Block Energy Plc, the exploration and production company focused on the Republic of Georgia, is pleased to announce it has entered into a gas sales agreement (“the Agreement”) with Bago LLC (“Bago”), one of the largest private gas suppliers and purchasers in Georgia, for the offtake of gas produced at the Company’s flagship West Rustavi field (“West Rustavi” or “the Field”).
Under the terms of the Agreement, which runs until 31 December 2022, Bago will purchase gas produced from the Field at a price of US$5.24 per MCF. Bago will also pay for the costs of installing the infrastructure necessary to connect the gas produced from the Field to Georgia’s gas distribution network. West Rustavi has gross, unrisked 2C contingent gas resources of 608 BCF in the Eocene and Cretaceous formations. The Agreement, which follows a Memorandum of Understanding announced on 5 October 2018, was finalised following Bago’s appraisal of gas samples from the Field. Sales are expected to commence during Q1 2020.
Free and associated gas is currently being flared from well WR-16aZ under a temporary permit issued by the Georgian state. Block is pursuing a multi-well programme designed to realise West Rustavi’s oil and gas potential, including the sidetracking of a second well, WR-38Z, updip and analogous to WR-16aZ, targeting the same Upper and Middle Eocene formations. Block also plans to sidetrack three other wells, test one of the Field’s gas discoveries, and drill a new gas well during its campaign. The Company is also acquiring a 3D seismic survey to provide a critical understanding of West Rustavi’s subsurface, allowing identification of optimal locations for future drilling.
Block Energy Chief Executive Officer Paul Haywood said:
“We are delighted to sign this Agreement with Bago, one of Georgia’s largest domestic private gas traders with ready access to extensive infrastructure capable of handling large volumes of gas. West Rustavi is the site of multiple historic gas discoveries, which we will test in the course of our work programme. When we have made further progress with our campaign, we look forward to providing guidance for West Rustavi oil and gas production for 2020.”
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.
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