Block Energy Has Georgian Gusher

UK AIM-listed Block Energy found "significant oil and gas shows" with its West Rustavi well in the former Soviet republic of Georgia, it said March 20. It reached target depth of 2,659 metres with well 16a and now it will test the Middle Eocene, a process that will last about two weeks.

Block said interpretation of drill cuttings, live oil shows nd frequent spikes in gas readings "provide strong indications that the expected naturally fractured hydrocarbon reservoir Middle Eocene formation was entered, and that the entire horizontal section was drilled within it."

At $60/barrel Brent crude, the company is aiming for a gross initial flow rate of 325 b/d, generating enough cash to recoup the well cost in under six months. According to Gustavson Associates, West Rustavi's Middle Eocene reservoir holds 21mn barrels of contingent resources.

Significant oil and gas shows were also seen in the Upper Eocene build section. Gustavson estimates this holds 12mn barrels.

In February, Block increased its working interest in West Rustavi from 25% to 100%, giving it full strategic control over the development of the field. In addition to an estimated 38mn barrels of gross contingent resources of oil, the field holds Soviet-era gas discoveries which support a gross contingent resource of 608bn ft³, believed capable of producing 1mn ft³/day and earning a netback of $2.50/'000 ft³. An offtake agreement with a Georgian trader is in place.

Block is carrying out its West Rustavi operations in parallel with an ongoing multi-well workover programme at its Norio field, which it wholly owns.

CEO Paul Haywood said that "achieving our forecast of a 325 bopd production rate at 16a would move the company well above its corporate production breakeven rate." In addition to operations at 16a, it will swiftly prepare another well for sidetracking if 16a is successful, he said.

Drumming up interest in its own assets, Block said last November that companies such as ExxonMobil and Schlumberger were taking Georgia's hydrocarbon potential seriously.