Block Energy Acquires Georgian Assets from Schlumberger
AIM-listed E&P independent Block Energy Plc has entered into an agreement with Schlumberger BV to acquire its subsidiary Schlumberger Rustaveli Company Ltd. (SRCL), which currently holds interests in 3 Production Sharing Contracts (PSCs) in the Republic of Georgia. Under the terms of the agreement, Block Energy will acquire producing Block XIB and exploration Block IX, while Schlumberger will apply to relinquish Block X.
The consideration for the acquisition will be satisfied by the issue of share options that will give Schlumberger the right to acquire 120 million ordinary shares, representing 23.3% of Block Energy’s enlarged ordinary share capital, at a nil exercise price (Base Options). SRCL is being acquired on a debt-free, cash-free basis. If it is determined that SRCL has net working capital assets following completion, Block will issue up to 10 million additional options to Schlumberger. For this purpose, it is agreed that the options are valued at US$0.05 each. This imputes a value to the Base Options of US$6 million. The agreed value of the options represents a premium of 92% to the closing price of Block Energy shares on March 25th, of GBpence 2.2. The Options are exercisable between 12 and 24 months from completion of the transaction, unless there is a change of control or general offer in respect of Block Energy, in which case they are exercisable immediately.
Block XIB is Georgia’s most productive block, with over 180 million bbls of oil produced from the Middle Eocene, peaking in the mid-1980s at 67,000 barrels of oil per day (bopd). The block is estimated to contain 2P reserves of 64 million barrels of oil equivalent (MMboe), with current production of 245 bopd. Block IX covers an area of 1,925 sq. km and contains 38 legacy wells, with 2 wells drilled in 2013 having oil and gas shows. The block contains several oil seeps and numerous prospects and leads with hydrocarbon indicators identified on 2D seismic.
The completion of the acquisition is conditional upon regulatory approvals in Georgia and the UK.