Block Energy: Acquires 100% interest of two fields in Georgia
Block Energy, an exploration and production company focused on the Republic of Georgia, has announced that it has agreed to acquire the outstanding 31% working interest in, and to become operator of the country’s Norio field via a cash payment of $310,000 to Georgia Oil and Gas Ltd. This follows the company’s previous statement that it intended to fully exercise its right to move to a 100% working interest in Norio before dual listing the company on AIM and commencing a defined field development program to increase production at Norio to over 250 bopd in the short term from approximately 20 bopd.
In addition to becoming operator of Norio, the acquisition will also see Block Energy assume operator-ship of neighboring Satskhenisi field in which Block Energy holds a 90% working interest. Current production at Satskhenisi stands at 6 bopd. At this level of production and due to the extremely favourable oil sharing terms associated with the Norio and Satskhenisi Production Sharing Contracts (“PSC”), combining production enables Block Energy to operate both fields from one entity, benefiting from economies of scale and therefore ensuring operating costs are fully covered by existing production revenue.
Norio and Satskhenisi: proven fields with multiple low cost, low-risk development opportunities
Norio lies 40 km from the city of Tbilisi. To date, 1.9 MMbbl of light sweet crude oil have been produced, largely from the Middle Miocene (Chokrak), with some production from the Lower Miocene (Maikopian) and Upper Miocene (Sarmatian). Current production stands at approximately 20 bopd from three wells drilled in the mid/late 1970s. In all, 55 vertical wells have been drilled on the field, to depths of between 500 to 1500 m, with the best well recovering more than 400,000 bbl of oil.
Due to its low operating costs, oil sharing terms, and a net crude field sale price of Brent minus $9, Norio is cash-flow positive and generates sufficient revenue to cover its operational costs, according to the company. Schlumberger, operator of the neighboring field, estimates Norio contains 118.7 million stock tank oil initially in place (STOIIP). Block intends to embark on a defined production enhancement program, including eight recompletions/workovers of existing wells and one sidetrack, to increase production to over 250 bopd in the short-term.
In parallel with this, Block Energy intends to undertake seven reactivations and recompletions at Satskhenisi to raise production to more than 100 bopd. Satskhenisi has produced 310,000 bbl of oil to date, mostly from the Maikop and shallow Sarmatian lithologies. It shares a similar geological setting and formations to Norio and, as a result, learnings from one permit apply to the other. At $45/bbl, both fields break even at a total of 20 bopd.