Block Energy PLC Sidetracking operations underway at West Rustavi (8183N)
23 January 2019 - 6:00PM
UK Regulatory
TIDMBLOE
RNS Number : 8183N
Block Energy PLC
23 January 2019
Block Energy Plc | Index: AIM | Epic: BLOE.L | Sector: Oil and
Gas
23 January 2019
Block Energy Plc ('the Company', 'Block' or 'the Group'):
Commencement of sidetracking operations at West Rustavi
field
Block Energy Plc, the exploration and production company focused
on the Republic of Georgia, is pleased to announce that
sidetracking operations from the existing 16a wellbore ('16a' or
'the Well') on the West Rustavi field ('West Rustavi') commenced
today. 16a is part of an initial two-well horizontal sidetrack
drilling programme at West Rustavi targeting combined gross
production of 650 bopd from the proven Middle Eocene formation by
the end of H1 2019.
A whipstock sidetrack drilling device has been lowered in the
Well by the ZJ40 drilling rig. The next operation will be to orient
the tool in the right direction and then cut a hole or window in
the side of the casing from which the drilling assembly can exit
the existing wellbore and drill the build and 1,600 foot horizontal
section into the reservoir. Production testing is forecast to start
immediately after drilling operations are complete and the drilling
rig has been moved off the wellsite. The target reservoir is at a
depth of approximately 2,100m which the Company estimates to have
had an original oil column up to 600 feet thick.
The sidetrack drilling of 16a follows a successful oil test in
December 2018 which confirmed the Well lies in an active
hydrocarbon system and that the previously producing Middle Eocene
reservoir still contains reserves and remains pressurised. During
the test, more than 200 barrels of oil were recovered from 16a
during a 10 hour flow period and an additional 300 barrels of light
oil flowed to a temporary wellsite production facility over the
following days (see Block's announcement of 14 December 2018 for
further details).
Block currently holds a 25% working interest in West Rustavi,
which has an estimated 38 MMbbls of gross contingent resources
('2C') of oil (Source: CPR completed by Gustavson Associates, 1
January 2018 ("CPR")). As part of an agreed earn-in, upon
completion of the two-well sidetrack programme, Block's interest in
West Rustavi increases to 75%. Four other wells have been
identified at West Rustavi offering similar opportunities for
re-entry and sidetracking.
West Rustavi also holds gas discoveries which lie on trend with
the same play being targeted by Schlumberger in neighbouring
fields. The Company plans to re-test the gas potential of the West
Rustavi licence in 2019 by re-entering up to two wells that
previously flowed gas. According to the well passport the Company
received on acquiring its interest in the field, one of the
discovery wells flowed at rates up to 29,000 m3/d when originally
tested in 1988. West Rustavi is one of three licences Block holds
in Georgia, the others being a 100% interest in the producing Norio
field, which has gross proven ('2P') oil reserves of 1.631 million
barrels (Source : CPR), and where a workover and sidetrack
programme is underway targeting 250 bopd by H1 2019; and a 90%
interest in the Satskhenisi field, which has estimated 28 MMbbls of
gross 2C contingent resources. (Source : CPR)
Chief Executive Officer Paul Haywood said: "The first of an
initial two-well sidetrack programme targeting an overall 650 bopd
(325 bopd per well) at West Rustavi, 16a is a high impact well for
Block and we are therefore delighted that drilling operations have
commenced at the site on schedule. This is testament to the
excellent work and meticulous planning carried out by the
operations team on the ground in Georgia, including the successful
flowback test at the Well in December which confirmed the targeted
Middle Eocene reservoir still contains reserves and remains
pressurised. With gross contingent resources of 38 MMbbls of oil, a
total of six historic wells identified as suitable candidates for
sidetracking, and a legacy gas discovery, the potential for West
Rustavi to generate significant cash flow and value for Block is
clear.
"With back-to-back drilling planned at West Rustavi and
multi-well workovers underway at Norio, we expect the strong
momentum behind the Company to continue as we focus on hitting our
H1 2019 target of 900 bopd. At 900 bopd, and with current oil
prices, our production will generate significant cash flow which,
in line with our strategy will be reinvested in high impact
activity across our existing licences and also new projects
offering similar low cost, high potential production opportunities.
We believe the disconnect between our GBP8.7 million market cap and
the US$39.3 million NPV10 assigned to our 2.5 MMbbl 2P gross oil
reserves alone is unwarranted, particularly as this does not take
into account the 2C gross contingent resources of 72.9 MMbbls of
oil and 626 BCF of gas across all three of our licences. We are
confident this valuation anomaly will soon be closed as results
come in and with this in mind I look forward to providing further
updates on progress."
Board Change
The Company also announces that, after significant contribution
to the successful IPO of the Company last year, and production of
the Annual Report, Serina Bierer will be stepping down from the
Board of Block Energy Plc with immediate effect. At this stage of
her career, Serina has decided to concentrate on her other work
interests.
Roger McMechan, Technical Director, has reviewed the reserve,
resource and production information contained in this announcement.
Mr McMechan has a BSc in 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.
For further information please visit
http://www.blockenergy.co.uk or contact:
Paul Haywood Block Energy Plc Tel: +44 (0) 203
(Chief Executive Officer) 053 3631
Neil Baldwin Spark Advisory Partners Tel: +44 (0) 203
(Nominated Adviser) Limited 368 3554
Craig Fraser Baden Hill, a trading Tel: +44 (0) 207
(Joint Corporate Broker) name of Northland Capital 933 8731
Partners ltd.
Colin Rowbury Novum Securities Ltd Tel: +44 (0)207
(Joint Corporate Broker) 399 9427
Frank Buhagiar/Juliet St Brides Partners Tel: +44 (0) 207
Earl Ltd 236 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 in the producing Norio licence, a 90% interest in the
producing Satskhenisi licence and a 25% interest in the West
Rustavi licence with the right to farm-in to up to a 75%
interest.
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
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