Member Info for Spudsoil

Hi Tony

I’ve been in invested here too long to get excited by a pending quarterly update! I’ve started fearing them rather than looking forward as they tended to always underwhelm, and occasionally contain nasty surprises. HOWEVER I am starting to make my peace with Block and I do think we are entering a period (in my mind probably running for the next 2 years) of stabilisation and consolidation. Now it might be that the stabilisation arrives at a lower BOPd figure than I was hoping for, but what I want from Block is stability of production so we can all make meaningful cash flow forecasts. I’m an oil bull and strongly believe we will have buoyant oil prices for a couple of years if not longer. So once we get stable production we can consolidate in a high oil price environment and continue to drill for oil at a steady pace, with an improving balance sheet.

The challenge for Block is to get ahead of the natural decline curve we see with the wells. If you take a figure of 2,500 BOPD the natural decline on that over a year would reduce to production to say 2,000 BOPd. So Block would need to do drill new oil of 500 BOPD during that year just to flatline at 2,500. I think that example helps to demonstrate why we are likely to need funding or support from another source - we can’t continue to drill 2 or 3 wells a year as unless we hit a monster we’ll be bobbling along around break even.

My thoughts on this are that Block need to get their head down for 2 years, drill say 8 sidetracks, move production up to a more meaningful level and then look for an injection of cash. Otherwise we risk becoming a company that offers nothing to investors if all we are able to do is increase production to offset natural declines.

I remain optimistic Block will become a bigger player in the region, and and the gas intrigues me also. Lots of upside but I for one don’t see anything incredible happening over next couple of years, but I’d take slow and steady stabilisation and consolidation, supported by a high oil price. Next well is critical although with current Brent prices it’s not quite as do or die as it was a few months ago.

One other point - I’m not sure we should get too excited about the average price we’ve managed to sell oil at in q1. Most sales have a lag on them so I expect q2 update in July to be where we notice the big kick on to 100dollar oil. I think q1 update in April will obviously represent sales at a good price but not sure we’ll see the figures some are hoping for. I’m happy to be proved wrong though!

Whilst acknowledging the geopolitical uncertainty and the tragedy unfolding in Ukraine, the fact that most of the heavy hitters in NATO are pushing for oil and gas sanctions will clearly put upwards pressure on what is generally recognised as an already tight market. There have been questions for a number of years around some of the ‘spare capacity’ we are told OPEC plus members have and it now seems there are doubts around the Iranian nuclear deal. All this points to an increasingly tight market, and while Georgia might not be high on many peoples list as a safe place to invest right now, there is an argument to be made that some of the majors (in concert with national governments) might be looking in as part of their hunt for new sources of oil and gas as the trend continues for companies to thankfully exit Russia.

I would suggest there is a realistic chance some of the proven (and unproven) resources that Georgia has will be on the radar of these companies more so now than before. A company that has demonstrated it can produce oil but lacks funding to scale up at pace….. whether the climate exists for BLOe (or FRR) to ‘do a deal’ remains to be seen but if the market remains tight for much longer I’m sure there will be a few looking in.

Haven’t looked in on the share price for a few weeks. Must admit was expecting a rise north but obviously the market isn’t won over yet. Agree with others that next drill proves it wasn’t a fluke, although we also need confirmation of sustained flow rates from current drill - the rhetoric around that sounded much more positive in recent communications so I’m expecting the rates to have stabilised at a healthy rate.

I do wonder if the ruski’s military activity is putting off investors as well. Hard to tell what putin’s intentions are but not sure Georgia poses the same supposed threat that Ukraine does, but any instability in the region can’t be positive. Holding and hoping for another successful drill, sustained flow rates from current drill, and a calming of tensions from-politically. If those three things happen and Brent stays strong we should be well north of here in six months time.

Looking at timeline for jkt well, drilling commenced second half of November and we have interim results 8 weeks later. So once maintenance on rig is completed and new well identified we shouldn’t be waiting too long for a repeat. If oil prices stay around this level looks like we can self fund the next couple and if they are a success that approach can continue but probably speed up as more money available to ramp up. Key period between now and end of H1. If oil price stays strong throughout then we should hopefully make a much more compelling investment case by then if we’ve had another 2 wells drilled.

If you are invested for the long term i don’t think that much has changed over the past 2 years to make you genuinely question your investment. We’ve had failed drills and declining well performance, both of which are part of the game in O&G exploration. Offsetting that we’ve had a massive expansion of acreage and increase in net asset value, we’ve laid some solid infrastructure to support future growth, teamed up with baker hughes and recruited some tech experts. If we had £10m in the bank and another 3 drills lined up we’d Be in a different place sentiment and SP wise.

But it only takes one small success to change the tide. If we get decent revenues from jkt and go back and succeed with a sidetrack at B1 then we are in a different place.

If we don’t succeed with jkt then big questions will be asked about our strategy and where we go next.

All this is normal for an small cap O&G explorer. The difference with us is we have zero debt - that is a materially different position than almost all our peer in this sector. So we have options - maybe we get bought out, maybe a farm out / in. Who knows but I don’t think the investment case is hugely different to 18 months ago, it’s just higher risk (hence declining sP) as this is our last shot with current funds.

I disagree, maintaining an active social media presence is an important part of investor communication strategy these days. Clearly there is no news to be shared via RNS so they are providing updates on the market in general. It’s 100%linked to our core business (oil) so of course it’s relevant to us as the cost of oil directly relates to our income.

Thanks for sharing. Have to say my confidence rating for this drill is the highest it’s been. It feels like all the learning they have gained, aligned with the technology and the experts they now have in the business means we have a great chance of success. Seemingly the chance of significant oil flows are high.

Geowiz - this isn’t a debt laden O&G explorer, we are arguably one or two drills away from proving we can successfully develop the field. As always in oil industry there are likely to be set backs, but the way some on here project that it’s all over and the company is a shambles - yes things could have been done better but we’ve got wells that producing and a buoyant global oil price that most are suggesting will stay around this level if not higher. If the next sidetrack is successful I think that firmly gets us back on track and will at least allow a raise at a price north from here. Maybe the pat-e1 well comes next. Have a read of the Tennyson report from earlier this year. Obviously we haven’t hit the oil numbers but the rest of the report should give shareholders confidence there is a plan. My hope is that they don’t try and secure financing to bridge the period between now and next spring which is realistically when we’d expect jkt oil to be contributing.

Not sure this can drift much lower. NAV is what 30m? Can’t raise at this price, at least not anything decent. I think we bump along here until jkt results, maybe there’s some funding discussions in background with Schlum or others. Personally I can see a much brighter 2022 but this sidetrack is critical. If that fails then what do we think? There’s no debt so it’s long way from insolvency but they will need to be pragmatic about options - possibly a sale of assets and a special dividend?

Bad result however I hold out some hope. Whatever anyone thinks it’s hard to argue that they aren’t learning from the drills they’ve completed, and however harsh those lessons have been for us financially you would like to think each one gives us a better chance of future success. 6m of free cash flow if they come in on target at Jkt, maybe a small raise to sidetrack at wrba1, and then reassess.

Understandably much negative sentiment and without AJWs technical insight to puncture it, reading this board is a hard slog at the moment. However most us know the fortunes of an oil and gas company are never far from flipping - that works both ways. Any sniff of a successful remediation on the current drill and the optics change completely. Radio silence at the moment - presumably because we are in testing. That silence will break soon.

Most positive update we’ve had in 3 years? Arguably. Would still like to see a version of this communicated directly to shareholders

It’s an interesting link to post on the company twitter page isn’t it. I was thinking the other day I wonder if there might be a deal being discussed in the background. Net asset value plus a takeover premium. Who knows, Block not in a strong negotiating position in terms of current performance but as a debt free company that strengthens their hand. I’m still optimistic about wrb1 but The lack of any updates always tests my nerves

And are we expecting news on next drill spud imminently? Lots still to look forward to, you’d think we were a dead duck reading some of these posts. Fundraising is par for the course with early stage o and g firms. Hopefully we won’t need one if wrb1 flows anything like half decent.

That video has restored some of my optimism. This isn’t a dud, we just need to be patient

Emotions running high, but I think those calling for PH to go should wait a few weeks. My reading of the RNS yesterday is that there is a known solution to an incredibly common problem all oilers are likely to encounter to a lesser or greater degree. Surely the time to judge board performance is when we know whether the fix has worked. Simply claiming this is a repeat of 16 is narrow minded in my view, give them a chance to fix the problem. If they can’t, then I agree we need a change. We have BH invovled in this drill do I don’t think this can simply be compared to past failings - it’s frustrating but my take is we need to wait a few weeks, and we will then be told where we stand. That is when we should judge, not now.

I would expect a verbal update or two via a podcast over next few weeks which should give us clearer indication on timescales for the solution for wrb1. AJ or others - hard to tell from the ops update but the decline rate of 38 appears steep. Is that typical of a work over well more than a newly drilled one. I.e if wrb1 can flow would we expect decline rates to be shallower? The corporate presentation I read previously suggested an 18% decline rate. Interested to know why 38 seems to be doing more. Can live with the the delay on wrb1, I was more perturbed by the drop in production quarter on quarter and suspect that’s a big factor in the sp decline today.

Nice one heps. . Fancy dropping him a reply asking for an emoji to sum up current well testing performance?

The testing update will come when it comes. I am taking a lot of positive vibes fr9m the twitter updates on oil price - I don’t for a minute think any company, certainly not one that has been on the roller coaster ride Block has, would be foolish enough to push out updates on rising oil prices, and then announce a failed well during testing period. The board would all be kicked out at the next opportunity. I think what is happening is the board has learnt lessons, taking their time and will publish results when ready, and in the meantime to avoid any news voids, they are signalling that as an oil producer, the improving macro demand / price is of direct benefit to the company. There’s no point signaling an exact date when results will be published - that just encourages the wrong sort of share trading in my opinion. They said last week ‘shortly’ I am reading that as anytime from now, but I’ve pencilled in this time next week. Happy to be proved wrong and for a nice gusher to be announced earlier. Trading volume is thin, historic trust issues and the constant drip selling of employees shares all put downward pressure on the share price. Imagine a world where there is a monthly dumping of new shares to suppress the price - if WR produces anything close to target then that world is only a few weeks away, hopefully.

It’s a valid question - you should email the company.