Block Energy plc, the development and production company focused on Georgia, is pleased to announce the conclusion of negotiations for the farmout of licence XIQ (forming part of Project IV) to a leading international E&P company ("Farm-in Partner"). All necessary agreements ("Transaction Documents") have been finalised by the parties and submitted to the government of Georgia for approval. Execution of the Transaction Documents will be conditional, inter alia, upon their approval by the government of Georgia.
Upon approval, which is expected during Q4 2025 - Q1 2026, the Transaction Documents will be executed by the parties and complete simultaneously, at which point the transaction will become legally binding.
The XIQ licence is currently held by Georgia Oil and Gas Limited ("GOGL"); (68%, Operator), Georgia Oil and Gas Corporation ("GOGC"); 22% and Block Energy (10% with an option to increase to 22%).
Under the agreement the Farm-in Partner will acquire up to a 75% working interest in the XIQ license, following the execution of the agreed work programme, comprising 3D seismic and three deep high-impact wells. Additionally, It will also receive an option to move to 92.5% interest in XIQ, in return for certain cash and royalty payments.
Highlights:
· Successful conclusion of negotiations for the farmout of licence XIQ which contains the exciting Martkopi Terrace prospect.
· The Farm-in Partner is an international independent E & P company with a successful record of exploration and development in the Eastern European region.
· Agreed terms of the farm-in include full funding by the Farm-in Partner of a staged work programme of 3D seismic and up to three deep high-impact wells on the Martkopi Terrace prospect.
· Total mean unrisked recoverable prospective resources for XIQ licence of 588.7 MMboe, with Martkopi Terrace mean unrisked recoverable prospective resources at 301.7 MMboe.
· Completion is subject, inter alia, to approval by the government of Georgia. The Company currently expects this to take place during Q4 2025 - Q1 2026.
Commenting, Paul Haywood, Block Energy Chief Executive Officer said:
"We are pleased to have agreed terms alongside our partners for the farm out of XIQ to a leading international E&P company.
"The successful conclusion of negotiations represents a major step for the development of the XIQ license and a material milestone for Block Energy and our shareholders. The significant proposed investment by a company with an excellent track record for exploration underlines the quality of our asset base and the prospectivity within the basin.
"Whilst there can be no certainty that the transaction will complete, the effort and progress from the XIQ partners and farminee provides confidence in a successful outcome. At completion, the agreement will not only unlock the potential of XIQ but should provide momentum to the ongoing farmout of Project III as well as other licenses within the Project IV portfolio.
"We look forward to concluding the farmout agreement with our new partner and publishing full details of the transaction with our stakeholders at completion."
Licence XIQ & Work Programme:
Licence XIQ is located immediately to the north of Block's existing XIB contract area and contains significant prospectivity, as defined in the independent DeGoyler MacNaughton prospective resource report (2023).
The primary target of the farm-in is the Martkopi Terrace prospect, a structure identified on 2D and 3D seismic in close proximity (c. 10km) to the prolific Patardzueli-Samgori field which produced c. 180 MMbbl from the same target reservoir.
The agreed farm-in work programme includes 3D seismic acquisition and the option to fund of up to three deep, high-impact wells, at which point the farm-in partner will become the operator.
On completion of the work programme, the farmin partner will have the option to move to 92.5% in the XIQ license, in return for cash payments and a royalty to the existing parties.
Block currently holds a 10% interest in the XIQ licence, with an option to increase this to 22%.
Project IV Background
Project IV refers to Block's exploration activities within its portfolio in Georgia. This includes the highly prospective XIQ licence (Block 10% with an option to increase to 22%), IX licence (Block 100%) and the XIH licence (Block has an option to acquire 22%).
The XIH licence, which is also subject to farmout discussions, is located immediately to the south of Block's existing XIB licence and covers an area of 486 km2. Seven structures have been identified within the XIH licence and DeGoyler MacNaughton (2023) ascribe a total of 485.7 MMboe of mean unrisked recoverable prospective resources.
A further notification will be made once the licence holders have received the government of Georgia's decision on the submission.