Block Energy P. Regulatory News (BLOE)

11 January 2022

Block Energy plc

("Block" or the "Company")

Q4 Operational Update

Block Energy Plc, the exploration and production company focused on Georgia, is pleased to announce its operations update for the three months ended 31 December 2021.

Highlights

· Over 110,000 operational man-hours worked in Q4 2021, with no LTIs

· Drilling of well JKT-01Z reached target depth ("TD") of 2,565m measured depth ("MD")

· Significant mud losses observed relative to the WR-B1 well, indicating initial geological objectives have been achieved

· Q4 production of 34.6 Mboe (Q3: 34.6 Mboe) or an average of 376 boepd

· Q4 revenue of $2,550,000 (Q3: $901,000)

o oil revenue of $2,441,000 (Q3: $742,000)

o gas revenue of $109,000 (Q3: $159,000)

Health and Safety

Over 110,000 operational man-hours have been worked by staff and contractors in Q4, and over 399,000 in the twelve months ended 31 December 2021, with no lost-time incidents.

Drilling Operations

Following the end of Q4, in early January 2022, well JKT-01Z reached TD at 2,565m MD. Considerable mud losses were encountered during drilling, suggesting the well has intersected multiple open fractures. Completion operations are now underway and will be followed by clean-up operations to unload the mud losses, ahead of the well being put on test.

JKT-01Z is the second well in the current two-well drilling programme. To support effective management of costs and minimise drilling time, whilst maintaining the same exposure to an oil-in-place of approximately 8 MMbbls, the well has been drilled via a sidetrack from a vertical well drilled in 2011 by a previous operator.

Located in Block XIB, JKT-01Z is close to and targets the same area of the Middle Eocene reservoir as KRT-39, which has been a sustained producer of oil and gas for over 20 years. Unlike KRT-39, JKT-01Z has been drilled as a horizontal well, to maximise the chance of intersecting fractures.

The trajectory and horizontal nature of JKT-01Z benefitted from data gathered from the drilling of previous wells, which enabled a recalibration of the high-quality 3D-seismic data acquired in 2019. The well has also benefitted from refinement of our geomechanics model and horizontal drilling practices.

Additionally, JKT-01Z has been tied into the recently installed gas infrastructure at KRT-39, which will enable the rapid monetisation of the gas production from JKT-01Z.

Oil and Gas Production

During Q4, gross production (including the state of Georgia's share) was 34.6 Mboe (Q3: 34.6 Mboe), comprising 24.9 Mbbls of oil (Q3: 21.0 Mbbls) and 9.7 Mboe of gas (Q3: 13.6 Mboe). The average gross production rate for Q4 remained the same as the previous quarter at 376 boepd. Production in Q4 included the first production from WR-B01, which was brought online in late October. It also benefitted from the addition of gas production from well KRT-39 in late November. Production was further supported by the production enhancement programme, which entailed wellbore cleaning using nitrogen and foam, tubing repairs and the replacement of rod pumps.

During 2021, gross production (including the state of Georgia's share) was 156 Mboe (2020: 25 Mboe), comprising 101 Mbbls of oil (2020: 25 Mbbls) and 55 Mboe of gas (2020: nil Mboe).

Oil Sales

In Q4 2021, the Company sold 33.6 Mbbls of oil (Q3: 11.2 Mbbls) for $2,441,000 (Q3: $742,000), resulting in a weighted average price of approximately $73 per barrel (Q3: $66 per barrel), which represents a 10% increase in the realised price in Q4 compared with Q3.

During 2021, the Company sold 86.7 Mbbls of oil (2020: 34.4 Mbbls) for $5,519,000 (2020: $1,255,000), resulting in a weighted average price of approximately $64 per barrel (2020: $36 per barrel), which represents a 75% increase in the realised price in 2021 compared with 2020.

Gas Sales

In Q4 2021, the Company sold 36.1 MMcf of gas (Q3: 52.4 MMcf) for $109,000 (Q3: $159,000), resulting in a weighted average price of approximately $3.03/Mcf (Q3: $3.03/Mcf).

During 2021, the Company sold 191 MMcf of gas (2020: nil MMcf) for $596,000 (2020: $nil), resulting in a weighted average price of approximately $3.11/Mcf (2020: n/a).

Cash Position

As at 31 December 2021, the Company had $1.2 million cash at bank (30 September 2021: $2.7 million).

As at 6 January 2022, Block had an estimated oil inventory of over 19,000 bbls, which at the current Brent price is worth over $1.4 million to the Company. The Company's next oil sales are expected to occur in January and February.

Block Energy plc's Chief Executive Officer, Paul Haywood, said:

"We are pleased with the progress being made at JKT-01Z. Having encountered hydrocarbons and experienced significant mud losses whilst drilling, the early signs are encouraging. If JKT-01Z proves to be successful, side-track operations funded by production revenue will be initiated back at WR-B01, adopting the same geological approach employed at JKT-01Z. Strong sales, stable production and the ability to take advantage of enhanced sales pricing during the quarter, combined with encouraging initial signs from JKT-01Z, all add to the Board's confidence in the Company's ability to improve performance as we look to the year ahead".

Jonathan Bedford (Block's Technical Manager) has reviewed the reserve, resource and production information contained in this announcement. Mr Bedford has an MSc in Petroleum Geoscience from the University of Aberdeen and is a petrophysicist.

**ENDS**

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

For further information please visit http://www.blockenergy.co.uk/ or contact:

Notes to editors

Block Energy plc is an AIM-listed independent oil and gas company focused on production and development in Georgia, applying innovative technology to realise the full potential of previously discovered fields.

Block has a 100% working interest in Georgian onshore licence blocks IX and XIB. Licence block XIB is Georgia's most productive block, with 2P oil and gas reserves of 64 MMboe, comprising 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe (Source: CPR Bayphase Limited: 1 July 2015) and historical production of over 180 MMbbls of oil from the Middle Eocene, peaking in the mid-1980s at 67,000 bopd.

The Company has a 100% working interest in the highly prospective West Rustavi onshore oil and gas field with multiple wells that have tested oil and gas from a range of geological horizons. The field has so far produced 50 Mbbls of light sweet crude and has 0.9 MMbbls of gross 2P oil reserves in the Middle Eocene. It also has 38 MMbbls of gross unrisked 2C contingent resources of oil and 608 Bcf of gross unrisked 2C contingent resources of gas in the Middle, Upper and Lower Eocene formations (Source: CPR Gustavson Associates: 1 January 2018).

Block also holds 100% and 90% working interests respectively in the onshore oil producing Norio and Satskhenisi fields.

The Company offers a clear entry point for investors to gain exposure to Georgia's growing economy and the strong regional demand for oil and gas.

Glossary

1. bbls: barrels. A barrel is 35 imperial gallons.

2. Bcf: billion cubic feet.

3. boe: barrels of oil equivalent.

4. boepd: barrels of oil equivalent per day.

5. bopd: barrels of oil per day.

6. LTI: lost-time incident.

7. Mbbls: thousand barrels.

8. Mboe: thousand barrels of oil equivalent.

9. MMbbls: million barrels.

10. MMboe: million barrels of oil equivalent.