Block Energy (BLOE ) said strong production rates and improved commodity prices have created a “robust” financial result and a solid platform to deliver on the value of its assets.

In an operations update for Q122, the Georgian-focused exploration and production company reported that over 92,000 operational man-hours were worked, with no lost-time incidents. As a result, the company recorded a strong exit to 1Q production with a rate of over 630 boepd.

In 1Q, gross production was 46.1 Mboe, up from 34.6 Mboe in Q421, comprising 32.1 Mbbls of oil (Q4: 24.9 Mbbls) and 14.0 Mboe of gas (Q4: 9.7 Mboe). The average gross production rate for the quarter was 512 boepd, up from an average rate of 376 boepd in the prior quarter.

In terms of sales, in 1Q, Block sold 24.4 Mbbls of oil (4Q: 33.6 Mbbls) for $2,168,000 (4Q: $2,441,000), resulting in a weighted average price of approximately $89 per barrel (4Q: $73 per barrel), representing a 22% increase in the realised price in Q1 compared with 4Q.

In 1Q, the Company also sold 48.4 MMcf of gas (4Q: 36.1 MMcf) for $193,000 (4Q: $109,000), resulting in a weighted average price of around $4.00/Mcf (4Q: $3.03/Mcf).

As at 31 March 2022, Block had $1.2 million cash at bank, in line with cash as of 4Q.

The Company acknowledged that 1Q production had been impacted due to well WR-38Z being off-line. This well was brought back into production at the end of March, replenishing lost production and providing a ‘strong’ 1Q exit rate for daily production of over 630 boepd.

Analysis of well JKT-01Z, which started production in mid-January 2022, has indicated that the well is in good communication with the in-place volume of 8 MMbbls associated with long-term producing well KRT-39. Block noted that gas production from well JKT-01Z was quickly tied into the gas infrastructure at well KRT-39 in order to support rapid monetisation.

Since mid-January, oil and gas production from JKT-01Z has delivered substantial additional cash flows, supporting early payback and moving Block into being cash flow positive, it said.

Preparations for the drilling of the side-track of well WR-B01 continue to make good progress while the construction of the pipeline from the WR-B01 to WR-38 wellsites (to enable the immediate monetisation of any gas produced from the WR-B01 sidetrack) has now begun.

Commenting on this morning’s update, Block Energy’s Chief Executive Officer, Paul Haywood, informed investors: “As the first quarter production results demonstrate, the Company is delivering operationally, which combined with improved commodity prices, creates a robust financial result. This gives us a stronger platform to deliver on the inherent value of Block’s assets and monetise the wider reserves and resources within our portfolio.”

We believe we now have a better understanding of the subsurface, which we have translated into a practical plan to grow production and create value for shareholders. While we can do this with our existing resources, we are also looking into non-dilutive financing options to accelerate production growth, and other ways to enhance value for shareholders.”

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