TIDMBLOE
RNS Number : 8110J
Block Energy PLC
25 August 2021
This announcement replaces RNS No 7703J which was released at
11:55 a.m. on Wednesday 25 August 2021. The first two sentences in
the ninth " Key Points" paragraph concerning the justification for
the forensic investigation have been replaced with one sentence.
All other details remain unchanged. The full amended text is shown
below:
25 August 2021
Block Energy plc
("Block" or the "Company")
Further Response to Requisition Notice
Shareholders Urged to Vote Against Resolution
Further to the Notice of a General Meeting dated 13 August 2021
(the " Notice of GM ") relating to the General Meeting to be held
on 1 September 2021 , Block Energy plc, the development and
production company focused on Georgia, continues to urge
shareholders to vote against the Resolution proposed in the latest
Requisition Notice from Forest Nominees Limited (on behalf of G.P.
(Jersey) Limited) ( " GP Jersey ") .
Terms defined in the Notice of GM shall have the same meaning in
this announcement. A copy of the Notice of GM (including the
recommendation of the Board to vote against the Resolution
proposed) can be found here:
https://www.blockenergy.co.uk/wp-content/uploads/2021/08/261808-Block-Notice.pdf
.
Key Points:
Ø Block Energy's operational and governance framework is of an
appropriate standard and adherence to this framework has wrongly
been called into question by GP Jersey.
Ø Board and management time and effort, and the Company's money,
should not be diverted from creating further value for its
shareholders, particularly at this critical time in the current,
potentially Company-transforming drilling campaign.
Ø The Board has previously stated its opinion that the
Requisition Notice was served to create nuisance and appears
ill-conceived in asking the Company to spend an amount that could
exceed GBP2 million on a forensic investigation.
Ø The Shareholder Group (including GP Jersey) is now proposing
material changes to the Resolution, with the Shareholder Group
stating on its website they will meet the costs of the
investigation. At this stage, it is not possible or appropriate to
vary the Resolution, as the Company has already posted the Notice
of GM containing the Resolution pursuant to GP Jersey's Requisition
Notice and the material changes proposed by GP Jersey would not be
within the scope of the General Meeting.
Ø Had GP Jersey genuinely wished to revise the Resolution it
could have followed due process and withdrawn the Requisition
Notice, as requested by the Company, before the Company called the
General Meeting on 13 August 2021, and submitted a revised
resolution.
Ø Even if the Shareholder Group were to fund the cost of any
investigation, which is not what the proposed Resolution states,
the Board remains opposed to undertaking an investigation that
would be a significant drain on the time of the few members of the
Company's management team.
Ø GP Jersey's overall approach shows that the Shareholder Group
has a disregard for the Company's and Shareholders' funds and
effective use of management time, and prefers to act as if it were
a de facto regulator of the Company or to further its own agenda
rather than to support the growth of the business. Over and above
the huge drain on management time dealing with each requisitioned
general meeting, the cash cost to the Company and its shareholders
of the General Meeting held on 11 August 2021 (requisitioned by GP
Jersey on 2 July 2021) was approximately GBP100,000.
Ø GP Jersey continues to wrongly imply that the Company has
something to hide. The Board is aware of its corporate governance
responsibilities and conducts its duties accordingly. As specified
in the Notice of GM, the Company's Nominated Adviser guides and
advises the Company on its responsibilities to ensure compliance
with the AIM regulatory regime and, each year, BDO LLP (the
fifth-ranked UK audit firm) audits the Company's accounts.
Ø GP Jersey implies that the resignations of Chris Brown and
David Sandroshvili are a justification for a full-scale forensic
investigation into the affairs of the Company over the previous
three years, but the Company does not agree with this. The Company
has recently announced the appointment of Jeremy Asher as an
independent non-executive director and is in the process of
appointing an additional independent non-executive director and
expects to make an announcement about this in due course.
Ø The Board sees no good reason to criticise the Company's
operational management. The current Board and management team have
a track record of delivering value since the Company's listing in
June 2018. This includes net asset value having increased by over
200% from $9.2 million as of 30 June 2018 to $29.7 million as of 31
December 2020, and 2P reserves having increased by more than
40-fold over the same period, despite the impact of Covid-19.
Furthermore, the Company has a clear strategy to unlock the full
potential of the Company's significant asset portfolio in Georgia.
This strategy was clearly mandated by Shareholders, with 99.9% of
votes cast in favour of the fundraising to fund the work programme,
at the Company's General Meeting held on 30 December 2020.
Ø The Board notes that most of the allegations made by the
Shareholder Group have already been answered comprehensively during
the discussion (and rejection) of the previous resolutions proposed
by GP Jersey, including, for example, the disclosure of a change in
the mechanism for calculating the gas price for a small proportion
of the Company's overall revenue. A new allegation made by the
Shareholder Group questions the recent appointment of Jeremy Asher
as an independent Non-Executive Director, a well-respected, senior
industry figure, grasping at the fact that he is known to the
Company's Chairman and CFO - which could be said of many industry
figures operating in the AIM oil and gas sector. The important
point is that the Company moved quickly to appoint a new
non-executive director, always following the correct regulatory
processes, precisely to ensure it complied with its corporate
governance responsibilities.
Ø Institutional Shareholder Services Inc ("ISS") recommends the
Company's shareholders vote against the Resolution proposed by GP
Jersey, citing that "the Dissident has not offered any compelling
rationale to commence an investigation".
Ø After previous repeated attempts to forge a constructive
working relationship with the Shareholder Group, the Company
concludes that their interests are not aligned with most
shareholders who genuinely wish to see the recovery of the
Company's share price and building of shareholder value, and who
have no other agenda.
Recommendation:
For the reasons noted above, the Board reiterates its unanimous
position that the Resolution is not in the best interests of the
Company and its Shareholders and, therefore, strongly recommends
that Shareholders vote AGAINST the Resolution proposed at the
General Meeting.
**S**
For further information please visit
http://www.blockenergy.co.uk/ or contact:
Paul Haywood Block Energy plc Tel: +44 (0)20 3468
(Chief Executive Officer) 9891
Neil Baldwin Spark Advisory Partners Tel: +44 (0)20 3368
(Nominated Adviser) Limited 3554
Peter Krens Tennyson Securities Tel: +44 (0)20 7186
(Corporate Broker) 9030
P hilip Dennis / M Celicourt Tel: +44 (0)20 8434
ark Antelme 2643
(Financial PR)
Notes to editors
Block Energy plc is an AIM-listed independent oil and gas
company focused on production and development in Georgia, applying
innovative technology to realise the full potential of previously
discovered fields.
Block has a 100% working interest in Georgian onshore licence
blocks IX and XI(B) . Licence block XI(B) is Georgia's most
productive block, with 2P oil and gas reserves of 64 MMboe, which
is comprised 2P oil reserves of 36 MMbbls and 2P gas reserves of 28
MMboe (Source: CPR Bayphase Limited: 1 July 2015) and historic
production of over 180 MMbbls of oil from the Middle Eocene,
peaking in the mid-1980s at 67,000 bopd.
The Company has 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
resources of oil and 608 Bcf of gross unrisked 2C contingent
resources of gas in the Middle, Upper and Lower Eocene formations
(Source: CPR Gustavson Associates: 1 January 2018).
Block also holds 100% and 90% working interests respectively in
the onshore oil producing Norio and Satskhenisi fields.
The Company offers a clear entry point for investors to gain
exposure to Georgia's growing economy and the strong regional
demand for oil and gas.
Glossary
1. bbls: barrels. A barrel is 35 imperial gallons.
2. boe: barrels of oil equivalent.
3. bopd: barrels of oil per day.
4. Mbbls: thousand barrels.
5. MMbbls: million barrels.
6. MMboe: million barrels of oil equivalent.
7. Bcf: billion cubic feet.
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