Block Energy plc reported a slight increase in production and fall in revenue during Q2 from its oil and gas operations in Georgia.
PRODUCTION
The company reported production of 47.2 Mboe (Q1: 46.1 Mboe) at an slightly increased average production of 519 boepd (Q1: 512 boepd)
Production was supported by a consistent performance from well JKT-01Z and well WR-38Z being brought back into production towards the end of the previous quarter.
FINANCES
Revenue decreased slightly $2,228,000 (Q1: $2,361,000) with the company holding cash at 30 June 2022 of $1.4m (31 March 2022: $1.2m).
In Q2, Block Energy sold 21.2 Mbbls of oil (Q1: 24.4 Mbbls) for $1,992,000 (Q1: $2,168,000).
As at 30 June 2022, the company had more than 11,000 bbls of unsold oil in inventory.
In Q2, the company sold 58.4 MMcf of gas (Q1: 48.4 MMcf) for $236,000 (Q1: $193,000).
OPERATIONS
Block Energy said it had completed preparations for and was ready to execute a five-well development plan, including WR-B01 sidetrack.
Advanced discussions continue with industry specialists on non-dilutive funding for the five-well development plan to accelerate a wider drilling programme.
STRATEGY
Block Energy has a three-project strategy: projects I and II aim to generate additional cash in the short to medium term, while project III seeks to add significant value from the deeper, extensive natural gas resources that lie beneath the portfolio of licences.
Project I is the development of the Middle Eocene oil reservoir in the West Rustavi/Krtsanisi field, which straddles Blocks XIF and XIB, initially comprising of three sidetracks and two new wells.
Preparations for the first sidetrack, of WR-B01, are now complete.
Construction of the gathering line from WR-B01 to the WR-38 wellsite is also complete, enabling offtake and rapid monetisation of the gas produced from the WR-B01 sidetrack.
Project I is primed for non-dilutive debt funding and discussions with potential lenders are at an advanced stage.
Project II, the infill development of the Middle Eocene oil reservoir in the prolific Patardzeuli oil field (100 MMbbls produced) in Block XIB will be self-funded from cash generated from operations and will start shortly.
Block Energy added it could drill that more than 50 sidetrack holes from the legacy well stock, six of which have already been defined for sidetracking.
Project III, the evaluation and development of the natural gas resources throughout the Eocene in blocks XIF and XIB, will begin later this year with the workover of legacy wells which discovered gas.
This includes the potential sidetrack of the PAT-E1 discovery well, engineered for a 1000m horizontal section through the Lower Eocene and designed to evaluate over 300 Bcf of contingent gas resources.
MULTI-WELL PROGRAMME
Block Energy plc’s chief executive Paul Haywood said that the company had a “solid quarter, with stable production and positive operational cash flow”.
“Furthermore, the intention is to bring forward plans to initiate infill drilling within the prolific Patardzeuli field and develop the PAT-E1 gas discovery, of over 300 bcf of contingent gas resources.
“With or without external financing, we will deliver the multi-well programme, as rapidly as diligent planning and capital discipline will allow.”