Block Energy PLC MOU Agreed for Gas Offtake from West Rustavi (0544D)
October 05 2018 - 2:00AM
UK Regulatory
TIDMBLOE
RNS Number : 0544D
Block Energy PLC
05 October 2018
Block Energy Plc / Index: AIM / Epic: BLOE.L / Sector: Oil and
Gas
5 October 2018
Block Energy Plc ("the Company", "Block" or "the Group")
MOU Agreed for Gas Offtake from West Rustavi Licence
Block Energy Plc, the exploration and production company focused
on the Republic of Georgia, is pleased to announce it has signed a
Memorandum of Understanding ("MOU") with Bago Ltd ("Bago"), one of
the largest private gas suppliers and purchasers in Georgia, for a
proposed offtake agreement for gas produced at the Company's West
Rustavi permit ("West Rustavi" or "the Licence"). Block currently
holds a 25% working interest ("WI") in West Rustavi (increasing to
a 75% WI after earn-ins described in the Company's Admission
Document of 4 June 2018) which has proven reserves and gross,
unrisked contingent resources ("2C") of 608 Billion Cubic Feet
("BCF") gas and 37.9MMBbls of oil.
Under the proposed terms of the MOU and subject to final legal
agreement, Bago will acquire the total amount of gas produced from
West Rustavi, subject to a minimum of 1,000 Cubic Metres of gas per
day. In addition, Bago is considering financing wholly, or in part,
required gas infrastructure at West Rustavi, including pipeline tie
backs to local infrastructure and gas processing plant solutions. A
final offtake agreement will be subject to final price negotiation
that is expected to be at a similar level to those agreements
already in place with neighbouring contractors (which are in line
with the Company's internal forecasts). The final agreement will
also be subject to successful gas appraisal work on existing
discoveries located within West Rustavi and all relevant government
permissions being obtained.
In addition to West Rustavi, Block's holds a 100% WI in the
Norio licence and a 90% WI in the Satskhenisi licence. A low cost,
multi well workover programme is due to commence shortly at Norio
and Satskhenisi, as part of the Company's strategy to increase net
production of oil to 900 bopd within 18-24 months.
Paul Haywood, Director of Block Energy, said: "I am highly
encouraged by progress we have made towards securing a final
offtake agreement with Bago, one of Georgia's largest domestic
private gas traders with extensive infrastructure capable of
handling large volumes of gas. West Rustavi offers huge value
potential for Block and with rig contracts now in place, we are all
set to commence work programmes to unlock this potential and
upgrade resources to proven reserves. With multiple gas discoveries
having already been made within the Licence which lie on trend to
the same play currently being targeted by Schlumberger on a
neighbouring licence, Block XIb, I look forward to commencing our
imminent work programme with optimism as well as to updating the
market when a final offtake agreement has been put in place."
Roger McMechan, Technical Director, has reviewed the reserve,
resource and production information contained in this announcement.
Mr McMechan is a BSc, Engineering from the University of Waterloo,
Canada and is a Professional Engineer registered in Alberta.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation which came into
effect on 3 July 2016.
**ENDS**
For further information visit www.blockenergy.co.uk or
contact:
Paul Haywood Block Energy Plc Tel: +44 (0) 20
Chief Executive Officer 3053 3631
Neil Baldwin Spark Advisory Partners Tel: +44 (0) 203
(Nominated Adviser) Limited 368 3554
Craig Fraser Baden Hill, a trading Tel: +44 (0) 20
(Joint Corporate Broker) name of Northland Capital 7933 8731
Partners ltd.
Colin Rowbury Novum Securities Ltd Tel: +44 (0)207
(Joint Corporate Broker) 399 9427
Frank Buhagiar / Juliet St Brides Partners Ltd Tel: +44 (0) 20
Earl 7236 1177
(Financial PR)
Notes:
Block Energy (BLOE.L) is an AIM quoted oil and gas company with
a growing portfolio of production, development and exploration
assets in the Republic of Georgia. Block holds a 100% Working
Interest ('WI') in the producing Norio licence, a 90% WI in the
producing Satskhenisi licence and a 25% WI in the West Rustavi
licence with the right to farm-in to up to a 75% WI. Block's three
licences lie in the heart of the Schlumberger's 100% held position
in the Kura basin, which at its peak produced 70,000 barrels of oil
per day ('bopd') in Georgia and is estimated to hold over 7 billion
barrels of proven reserves in Azerbaijan and North Caucasus
(Russia).
The licences currently hold estimated net proven oil reserves of
1.5 million barrels plus 61 million barrels unrisked contingent oil
resources ('2C'). Furthermore, the West Rustavi permit has
estimated gross unrisked contingent gas resources (2C) of 608 BCF.
Multiple gas discoveries have already been made in the Lower
Eocence and Upper Cretaceous within the Licence and lie on trend
with the same play currently being targeted by Schlumberger on
neighbouring licence, Block XIb. The estimated cost of gas
development and production at West Rustavi is c.US$2.00/Mcf which
equates to operating netbacks of c.US$2.6/Mcf (assuming a 75%
working interest) - Georgia currently purchases its gas for
c.US$5.5 /Mcf (c.US$600m project value to the Company).
Appraisal of West Rustavi is being conducted contemporaneously
with the rehabilitation of the producing Norio (100% WI) and
Satskhenisi fields (90% WI) which provide immediate production
uplift on commencement of field operations in Q4. The near-term
target is to raise production to 900 bopd from 15 bopd within 18
months via a low cost, low risk workover and sidetrack programme,
and then to utilise the cash flow to drill horizontal wells and
sidetracks to raise production to c.2,000 bopd. Oil production on
the fields offers excellent netbacks, with the current cost of
production of c.US$25 per barrel providing netbacks of c. US$30-35
per barrel.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
AGRMIBFTMBAMBIP
(END) Dow Jones Newswires
October 05, 2018 02:00 ET (06:00 GMT)
Block Energy (LSE:BLOE)
Historical Stock Chart
From Sep 2024 to Oct 2024
Block Energy (LSE:BLOE)
Historical Stock Chart
From Oct 2023 to Oct 2024