Block Energy has reported a slight rise in production in the second quarter reporting 47.2 Mboe, up from 46.1 Mboe in the first quarter. Production comprised 32.8 Mbbls of oil (Q1: 32.1 Mbbls) and 14.4 Mboe of gas (Q1: 14.0 Mboe). Average production during the quarter also increased to 519 boepd, from 512 boepd in Q1.
Production in Q2 was supported by a consistent performance from well JKT-01Z and well WR-38Z being brought back into production towards the end of the previous quarter. In Q2, the company sold 58.4 MMcf of gas (Q1: 48.4 MMcf) for $236,000 (Q1: $193,000), resulting in a weighted average price of approximately $4.04/Mcf (Q1: $4.00/Mcf).
Block also sold 21.2 Mbbls of oil in Q2 (Q1: 24.4 Mbbls) for $1,992,000 (Q1: $2,168,000), resulting in a weighted average price of approximately $94 per barrel (Q1: $89 per barrel), representing a 6 percent increase in the realized price in Q2 compared with Q1. As at 30 June 2022, Block had over 11,000 bbls of unsold oil in inventory.
The company is focusing on its three-project strategy with Projects I and II aimed at generating additional cash in the short to medium term, while Project III seeks to add significant value from the deeper, extensive natural gas resources that lie beneath the portfolio of licenses. The investment case for this strategy is supported by the improved understanding of the complexities of the Eocene reservoirs, which was a key objective in 2021.
Project I is the development of the Middle Eocene oil reservoir in the West Rustavi/Krtsanisi field, which straddles Blocks XIF and XIB, initially comprising of three sidetracks and two new wells. Preparations for the first sidetrack, of WR-B01, are now complete. These included the procurement of long-lead items and site preparation.
Furthermore, construction of the gathering line from WR-B01 to the WR-38 wellsite has been completed on time and on budget, enabling offtake and rapid monetization of the gas produced from the WR-B01 sidetrack. Project I is primed for non-dilutive debt funding and discussions with potential lenders are at an advanced stage.
Project II, the infill development of the Middle Eocene oil reservoir in the prolific Patardzeuli oil field (100 MMbbls produced) in Block XIB will be self-funded from the cash generated from operations and will commence shortly. More than 50 sidetrack holes could be drilled from the legacy well stock, six of which have already been defined for sidetracking.
Project III, the evaluation and development of the natural gas resources throughout the Eocene in blocks XIF and XIB, will commence later this year with the workover of legacy wells which discovered gas. This includes the potential sidetrack of the PAT-E1 discovery well, engineered for a 1000m horizontal section through the Lower Eocene and designed to evaluate over 300 Bcf of contingent gas resources.
“Block had a solid quarter, with stable production and positive operational cash flow. We have developed a balanced portfolio-wide strategy to unlock the inherent value across our assets, which we believe makes for a compelling investment case, particularly at current commodity prices. To accelerate that program and mitigate the direct risks associated with a single well programme, we are in advanced discussions on a package of non-dilutive financing. Furthermore, the intention is to bring forward plans to initiate infill drilling within the prolific Patardzeuli field and develop the PAT-E1 gas discovery, of over 300 Bcf of contingent gas resources. With or without external financing, we will deliver the multi-well programme, as rapidly as diligent planning and capital discipline will allow,” said Block Energy’s Chief Executive Officer, Paul Haywood.
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Published at Wed, 13 Jul 2022 12:45:01 -0700