TIDMBLOE
RNS Number : 6952X
Block Energy PLC
22 December 2023
22 December 2023
Block Energy plc
("Block" or the "Company")
Corporate Update and Project III Farm Out Process
Block Energy plc, the development and production company focused
on Georgia, is pleased to provide the following corporate
update.
Background
The Company's four-part project strategy is evolving to
accelerate the significant commercial opportunity offered by
Project III, focused on the multi-TCF undeveloped gas resource
within the Lower Eocene and Upper Cretaceous reservoirs of Blocks
XIB and XIF to which internal estimates attribute 984 BCF 2C
Contingent Resources.
Following continued development during 2023, Project III was
declared a gas resource of strategic importance by the State of
Georgia, and Block has concluded it is now ready to support a
farm-out at the asset level. Until now the Project has been funded
organically through cashflows from Project I. The accelerated
development of Project III has a good chance of success and
promises to have a material impact on its Net Asset Value.
The disciplined implementation of Project I during 2023, and
Block's focus on improving its overall margin through reducing its
operational cost structure ensures the Company will be well funded
to execute this high-impact strategy through 2024, based on current
production, oil prices and expected natural decline rates. Block
will, however, consider drilling additional Project I wells next
year as the Company progresses its farm-out strategy.
Project III update
During 2023, the Company completed an integrated full field
development study of the Lower Eocene and Upper Cretaceous
reservoirs , identifying gas-bearing natural fracture systems of
one and a half kilometres thick, spanning the Company's XIB and XIF
blocks across three fields, which included reinterpreting two 3D
seismic surveys, well design and planning, third-party conceptual
development engineering and cost estimation of a pilot scheme and
full field processing facilities. Block also signed an MoU with the
State of Georgia to support commercialisation of the Company's
Project III gas resources. The Company is also currently completing
a study on what promises to be a world-class Carbon Capture and
Storage (CCS) project throughout XIB, integrated into Project III
development plans, thus supporting the Company's longer-term
sustainability goals.
Project III Farmout process
Work undertaken in 2023 has informed the design of a staged
appraisal and development plan which is being used to facilitate
discussions with possible partners regarding the broader
development of our assets in Georgia, including a farm-out of
Project III. These discussions, supported by the Government of
Georgia, are taking place within the context of Georgia's continued
integration with the global economic community this year, including
the country's acceptance as an EU candidate nation and its entry
into a strategic partnership with China.
Growing industry interest in Georgia is also spurring an
increase in exploration activity. OMV is planning to acquire 3D
seismic in the Black Sea, and China's commitment to the country has
been underlined by the presence of a private Chinese firm using
services supplied by CNPC, the Chinese state-owned integrated
energy group, in an onshore location between the Black Sea and
Block's Project III.
CNPC has been contracted to deliver a firm work programme
comprising two deep wells, using a modern rig and a full suite of
integrated services. Positive results from this work programme
would have an instant read-through to the value of Project III,
which stands to benefit from access to a drilling rig and
integrated services capable of drilling deep directional wells
promising to reduce mobilisation and demobilisation time and
costs.
Reporting process:
Given Block's strategy has evolved in-line with the development
of its assets, the Company is revising its reporting process.
Rather than providing updates each quarter Block will publish
shareholder updates in-line with specific news on strategic and
operating activity, and to observe financial reporting
requirements. The Company believes news of its initiatives and
operating developments no longer conform to a quarterly news cycle
and therefore risk compromising strategic and commercial
discussions with potential farm-in candidates.
Block Energy plc's Chief Executive Officer, Paul Haywood,
said:
"I would like to thank the entire Block team for their continued
effort and focus, which has supported the safe delivery of this
year's plan and ensured we remained cashflow positive while
allocating capital to advance our high-impact Projects III and
IV.
" Our strategy is now evolving to accelerate the delivery of
value from the Company's high-impact projects which, in addition to
Projects III and IV, include Project II, where the team continues
to advance plans for secondary recovery that promise to trigger yet
another high-impact and near-term CF farm-out process, supported by
a CCS pilot programme. This shift in focus also allows us to
restructure our cost base and set our Project I programme within
the context of our wider strategy.
"The Company remains focussed on delivering a quantum leap for
our shareholders and has an extremely busy first quarter planned in
2024, when we will continue to implement our strategy , which is
being funded by current cashflows. In the meantime, I wish you all
a Merry Christmas and look forward to reporting on our progress
early in the New Year".
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.
**S**
THIS ANNOUNCEMENT CONTAINS INFORMATION PREVIOUSLY DEEMED BY THE
COMPANY TO BE 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. WITH
THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION
SERVICE, SUCH 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
P hilip Dennis C elicourt Communications Tel: +44 (0)20
/ M ark Antelme 7770 6424
/ Ali AlQahtani
(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.
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.
Project I is focused on developing oil production from the
Middle Eocene reservoir of the West Rustavi/Krtsanisi field.
Project II aims to redevelop the Middle Eocene reservoir of the
Patardzeuli and Samgori fields.
Project III is focused on the undeveloped gas-bearing natural
fracture system within the Lower Eocene and Upper Cretaceous
reservoirs - each more than a kilometre thick - spanning the XIB
and XIF blocks.
Project IV is focused on exploring the full potential of our
licences, including licence IX and Didi Lilo where we have
identified significant prospectivity.
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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