Last checked at 28 Aug 2018 07:00
Block Energy Plc / Index: AIM / Epic: BLOE.L / Sector: Oil and Gas
28 August 2018
Block Energy Plc ('the Company' or 'the Group')
West Rustavi PSC
Block Energy Plc ('Block' or 'the Company'), the exploration and production company focused on the Republic of Georgia, is pleased to announce that the Production Sharing Contract ('PSC') terms for its West Rustavi licence ('West Rustavi' or 'the Licence') have been accepted by the government of the Republic of Georgia. Block holds a 25% working interest in West Rustavi which has proven reserves and gross, unrisked contingent resources ('2C') of 608 BCF gas and 37.9MMBbls of oil.
The PSC will become effective as of 1 September 2018 and will allow Block to conduct planned operations within the Licence area. As previously announced, service inspections for one workover rig and one drilling rig are complete with final negotiations for contracts underway ahead of mobilisation to Block's licence areas. Drilling of the first high impact horizontal side-track is expected to commence during Q4 2018 and to be completed and on production by early Q1 2019. Initial oil production from this well is forecast to be approximately 300bbls/d and Block has identified four other existing wells that can be re-entered and side-tracked in a similar manner.
Paul Haywood, Director of Block Energy, said: "We are delighted to have received the Production Sharing Contract for West Rustavi which will allow us to hit the ground running with our high-impact work programme. With multiple discoveries already made within the Licence which lie on trend with the same play currently being drilled by Schlumberger on neighbouring licence, West Rustavi represents significant development potential and value uplift for the Company. I look forward to updating shareholders as further progress is made."
**ENDS**
For further information visit www.blockenergy.co.uk or contact:
Paul Haywood Executive Director | Block Energy Plc | Tel: +44 (0) 20 3053 3631 |
Neil Baldwin (Nominated Adviser) | Spark Advisory Partners Limited | Tel: +44 (0) 203 368 3554 |
Craig Fraser (Joint Corporate Broker) | Baden Hill LLP | Tel: +44 (0) 20 7933 8731 |
Colin Rowbury (Joint Corporate Broker) | Novum Securities Ltd | Tel: +44 (0)207 399 9427 |
Frank Buhagiar / Juliet Earl (Financial PR) | St Brides Partners Ltd | Tel: +44 (0) 20 7236 1177 |
This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.
Notes:
Block Energy (BLOE.L) is an AIM traded oil and gas company with a growing portfolio of production, development and exploration assets in the Republic of Georgia. Block holds a 100% Working Interest ('WI') in the producing Norio licence, a 90% WI in the producing Satskhenisi licence and a 25% WI in the West Rustavi licence with the right to farm-in to up to a 75% WI in the Licence. Block's three licences lie in the heart of the Schlumberger's 100% owned strategic position in the prolific Kura basin, which at its peak produced ~70,000 barrels of oil per day ('bopd') in Georgia and is estimated to hold over 7 billion barrels of proven reserves in Azerbaijan and North Caucasus (Russia).
The licences currently hold net proven oil reserves of 1.5 million barrels plus 60 million barrels of oil and c.600 billion cubic feet ('bcf') of gas classified as 2C contingent resources. The West Rustavi permit, in which Block has just increased its stake in, has proven reserves and gross, unrisked contingent resources ('2C') of 608 BCF gas and 37.9MMBbls of oil. Multiple gas discoveries have already been made in the Lower Eocence and Upper Cretaceous within the Licence, which lie on trend to the same play currently being targeted by Schlumberger on neighbouring licence, Block XIb. The estimated cost of gas development and production at West Rustavi is c.US$2.00/Mcf which equates to operating netbacks of c.US$2.6/Mcf (assuming a 75% working interest) - Georgia currently purchases its gas for c.US$5.5 /Mcf (c.US$600m project value to the Company).
West Rustavi's development is being conducted contemporaneously with the development of the producing Norio (100% WI) and Satskhenisi licences (90% WI) which provide immediate production uplift on commencement of field operations in Q3. The near-term target is to raise production to 900 bopd from 15 bopd within 18 months via a low cost, low risk workover and sidetrack programme of existing wells, and then utilise cashflow to drill horizontal wells and sidetracks to rapidly raise production to c.2,000. Oil production on the fields offers excellent netbacks, with the current cost of production of c.US$25 per barrel providing netbacks of c. US$30-35 per barrel.