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DJ Block Energy Plc CPR and AIM Admission Update

 
TIDMBLOK 
 
13 December 2017 
 
                               Block Energy plc 
 
                       ("Block Energy" or the "Company") 
 
              Competent Person's Report and AIM Admission Update 
 
AIM Admission Update 
 
The Company reaffirms it's plan to dual-list on AIM and the NEX Exchange Growth 
Market. AIM admission and NEX Exchange Growth Market re-admission is expected 
in Q1 2018, and remains conditional on raising the pre-requisite funding 
requirements. 
 
   CPR highlights significant reserves and gross contingent resources of 73 
         Million Barrels of Oil and 626 BCF of Gas on Georgian assets 
 
Block Energy, the exploration and production company focused on the Republic of 
Georgia, is pleased to announce the results of an independent Competent 
Person's Report ('CPR') prepared by Gustavson Associates ('Gustavson'), which 
confirm the asset backing behind Block Energy, comprising gross 2P oil reserves 
of 1.6 MMbbl and an NPV10 of US$26.9m for its Norio licence (100% Working 
Interest).  A further 0.9 MMbbl have also been identified on the previously 
producing West Rustavi permit where the Company has an agreement in place to 
farm-in to a 75% working interest and 11.3MBbl at its Satskhenisi Licence (90% 
Working Interest) 
 
In addition, the CPR highlights major development potential across the asset 
base, including gross contingent resources (2C) stand at 73 Million barrels of 
oil and a significant 626BCF of gas across all three licences. All three 
permits are located within immediate proximity to Georgia's largest discovery, 
which at its peak produced approximately 70,000bopd, accounting for nearly 95% 
of Georgia's total oil production and recently acquired (100% working interest 
& operator) by major oil services Company, Schlumberger. 
 
The complete CPR can be found at the following link: http:// 
www.blockenergy.co.uk/wp-content/uploads/2017/12/ 
Block-Energy-CPR.Gustavson-Final.112217.pdf 
 
CPR confirms significant 2P oil reserves and value net to Block: 
 
  * Total net 2P oil reserves of 1.5 MMbbl (including West Rustavi), which have 
    been assigned an NPV10 of US$35.63m net to Block, and are comprised of: 
 
      + Norio: 1.142 MMBbls with an NPV10 of US$26.9 million - based on 
        evaluation of current and historic production wells and also a number 
        of horizontal offset locations which will be drilled in upcoming work 
        programme 
 
      + West Rustavi: 354.4MBbl with an NPV10 of US$8.6 million - based on 
        evaluation of previously producing wells which Block Energy plans to 
        reactivate/workover completing its farm-in to earn a 75% working 
        interest 
 
      + Satskhenisi: 7.7MBbl with an NPV10 of US$0.13 million - based on 
        evaluation of current and historic production wells, a number of which 
        are included in a workover programme planned by the Company 
 
CPR highlights company-making development / appraisal potential 
 
  * Total 2C gross unrisked contingent resources of 73 MMBbl oil and 626 BCF 
    gas comprised of: 
 
      + Norio: 7.2 MMBbl and 1.9BCF of 2C gross unrisked contingent resources 
 
      + West Rustavi: 28.4 MMBls and 456 BCF of unrisked contingent 2C 
        resources net to Block, based on Block completing its farm-in to earn a 
        75% working interest. The gas target forms part of the play being 
        targeted by Schlumberger on neighbouring licence 
 
      + Satskhenisi: 27.8 MMBbl and 16.4 BCF of gross unrisked contingent 2C 
        resources in which Block has a 90% working interest 
 
CPR forms part of ongoing process to dual-list on AIM and build a leading oil & 
gas producer in Georgia and the wider region 
 
  * Following the expected AIM Admission in Q1 2018 and being fully funded, 
    Block Energy will commence phase one of a three stage work programme to 
    transform Block into a highly cash generative producer within 12 months 
 
      + Phase 1: increase production to 1,100 bopd within 12 months from 20 
        bopd today via a low cost, low risk workover and sidetrack programme of 
        existing wells across all three licences - management estimates Block 
        will break even at 100bopd at US$50 per barrel 
 
      + Phase 2: increase oil production to over 2,000 bopd via the drilling of 
        new horizontal wells and sidetracks; and test and flow gas discoveries 
        at the W Rustavi licence which have been assigned gross unrisked 
        contingent resources of over 600BCF (2C) and 1TCF (3C) 
 
      + Phase 3: bring West Rustavi gas target online, which the Company 
        estimates has an all-in capex of less than $2/MCF and a net back of $3 
        /MCF 
 
Paul Haywood, Director of Block Energy, said, "This year's final quarter has 
been a progressive and exciting one. Block Energy has made significant strides 
in accomplishing key milestones and further verified  the Company's value 
proposition. 
 
The CPR confirms what management has long known: our portfolio of oil and gas 
interests in Georgia not only provide Block Energy with significant asset 
backing in the form of proven reserves but also multiple development 
opportunities with company-making potential. Prior to Block Energy's suspension 
on NEX, which has triggered a significant change in business and commencement 
of the dual-listing process, Block Energy had a market capitalisation of 
approximately GBP5 million. Since then, the Company has moved from a minority to 
majority participating interest holder and operator in its key assets, 
commissioned independent competent persons Gustavson and Associates, to 
complete detailed analysis of the Company's license areas and short term field 
development plans and prepared itself for a dual listing. The results of the 
CPR assigns a NPV10 value of US$35.63 million to the development of Block 
Energy's P2 Reserve base and importantly outlines the significant gas potential 
in West Rustavi. 
 
All this activity against a backdrop whereby the immediate neighbours, 
Schlumberger, is focussed on the appraisal and development of the very same 
play, offers great commercial potential and strengthens the operating 
environment in Georgia. 
 
We expect 2018 to be an exciting one for the company and we look forward to 
updating the market in due course" 
 
Further Information 
 
The Company currently holds two licences and the right to earn-in to a third, 
all of which are proven fields in Georgia that are either currently producing 
or have historically produced: Norio; Satskenisi; and West Rustavi. 
 
Norio 
 
The Norio Field was discovered in 1938. A total of 55 oil wells have been 
drilled on the block to depths of between 500-1500m, 31 of which produced oil 
from the Miocene age Chokrak formation, a fractured, volcanic-sourced arkosic 
sandstone reservoir with the best well recovering over 400,000 barrels. To date 
1.9mbbl of light sweet crude oil has been produced largely from the Middle 
Miocene (Chokrak) with some production from the Lower Miocene (Maikopian) and 
Upper Miocene (Sarmatian).  Current production stands at approximately 20bopd 
from three wells drilled in the mid/late 1970s. The Norio block area is 
approximately 5,570 acres (22.54 km2) and is located 40km from the city of 
Tbilisi.  Due to its low operating costs, highly favourable oil sharing terms, 
and a crude field sale price of Brent minus US$9, Norio is cash flow positive 
and generates sufficient revenue to cover its operational costs. 
 
The Company intends to embark on a defined production enhancement programme, 
including eight recompletions/workovers of existing wells and one sidetrack, to 
increase production to over 250 bopd in the short-term. 
 
Satskhenisi 
 
The Satskhenisi Field, was discovered in 1956. A total of 64 oil wells have 
been drilled on the block, 14 of which have produced oil from the Lower Miocene 
age Maikop formation. This reservoir is a fractured, volcanic-sourced arkosic 
sandstone formation. Satskhenisi has produced 310,000 barrels of oil to date 
mostly from the Maikop and shallow Sarmatian lithologies.  It shares a similar 
geological setting and formations to Norio and as a result learnings from one 
permit apply to the other. Current production stands at approximately 5bopd 
from four wells.  At US$45 per barrel, both fields opex break-even at a total 
of 20 bopd. The Satskhenisi block area is approximately 6,024 acres (24.38 km2) 
and is located 32 kms north of Tbilisi. 
 
Block Energy intends to undertake seven reactivations and recompletions at 
Satskhenisi to raise production to over 100bopd. 
 
West Rustavi Block Xif 
 
The West Rustavi Field on Block XiF was discovered in 1988. A total of 13 wells 
have been drilled on the block, which has produced 500,000 barrels of oil to 
date and tested commercial quantities of sweet gas. West Rustavi, which is 
currently not producing, has historically produced 41 MBO and 41 MMcf from two 
wells completed in the Middle Eocene horizon. West Rustavi shares the same 
geology and play types as Schlumberger's adjacent Block XIb permit, where 200 
million barrels of oil have been recovered and which is currently undergoing a 
significant evaluation of its gas potential.  The block area is approximately 
9,328 acres (37.75 km2) and is located 6 miles (10 km) south-east of Tbilisi 
and approximately 14 miles (23 km) south of Norio Field. 
 
As part of a farm-in agreement to earn a 75% working interest in the West 
Rustavi PSC, Block Energy intends to re-enter 2-3 wells and side track 3-4 
additional wells to increase production to over 1,000bopd of oil from the 
Middle Eocene. Furthermore, Block Energy also plans to re-test gas production 
from previously discovered wells located within the permit. 
 
Total 2P oil reserves for all three licences summarised in the table below 
(Source: Gustavson CPR): 
 
                             Oil Reserves, MBbl 
 
               Gross                   Net                    Net Present Value 
                                                              Discounted at 10%, 

(MORE TO FOLLOW) Dow Jones Newswires

December 13, 2017 02:00 ET (07:00 GMT)

DJ Block Energy Plc CPR and AIM Admission Update -2-

                                                              MMUS$ 
 
Reserve        P90     P50     P10     P90    P50     P10     P90    P50    P10 
Classification (1P)    (2P)    (3P)    (1P)   (2P)    (3P)    (1P)   (2P)   (3P) 
 
Producing      33.9    39.1    45      18.8   24.5    32.8    0.11   0.22   0.23 
 
Developed      539.8   1,020   1,768   280.8  442     716.1   3.98   9.91   20.07 
Non-Producing 
 
Undeveloped    804.7   1,505.1 2,333.9 602.5  1,038   1,371.4 9.1    25.5   38.2 
 
TOTAL          1,378.4 2,564.2 4,146.8 902.1  1,504.5 2,120.3 13.09  35.63  58.51 
 
Total 2C Contingent Resources net to Block for all three licences summarised in 
the table below (Source: Gustavson CPR): 
 
            Contingent Oil/ Condensate Contingent Associated/Free 
            Resources, MMBbl           Gas Resources BCF 
 
Block       Low      Best     High     Low      Best     High     Risk 
            Estimate Estimate Estimate Estimate Estimate Estimate Factor 
            (1C)     (2C)     (3C)     (1C)     (2C)     (3C) 
 
Norio       3.1      7.2      13.9     0.8      1.9      3.7      75% 
 
West        13.9     28.4     52       235      456      750      75% 
Rustavi 
 
Satskhenisi 14.7     25       39.3     8.4      14.7     23.9     75% 
 
TOTAL       31.8     60.6     105.2    244      473      778 
 
The Directors of the Issuer, accept responsibility and have approved the 
information contained in this announcement. 
 
For further information contact: 
 
Block Energy plc  Executive 
Director                          Tel:  020 3053 3631 
Paul Haywood                      Paul @blockenergy.co.uk 
 
Peterhouse Corporate Finance      Tel +44 020 7469 0930 
 
Guy Miller / Mark Anwyl 
 
 
 
END 
 

(END) Dow Jones Newswires

December 13, 2017 02:00 ET (07:00 GMT)