, the exploration and production company focused on the Republic of Georgia, on Wednesday told investors that well 16aZ in its West Rustavi field has been producing at a rate of 700 barrels per day.
The well initially produced at a daily rate of 1,100 barrels, significantly ahead of the expected 325 barrels.
The company told investors it reduced the diameter of the choke to ⅛ inches in order to scale back production while it upgrades production infrastructure.
Chief Executive Officer Paul Haywood said: “With an average production rate of 700 bbl/d, the well is expected to deliver gross monthly free cash to the Company of US$1m at the current price of US$70/bbl for Brent crude oil (with an approximate two month well cost payout).”
Shares in Block Energy soared following the update, trading 31.33% higher at 10.9p a share by mid morning
Block Energy said that the formation matrix and natural fractures are both contributing to the well's production, with the well's productivity index measured as 8 bbl/d/psi.
It also confirmed that it is negotiating terms for additional storage facilities, as well as new oil sales contracts with local and international purchasers, with parties showing “strong interest” in supporting Block’s future development plans.
Mr. Haywood added: “We are also delighted that, with associated gas flowing from the well, the gas offtake agreement we entered into with Bago last year will now come into effect, offering the Company the ability to switch from flaring to swiftly commercialising its gas at little to no cost, potentially adding around US$1.0m of additional annual free cash to Company's cash receipts.”
Block Energy confirmed that gas will be sold to Bago Ltd, one of the largest private gas suppliers and purchasers in Georgia, which it signed a Memorandum of Understanding with last year.
Mr. Haywood added the company is working on a detailed operational market update that will cover its planned oil and gas development.
He said: “The update will include the scheduled spud date for the sidetracking of West Rustavi's well 38, a neighbour and analogue to well 16aZ, plans for the appraisal of the field's existing gas discoveries, the acquisition of a 3D seismic survey and, a revision of the CPR consequent to the performance of 16aZ.”
“2019 promises to be an exciting time for Block Energy, and we look forward to updating the market as we continue to work hard to realise the great potential of our assets.”
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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 and the author may or may not hold investments in all or any of the companies under discussion.
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