London-listedhas taken a series of new measures to navigate the business through trying times amid the coronavirus pandemic.
The Georgian-focused oil and gas firm says it has been working to establish itself as “significantly more sustainable” and has even conserved its hydrocarbon assets for the future.
Block has postponed all new capital expenditure and has reduced its monthly cash burn in Georgia by 40% - from $107,000 to $64,000 - given the low oil price and imposed restrictions.
Meanwhile, 40% of directors’ and employees’ salaries will be paid in nil-cost options to acquire ordinary shares to reduce monthly cash salary costs from £43,000 to £26,000.
As at 6 April 2020, the group’s cash balance was $3.4m and net crude oil inventory was valued at $470,000.
“We have to navigate our business through a new environment of low oil prices, a slowing wider economy and countrywide lock-downs,” said Paul Haywood, CEO of Block.
Shares in Block Energy were trading -32.69% lower at 1.75p during Tuesday morning.
Block announced the shut-in of the West Rustavi production wells, WR-16aZ and WR-38Z, in order to conserve valuable gas resources until the gas sales pipeline is complete later this year.
It highlighted that prior to shut-in, field production at West Rustavi remained stable at a choked-back rate of 325 barrels of oil equivalent per day.
Early results from fully-migrated 3D seismic data have exhibited good subsurface imaging of the main producing and prospective formations at West Rustavi.
An early production facility, which has a total capacity of approximately 3MMCF/d, to provide for the addition of future Middle and Lower Eocene gas production has been purchased by the group.
Furthermore, Block has wrapped up drilling operations at the WR-51Z site due to poor existing well conditions of the original well.
“The decision taken by management is the right one. There are inherent risks when re-entering old wellbores which demand a disciplined approach to cash management,” added Haywood.
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