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LONDON (Alliance News) - Shares in Block Energy PLC rose on Wednesday as the firm reported flow rates from a Georgian well significantly ahead of expectations.
Block was trading at 10.35 pence a share on Wednesday morning, 25% higher, having been at 3.90p at the end of March.
The 16aZ well at West Rustavi has been producing at 1,100 barrels a day, with Block having targeted a rate of 325 barrels a day.
This meant it had to "immediately" upgrade production infrastructure, and whilst it does this it has scaled production back to around 700 barrels a day.
"We are very happy to confirm the exceptional test results announced at the beginning of the month. 16aZ continues to flow strongly, going from strength to strength with a steady increase in pressure as the well cleans up," said Chief Executive Paul Haywood.
"With an average production rate of 700 barrels a day, the well is expected to deliver gross monthly free cash to the company of USD1 million at the current price of USD70 ber barrel for Brent crude oil (with an approximate two month well cost payout)."
Block has agreed terms for further storage facilities, and is also in talks over new oil sales contract both in Georgia and internationally.
Gas production from the wells will also be sold to Georgian firm Bago Ltd, Block added, with whom it signed a memorandum of understanding in 2018 over sales of gas from West Rustavi.
Bago will take at least 1,000 metres cubed of gas a day, and will also pay for all gas infrastructure needed.
Haywood added: "We are also delighted that, with associated gas flowing from the well, the gas offtake agreement we entered into with Bago last year will now come into effect, offering the company the ability to switch from flaring to swiftly commercialising its gas at little to no cost, potentially adding around USD1.0 million of additional annual free cash to company's cash receipts.
"We look forward to working closely and expanding our relationship with Bago, as we seek to unlock the field's contingent gas and oil resources."