Block Energy gets farm-in proposal for Georgia's Project III

(Sharecast News) - Block Energy announced on Monday that it had received a non-binding farm-in proposal for its Project III gas interests in Georgia, offering to fund appraisal and early development work at the Patardzueli-Samgori field. The AIM-traded company said the indicative offer came from a large energy group following detailed technical and commercial discussions and included a full carry on the appraisal programme and initial development costs.

It said the proposal covered re-testing three historical wells, drilling two highly inclined sidetracks targeting the Lower Eocene horizon, and undertaking full reservoir data acquisition and well-testing operations.

It also included funding for construction and hook-up of an early-production facility capable of handling 20 million cubic feet per day, equivalent to roughly 3,300 barrels of oil equivalent per day.

Block Energy estimated the gross value of the carry at between $25m and $30m.

The Patardzueli-Samgori field contains 1,074 billion cubic feet of 2C contingent gas resources with an estimated net present value of $501m, according to a 2024 report by Oilfield Production Consultants.

Project III also encompassed the Rustavi and Teleti fields, which together contain a further 1,710 billion cubic feet of contingent resources, as well as the South Dome exploration prospect, holding 574 billion cubic feet of unrisked prospective resources.

All assets lay within about 15 miles of the South Caucasus Pipeline, a key conduit for Caspian gas exports to Europe.

Completion of the farm-out remains subject to negotiation of definitive binding agreements and approval from the Georgian government.

"We are very pleased to have received a farm-in offer from a strong prospective JV partner with whom we have progressed extensive negotiations," said chief executive Paul Haywood.

"While there is no certainty that a transaction will complete, the non-binding offer meets our core objectives - a full carry of the appraisal programme and early-stage development of Patardzueli-Samgori, a field with over 1 Tcf of 2C contingent gas resources, with material upside across the Rustavi and Teleti fields as well as the South Dome exploration prospect which are all located within 15 miles of the South Caucasus Pipeline, one of Europe's major gas import corridors."

Block Energy said it will continue progressing discussions and update shareholders as negotiations advanced.

At 1440 GMT, shares in Block Energy were up 26.92% at 0.83p.

Reporting by Josh White for Sharecast.com.