Page 12 - FSUOGM Week 13

FSUOGM PROJECTS & COMPANIES FSUOGM
London-listed Block Energy builds up Georgian operations
GEORGIA
GEORGIA-FOCUSED junior Block Energy has penned a deal to acquire rights to two oil and gas blocks from US oilfield services group Schlum- berger, without paying any cash up front.
Shares in the London-listed firm were up 55% on March 26 after Block announced the pur- chase, closing at GBP0.034 ($0.04) apiece.
Block Energy signed a purchase and sales agreement to take over Schlumberger’s produc- tion-sharing agreements (PSAs) for Blocks XIB and IX, situated adjacent to its existing fields near the Georgian capital of Tbilisi. Instead of paying cash for the assets, the company will issue Schlumberger options to acquire 120mn of its shares at a nil exercise price, which would give it a 23% stake in the explorer. The options can be exercised within 12 and 24 months of the transaction’s completion.
Block Energy CEO Paul Haywood described the deal as “transformational” for the company, providing it with “scale and increased produc- tion, reserves and resources.”
“A critical component of this transaction is that it will be completed with no cash considera- tion, using options on our own share capital,” he continued. “The acquisition demonstrates man- agement’s ability to identify, compete for and secure the right deals for its shareholders in an environment posing unprecedented challenges for the industry.”
The 615-square km Block XIB is Georgia’s most productive block, having yielded more than 180mn barrels of oil since being brought on stream in the Soviet era. Its output peaked at 67,000 barrels per day (bpd) during the mid-1980s.
The 1,925-square km Block IX is at the explo- ration phase. It contains 38 legacy wells, with two wells drilled since 2013 containing oil and gas shows.
Schlumberger acquired the two sites in 2017 along with a third, Block X, which it now intends to relinquish, according to Block Energy.
Block Energy said it would net 65mn barrels of oil equivalent (boe) in proven and probable oil and gas reserves from the deal, as well as 245 bpd of initial oil production. The acreage also contains 600bn cubic feet (17bn cubic metres) of initial in-place gas, identified by Schlumberger during recent appraisal drilling.
Schlumberger has already fulfilled the min- imum work requirement at both blocks, but Block Energy will announce its own work pro- gramme at a later stage, Haywood said. He did not say when the deal was expected to be closed.
Block Energy operates the nearby Norio, Satshenisi and West Rustavi oil and gas fields. The largest of these is West Rustavi, where the company has begun exploiting a 14.4 bcm gas resource. ™
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w w w . N E W S B A S E . c o m Week 13 01•April•2020