LONDON (Alliance News) - Oil & gas company Block Energy PLC on Monday said it has signed a memorandum of understanding with JSC Norio Oil Co for the hire of two rigs.
The non-binding agreement will see JSC Norio provide an A50 workover rig to Block Energy, which it will use across its three licence areas in the Republic of Georgia in its 2018/2019 work programmes.
JSC Norio will also provide a ZJ40 drilling rig for use in the third quarter of this year and the first quarter of 2019, which will drill two side tracks in its West Rustavi permit. These side tracks will increase the company's West Rustavi working interest to 75% from 50% and have a combined initial production target of around 600 barrels a day.
Georgia Oil & Gas Ltd holds a 13% stake in Block Energy, and is also connected to JSC Norio, making the agreement a related party transaction under AIM rules.
"The company is fully funded to complete the first of a three phase work programme focused on scaling up production to a gross 900 barrels of oil per day within 24 months and on testing legacy gas discoveries at West Rustavi," said Block Energy Director Paul Haywood.
"The memorandum of understanding secures two suitable rigs for the company for a period of 12 months, giving us the flexibility and security to execute and complete our first phase of work before immediately moving into phase two with the same rig and crew. Furthermore, the terms of the agreement reduce the risks related to rig availability and cost overruns associated with hiring on a daily rate basis," Haywood added.
Shares in Block Energy were down 1.5% at 3.22 pence on Monday.
Block Energy P. (BLOE)