Block Energy raises £12 million unlock West Rustavi’s “company-making” potential
Abraham Darwyne
Company News - 3 min read
10:06, 16th May 2019

Block Energy (BLOE) FOLLOW completed an accelerated bookbuild on Thursday, raising £12 million from Institutional investors to advance the development of its West Rustavi license.

The company laid out targets for the next 12 months, including drilling up to four horizontal sidetracks to scale up production and fund future capital programmes. Block aims to expand its production facilities to increase capacity to 4,000 - 5,000 bbl/d.

Chief Executive Officer Paul Haywood said: "We are delighted to have secured support for an ambitious work programme to develop our West Rustavi licence, the potential of which was confirmed by last month's excellent oil production test rates at well 16aZ of approximately 1,100bbl/d, more than three times higher than forecast.”

Additionally, Block is set to acquire 3D seismic of the subsurface and appraise two existing gas discoveries. The company also plans to drill a new well targeting a gross contingent 2C gas resource of 608 BCF.

The company said that over the next 24 months, it aims to bring West Rustavi gas reserves into production, continue oil development, and secure additional licences in the region.

Paul Haywood commented: “With this fresh injection of £12m we keenly anticipate pursuing our programme to unlock West Rustavi's company-making potential: proven reserves of 0.9MMbbls, contingent resources of 38 MMbbls and 608 BCF and excellent netbacks of US$36/bbl at US$65/bbl Brent and US$3.40/MCF for gas.”

He said: “We have designed a rigorous programme promising rapid paybacks. The upgrade of production facilities will provide capacity for production from three new sidetracked wells.”

In Q4, Mr. Haywood added, the company will sidetrack the West Rustavi well 38, and in the first half of 2020, will sidetrack West Rustavi 30 and 3 as well as test their gas discoveries. The 3D seismic survey acquired during 2019 will help identify locations for new gas wells and horizontal oil wells to be explored in 2020.

Block will also continue its workover programme at Norio and has scheduled the field's well 60 for sidetracking later in the year.

Mr. Haywood told investors, “Today marks a major step forward for Block as we move towards our objective of becoming one of AIM's newest mid-tier oil and gas producers."

The shares are to be issued and allotted by the Company in three tranches, and subject to completion, are expected to represent 28.32% of the Company’s enlarged share capital.

At a placing price of 11p, it was a discount of approximately 15.7% to the closing market price of 13.05p on the day before the bookbuild.

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The information, investment views and recommendations in this article are provided for general information purposes only and do not constitute financial, investment or legal advice. Although based on information believed to be accurate and complete, the information is not guaranteed to be accurate or current and readers should seek advice specific to their circumstances from their adviser before making any investment decision or taking any action. Nothing in this article should be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from doing so or engaging in any other transaction. Full disclosure of potential conflict of interest is made in accordance with ethical standards. The author may or may not hold investments in all or any of the companies under discussion.

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