A new company attempting to tap the oil and gas potential of the former Soviet Republic of Georgia joined AIM today.
Small investors have had their fingers burnt in Georgia in recent years, but Haywood believes an emphasis on production makes Block Energy a much better bet.
The company has interests in three fields, two of which are already in production – Norio (100% owned) and Satskhenisi (90%).
Block raised £5mln ahead of listing, a sizeable chunk of which has been earmarked for a programme of ten recompletions or sidetracks at wells previously in production.
The programme will take between 18-24 months, during which time Haywood believes production can be increased to 900 barrels per day from 20 barrels currently.
Block needs production of 120 barrels per day to break even at a US$70 oil price.
Reserves (2P) are 1.5mln and can provide steady production for some years, but it is Block’s third asset, West Rustavi, that has the exploration potential.
Oil giant Schlumberger has just started drilling at a licence adjacent to West Rustavi in the hope of a major gas find.
Georgia is critically short of gas, explains Haywood, with 98% currently imported from Azerbaijan.
A US$300mln gas storage project in the country has reached the bidding stage, while the Georgian government is actively encouraging domestic production as hard as it can.
West Rustavia is 15km and on trend from Schlumberger’s licence.
Current estimates for Block’s licence are 608bcf (billion cubic feet) of gas on a 2C basis and Haywood want to shift a portion of this into the lower risk reserves category.
Shares were trading at 4.5p, up from the 4p listing price, and valuing the company at £11.6mln.