Member Info for holyroller

Geowiz, I I can see how a CPR would work for Jan 2022 and on that basis it is definitely worth doing.

1) If JKT1 flows commercially then the CPR could be useful to show what else might be achieveable with a multi-well drilling campaign.

2) If JKT-1 is unsuccessful then a CPR could be useful to raise some money for a new management team to have another go. - though if JKT1 fails then I am personally intending to sell out for a loss and move on to pastures new as I believe that this will mean basically starting again from scratch with new management.

However, we need to remember that a CPR is not going to make the blindest bit of difference just now as everything is about the next drill and whether Block can show that they have finally understood and cracked the code for the reservoir geology or not. This is the only thing that is going to move the share price in 2021 IMO.

No, the thing that is saving this from sub penny territory is the fact that Block is fully funded to drill JKT1 and they claim to have cracked the reservoir geology. If they can make JKT1 flow commercially then everything changes and they can fund a new well program on debt. If they can't it all goes down the toilet and we are left with a total failure and the job of a new BoD to rebuild.

A CPR won't help now, only oil from JKT1. If this comes in then the company will be a success and if it doesn't it will be a total disaster. There is no middle ground.

So everything seems to rest on JKT-1 now. We know that the well is fully funded from Haywood’s comments in Friday’s video and according to Steven James, the Geoscience Manager, in the video the other day they seem fairly confident that using the lessons learned from WR-B1A they will be able to deliver a successful well that avoids all of the issues they have had so far.

From what I have taken from the video and Sea7’s comments on this board last week it appears that Block have so far drilled two unsuccessful wells, but that were each unsuccessful in completely different ways.

They have had one drill (WR-16AZ) that flowed over 1,000 bopd but consequently had a 78% water cut that reduced the oil flow down to 300bopd.

Then they had a second well (WR-B1a) where they appear to have attempted to solve the water-problems by drilling into an area had a low density of natural fractures but by doing this have massively reduced the flow rate down to 50 bopd even with a pump.

As far as I can tell from watching the video (and I have had time over the weekend to transcribe it and make it easier to read) Steven James now appears to think that they have now fully understand the reservoir as he says: “Following extensive evaluation we now believe that WR-B01a encountered a relatively low density natural fracture network that has resulted in a lower than predicted production rate. In planning to drill Block Energy’s next well, a side-track from the JKT-1 well that was drilled in 2011, Block Energy has brought these learnings together to optimally position the well specifically by calibrating the 3d seismic with the data that has been gathered by drilling and production.”

In other words, they think that they have finally found the goldilocks zone where everything in just right…

Whether they have finally understood the reservoir or not is only going to be proved by the successful drilling of JKT-1 but the logic of how the company and Sea7 have explained these drills does seem to make sense. They raised the money for a two well program and if they can still deliver success I would be delighted and it would make all the failures up until now worthwhile.

But make no mistake, everything rests on this last well. They have now claimed to have understood the geology and if they can prove that they really do then we have a proper production asset on our hands that can be gradually spun out into something enormous via debt.

However, the company is also drinking in the last chance saloon and if the BoD fail again then they should all immediately quit or be forced out. They have said that they finally understand the reservoir and now they have to prove it by delivering a MINIMUM of 300bopd from JKT-1.

Geowiz is not wrong. Debt needs to be serviced by cash and if a company is not generating any cash then it does not really matter what the value of the assets are. So at this second it would be fairly impossible to get debt financing. This is why it is so lucky that we are still fully funded for JKT-1 as everything now rides on this and it would be almost impossible to fund it (except at massive dilution) if we did not already have the finances in place.

However, on a positive note, if they could get JKT-1 to flow at even 300 bopd then this would generate around $5 million per year in revenue and this would be easily enough to get a debt facility to drill another well. Success in one well, money raised by debt and serviced by cashflow allows you to drill a second. Repeat the process and you gradually build up a very significant cash generator which services the debt and after it is paid off, goes straight to shareholders.

As of today, Geowiz is absolutely right, there is no way Block could get any debt funding. However this all changes if we suddenly have a successful well that is producing cash. This is why everything rests on JKT-1.

I need a bit of time to absorb this morning's RNS but everything is on JKT-01 now. If they cannot make that flow tin a significantly commercial way then Heywood et al need to fall on their swords and hand Georgia over to somebody with more experience in the region.

Whatever way we look at it , this morning's news is incredibly disappointing. I jus hope that the share price holds up considering we have another drill starting before the end of the month.

When I asked about timescales last month the general consensus was that we would likely not hear anything about the test until the end of this month. I even think that we may hear about the spud of JKT-01 before we get the flow rates for WR-B1a. This is not the way round that I would like it but I do want JKT-01 drilled asap so if this is the order then so be it.

We do need to hear something from the board though as the silence from the company is deafening.

I think that we will spud in the next couple of weeks as that would then give them 6 weeks to finish the drill before the end of the year which is always what they said that they intended to do. I can't see them wanting to wait until the New Year for the results. so I think that you are right cperkin. It is going to be soon.

Given that a lot of people were predicting that we would not get the results for WR-B1a until the end of this month this means that there is every possibility that we will get the spud RNS for JKT-01 before we get the flow rates for WR-B1a. I would prefer it the other way round but I do want JTK drilled as soon as possible so we can assess whether or not the two-well campaign has been a success or a failure before Christmas.

Cperkin, this is oil and gas - anyone who demands that all stated target aims are always hit 100% should not be investing in this space as it is risky business. Previously I said 700 bopd would be ok by me but since you put words in my mouth 50% delivery on the aim of 1,100 barrels (550bopd) would also still be just about ok for me. This would deliver a revenue of between $10-12 million per annum to Block which would provide plenty of funds to keep the company running and to deliver an additional well program.

Don't get me wrong, I would fare rather see 1,100 bopd and $20+ million a year come out of the two wells than I would half that, but I am also realistic enough to accept that not everything works 100% of the time especially in oil and gas exploration.

I stick to the opinion I voiced here the other day:, as long as the company is still fully funded to drill the second well then they should be allowed to complete the campaign that they raised the money for. and be judged on the combined production from both. However, If they have wasted this money and are no longer fully funded then management have failed shareholders and should be forced out immediately.

Assuming that the second well is drilled and the two well program is completed then this is how I would define success.

1) If they deliver 1,100bopc then I will be praising management to the skies.
2) If they deliver 550+bopd then they have earned the chance to continue running the company as this will provide enough income to enable them to continue a drilling campaign without raising further funds via equity.
3) If they deliver less than 550bopd then they should fall on their swords as new money will need to be raised via placement for further drilling campaigns and I would want somebody else to be in charge for this

So at the moment I am in wait-and-see mode but I am fully ready to call to replace the current management with a different team that have a track record of successfully drilling in Georgia if this campaign does not deliver.

Cperkin, they raised £5 million for the two wells last year and both wells are definitely all funded through to production. In the 3rd Dec 2020 RNS they explicitly state: “The two wells proposed to be drilled in the First Phase are intended to further increase production and cashflow from West Rustavi and Block XIB”

Cperkin - The Scirocco comparison is not to do with delays with Ruvuma, I am talking about the £4.5 million from the Horse Hill sale that was supposedly ringfenced for acquiring other assets but instead disappeared into directors salaries, administrative expenses and consultancy fees over the next two years. This is what I am almost certain would happen with Block's funding for the second well if it is delayed for any significant time period. The money was raised last December to drill two wells and I expect it to be spent on drilling two wells and nothing else.

Personally, I think that Block must be fully funded for the second well. If they are not then that is it as far as I am concerned, I will not be putting any money in to any further raisings and will instead be calling for the wholesale replacement of the existing board as they will have completely betrayed our trust.

It is one thing for an oil drill to not go as planned (this is the nature of the game and we all know that some drills are successful, others are less successful and still others are complete dusters) but is a completely different thing for a company to raise money for two drills and then spunk all of the cash on one. I do not think that there is any chance that they have done this but it they did then it would have been a complete betrayal of shareholders trust and they should not be given the opportunity to drill again.

It is pretty simple from my point of view. If the BoD still have the money to drill the second well then they should be allowed to get on and do it but if they haven't they should step down and appoint someone with successful in-country drilling experience to take over and try again with new funds.

These two wells are the existing BoD's last chance as far as I am concerned. If they do not get a decent combined flow rate from the two wells then they have let shareholders down and should fall on their swords.

My concern about changing the board after WR-B1a is that this may mean that the second well is never drilled. As we have both seen from our disastrous time at Scirocco, funds once received have a habit of simply disappearing into administrative expenses if they are left in any small cap company too long.

At Block, the company raised money last year to drill two wells and so we are fully funded to drill the second well. One thing I can guarantee is that if we waited around for 6 months while finding new management then that drill money would disappear into administrative costs and we would no longer be fully funded to drill the well.

Even if WR-B1a only produces 100 bopd then we should still drill the second well. If that one is also a failure then we should mobilise to get the board out and, as you say, replace them with an experienced team with Georgian operating experience.

Hopefully it will not be necessary though. Remember we could still end the two well drilling campaign with 700+ bopd flowing from the two wells and this would be worth around $20 million per annum in gross income which would leave us all be saying how well the company has done. Here’s hoping anyway.

I don’t mind waiting until the first week of December if they can turn this around and post some decent results by then. Hopefully we can also get the second and less risky well under way by then so the board will have at least delivered on their promise to drill two wells this year by then. Hopefully these will finally deliver us all with some good news.

If the neither of these wells deliver good news to us then we need to mobilise as private investors and get rid of the current board without letting the Scottish contingent get their hands on the company. Our assets have such potential there must be someone out there who can deliver the commercial production that we all want if the current lot cannot manage to do so.

From my point of view, if we do not get significant results from on or other of these two wells then it will be time to really make our feelings known and get rid of the current board.

When does everyone think that we are going to get the updates on the results of the cleaning and the flow test of WR-B1a? My thoughts are that given that we had to wait for the chemicals to arrive, carry out the cleaning and then flow test for several days to check the rates that it will probably take until the end of the first week of November, with the chemicals hopefully arriving next week. Does anyone think differently?

magicpuppy - like you say it all depends on what the actual flow rates are from this. At the current oil price every hundred barrels is worth $7,700 gross per day (or $2.8 million per year) but there is a hell of a lot of difference between $2.8 million for 100 barrels and $14 million for 500 barrels.

Given the past history I can appreciate why Haywood is not making any estimates of flow rates just now, but personally if they were being able to clean up WR-B1ato get it to flow anywhere between 200-300 barrels at this stage then I would call that a result at this stage. It is not the 500+ barrels that I was hoping for but it is better than nothing - and at the moment it feels to me like the market is pricing in this well as a duster so I am hoping that the only way is up, both for this one and JKT-01.

My figure of 200-300 barrels is just picked from thin air as something I would be able to live with (and that I think would raise the share price) but it does feel like this well is not completely dead and they should be able to get something flowing. It is just a question of how much.

Anyway, this is me trying to keep positive...

Since I was hoping for an RNS announcing that we were flowing at around 500 bopd, there is no way of reading this as anything other than bad news. The question that I need to clarify in my own mind is: how bad and is it recoverable?

The fact that gas an oil have been recovered to the surface suggests that all may not be lost - or am I just clinging on to optimistic hopes?

I am just back from holiday and am very pleased to see that the concert party's puppet Charles Valeschini has finally been kicked out of Block. As I said before this allows us to finally draw a line under this whole sordid little corporate takeover affair and concentrate on what is important to all of us - success with the drill bit.

The results in both votes clearly went the right way for all who believe in the future of Block Energy, but it has also come at great expense to everyone except the concert parties themselves. The two 303 votes appear to have cost the company about £200,000 but the real damage has been felt by us shareholders as these corporate actions have massively depressed the share price in the middle of the drill – which is a time that any other small cap oiler would have expected the share price to show a significant increase in the anticipation of good results.

This lack of any significant rise is a blame that can laid firmly at the door of Lang, Fitzpatrick and their cohorts. If they had not taken the actions that they did (which were solely for their own benefits anyway) then I believe that we would be looking at a share price of at least 4p by now. We just have to hope that this is an end to it and they do not keep going with their takeover attempts at such a crucial time in the company’s development. We have this well to finish and another well to drill and I feel that with these two recent votes management have at least earned the right to get these done without any further interference.

We need good results though. We as retail investors have shown what a significant force we can be in steering the future direction of Block Energy and we should not hesitate to use our influence if the drilling results are not good.

Having seen the RNS today I have extreme reservations as to whether GP Jersey and the other minority shareholders – Jon Fitzpatrick, Alistair Ferguson, Peter Young, et al have any idea about how to successfully operate a business if they truly think that it is a good idea to spend £2 million of shareholders money on their own vanity investigation instead of drilling wells.

GP Jersey – is the vanity vehicle of 30 year old Frazer Lang, a spoiled little rich kid who (according to his own linked in profile: https://www.linkedin.com/in/frazer-lang-6b7ba9161/) has only worked for 4 years in his life and whose only job outside his own family business lasted 7 months before he “resigned”. So I guess it is not really very surprising that Frazer would have no idea what anything actually costs in the real world. He probably just assumed that Block would put the cost of the forensic investigation on his daddy’s credit card like he would have!

However, it is surprising that Jon Fitzpatrick and Alistair Ferguson did not have a better idea of how much the forensic investigation would cost before the demand for this second 303 was made, after all they are supposed to be experienced industry professionals who have successfully managed other Aim-listed companies in the past.

The fact that they put forward this motion at all can only mean one of two things:

a) They had no idea how much such an investigation would cost – in which case they are completely incompetent and should not be listed to on the basis that they do not know what they are doing.

b) They did know how much this type of forensic investigation would cost and simply did not care that £2 million of shareholders money would be spent on it as long as it helped them to get their hands on executive control of Block Energy. In which case it is a scary look into what a company run by this lot would actually look like – spending a huge amount of company money on their own vanity projects with no concern at all for shareholder value.

Whichever answer is the right one the very fact that they were willing to put forwards such a stupid and expensive proposal shows that they should be allowed nowhere near Block Energy (or indeed any other public company). Once again, we should gang together and vote down their ridiculous and completely self-serving motion.

I would also like to enquire if anyone here knows how much it costs to company to carry out the whole procedure of the 303 notice each time GP Jersey request one. How much of our money have they wasted already with their ridiculous demands.

Vote them out again and then let’s see if we can kick them completely out of town.

I was given a warning by LSE for the terminology used in my last post. Apparently the minority shareholders are still "in dialogue with LSE to ensure that their own use guidelines are met by all users."

I assume that it is still ok for me to voice my opinion that Charles Valeschini does not represent the interests of the overwhelming majority of investors who today voted against his appointment as Chairman.

IN MY OPINION: Valeschini should be fired immediately as this whole sorry affair cannot be finished until he is gone.

I feel that the motion must have been defeated as PIs were so organized for this vote and absolutely everyone was dead set against it so I cannot see anything but a landslide victory. But I have been wrong before and I will not be happy until I see an RNS confirming that GP Jersey have lost AND that Chareles Valeschini has been sacked.

Then of course we need to go on and defeat their second 303...

GLA

AJW, you mentioned the figure of $500,000 earlier this morning as a potential cost for the audit proposed in the second resolution. However, I think that this is a very optimistic figure. Amongst the many emails I have received over the last two weeks was one from another poster who state that in his experience with KPN+MG / Bain etc that they wouldn’t get out of bed for less than $1 million. I have subsequently enquired further into my contact network and the general consensus from them also is that the price would be $1M +.

I don’t know about anyone else here but I do not think that the company should take out $1 million of shareholders funds to be spent on what amounts to a fishing trip to benefit a cabal of a shareholders with a very poor record of probity from their own side.

The minority shareholders group seem to think that they can continue issuing 303 after 303 demanding motions that all need to be carried out at the company’s expense and with no consequence to them. They lost the vote on Dimmock at the AGM and so they demanded a second via 303. Once it became clear to them that they were going to lose the second vote as well then they demanded another vote on further criticism of the company. It is as if they want to cause as much damage to the company and the shareholders as possible as a measure of revenge for us not letting them in to come and pillage the company with Gneiss Energy fees.

Personally I think that it is very dangerous for the company to constantly be taking instruction from this collection of individuals, especially considering the dubious and self-serving record that they have – including the allegations of their members being involved in insider trading, conflicts of interest re service companies and non-payment of bills for JV projects with other listed vehicles.

I would rather that Block spent $1 million on drills rather than accountants and I would rather that we reject everything that this minority shareholders group have proposed. It is clear that they only have their own interests at heart and we should send them a message in no uncertain terms that they are not welcome in our company and they should take their never-ending 303s somewhere else.

If anybody has not yet voted in the vote on Dimmock can you please call your broker now and see if there is still time to register your vote against them. As has been said here before: every share counts and it is about time we stood up and bloodied the nose of this collection of AIM bully-boys.