Block Energy Plc (LON:BLOE) chief executive Paul Haywood said the company remains “enthusiastically active on many fronts” as the firm updated on developments at the West Rustavi field in Georgia.
The group noted that key equipment is arriving at the West Rustavi field and a new contractor is being brought on board to help advance projects.
Block pointed out, however, that production remains shut-in due to the coronavirus pandemic although the Republic of Georgia is presently at the beginning of a phased approach to restart businesses following lockdown.
Restrictive measures have been relaxed for Georgia’s citizens and a re-opening of borders to foreign travellers is due in July.
The company noted that Georgia has had 888 coronavirus (COVID-19) cases and 14 deaths, as of June 17, 2020. To date there have been no cases at Block’s operations. Block employees continue to forgo 40% of their cash salary, taking a deferred cash payment or share options instead, the company noted.
Meanwhile, the Early Production Facilities (EPF) - which comprises an inlet manifold for six wells, separators and a gas dehydration and measuring unit - has arrived on site at West Rustavi.
This is described by Block as a ‘key component’ allowing it to process and sell the gas produced at West Rustavi. It now consequently anticipates gas sales to start during the second half of this year, once wells (WR-16aZ and WR-38) are tied in to the EPF.
Haywood commented in the statement: "The Block team remains enthusiastically active on many fronts. I am pleased to report the arrival of our West Rustavi early production facility in the field getting us closer to achieving gas sales, a significant milestone for the company.”
It also told investors that is has engaged consultant EPI Limited which is expected to add significant value and technical discipline to Block's oil and gas future development programmes.
Block noted its “even more exciting portfolio of assets” which will now be supported by EPI as the company looks to define new development well activity in our existing fields and the pending acquisition of the Block XIB area.
In particular, it said “significant potential” for horizontal side-track drilling in existing wells - a strategy that has already yielded strong results at West Rustavi - and the appraisal of the PAT-E1 gas discovery, which was previously drilled in 2019 by Schlumberger.
"We are delighted to welcome the EPI team, whose engagement expresses a strong vote of confidence in our Company's asset base,” Haywood said. “Their expertise will immediately strengthen our current workstreams, whilst defining our next phase of development."
“Our Georgian portfolio is an undervalued resource base. The newly-formed relationship with EPI will significantly augment our technical capability and enhance the group's ability to define the optimum development programme for the soon-to-be-acquired XIB asset," he added.
In March, Block agreed the acquisition of two areas held by Schlumberger for no upfront cash consideration. Schlumberger was instead 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. 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.