Block Energy PLC (LON:BLOE) has highlighted significant operational progress with the early production facility (EPF) at the West Rustavi project, in Georgia, where gas sales are expected in the fourth quarter of 2020.
Oil production at West Rustavi was suspended in April amidst coronavirus (COVID-19) restrictions, lower oil prices, and to preserve reserves. Today, Block revealed that some US$570,000 worth of crude was sold from its inventory, taking advantage of improving oil prices.
The EPF is a key component in enabling the company to advance gas sales from West Rustavi and it arrived on-site back in June. It has now been installed and connected to the WR-16aZ well, and under test conditions has produced dry gas over a continuous 25 hour period.
A gas gathering line is being constructed to connect the EPF with the WR-38Z and this is due to be complete by the end of October. Once connected, the EPF will be ready to process gas from the two West Rustavi wells.
The facility is initially rated to handle up to 3mln cubic feet of gas per day, though the company noted that it can be expanded and it has inlets for four additional wells.
“I am extremely pleased with the progress we are making with our EPF at West Rustavi, despite the challenges of COVID-19 and low oil prices,” Paul Haywood, Block Energy’s chief executive said in a statement.
“We remain focused on completing the remaining work in order to commence gas sales towards the end of Q4. Gas sales will not only provide an additional revenue stream to Block but will also diversify the group’s resources and provide a clear path to commercialisation of future gas developments and discoveries.
“Our acquisition of Schlumberger’s Georgian upstream business is also progressing well, opening up a raft of mature opportunities for Block,” he added.
Off-take gas buyer Bago is presently completing the final stages of permitting a pipeline which is due to be ready in the fourth quarter, to allow gas sales to start before the end of 2020.
In March, Block announced it would acquire the Schlumberger unit and, administrative challenges due to COVID-19 aside, the transaction is advancing towards state approval and the transaction’s eventual close.
Block today also noted that director Roger McMechan has expressed his intention to stand down from the board on September 30, 2020. He will continue to be engaged with the company as a consultant, providing expertise on the sub-surface and operations in Georgia.
The company said it is now engaged an energy executive search firm to assist in the appointment of a new senior independent director and an independent non-executive director.
Additionally, Block noted that it recently consulted with major shareholders, who confirmed their continued support of the company and its directors.
Interim financial results for the six months ended June 30, 2020, are expected before September 30, it noted.