's
accounts on a going concern basis. The Directors are nevertheless
conscious that oil prices have been volatile during the past few
years, and could rise further but could also fall back in the year
ahead, and that future production levels depend on both depletion
rates from existing wells and the success of future drilling. As
part of their going concern assessment, the Directors have examined
multiple scenarios in which oil prices and/or future production
levels fall substantially and have concluded that it remains
possible that future revenues in at least some scenarios might not
cover all operating costs and planned capital expenditures,
creating a material uncertainty that may cast doubt over the
Group's ability to continue as a going concern. Whilst
acknowledging this material uncertainty, the Directors remain
confident of making cost savings if required and, therefore, the
Directors consider it appropriate to prepare the financial
statements on a going concern basis. The financial statements do
not include the adjustments that would result if the Group were
unable to continue as a going concern.
3. Operating segments
The Group is engaged in the appraisal and development of oil and
gas resources in Georgia and is therefore considered to operate in
a single geographical and business segment.
4. Borrowings/ Finance expense
On 1 February 2023, the Company entered into a senior secured
loan facility of up to $2 million. $1.06 million was drawn down on
the 2 February 2023 with the remaining being drawn down on 10 May
2023.
The Loan Facility is for a term of 18 months, commencing 2
February 2023, at which point the principal is repayable in full.
The loan carries an interest rate of 16% p.a., payable quarterly in
arrears in cash. The Company can elect to repay amounts outstanding
under the Loan at the end of each quarter, in part or in full,
subject to a 2% early repayment fee.
Each lender received warrants exercisable at any point during
the three years from the Closing Date. The exercise price of each
warrant is 1.7 pence per ordinary share for the initial tranche and
1.92 pence per ordinary share for the second tranche. The number of
warrants to be issued to each lender corresponds to an exercise
value equal to 50% of their respective loan commitment under the
Loan Facility ("Warrant Value"). Therefore, the number of warrants
to be issued to lenders as part of the $2.0 million loan in
aggregate is 44,682,643.
A debenture has been provided by the Company to the lenders as
security, providing a fixed and floating charge over the Company's
property and assets.
The fair value of non-current borrowings are not materially
different from their carrying amounts, since the interest payable
on those borrowings is either close to current market rate or the
borrowings are of a short-term nature (18 months). The transaction
costs were recorded as $53,000 as the cost of arranging part of the
facility and $35,000 was calculated as the Warrant Value in
reference to the warrants issued to the lenders.
Finance expense 6 months ended 6 months ended
30 June 2023 30 June 2022
$ '000 $ '000
I nterest paid 8 6 -
Unwinding of t ransaction 24 -
costs
110 -
--------------- ---------------
5. Earnings per share
The calculation of earnings per share for the six months ended
30 June 2023 is based on the loss for the period attributable to
ordinary shareholders of $432,000 and the weighted average number
of shares of 687,068,781 and is (0.06) cents from continued
operations.
The calculation of loss per share for the six months ended 30
June 2022 is based on the profit for the period attributable to
ordinary shareholders of $627,000 and the weighted average number
of shares of 656,329,007 and is 0.10 cents from continued
operations.
The calculation of fully diluted earnings per share for the six
months ended 30 June 2023 is based on the loss for the period
attributable to ordinary shareholders of $432,000 and the weighted
average number of shares of 687,068,781 plus warrants outstanding
of 54,241,837 and options outstanding of 114,198,627 at period end
and is (0.05) cents from continued operations.
The calculation of fully diluted earnings per share for the six
months ended 30 June 2022 is based on the profit for the period
attributable to ordinary shareholders of $627,000 and the weighted
average number of shares of 656,329,007 plus warrants outstanding
of 10,809,194 and options outstanding of 104,274,756 at period end
and is 0.08 cents from continued operations.
6. Property, plant and equipment
Development PPE/Computer/
& Office equipment/
Production Vehicles
Unaudited Assets Total
Cost $'000 $'000 $'000
At 1 January 2023 29,115 2,072 31,187
Additions 1,111 62 1,173
Disposals - (35) (35)
Foreign exchange movements 2 11 13
------------ ------------------- --------
At 30 June 2023 30,228 2,110 32,338
Accumulated depreciation
and impairment
At 1 January 2023 5,711 661 6,372
Charge 682 145 827
Disposals - (14) (14)
Foreign exchange movements (1) 3 2
------------ ------------------- --------
At 30 June 2023 6,392 795 7,187
Carrying amount
------------ ------------------- --------
At 30 June 2023 23,836 1,315 25,151
------------ ------------------- --------
At 31 December 2022 23,404 1,411 24,815
Development PPE/Computer/
& Office equipment/
Production Vehicles
Unaudited Assets Total
Cost $'000 $'000 $'000
At 1 January 2022 26,962 1,802 28,764
Additions 998 78 1,076
Reduction of baseline
oil asset /disposals (244) (6) (250)
Foreign exchange movements - 8 8
------------ ------------------- --------
At 30 June 2022 27,716 1,882 29,598
Accumulated depreciation
and impairment
At 1 January 2022 4,029 390 4,419
Charge 820 130 950
At 30 June 2022 4,849 520 5,369
Carrying amount
------------ ------------------- --------
At 30 June 2022 22,867 1,362 24,229
------------ ------------------- --------
No impairment was recognised in the six months ended 30 June
2023 (2022: Nil).
7. Share capital
The Ordinary Shares consist of full voting, dividend and capital
distribution rights and they do not confer any rights for
redemption. The Deferred Shares have no entitlement to receive
dividends or to participate in any way in the income or profits of
the Company, nor is there entitlement to receive notice of, speak
at, or vote at any general meeting or annual general meeting.
On 30 June 2023, the Company's share capital consisted of
689,551,104 Ordinary Shares (30 June 2022: 658,669,945) and
2,095,165,355 Deferred Shares (30 June 2022: 2,095,165,355).
8. Related party transactions
The Company's Chief Executive Officer, Paul Haywood has provided
$105,000 of the Loan referred to above, and the former Board
Director, Ken Seymour, has provided $125,000 of the Loan. $6,376
and $7,025 has been paid in interest to these respective related
parties as at 30 June 2023.
Mr Haywood and Dr Seymour are each treated as a related party of
the Company pursuant to the AIM Rules. Consequently, the
participation of Mr Haywood and Mr Seymour in the provision of the
Loan Facility constitutes a related party transaction for the
purposes of AIM Rule 13.
9. Other matters
A copy of this report is available from the Group's website,
www.blockenergy.co.uk
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