Close of Accelerated Bookbuild; result of Placing

16 May 2019

Block Energy PLC

("Block Energy" or "the Company")

Close of Accelerated Bookbuild and result of Placing

Further to the announcement made yesterday, Block Energy plc (AIM: BLOE), the exploration and production company focused on the Republic of Georgia, is pleased to announce it has completed a placing of 109,090,000 new Ordinary Shares ("Placing Shares"), raising approximately £12 million (before expenses) with institutional investors at a Placing Price of 11 pence per share. Mirabaud Securities Limited ("Mirabaud") acted as sole bookrunner and broker in connection with the Placing. Mirabaud has been appointed as joint broker to the Company with immediate effect.

The Placing Price represents a discount of approximately 15.7 per cent. to the closing market price, of 13.05 pence per Existing Ordinary Share on 15 May 2019, the last business day before the announcement of the Placing.

The Placing Shares shall be issued and allotted by the Company in three tranches. The issue and allotment of the First Tranche Firm Placing Shares shall take place by no later than 4.00 p.m. on the day prior to First Admission. These shares have been allotted separately so as to meet eligibility criteria for Venture Capital Trust and Enterprise Investment Scheme relief. The Second Tranche Firm Placing is conditional, inter alia, upon First Admission (which is expected to become effective with dealings in all of the Firm Placing Shares to commence on 22 May 2019); and the Conditional Placing is conditional, inter alia, upon Second Admission (which is expected to become effective with dealings in the Conditional Placing Shares to commence on 5 June 2019).

Upon First Admission, the Enlarged Share Capital is expected to be 318,951,218 Ordinary Shares. Upon Second Admission, the Enlarged Share Capital is expected to be 385,221,218 Ordinary Shares. On this basis, the Placing Shares will represent approximately 28.32 per cent. of the Company's Enlarged Share Capital.

The Conditional Placing is conditional upon, inter alia, approval by Shareholders at the General Meeting of the Placing Resolutions. The Placing Resolutions will provide the Company with the authority to allot and issue, the Placing Shares. It is expected that the Conditional Placing Shares will be admitted to trading on AIM at 8.00 a.m. on 5 June 2019.

In addition, and conditional upon First Admission the Company will issue 2,141,000 warrants to brokers exercisable at the Placing Price at any time in the three years following First Admission; and conditional upon on Second Admission will issue 3,313,500 broker warrants to brokers exercisable at the Placing Price at any time in the three years following Second Admission.

Notice of General Meeting

A Circular explaining the background to and reasons for the Placing and containing the Notice of General Meeting is expected to be posted to Shareholders shortly. A copy of the Circular and Notice of General Meeting will thereafter be made available on the Company's website: www.blockenergy.co.uk.

Capitalised terms not otherwise defined in this announcement shall have the same meaning ascribed to such terms in the announcement released earlier today unless the context requires otherwise.

Chief Executive Officer Paul Haywood commented: 

"We are delighted to have secured support for an ambitious work programme to develop our West Rustavi licence, the potential of which was confirmed by last month's excellent oil production test rates at well 16aZ of approximately 1,100bbl/d, more than three times higher than forecast. We used the £5m we raised for our IPO last June to demonstrate our capacity to undertake disciplined low cost operations and prove the value of our assets. With this fresh injection of £12m we keenly anticipate pursuing our programme to unlock West Rustavi's company-making potential: proven reserves of 0.9MMbbls, contingent resources of 38 MMbbls and 608 BCF and excellent netbacks of US$36/bbl at US$65/bbl Brent and US$3.40/MCF for gas.

We have designed a rigorous programme promising rapid paybacks. The upgrade of production facilities will provide capacity for production from three new sidetracked wells. In Q4 this year we will sidetrack West Rustavi well 38, a neighbour and analogue to 16aZ. Two further wells, West Rustavi 30 and 3 will be sidetracked through H1 next year, and their associated gas discoveries tested. We will acquire a 3D seismic survey this year which will allow us to identify optimal locations for new gas wells and horizontal oil wells to be explored next year. We will also continue our ongoing workover programme at Norio, and have scheduled the field's well 60 for sidetracking later this year.

The funds raised also give us the freedom to explore fresh opportunities: we are a young, ambitious company keen to apply the low cost, innovative drilling technologies we have deployed in Georgia to new ventures in the region and beyond. Today marks a major step forward for Block as we move towards our objective of becoming one of AIM's newest mid-tier oil and gas producers."