Page 15 - FSUOGM Week 15

FSUOGM PROJECTS & COMPANIES FSUOGM
Georgia-focused Block slashes spending, shuts down wells
GEORGIA
Block is set to expand its Georgian operations through a deal with Schlumberger.
GEORGIA-FOCUSED junior Block Energy has followed its larger peers in announcing steep cuts in spending.
The company, which last month unveiled a deal to expand its Georgian operations, announced on April 7 a 40% reduction in its cash spending. It also said it would shut down its two producing wells at the West Rustavi gas field in order to conserve gas resources until a sales pipeline is finished later this year. The pair had been flowing at a combined rate of 325 barrels of oil equivalent per day (boepd).
The wells have gas-to-oil ratio of around 50:50, and Block Energy wants to save the gas until it can extract it at a higher margin. Early stage gas production facilities are en route to West Rustavi, the largest of Block Energy’s three fields, located near the Georgian capital of Tbi- lisi. The wells’ oil has a Brent break-even price of only $24 per barrel.
Depending on the oil price, Block plans to continue producing crude at its Norio and Sat- skhenisi fields, and if necessary store the barrels until prices recover.
“These are unprecedented times for the global economy in general, and the oil and gas sector in particular,” the London-listed firm’s CEO Paul Haywood said in a message. “We have to navigate
our business through a new environment of low oil prices, a slowing wider economy and coun- trywide lockdowns. With the implementation of the measures announced today, we have made our business significantly more sustainable, as well as conserving our hydrocarbon assets for the future.”
Block Energy has $3.4mn in cash and $470,000 worth of oil in storage.
Haywood added that Block Energy was work- ing “tirelessly” to wrap up a deal to acquire two oil and gas blocks situated adjacent to its fields from Schlumberger of the US. It is weighing up opportunities to re-enter existing wells at the XIB block, including the Pat E-1 deep gas borehole, with the aim of sidetracking it and adding a hori- zontal section.
Earlier data from the well suggest the pene- tration of structures holding around 17bn cubic metres of in-place gas, it said.
“Drilling a horizontal hole in the best zone has the potential of changing these resources into reserves, ready for production,” Block Energy said.
With first large-scale gas sales on the way and a comprehensive development plan in place, Haywood concluded that Block Energy was “well-positioned” to weather the coronavirus (COVID-19) crisis. ™
Week 15 15•April•2020 w w w . N E W S B A S E . c o m P15