Block Energy (AIM:BLOE) has now acquired Schlumberger Rustaveli Company Limited ("SRCL") meaning the group now holds licences for Georgian onshore blocks IX and XIB.
The Georgian-focused exploration and production company has described the licences as ‘transformational assets that, as well as significantly increasing production, will provide several development and exploration opportunities for the Company in the coming months.’
Following the completion of the acquisition, Block will now begin the integration process and will implement a cost reduction plan to ensure the new assets are operated efficiently.
Block said it has continued its subsurface technical studies of SRCL's assets, yielding economically attractive short and medium-term opportunities during the acquisition process.
Following a rigorous technical evaluation of the XIB licence area, which combined production data from over 150 wells, modern 3D-seismic and well logs, Block will soon apply for permits for a workover and drilling programme across the XIB and West Rustavi licence areas.
Commenting on the company’s largest transaction, Block’s CEO Paul Haywood, said:
"I am delighted to announce the completion of our acquisition of SRCL from Schlumberger. It represents a truly transformational deal for Block, that enhances our current production, increases our acreage 30-fold and adds exciting new development opportunities.”
Shares in Block Energy have increased by over 12% in the past month to open 14.61% higher at 5.05p this morning following the announcement.
Reasons to Follow Block Energy
Block Energy is an oil and gas company focused on production and development in Georgia. The Company believes that it offers ‘a clear entry point’ for investors to gain exposure to Georgia's growing economy and the strong regional demand for oil and gas.
Block holds 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 oil resources and 608 BCF of gross unrisked 2C contingent gas resources in the Middle, Upper and Lower Eocene formations (Source: CPR by Gustavson Associates: 1 January 2018).
In addition, Block also holds 100% and 90% working interests in the onshore oil producing Norio and Satskhenisi fields. In March 2020, it entered into a conditional sale and purchase agreement to acquire a company that owns Georgian onshore licence Block IX and XIB.
In a half-year report to 30 June 2020, the company said it expects gas sales to commence in Q4 from West Rustavi despite the coronavirus pandemic proving “very hard to predict”.
The group’s shut-in of the West Rustavi field's production at wells WR-16aZ and WR-38Z was done to conserve valuable gas resources until the gas sales pipeline is soon completed.
Proceeds from sales of crude oil from its West Rustavi, Norio and Satskhenisi licences were $0.313m during 1H2020 and $0.568m following the period end in August and September.
Paul Haywood, Chief Executive of Block Energy, said, “Block Energy remains strong and agile, with cash on the balance sheet and near-term realisation of its gas reserves.”
He added, “Through these gas sales, we will generate more cash from our production base. We look forward to the remaining months of 2020, to continue our mission of value creation for our shareholders, through growing the business and unlocking Georgia's potential."
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