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Here is my investment rational write up on Block Energy and Stockopedia link to the article

https://app.stockopedia.com/content/one-to-watch-block-energy-794614?order=createdAt&sort=desc&mode=threaded

Block Energy
Ticker (LON: BLOE)
Shares: 624m
Share Price: 2.7p
Market Cap: £16.8m

Block Energy (LON:BLOE) is an AIM listed exploration and production company focused on the Republic of Georgia and was listed on AIM in June 2018.

Fair to say the first three years on AIM have been a steep learning curve for the company and following a hibernation on the production side due to covid in 2020, Block is now well positioned for a transformational 2021.

The company is debt free and has as of 31 March 2021, has $6.8m cash in the bank. During Q1 2021 the company connected its early production gas facility to the Georgian network and at the same time restarted oil production and produced a combined total of 44,394 boe of oil and gas during Q1 2021 (report). The average production achieved during Q1 was 573 boepd, and this rate of production generates sufficient revenue, at current oil and gas prices, to cover over 95% of operating and administration costs, importantly allowing almost all of the cash in the bank for new wells and facilities. Maintaining the base production rate is key and will hopefully be increased significantly as the year progresses with the drilling of two fully funded wells, each targeting 600 boepd starting in May.

Block also hopes to shortly announce an increase in the base production rate, with the figures of the WR-16aZ well, which is currently undergoing an intervention to be added. In addition Block continues to execute a low-cost workover programme in its newly acquired Block XIB oil fields which has so far seen a net positive impact.

The technical knowledge and strength within the company has improved considerably over the past 12 months, both via the key appointed personnel, 3D and via the Schlumberger acquisition. The new corporate presentation maps out the objectives and plan to reach c. 1,800 boepd during 2021 and the plan to 6,000 bopd to year end 2022. The new presentation can be found here.

Tennyson in their recent broker note forecast calculate a core NAV of 7.9p, which is a 193% upside on the current share price on a fully diluted bases and based on the existing producing assets within the portfolio plus a risked value for the three upcoming wells, when taking the undeveloped 2P reserve base, Tennyson have a risked Total NAV of 25.7p/shr. For each of the new wells in the 2021 campaign and based on current prices, Tennyson have these based on existing prices and producing 500 boepd adding and additional $3m each on top of current cash flow which can be reinvested in new wells. The house broker estimates EBITDA profitability over the next three years at $11.2m, $20.4m, $27.1m respectively.

https://app.stockopedia.com/content/one-to-watch-block-energy-794614?order=createdAt&sort=desc&mode=threaded

Commenting on the Q1 results, Block Energy plc's Chief Executive Officer, Paul Haywood, said:

"I am very pleased to be able to announce a definitive set of objectives that Block has set itself for the year, along with detail of the drilling plans formulated to achieve these objectives. The strengthening of Block's drilling team and the objectives set by the Board has taken the Company's potential to the next level and I look forward to kicking off our 2021 drilling programme in May. We have several options to pursue in the West Rustavi licence, each targeting approximately 600 boepd, and have significant remaining reserves to access in Block XIB.

We enter the drilling campaign with a healthy balance sheet, as our cash and ongoing oil and gas sales means we can plan a sustainable growth strategy for the Company. 2021 will be a busy year for the Company and Block is better positioned than ever to meet shareholders' high expectations."

Turning the clock back to last year and during the hibernation period, the company progressed and completed significant corporate developments which now start to bear fruit following the recent Q1 operations report to the market including the constructing and connection of an early production facility. However, without doubt the key major development completed during the last financial year was the acquisition of the Schlumberger Rustaveli Company Limited, where block XIb is Georgia’s most productive block, with over 180 million bbls of oil produced from the Middle Eocene, peaking at 67,000 bopd. The integration has boosted Block’s 2P oil and gas reserves by 64 million boe and initial production by approximately 200 boed, in addition to inheriting around 29,000 barrels of oil inventory in the deal. Interestingly Schlumberger also quite recently drilled and appraisal well, which revealed c. 600 BCF of initial-gas-in-place in the Lower Eocene and Upper Cretaceous.

The integration has increased Block’s acreage by more than 40 times, a total licence area of 2,633km2. Block IX also provides significant exploration upside, with the Patardzeuli field a very significant future play for the company in addition to 38 legacy wells, which will allow Block to evaluate and farm out some high-risk/high-reward drilling, offering scale for potential farm-in partners.

As we currently stand the objectives and prospects seem much more focused and within reach, with some key company developments and a vastly improved set of technical evidence, 3D, coupled with the key personnel now on-board, 2021 is set to be a big year for a fully funded Block Energy.

Disclosure: I hold shares in Block Energy(LON:BLOE)

https://app.stockopedia.com/content/one-to-watch-block-energy-794614?order=createdAt&sort=desc&mode=threaded

New Tennyson initiation note 7.9p target, 172% upside

EBITDA Profitability

2021 = $11.2m
2022 = $20.4m
2023 = $27.1m

(Market cap £18m, debt free, c. £6m cash, O&G production and new wells soon)

When gold goes on the next run up and it will, PAF will be quickly taken up at the current SP which is attractive yield wise and a low PE.

The half way figures speak for themselves here.

Revenue increased by 38.4% to US$183.8 million

Profit after taxation increased by 86.3% to US$40.8 million

EPS increased by 85.1% to US 2.11 cents per share

Added some Pan African sub 19p, substantial gold production, dividend payer and very well placed for 2021. It is a gift down here.

Paul Haywood also mentioned this with regard to Block IX when we last caught up

“Block IX also provides significant exploration upside, and has 38 legacy wells, allowing Block to evaluate and farm out some high-risk/high-reward drilling, offering scale for potential farm-in partners”

https://total-market-solutions.com/2020/11/block-energy-3/

It is worth noting that the Schlumberger acquisition boosts Block’s 2P oil and gas reserves by 64 million boe and initial production from this asset of 200 boed.

Also Schlumberger recently before the Block acquisition performed the drilling of an appraisal well, which revealed approximately 600 BCF of initial gas in place in the Lower Eocene and Upper Cretaceous.

All in all the Schlumberger acquisition increases Block’s acreage by more than 40 times, a total licence area of 2,633km2.

We will see this value come through in 2021 and beyond.

The key factor here is Block Energy will be servicing for years to come a home market that is currently heavily reliant for its energy needs on imports. When I caught up with Block CEO Paul Haywood for one of the questions I asked was as to how robust the domestic was market in terms of demand for the gas and oil produced in Country.

“Georgia is extremely reliant on imports for its energy needs and currently imports over 95% of its current energy requirements, the majority of which is oil & gas. Block, as one of the only E&P’s operating in Georgia, is in a prime position to supply some of the country’s vast demand, with the domestic oil and gas industry having been extremely underfunded for many decades, meaning any supply has a captive market.”

https://total-market-solutions.com/2020/11/block-energy-3/

Results imminent from 4,400m Reverse Circulation infill programme

Sale of the Georgian assets for $7m

Director Options at 4p and at 5.5p

Eclipse Gold acquisition previous owner options at 4.7p

75% interest in Eclipse

£3.25m recently raised

Active discussions regarding potential acquisitions in Western Australia.

Gone back through the recent RNS, here are notes on some key Empire factors.

Wide quartz veins discovered in areas beyond and below the current Eclipse workings

Confirmed the extension of the main mineralised structure at depth, further to the north-west.

New CEO appointment

“Initial work programme completed at Eclipse has increased confidence in the Project's potential to host a profitable small-scale high-grade open pit gold mine”

“different clusters of quartz veining mainly associated with the higher grades, confirming there is more than one mineralised structure”

“mineralisation is also open at depth is particularly interesting”

Permit expected near term for drilling further to the north-west along the strike of Eclipse, in the vicinity of the other old workings of Jack's Dream and Steinhobel

Jack's Dream was worked in the early 1900s and produced 197 tonnes @ 23.8 g/t Au and whilst there are no records of the production at Steinhobel, old stopes are visible at surface indicating that historically it produced gold.

A recap of some of the results so far for Empire, the infill results due next and based on these phase one results bode well:

ECRC20_039 which intersected the main vein at Eclipse at 85m from surface: 14m @ 2.57 g/t gold from 94m downhole, including 4m @ 4.98 g/t Au from 97m.

ECRC 20-009 was 30m along strike of existing historical workings and represents a previously unidentified extension to the main high-grade lode

ECRC 20-037 was 40m below the previously reported result of 11m at 3.04g/t indicating the mineralised structure remains open at depth and along strike

ECRC20_009: 3m @ 21.96 g/t Au gold from 45m (including 1m @ 56.9 g/t Au)

ECRC20_037: 8m @ 3.2 g/t Au from 133m (including 3m @ 4.45 g/t Au)

ECRC20_005: 8m @ 2.14 g/t Au from 42m

ECRC20_039 (refer announcement 28 October 2020) includes 4m @ 4.98 g/t Au

ECRC20_022: 14m @ 3.78 g/t gold ('Au') from 22m, including 1m @ 21.4 g/t Au, and 1m @ 16.65 g/t Au

ECRC20_027: 8m @ 2.27 g/t Au from 32m including 3m @ 5.27 g/t Au

ECRC20_032: 5m @ 6.50 g/t Au from 26m, including 3m @ 9.29 g/t Au

ECRC20_017: 3m @ 3.18 g/t Au from 49m including 1m @ 6.49 g/t Au

ECRC20_026: 1m @ 6.93 g/t Au at surface, and 1m @ 4.50 g/t Au from 10m

ECRC21_003 intersected 8m @ 2.83 g/t Au, from 118m, and

ECRC21_004 intersected 3m @ 2.60 g/t Au from 134m.

ECRC20_021: 14 m @ 1.70 g/t Au from 9m depth including 1m @ 7.76 g/t Au at 9m and 4m @ 2.37 g/t Au from 19m

Anglo Asian Mining will be presenting on Wednesday.

Click here if you want to register

https://hardman-co.com/p/49CL-DDV/join-our-event

Block Energy are now in a really strong position in country following the Schlumberger acquisition and this value will come through to the market cap in due course as this unfolds.

The company have a strong balance sheet, with no debt, £5m in cash and 29,000bbls of crude oil inventory from Schlumberger, worth over £1.5m.

The West Rustavi Oil and Gas production to start any day on top of Schlumberger oil production from the acquired assets.

The full combined production figures out in an update soon and the drilling programme, this will not be £18m market cap as this unfolds.

Yes Hepseal, I did add 1m on Wednesday, I have kept close contact with the company over the years. There is a lot going on and plenty of operational activity this year. Fully funded, no debt, with oil and gas production next news and onto new wells.

Taken advantage of the dip to add, importantly fully funded and key gas online RNS due end Jan / 1st wk Feb and oil production plus drillis soon to start.

Looking forward to the trading update tomorrow and especially its traction within the Bioplastics division which is gaining good momentum with important new contracts signed, particularly with US-based customers, there is a growing interest globally in the substitution of conventional plastics.

In the last update they mentioned a potential second US customer, this would be significant, lets see.

“The Bioplastics division is working with an expanding list of potential new customers, particularly in the US. Developmental work related to this continues with some vigour, despite the impact of Covid-19. In particular, the implementation of a filtration mesh project with a second US end-customer has moved forward assuredly and initial revenues are expected later this quarter.”

When Hardman and SP Angel come to update Anglo Asian Mining with an additional 120,000 oz gold production and 7m + increased gold resource, the target price will be considerably higher than their current target, expecting to be £5 +

I am sure Bill Morgan will want a positive presentation next Thursday. Plenty to look forward to with Anglo in 2021.

Virtual event link Link to register:

https://www.proactiveinvestors.co.uk/register/event_details/314