Block Energy PLC (LON:BOE) has acquired new acreage in Georgia, picking up two areas held by Schlumberger for no upfront cash consideration.
Schlumberger will instead be given options over Block Energy stock - 120mln shares, or 23.3% of the company, ascribing a base deal value of around US$6mln.
The firm is acquiring Block XI which is described as “Georgia's most productive block” - over 180mln barrels of oil have been produced historically, with a peak of 67,000 barrels of oil per day (bopd) in the mid-1980s – and, it adds 64mln barrels (boe) of 2P oil reserves to the group.
READ: Block’s latest sidetrack flows 550 boepd in tests
The other adjacent new asset is Block IX which comprises exploration acreage. Recent appraisal drilling by Schlumberger has unearthed additional potential, identifying 600bn cubic feet of in-place gas.
The new assets added that the acquisition increases 2C contingent resources by 29mln boe plus 245mln boe of prospective resources.
“The Acquisition is transformational for Block Energy, providing the Company scale and increased production, reserves and resources,” said Paul Haywood, Block chief executive in a statement.
“A critical component of this transaction is that it will be completed with no cash consideration, using options on our own share capital. The acquisition demonstrates management's ability to identify, compete for and secure the right deals for its shareholders in an environment posing unprecedented challenges for the industry.”
Haywood noted that the company will update the market on a work programme for the enhanced integrated portfolio.