Block Energy’s West Rustavi field now able to receive gas
(AIM:BLOE ) said in a report that it has continued progress at its Early Production Facility ("EPF") on the West Rustavi oil & gas field despite operational challenges.
The Georgian-focused exploration and production company said the construction of its gathering line between the EPF and the WR-38Z well has been completed ‘on time and on budget’ despite operational challenges as a result of the ongoing COVID-19 pandemic.
It said the pipeline has been successfully pressure tested at 6,600 kPa with no failures while the EPF is ready to receive gas from wells WR-16aZ and WR-38Z, which will remain shut-in to conserve gas until the gas sales line has been constructed and gas sales can commence.
The Georgian independent gas company, Bago LLC, which has agreed to purchase the gas from the EPF, has now received all required permits and is continuing with the construction of its gas sales line, in order to recover time lost consequent to the coronavirus pandemic.
Block told investors that once the sales line is complete, oil production from the West Rustavi oil and gas field will recommence and first sales of associated gas will be achieved.
“Safely completing the assembly of the EPF and construction of the gathering line on time and budget is a testament to the relentless efforts applied by the team to deliver this important milestone,” said Block Energy’s Chief Executive, Paul Haywood on today’s report.
Haywood added that the group’s focus now remains on supporting Bago to ensure the safe and efficient installation of the sales pipeline, which will allow gas sales to commence.
Shares in Block Energy have increased by over 12% in the past month to open 4.26% higher this morning at 3.18p following the announcement.
Reasons to Follow Block Energy
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.
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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