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Block Energy boosted by new terms in Schlumberger Georgia asset deal

The asset package "will truly define" the company's future as an oil and gas company in Georgia, said chief executive Paul Haywood

Block Energy PLC -

Block Energy PLC (LON:BLOE) has told investors it is expected to close its acquisition of the Schlumberger Rustaveli Company Limited (SRCL) entity on November 23, 2020.

Additionally, the company noted that amended deals terms will see it also take possession of some 29,000 barrels of crude oil inventory.

Block shares jumped by more than 30% in Friday’s early deals, rising 1.22p or 31.99% to change hands at 5.02p.

READ: Block’s West Rustavi EPF is ready for gas

Block said that this will be a welcome boost to its balance sheet.

A transition services agreement will be inked with Schlumberger providing support during the handover.

"I am delighted to be able to inform shareholders about the amendments to the SPA and that the acquisition of Blocks XIB and IX is in near sight,” said Paul Haywood, Block chief executive in a statement.

“We look forward to 23 November, when we will commence ownership of these transformational assets. They will truly define our future as an oil and gas company in Georgia.”

Stockbroker Mirabaud highlighted that proceeds from the sale of inventory crude would support the planned low-cost operations and that the services agreement which provides technical assistance for free.

“At current oil prices this [inventory] is worth in excess of US$1.1mln, which given the company’s ultra-low cost of operations is significant (this sum would, for example, fund 50% of a new development well),” said Mirabaud analyst James Midgley.

“Given the large scale of the asset, which includes a small amount of production (c.2-300 boepd), as well as development, appraisal and exploration opportunities, this  assistance [from Schlumberger] should help with the smooth transferal of ownership.”

 

--UPDATED TO ADD BROKER COMMENTARY AND SHARE DETAILS--

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Price: 3.1275 GBX

AIM:BLOE
Market: AIM
Market Cap: £19.87 m
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