Block Energy (BLOE ) has signed a Memorandum of Understanding (“MoU”) with Baker Hughes, the global energy technology company, to support drilling operations in Georgia and assess and potentially develop geothermal, carbon capture, and hydrogen applications across the Samgori, Patardzeuli and West Rustavi fields.
Furthermore, the MoU with Baker Hughes also provides a broader partnership on developing significant oil and gas opportunities throughout Block's entire portfolio.
The MoU envisages multiple service awards for advanced oil and gas technology across a production-led, multi-well drilling programme with an initial horizontal well project targeting a recoverable volume estimated to be 2.1 MMboe at the WR-BA well target location in West Rustavi.
This initial project, Block's first new horizontal well at the WR-BA location, includes advanced rotary steerable technologies that will greatly improve drilling efficiency, safety and well placement accuracy. Logging-while-drilling measurements will also be acquired to aid reservoir characterisation and production optimisation.
Baker Hughes will also provide a range of efficient well intervention and production-enhancement services to boost current production rates and drive efficiency. This will be achieved through the application of enhanced mechanical and chemical technologies to the Company's planned well interventions, including the intervention of the WR-16aZ well.
Furthermore, Baker Hughes will assist Block Energy in the evaluation of its portfolio of conventional oil and gas assets and green energy opportunities. Initial focus will be on production enhancement of the Company's mature assets and developing the geothermal production potential across the Samgori, Patardzeuli and West Rustavi fields.
Block Energy plc's Chief Executive Officer, Paul Haywood, said: "I am pleased to update our stakeholders on this agreement with one of the world's leading energy technology companies. I am looking forward to drilling our first well utilising our newly acquired 3-D seismic and the state-of-the-art directional drilling services and well assurance provided by Baker Hughes. The added technical and operational expertise, never before used in Georgia, provides a step-change in our technical capability and will better enable the team to unlock the significant potential across our asset base. Overall, Baker Hughes's commitment to leading the energy transition and its deep breadth of technical, operational and digital capabilities are expected to help us better plan and execute energy projects. Baker Hughes is a welcome partner. Meanwhile, preparations for the well at WR-BA location continue. We expect to announce the spud of this well shortly."
Baker Hughes's Vice President of Oilfield Services for Russia Caspian, Tommy Kassem, said: "Baker Hughes has extensive experience operating in the Caspian region and deploying advanced energy technology to help customers execute projects more efficiently and sustainably. We look forward to collaborating with Block Energy to support its goal to improve oil and gas production while accelerating our joint commitment to explore new energy frontiers like geothermal energy, accelerating the energy transition and path to net-zero emissions.
View From Vox
Block Energy's collaboration with Baker Hughes is positive news for shareholders as it will support all current and future development across the Oil and Gas asset portfolio enhancing existing production expectations and accelerating new well development.
We expect the services to be provided by Baker Hughes to include the provision of drilling fluids, cementing, drill bits, directional drilling with advanced rotary steerable technology systems and its premium “logging-while-drilling” services.
The addition of geothermal, carbon capture and hydrogen production across the Samgori, Patardzeuli and West Rustavi Fields should also be welcomed by investors as the Company diversifies revenue streams towards the Green Economy.
The shares advanced 1.75% to 2.9p following the MoU.
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."