Resumption of Production at West Rustavi
Block Energy Plc | Index: AIM | Epic: BLOE.L | Sector: Oil and Gas
Resumption of Production at West Rustavi
26 July 2019
Block Energy Plc ('the Company' or 'Block'), the exploration and production company focused on the Republic of Georgia, is pleased to announce the resumption of production at well 16aZ ('the Well') at its flagship West Rustavi field ('West Rustavi' or 'the Field'). Production resumed on 11 July and since testing began the Well has produced at an average rate of approximately 360 boepd (295 bopd plus 390 Mcf/d) on varying choke sizes, with an average water cut of 25%, considered to be mainly returned drilling fluid.
A minimum of 1,200 barrels of drilling fluid were lost to the Well during drilling and completion operations, a considerable amount indicative of the high productivity of the fractures system. Estimates of the volume of water produced and observations of polymer and other drilling fluid chemicals indicate that the Well continues to clean up lost drilling fluid and stabilise.
The Company is adopting a prudent approach, gradually increasing production to establish a sustainable flow rate as the Well cleans up. Produced oil is being transported to storage leased by Block at a facility owned by the Georgian Oil and Gas Corporation ('GOGC'), the state-owned national oil company of Georgia, near the town of Sartichala, some 30km along the Khakheti motorway from West Rustavi. Block entered into an agreement with GOGC last month (RNS: https://bit.ly/323XWfy) allowing access to 90,000 bbls storage capacity.
Bringing well 16aZ onto production is a significant step in Block's fully-funded £12m programme to realise West Rustavi's potential (RNS: https://bit.ly/2WYyx8e), which was demonstrated by the exceptional test production rates of 1,100 bbl/d - more than three times pre-drill expectations - recorded at the Well on 1 April this year (RNS: https://bit.ly/2YfdI50). Preparations are well advanced for the horizontal side tracking this summer of well 38Z, analogous, adjacent and updip to well 16aZ, and targeting the same Middle Eocene formation. Well 38Z is one of four wells the Company plans to sidetrack across the Field - in which Block now holds a 100% Working Interest ('WI') - during its 2019/2020 back-to-back drilling campaign. The award of the contract for Block's planned 3D seismic survey of the Field is also imminent. The processing and interpretation of this survey by the latest techniques will enable the Company to pinpoint optimal drilling locations.
In parallel with its operations at West Rustavi, Block continues to produce oil at its Norio (100% WI) and Satskhenisi (90% WI) licences, at a cumulative average production rate of 26 bopd.
Paul Haywood, Block Energy Chief Executive Officer, said: 'We are pleased to resume production at well 16aZ and look forward to establishing with due caution a stable production rate for our best performing well to date. The Well produced exceptional test rates earlier this year and offers excellent netbacks of $35/bbl at $65/bbl Brent.
'With the resumption of production at well 16aZ our fully-funded back-to-back multi-well drilling programme continues to gather momentum. We now keenly anticipate ramping up production with the sidetracking this summer of well 16aZ's neighbouring well, 38Z. Three of West Rustavi's other wells will also be sidetracked in the Middle Eocene structure, and two of them tested for their historic gas discoveries in the Lower Eocene. We also look forward to acquiring a 3D seismic survey that will identify optimal locations for new horizontal oil and gas wells across the Field and support an upgrade of the Company's CPR, prepared back in January 2018.'
'Roger McMechan, Technical Director, has reviewed the reserve, resource and production information contained in this announcement. Mr McMechan has a BSc in Engineering from the University of Waterloo, Canada and is a Professional Engineer registered in Alberta.
This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.
For further information please visit http://www.blockenergy.co.uk/ or contact:
(Chief Executive Officer)
Block Energy Plc
Tel: +44 (0)20 7997 6136
Spark Advisory Partners Limited
Tel: +44 (0)20 3368 3554
Mirabaud Securities Limited
Tel: +44 (0)20 3167 7221
Frank Buhagiar/Juliet Earl
St Brides Partners Ltd
Tel: +44 (0)20 7236 1177
1. West Rustavi has an estimated 0.9 MMbbls 2P oil reserves, 38 MMbbls of gross unrisked 2C contingent resources of oil in the Middle, Upper and Lower, Eocene and 608 BCF of legacy gross unrisked 2C contingent resources of gas in the Eocene and Cretaceous (Source: CPR Gustavson Associates : 1 January 2018).
2. bbls; bbl/d: Barrels; barrels per day. A barrel is 35 imperial gallons.
3. boepd: Barrels of oil equivalent per day.
4. Updip: Located up the slope of a dipping plane or surface.
5. Well 16aZ has been referred to as well 16a in previous updates. The Company is now referring to the well as 16aZ to reflect the addition of the horizontal sidetrack to the vertical well.
6. CPR: Competent Persons Report
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
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