Block Energy (BLOE ) said production from the WR-38Z and WR-16aZ wells at the West Rustavi oil and gas field, of which it holds a 100% working interest in, has recommenced. 

The Georgian-focused development and production company said the Wells have been brought back online safely, with oil and gas flowing through its new in-field flowline to its Early Production Facility ("EPF"), which is located in West Rustavi at the WR-16aZ wellsite.

In the EPF, gas is separated from the crude oil before entering the gas sales pipeline, which is owned by Bago LLC, one of the largest private gas suppliers and purchasers in Georgia.

Bago has carried out the final testing of its facilities using gas provided by Block and is now completing the final steps required to tie back into the main gas pipeline, which is owned by the Georgia Oil and Gas Corporation. Gas sales will commence within a day of the tie back being completed and Block will provide an update to the market once sales have begun.

"I am pleased to announce recommencement of production from our West Rustavi field, with the expected revenue from both our oil and gas production providing a welcome boost to Block's cash flow position, further strengthened by the current higher oil price. 

Production from the Wells remains stable and consistent with the production rates achieved before they were shut-in in April 2020. We continue to make regular sales of our crude oil inventory to local buyers,” said Block Energy plc's Chief Executive Officer, Paul Haywood.

To date, the Company’s West Rustavi onshore oil and gas field has 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.

With the price of Oil recovering to pre-COVID-19 levels, due to the growing expectations of a sharp economic recovery following positive initial vaccine results, BLOE has timed its return to production at the West Rustavi O&G field well. Shares in Block Energy have gained around 45% in value since the beginning of April 2020. The stock has increased by over 10% in the past week alone.

Reasons to  BLOE

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.

The Company believes that its activity 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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