Wednesday, December 6th 2023

Block Energy CEO Interview

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By Elias Jones


TMS welcomes guest blogger and financial commentator Elias to the platform where he shares great insight from his latest interview with Block Energy (LON:BLOE)  an AIM listed exploration and production company focused on the Republic of Georgia.  

Block Energy joined AIM in June 2018 raising £5m at IPO for their stage one programme which is currently underway, comprising of multi-well workover and sidetrack programme at their Norio field targeting an increase in production to 250 bopd by H1 2019. In tandem with the Norio operations Block Energy have a potentially high impact programme at West Rustavi, where they are aiming to produce 650 bopd through the drilling of two sidetrack wells in Q1 2019, and to re-test a historic gas discovery (1).

I put the following questions to Block CEO Mr Paul Haywood.

Q1. Briefly, could you provide the background to Block Energy and why the focus on Georgia?

Before establishing Block Energy the executive team had accumulated significant experience working in Georgia: I had worked as a consultant for Georgian Oil and Gas (GOG) since 2011.

In 2016/17 GOG was in financial difficulty and was seeking cash for assets to remedy corporate debt. Our relationship with GOG helped facilitate a timely acquisition facilitated by a unique situation.

Block Energy holds a 100% Working Interest (WI) in the producing Norio licence, a 90% WI in the producing Satskhenisi licence, and a 25% WI in the West Rustavi licence with the right to farm-in to up to a 75% WI.

Q2. Could you briefly explain the Satskhenisi project and your plans for it?

The Satskhenesi project will be implemented depending on the success of the Norio work programme. Essentially, Satskhenesi is inbuilt upside to Norio and available for farmout. The intrinsic value will increase exponentially depending on success at Norio.

Q3. What’s the current situation from the Norio field?

Initial results from Norio have been encouraging as per our recent press release (2), though the real test will be how the wells perform once on pump.

This will allow the company a firmer understanding of the productivity of the relevant wells. The pumps are currently being set in Norio wells 44 and 39. Subject to results the company will press ahead with its workover plan.

Q4. Can you explain a bit about the West Rustavi licence, and what activity can be expected?

West Rustavi is immediately south of the largest producing field in Georgia (Block XIb) owned 100% by Schlumberger, who are currently drilling and testing a structure in the permit that is on trend with Block appraisal targets in West Rustavi.

In December more than 200 barrels of oil were recovered from the legacy vertical well 16a at West Rustavi permit during a 10 hour flow period. An additional 300 barrels of light oil flowed to a temporary wellsite production facility over the following days. The results of the test confirm the well lies in an active hydrocarbon system and that the previously producing Middle Eocene reservoir still contains reserves and remains pressurised (3).

Block’s immediate plans for West Rustavi is to re-enter well 16a which was previously producing and perform a 100 metre sidetrack in the Middle Eocene, expecting to spud very soon.  

Following the results in West Rustavi 16a, the Company plans to move its rig across to 38 and perform another side track. After this work, the plan is re-test a significant gas discovery at well number 30.

West Rustavi is the Company’s flagship licence and offers significant vertical opportunity for both oil and gas. Oil is in the shallower zones above 2500 metres and gas deeper down below 2500 metres.

Q5. Can you explain a bit about the legacy gas discovery in the Lower Eocene and your plans for this?

In tandem with the sidetrack programme at West Rustavi, the Company is planning to workover two of the field’s other wells in order to test the potential of the Lower Eocene gas zones, which hold an estimated 606 BCF of gross 2C contingent gas resources. Previous well tests achieved rates of up to 0.9 MMCF/d from the Lower Eocene and 1.6 MMCF/d from the Upper Cretaceous.  Subject to the results of the tests, the Company plans to swiftly finalise a field development plan and gas sales contracts, and to install gas production infrastructure.

Q6. With regards to the activity at Norio and West Rustavi, roughly what process do you need to follow and how soon can any potential finds be converted into cash flow?

We are currently producing circa 20 bopd at Norio, and the infrastructure necessary to service production increase from Norio and West Rustavi is in place. Any production increase will immediately feed into current infrastructure for selling. Substantial work has been done to bring the production facility to industry standard.

We currently sell our crude at Brent minus US $10 to a domestic refinery which has capacity to acquire up to 2,500 bopd from Block. Should we exceed these levels the Company will seek to tie back into the BP line, which is also available to us at 2,500 bopd – and much more. This line is close to both West Rustavi and Norio.

Q7. Having raised £5m at the IPO in June at 4p, what do you make of the market sentiment relating to Block Energy and do you feel the current share price of around 3p is a fair reflection of where the company is at?

We believe we are significantly undervalued relative to our peers. This is primarily for two reasons: the value for oil companies through 2018 has been soft for many reasons, and the market’s perception of Georgia has been distorted due to the poor corporate governance and performance of some companies in the past.

Confidence in Block is now starting to rise, indicated by the increase in our trading activity and the number of investor meetings being requested.

  1. What can Block Energy shareholders look forward to over the next 12 months?

Lots of activity in the field. We expect good results to bolster confidence that will unlock value for our shareholders.

Thanks, Paul for taking the time to discuss the various business aspects and for sharing your thoughts.


Ticker code: BLOE, Shares in issue: 259.05m, Current SP: 3.30p,  Market Cap: £8.55m,  52 Wk Low: 2.55p,  52 Wk High: 4.00p


You can also hear a recent podcast interview with Paul Haywood below

The interviewer holds shares in Block Energy but was not remunerated to conduct the interview 


  1. AGM Statement

  1. Excellent initial production results from Norio field

  1. Positive Flow and Pressure Test Results at West Rustavi field, Georgia, and Board and Other Management Changes

O&G Risk

As always, when looking at oil and gas exploration activity the risk element is high, and a dry or non-commercial well almost certainly results in a severe share price drop.  Oil and gas exploration activity is also a very costly business, hence the future economic outlook and the ability of companies to raise future funds also needs serious consideration, alongside factors such as oil/gas price risk, political risk etc.


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