Block Energy informed investors that it has reported yet another positive quarter for the business following the successful spudding of WR-B1 well in Georgia at the end of 2Q21.

Block holds a 100% working interest in the West Rustavi onshore oil and gas field with multiple wells that have tested oil and gas from a range of geological horizons. The Company spudded the WR-B1 well at the WR-BA location on the West Rustavi field back in June 2021. 

The well is targeting the Middle Eocene reservoir with a horizontal section around 800 metres long for 2.1 MMboe of recoverable oil and gas. WR-BA is the first well to be drilled using the data from Block’s 3D-seismic survey acquired over the West Rustavi licence area in 2019.

On its success, the WR-B1 well will be tied into Block's Early Production Facility for processing both oil and gas produced from the well. Furthermore, the Group said technical well planning and engineering screening of several well candidates are in advanced stages to enable the Company to press forward with its second well after the completion of WR-B1.

During 2Q21, Block produced 25.7 Mbbls of oil (Q1: 29.8 Mbbls) and 16.9 Mboe of gas (Q1: 14.6 Mboe), resulting in a combined total of 42.6 Mboe of oil and gas (Q1: 44.4 Mboe). 

The average production rate for Q2 was 468 boepd (Q1: 493 boepd), which represents a decrease of approximately 5%. Although WR-38Z was on production for the whole of Q2 compared to only two months in Q1, this was outweighed by the natural decline of the wells.

During 2Q21, Block sold 15.6 Mbbls of oil (Q1: 26.3 Mbbls) for $960,000 (Q1: $1,370,000), resulting in a weighted average price of approximately $62 per barrel (Q1: approximately $52 per barrel), which represents an 18% increase in the realised price in Q2 compared with Q1.

In 2Q21, Block's first full quarter of gas sales, it sold 64.6 MMcf of gas (Q1: 38.4 MMcf) for $209,000 (Q1: $123,000) with a weighted average price of c. $3.24/Mcf (Q1: $3.20/Mcf).

As at 30 June 2021, Block had $5.4 million cash at bank (31 March 2021: $6.8 million).

"Towards the end of the quarter, we delivered on our key objective as we spudded the WR-B1 well, which, after significant planning and dedication from the team, seeks to provide a material boost to our production in Georgia,” said Block Energy's CEO, Paul Haywood.

He said, “The WR-B1 well will also play a vital role in the second well in the campaign as we will look to use critical WR-B1 drilling information to mitigate risk and optimise the programme of the next well. Beyond the drill bit, execution of the baseline production enhancement plan has made solid progress throughout Q2 and we look forward to seeing the results of the team's hard work as Block moves through an active drilling and workover period in Q3."

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If the spudding of WR-B1 proves successful, WR-B1 will be ‘rapidly tied’ into Block's Early Production Facility, processing both oil and gas produced from the well, it told shareholders. 

The drilling results are expected to strengthen Block’s understanding of the Middle Eocene, thereby bolstering its design of a full field development plan, the group highlighted. It added that future drilling will incorporate results and lessons learned from the WR-B1w well. 

Block said technical well planning and engineering screening of several well candidates are in advanced stages. The Group said it is committed to adding ‘significant production to its operations through a combination of new wells and re-entry and side-track of existing wells.’ 

Block Energy announced back in June 2021 that it had signed an MoU with global energy technology company, Baker Hughes, to support the group’s drilling operations in Georgia. 

The company believes that its MoU with Baker Hughes will also provide a broader partnership on developing significant oil and gas opportunities throughout the group’s entire portfolio.  

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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