World Oil
(WO) — Block Energy Plc, the development and production company focused on Georgia, is pleased to provide the following corporate update. The company’s four-part project strategy is evolving to accelerate the significant commercial opportunity offered by Project III, focused on the multi-Tcf undeveloped gas resource within the Lower Eocene and Upper Cretaceous reservoirs of Blocks XIB and XIF to which internal estimates attribute 984 Bcf 2C Contingent Resources.
Source: World Oil
Following continued development during 2023, Project III was declared a gas resource of strategic importance by the State of Georgia, and Block has concluded it is now ready to support a farm-out at the asset level. Until now the Project has been funded organically through cashflows from Project I. The accelerated development of Project III has a good chance of success and promises to have a material impact on its Net Asset Value.
The disciplined implementation of Project I during 2023, and Block’s focus on improving its overall margin through reducing its operational cost structure ensures the company will be well funded to execute this high-impact strategy through 2024, based on current production, oil prices and expected natural decline rates. Block will, however, consider drilling additional Project I wells next year as the Company progresses its farm-out strategy.
Project III update
During 2023, the company completed an integrated full field development study of the Lower Eocene and Upper Cretaceous reservoirs, identifying gas-bearing natural fracture systems of one and a half kilometers thick, spanning the company’s XIB and XIF blocks across three fields, which included reinterpreting two 3D seismic surveys, well design and planning, third-party conceptual development engineering and cost estimation of a pilot scheme and full field processing facilities.
Block also signed an MoU with the State of Georgia to support commercialization of the company’s Project III gas resources. The company is also currently completing a study on what promises to be a world-class Carbon Capture and Storage (CCS) project throughout XIB, integrated into Project III development plans, thus supporting the company’s longer-term sustainability goals.
Project III farmout process
Work undertaken in 2023 has informed the design of a staged appraisal and development plan which is being used to facilitate discussions with possible partners regarding the broader development of the company’s assets in Georgia, including a farm-out of Project III. These discussions, supported by the Government of Georgia, are taking place within the context of Georgia’s continued integration with the global economic community this year, including the country’s acceptance as an EU candidate nation and its entry into a strategic partnership with China.
Growing industry interest in Georgia is also spurring an increase in exploration activity. OMV is planning to acquire 3D seismic in the Black Sea, and China’s commitment to the country has been underlined by the presence of a private Chinese firm using services supplied by CNPC, the Chinese state-owned integrated energy group, in an onshore location between the Black Sea and Block’s Project III.
CNPC has been contracted to deliver a firm work program comprising two deep wells, using a modern rig and a full suite of integrated services. Positive results from this work program would have an instant read-through to the value of Project III, which stands to benefit from access to a drilling rig and integrated services capable of drilling deep directional wells promising to reduce mobilization and demobilization time and costs.
Given Block’s strategy has evolved in-line with the development of its assets, the Company is revising its reporting process. Rather than providing updates each quarter Block will publish shareholder updates in-line with specific news on strategic and operating activity, and to observe financial reporting requirements. The Company believes news of its initiatives and operating developments no longer conform to a quarterly news cycle and therefore risk compromising strategic and commercial discussions with potential farm-in candidates.
“Our strategy is now evolving to accelerate the delivery of value from the company’s high-impact projects which, in addition to Projects III and IV, include Project II, where the team continues to advance plans for secondary recovery that promise to trigger yet another high-impact and near-term CF farm-out process, supported by a CCS pilot program,” Paul Haywood, Block Energy Plc’s CEO, said. “This shift in focus also allows us to restructure our cost base and set our Project I program within the context of our wider strategy.”
