Block Energy Provides Project I Update

Source: 8/1/2022, Location: Asia

Block Energy plc, the exploration and production company focused on Georgia, is pleased to announce the results of a Competent Person's Report ("CPR") covering the Krtsanisi Anticline part of the West Rustavi and Krtsanisi oil field, which straddles the Company's licence blocks XIF and XIB.

The CPR supports Block's sub-surface studies, through a comprehensive and independent evaluation with the reported Reserves in line with the Company's internal estimates. It provides the basis to seek development financing for the next five wells of Project I, the development of the Middle Eocene oil reservoir in the West Rustavi/Krtsanisi field. The effective date of the CPR is 31 March 2022.

The scope of this CPR was deliberately focused on the Krtsanisi Anticline, and on Reserves only, rather than Contingent Resources or Prospective Resources, to support discussions and negotiations with development finance providers. The Reserves reported are only part of the Reserves reported in the previous CPRs; for West Rustavi by Gustavson Associates dated 1 January 2018 (relating to block XIF), and for Krtsanisi by Bayphase Limited dated 1 July 2015 (relating to block XIB). Therefore, as a CPR focused on a Krtsanisi Anticline five-well drilling programme, it is not directly comparable to previous CPRs with different approaches.

These Reserves are associated with just the first phase of development of the West Rustavi/Krtsanisi field (Project I) to begin to exploit the 19.5 MMbbls of Contingent Resources identified by the Company. Data acquisition from this phase will enhance our sub-surface understanding and guide further phases of development drilling to access the remaining Contingent Resources.

Competent Person
The CPR was undertaken by ERC Equipoise Limited ("ERCE"), a company well recognised across the industry, including by the potential provider with which the Company is in advanced discussions relating to the provision of non-dilutive finance. ERCE consents to the inclusion of the information in the form and context in which it appears.

Field Gross 2P Reserves: 1.07 MMbbls
NPV10 2P Reserves: $17.95 MM

In estimating net present values of the Reserves, ERCE used their own forecast of future production, the fiscal terms provided in each of the production sharing contracts and, having validated them, Block's estimates of capital and operating costs. Production forecasts were cut off at the earlier of the date of licence expiry and the date the operations cease to be economic, as defined under PRMS. It should be noted that net present values of the Reserves do not necessarily represent the fair market value.

Block Energy plc's Chief Executive Officer, Paul Haywood, said:
"This CPR independently verifies the work and plans for the initial phase of Project I, which covers five production wells in the West Rustavi/Krtsanisi field. These wells are expected to deliver material returns for shareholders, particularly at current oil and gas prices. The report also provides the audited information necessary to support discussions on non-dilutive financing, to deliver the initial phase of Project I.

Project I will be implemented concurrently with Project II, which will be funded separately using net cash generated from the Company's existing operations. Block considers this approach to managing Projects I and II to be the most efficient use of Company resources to deliver production and returns to shareholders, in a way that is timely and balanced".

Information in the CPR has been reviewed by Paul Wilson BSc, MSc, PhD (Block Energy's Head Geophysicist) who was the technical lead responsible for obtaining the CPR focused on the Krtsanisi Anticline presented in this announcement. Dr Wilson is a geoscientist with over 18 years' experience in oil and gas exploration, appraisal and field development. Dr Wilson consents to the inclusion of the information in the form and context in which it appears.

Gulf Oil and Gas
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