logo-loader
viewBlock Energy PLC

Block Energy reveals new deal to take full ownership of West Rustavi asset

“A 100% WI in West Rustavi will give the company complete discretion over the realisation of the field's potential,” said Paul Haywood, Block chief executive

oil and gas operations
Initially Block's stake rises to 71.5% with payments to GOG

Block Energy Plc (LON:BLOE) has announced a deal that sees it take full ownership of the West Rustavi licence in Georgia.

The company already owns 25% of West Rustavi and the new agreement with Georgian Oil and Gas Limited (GOG) will increase the stake up to 100%. It replaces an ‘earn-in’ agreement entered into back in 2017. The previous arrangement would’ve seen Block increase its stake to 75% with the completion of ongoing West Rustavi workover and sidetracking programme.

WATCH: Block Energy boss profiles start of horizontal side-track at West Rustavi

The new staged agreement will see Block’s stake rise to 71.5% with a US$250,000 cash payment, and, a further US$500,000 will be paid to GOG, which in turn will subscribe for Block shares at a minimum price of 4p.

In stage-2, Block can increase its working interest to 90% with a US$250,000 in cash payment, upon the start of additional new operations at West Rustavi or 31 August 2019 – whichever comes sooner.

Stage-3 would allow Block to increase its stake to 100% with a subsequent US$500,000 cash payment.

The new arrangement does not include the previously in place work obligations.

Specifically, Block highlighted that it is longer obliged to carry out work that would’ve demanded at least US$4mln of spending, and, would’ve needed US$1mln worth of additional production facilities.

“A 100% WI in West Rustavi will give the company complete discretion over the realisation of the field's potential,” said Paul Haywood, Block chief executive.

"The economic impact of this transaction is also significant, whereby in our single well base case production scenario (325 bopd) well netbacks increase by over 40% on completion of the transaction, to around US$41 per bbl at US$60 Brent.

“Moreover, we welcome further strengthening of the relationship between Block and our major shareholder GOG.

“The deal structure, which is heavily weighted towards equity in the company, is a strong testament of GOG's confidence in the company's current value and potential upside.”

Quick facts: Block Energy PLC

Price: 6.15 GBX

AIM:BLOE
Market: AIM
Market Cap: £24.2 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Block Energy PLC named herein, including the promotion by the Company of Block Energy PLC in any Content on the Site, the Company receives from...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Investor Update: SIMEC Atlantis chosen for demo project in Japan

Headlines from the Proactive UK newsroom. SIMEC Atlantis Energy (LON:SAE) has been chosen to supply tidal generation equipment and offshore construction services for a demonstration project in Japan. The project is located in the straits of Naru Island.  Block Energy (LON:BLOE) has...

1 week, 5 days ago

RNS

Holding(s) in Company

1 week, 4 days ago

Result of AGM and Board Change

1 week, 5 days ago

AGM Presentation

1 week, 5 days ago

Operations Update

1 week, 5 days ago

Gas Sales Agreement

1 week, 6 days ago

Grant of Options

3 weeks, 1 day ago

Operations Update

3 weeks, 1 day ago

2 min read