Block Energy signs MOU for gas offtake from West Rustavi license in Georgia

LONDON -- Block Energy Plc, the exploration and production company focused on the Republic of Georgia, has announced that it has signed a Memorandum of Understanding (MOU) with Bago Ltd (Bago), one of the largest private gas suppliers and purchasers in Georgia, for a proposed offtake agreement for gas produced at the Company’s West Rustavi permit. Block currently holds a 25% working interest (WI) in West Rustavi (increasing to a 75% WI after earn-ins described in the Company’s Admission Document of June 4, 2018), which has proven reserves and gross, unrisked contingent resources (2C) of 608 Bcf gas and 37.9 MMbbl of oil.

Under the proposed terms of the MOU and subject to final legal agreement, Bago will acquire the total amount of gas produced from West Rustavi, subject to a minimum of 1,000 Cubic m of gas per day. In addition, Bago is considering financing wholly, or in part, required gas infrastructure at West Rustavi, including pipeline tie backs to local infrastructure and gas processing plant solutions. A final offtake agreement will be subject to final price negotiation that is expected to be at a similar level to those agreements already in place with neighbouring contractors (which are in line with the Company’s internal forecasts). The final agreement will also be subject to successful gas appraisal work on existing discoveries located within West Rustavi and all relevant government permissions being obtained.

In addition to West Rustavi, Block’s holds a 100% WI in the Norio license and a 90% WI in the Satskhenisi license. A low cost, multi-well workover program is due to commence shortly at Norio and Satskhenisi, as part of the Company’s strategy to increase net production of oil to 900 bopd within 18-24 months.