Block Energy Plc, the exploration and production company focused on the Republic of Georgia, is pleased to announce an operations update from its Norio licence (100% working interest), Satskhenisi licence (90% working interest) and the West Rustavi permit (25% working interest) which collectively have net proven oil reserves of 1.5 million barrels plus 60 million barrels of oil and c.600 billion cubic feet (‘bcf') of gas classified as 2C contingent resources.
o Appointed four geologists/geophysicists and one logistical and HSE manager with significant Georgian and multi-national experience
o First rig to mobilise to Satskhenisi to complete a short three well workover programme during Q3 2018
o On completion at Satskhenisi, rig to move to Norio where eight candidate wells have been selected
o One workover rig and one drilling rig to be mobilised to West Rustavi targeting 300 bopd from first high-impact horizontal side-track well
Paul Haywood, Director of Block Energy, said: “We have been highly active on the ground since our IPO in June, preparing for an incredibly busy end to the year as we prepare to mobilise rigs to locations across our portfolio. Thanks to our access and review of additional existing seismic data, we have increased our confidence and understanding of our West Rustavi permit. Having recently increased our working interest to 25%, we look forward to commencing drilling at the first of several high-impact locations as per our work programme which will earn our eventual 75% working interest in the permit.
“In line with our strategy to increase production and generate significant value we have been evaluating an enhanced perforating system and look forward to applying this exciting technology once we have finalised contracts. As activities have increased on the ground we have made a number of new high calibre appointments to our technical team – we welcome them on board. Their experience and expertise will prove invaluable during this exciting time for Block. I look forward to providing further updates with regards to the various work streams as we look to mobilise drill rigs in the near-term and embark on our programme to ramp up production to 900 bopd within 18 -24 months.”
2-D Seismic Programme
A further 20km of existing high quality 2D seismic data has been obtained across the West Rustavi permit, providing an improved understanding of the structural faulting throughout the licence area and validating the Company's preferred well locations. The lines provide excellent quality and pass key wells, 16a, 30, 38 and 51. Line L4037 includes discoveries and horizontal side track candidates 38 and 51. The Company plans to drill two horizontal side track wells in a potentially undrained fault block containing the Middle Eocene (‘ME') formation. Based on nearby vertical well performance, the Company anticipates that the ME formation will be naturally fractured and hence, very productive.
Technical Team Appointments
A number of highly experienced geologists and geophysicists have been hired by the Company as work programmes are ramped up on the ground in Georgia. A full time HSE manager has also been hired in Georgia to start implementing the Company's policies and procedures related to the safety of its operations and the protection of the local environment in Georgia. These appointments include:
A geologist with over nine years' experience in the oil and gas industry including four years' experience focusing on the FSU for Tethys Petroleum with a particular focus on Georgia. Peter has detailed understanding of the structural geology and the reservoirs across Block Energy's area of interest.
A geophysicist with over 40 years' experience, most of which has been in Georgia. Artem's past experience has been with majors such as Schlumberger, CNPC and BHP.
A geologist with over 12 years' experience. Alexander is highly experienced in Geological and Petrophysical Modelling.
A geologist with over 40 years' experience in Georgia bringing in-depth experience of the original drilling in West Rustavi and Ninotsminda fields. Irakli is experienced in preparing statutory reports and applications to the Georgian State Agency.
Sergo has been appointed as HSE Manager. He has a Petroleum Engineering background with a wealth of experience in field operations within multinational oil companies.
Enhanced Perforating Technology
The Company has been evaluating the application of an enhanced perforating system. This new system utilises a miniaturised horizontal drilling system that bores multiple small holes out from the wellbore, bypassing wellbore damage and contacting virgin reservoir.
A contract with this specialised service provider is currently being finalised and the Company will provide further details in the coming weeks. Block estimates that this new technology has the potential to provide a 2-3 multiple of production rates vs conventional perforating.
Preparation for Rig Mobilisation
Ahead of mobilisation, two rig inspections have now been completed with no mechanical issues encountered. Final rig contract negotiations are now underway and expected to be concluded shortly.
Once contracts have been agreed, the crew will mobilise the rig to Satskhenisi to complete a short three well workover programme prior to mobilising the same rig to the Norio licence where the first four existing wells will be prepared for the enhanced perforating system currently expected to arrive in Georgia before the end of October. This workover rig will then move to West Rustavi, where two wells will be prepared for side tracks and the re-testing of a historical gas discovery in the Lower Eocene, a play being targeted by neighbour Schlumberger. Following this preparation work, the Company will mobilise the service rig back to Norio to utilise the enhanced perforating system and install the production equipment. The Company is targeting the second tranche of four Norio wells to be prepared, completed and on production by Q1 2019. At Norio, a total of eight candidate wells have been selected and the required equipment and services are currently being sourced.
The Company is targeting to commence drilling the first high impact horizontal side-track in the West Rustavi permit during Q4 2018 and to be completed and on production by the end of this year. Block is forecasting initial production from this well to be approximately 300bbls/d and has identified four other existing wells in the permit that can be re-entered and side-tracked in a similar manner. Once drilling has commenced at West Rustavi, the Company's working interest will increase from 25% to 50%.