Block Energy P. Share News (BLOE)

(Sharecast News) - Georgia-focussed exploration and production company Block Energy announced on Friday that more than 200 barrels of oil had been recovered from the legacy vertical well 16a at its West Rustavi permit during a 10 hour flow period.The AIM-traded firm said an additional 300 barrels of light oil flowed to a temporary wellsite production facility over following days.It said the results of the test confirmed the well lay in an active hydrocarbon system, and that the previously-producing Middle Eocene reservoir still contained reserves and remains pressurised.The company would 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 the first quarter of 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 of oil, West Rustavi held estimated gross 2C contingent gas resources of 606 BCF, which Block planned to test in 2019 by re-entering up to two wells that previously flowed gas.West Rustavi was one of three licences Block held in Georgia, with one of the others being a 100% interest in the producing Norio field, which had gross proven oil reserves of 1.631 million barrels, and where a workover and sidetrack programme was underway targeting 250 bopd by the first quarter of 2019.The other was a 90% interest in the Satskhenisi field, which had estimated 28 MMbbls of gross 2C contingent resources."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," said chief executive officer Paul Haywood."Having raised £5m 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 the first quarter of 2019."With the company's existing production at Norio selling for Brent minus $10, a production rate of 900 bopd had the potential to generate around $13m in annual revenues at current oil prices, which would be a level that far outstripped Block's existing £7m market valuation, Haywood noted."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."Haywood said Block was not solely focussed 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 $20m."