Block Energy announces increased EBITDA and 2C resource growth in H1 2024 interim results

Block Energy plc, a development and production company focused on oil and gas in Georgia, has announced its interim results for the first half of 2024. Despite facing operational challenges, the company has maintained positive cash flow and increased its earnings before interest, taxes, depreciation, and amortisation (EBITDA), highlighting steady production performance.

During the six months ended 30 June 2024, Block Energy worked a total of 144,072 operational man-hours, down from 283,176 hours in the first half of 2023. The company reported one lost-time incident, consistent with the safety record of the previous year. An independent engineering report was completed on the Patardzueli-Samgori Lower Eocene and Upper Cretaceous reservoirs (Project III), identifying 1,074 BCF of 2C contingent resources. Later, Block announced an additional 1,700 BCF of contingent resources in the Rustavi and Teleti fields, bringing the total Project III 2C contingent resources to 2,774 BCF. This announcement paved the way for a farm-out campaign, which is now progressing with multiple interested parties.

In a strategic move towards carbon capture and storage, Block Energy signed a Memorandum of Understanding with JSC Rustavi Azot, a subsidiary of Indorama Corporation, one of Asia’s largest chemical companies. This partnership could potentially meet the significant demand for carbon capture and storage at the Rustavi fertiliser factory.

Financially, Block remained cashflow positive throughout the period, achieving an EBITDA of $645,000, up from $491,000 in the same period last year. Although the company posted a modest profit of $2,000 compared to a loss of $432,000 in the first half of 2023, total production fell to 82.8 Mboe, comprising 61.3 Mbbls of oil and 21.5 Mboe of gas. This marks a decrease from the 96.4 Mboe produced in the first half of 2023. Average daily production also dropped to 455 boepd, down from 533 boepd last year, although a workover of well WR-34Z improved production in the second half of the period. Between 1 July and 27 September 2024, daily production averaged 527 boepd.

Oil sales for the period amounted to 46.6 Mbbls, generating $3.3 million in revenue at an average price of $71 per barrel. Gas sales contributed a further $0.38 million, with 93.5 MMcf sold at an average price of $4.1 per Mcf. The company ended the period with $656,000 in cash, slightly down from $713,000 at the end of 2023.

Post period, Block extended its $2.0 million loan facility by 18 months to 2 February 2026 and issued 91,185,133 warrants, exercisable until 30 July 2027, at a price of 0.85 pence per ordinary share.

Paul Haywood, Block Energy’s Chief Executive Officer, reiterated the company’s focus on asset-level finance and maintaining positive cash flow, adding that production had improved following the workover of WR-34Z. Haywood also highlighted progress on the farm-out campaign for Project III and the ongoing development of the company’s carbon capture storage project, noting that discussions with potential partners were advancing.

Block’s Subsurface Manager, Dr Stephen James, reviewed the reserve, resource, and production data included in the report. Dr James has over 40 years of experience in field development and reservoir management.