West Rustavi/Krtsanisi Field CPR - Replacement

This announcement replaces RNS No. 3314U which had formatting issues.

1 August 2022

Block Energy plc

("Block" or the "Company")

Project I Update

Krtsanisi Anticline, West Rustavi/Krtsanisi Field

Competent Person's Report

Block Energy plc, the exploration and production company focused on Georgia, is pleased to announce the results of a Competent Person's Report ("CPR") covering the Krtsanisi Anticline part of the West Rustavi and Krtsanisi oil field, which straddles the Company's licence blocks XIF and XIB.

The CPR supports Block's sub-surface studies, through a comprehensive and independent evaluation with the reported Reserves in line with the Company's internal estimates. It provides the basis to seek development financing for the next five wells of Project I, the development of the Middle Eocene oil reservoir in the West Rustavi/Krtsanisi field. The effective date of the CPR is 31 March 2022.

The scope of this CPR was deliberately focused on the Krtsanisi Anticline, and on Reserves only, rather than Contingent Resources or Prospective Resources, to support discussions and negotiations with development finance providers. The Reserves reported are only part of the Reserves reported in the previous CPRs; for West Rustavi by Gustavson Associates dated 1 January 2018 (relating to block XIF), and for Krtsanisi by Bayphase Limited dated 1 July 2015 (relating to block XIB). Therefore, as a CPR focused on a Krtsanisi Anticline five-well drilling programme, it is not directly comparable to previous CPRs with different approaches.

These Reserves are associated with just the first phase of development of the West Rustavi/Krtsanisi field (Project I) to begin to exploit the 19.5 MMbbls of Contingent Resources identified by the Company. Data acquisition from this phase will enhance our sub-surface understanding and guide further phases of development drilling to access the remaining Contingent Resources.

Competent Person

The CPR was undertaken by ERC Equipoise Limited ("ERCE"), a company well recognised across the industry, including by the potential provider with which the Company is in advanced discussions relating to the provision of non-dilutive finance. ERCE consents to the inclusion of the information in the form and context in which it appears.

The CPR is available on the following page of the Company's website: www.blockenergy.co.uk/investors/circulars-presentations-and-reports/.

Highlights:

· Field Gross 2P Reserves: 1.07 MMbbls

· NPV10 2P Reserves: $17.95 MM

The Reserves were evaluated based on ERCE's Brent crude oil price forecasts as of 1 April 2022.

In estimating net present values of the Reserves, ERCE used their own forecast of future production, the fiscal terms provided in each of the production sharing contracts and, having validated them, Block's estimates of capital and operating costs. Production forecasts were cut off at the earlier of the date of licence expiry and the date the operations cease to be economic, as defined under PRMS. It should be noted that net present values of the Reserves do not necessarily represent the fair market value.

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

"This CPR independently verifies the work and plans for the initial phase of Project I, which covers five production wells in the West Rustavi/Krtsanisi field. These wells are expected to deliver material returns for shareholders, particularly at current oil and gas prices. The report also provides the audited information necessary to support discussions on non-dilutive financing, to deliver the initial phase of Project I.

Project I will be implemented concurrently with Project II, which will be funded separately using net cash generated from the Company's existing operations. Block considers this approach to managing Projects I and II to be the most efficient use of Company resources to deliver production and returns to shareholders, in a way that is timely and balanced".

Information in the CPR has been reviewed by Paul Wilson BSc, MSc, PhD (Block Energy's Head Geophysicist) who was the technical lead responsible for obtaining the CPR focused on the Krtsanisi Anticline presented in this announcement. Dr Wilson is a geoscientist with over 18 years' experience in oil and gas exploration, appraisal and field development. Dr Wilson consents to the inclusion of the information in the form and context in which it appears.

**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 licence block XIF, which contains the 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).

Project I is the development of the Middle Eocene oil reservoir in the West Rustavi/Krtsanisi field, which straddles Blocks XIF and XIB.

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

· bbls: barrels. A barrel is 35 imperial gallons

· Bcf: billion cubic feet

· boe: barrels of oil equivalent

· bopd: barrels of oil per day

· Contingent Resources: "Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, by the application of development project(s) not currently considered to be commercial owing to one or more contingencies. Contingent Resources have an associated chance of development. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the range of uncertainty associated with the estimate and should be subclassified based on project maturity and/or economic status." (source: PRMS)

· CoP: (economic) cut-off point

· Mbbls: thousand barrels

· Mcf: thousand cubic feet

· MMbbls: million barrels

· MMboe: million barrels of oil equivalent

· NPV10: net present value using a discount rate of 10 per cent

· PRMS: Petroleum Resources Management System - 2018 Update, Society of Petroleum Engineers, https://www.spe.org/en/industry/petroleum-resources-management-system-2018

· Prospective Resources: "Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects." (source: PRMS)

· Reserves: "Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of a given date) based on the development project(s) applied." (source: PRMS)

· 1P: low estimate

· 2P: best estimate

· 3P: high estimate