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    Georgia-focused Block Slashes Spending by 40%


Block has shut down gas production to conserve its reserves.

by: Joseph Murphy

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Georgia-focused Block Slashes Spending by 40%

Georgia-focused Block Energy has taken steps to shield its business from the market turmoil, announcing on April 7 a 40% reduction in cash spending.

The London-listed junior has also shut in its two producing wells at the West Rustavi gas field, to conserve gas resources until a sales pipeline is completed later this year. Early production facilities are on their way to the field.

Block Energy has $3.4mn in cash and a crude inventory worth $470,000, it said. Before the field's closure, West Rustavi was flowing around 325 barrels of oil equivalent/day.

"These are unprecedented times for the global economy, in general, and the oil and gas sector, in particular," Block CEO Paul Haywood said. "We have to navigate our business through a new environment of low oil prices, a slowing wider economy and countrywide lock-downs. With the implementation of the measures announced today, we have made our business significantly more sustainable, as well as conserving our hydrocarbon assets for the future."

Block Energy is working "tirelessly" to complete a deal announced last month to acquire rights to two oil and gas blocks, XIB and IX, from US services giant Schlumberger. It is evaluating opportunities for re-entering existing wells at XIB,  including the deep Pat E-1 gas well, in order to sidetrack it and complete a horizontal section. Previous data from Pat E-1 indicates that the well has penetrated structures containing 600bn ft3 of initial in-place gas resources.

"Drilling a horizontal hole in the best zone has the potential of changing these resources into reserves, ready for production," Block Energy said.

"With a determination to achieve first gas sales and the preparation of a comprehensive exploitation plan, leaving it well-positioned as the Covid-19 crisis subsides and oil prices recover," Haywood continued.

Block Energy also announced that its programme to re-enter and sidetrack the WR-51Z well had been cancelled because of the poor condition of the original well. Block Energy is also developing the Norio and Satskhenisi fields in Georgia.