Block Energy sets out its FY21 targets with two new wells
(BLOE ) informed investors that its plans to drill two wells, each targeting 600 barrels of oil equivalent per day, in addition to spudding a third well by the end of the year.
The Georgian-focused independent oil and gas firm has outlined its objectives for 2021, stating that it plans to commence its 2021 drilling programme with a new horizontal well in West Rustavi, at WR-BA location, with the first well expected to spud in May/June 2021.
If successful, Block has identified a number of options for the second well in its work programme but will await results from the well at WR-BA before making a final decision.
Should the group progress with the drilling of a second well at WR-BB location, this would access a further volume of oil and gas in the West Rustavi Middle Eocene core area.
Commenting on the plan, Block Energy’s Chief Executive Officer, Paul Haywood, said, “I am very pleased to be able to announce a definitive set of objectives that Block has set itself for the year, along with detail of the drilling plans formulated to achieve these objectives.”
Block’s current production rate across all of its licences, (excluding WR-16aZ well, which is undergoing intervention) is 555 boepd, based on a 30-day average, the group noted.
During 1Q21, Block produced a combined total of 44,394 boe of oil and gas and sold 26,300 barrels for $1.37mln, or $52 a barrel. Gas sales started on 15 February with Block selling 38,400 metric cubic feet (Mcf) of gas during 1Q21 for US$0.125m or US$3.26 per Mcf.
As part of building its in-house operational capability, Block appointed Andrew Moncur as its new drilling manager. Moncur, who has spent the last 22 years managing drilling operations in the Middle East, Caspian and the former FSU, supervised Georgia’s first horizontal wells in the Ninotsminda field, resulting in a significant increase in production.
“The strengthening of Block’s drilling team and the objectives set by the Board has taken the Company’s potential to the next level and I look forward to kicking off our 2021 drilling programme in May,” said Haywood.
As of 31 March 2021, Block holds a’ strong liquidity position’ with $6.8m cash. Haywood said, “We enter the drilling campaign with a healthy balance sheet, as our cash and ongoing oil and gas sales means we can plan a sustainable growth strategy for the Company.”
Block’s WR-38Z and WR-16aZ wells returned to production on 28 January 2021 and 3 February 2021, respectively and during 1Q 2021, the Company produced a total of 29.8 Mbbls of oil and 14.6 Mboe of gas, resulting in a combined total of 44.4 Mboe of oil and gas.
In mid-February, Block confirmed that gas sales at the West Rustavi field in Georgia had officially commenced with production rates coming in ‘substantially higher’ than in 2020.
The company highlighted to investors that these production rates had generated sufficient revenue, at current oil and gas prices, to cover over 95% of operating and administration costs and therefore preserve almost all of Block’s existing cash for new wells and facilities.
Looking ahead, Block said it has entered this year’s drilling campaign with a healthy balance sheet and that it is “better positioned than ever to meet shareholders’ high expectations.” Shares in the stock were trading 12.24% higher this morning at 2.7p following the news.
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."
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