Block Energy PLC (LON:BLOE) Operations Update

Block Energy Chief Executive Officer Paul Haywood said: We are glad to announce that our development programme is moving full-speed ahead on multiple fronts.

Block Energy Plc, the exploration and production company focused on the Republic of Georgia, is pleased to provide an update on operations at its West Rustavi field (“West Rustavi” or “the Field”):

Highlights

· Multi-rate production testing is underway at well WR-38Z (“WR-38Z”) following a clean-up period to stabilise the well and recover fluids lost during drilling. Peak production rates have exceeded 300 bopd and 1.5 MMCF/d of gas (equivalent to a total of more than 550 boepd).

· With the WR-38Z test confirming West Rustavi’s rich gas potential, Block is accelerating the monetisation of its gas reserves by installing a central gas processing facility for the Field and by applying for permits required to get the gas onstream during Q2 2020.

· Drilling operations have begun at well WR-51Z (“WR-51Z”), the third of West Rustavi’s wells to be horizontally sidetracked.

· Operations at the West Rustavi appraisal well WR-16aZ (“WR-16aZ”), which was shut-in during December for the installation of improved surface test facilities, are scheduled to re-start in early February with a well intervention programme designed to add a further 100-200 boepd to the Field’s production.

· The Company is encouraged by the quality of data indicated by a preliminary review of the recently acquired 3D seismic survey of West Rustavi.

Initial results of the multi-rate production test at WR-38Z

The well has been flowing naturally since 30 November 2019, aside from a brief shut-in period between 27 December 2019 and 1 January 2020, when pressure recorders were installed in the well for the production test. The formal multi-rate test began on 3 January 2020, recording high well productivity and higher gas production rates than expected.

The production test has produced the following range of results as of 26 January 2020:

Wellhead flowing pressures have remained high, indicating the well’s long-term flow potential. Although significant, the water cut has been stable since testing began. Analogous wells close to West Rustavi have produced for long periods: For example a vertical well located two kilometres to the north has produced for 20 years with a similar water cut. The Company expects WR-38Z, a horizontal well which has already produced more than 5500 barrels of oil, to be significantly more productive than a vertical well.

To reduce the amount of gas flared, the choke size has been reduced to a diameter of 9/32″ for the remainder of the test, which is expected to continue until 31 January 2020. The well will then be shut-in to measure the pressure build-up and determine technical reservoir qualities, then put back on production at a choked-back rate of 200 boepd to conserve gas and reduce flaring while gas facilities are being installed. Once the facilities have been installed, the Company intends to flow the well at an oil production rate of approximately 150 bopd and a gas production rate of more than 1 MMCF/d (giving a combined total oil and gas rate of 322 boepd). Such rates will pay back the well cost in less than a year and so meet one of the Company’s primary investment critieria for capital expenditure.

Produced water is being trucked at low cost with the oil to a nearby storage facility owned by the Georgian Oil and Gas Corporation (“GOGC”) . The storage leasing agreement with GOGC provides for the disposal of the water into a state-approved injection well. No treatment is necessary prior to disposal. The Company continues to make regular oil sales to a local refinery.

Full update LINK https://www.share-talk.co.uk


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