21 December 2022

Block Energy plc

("Block" or the "Company")

Results of well JSR-01 DEEP testing programme

Block Energy plc, the exploration and production company focused on Georgia, is pleased to announce that the JSR-01 DEEP testing programme has proven oil from a previously unproduced zone in the Patardzeuli field.

Highlights:

·    Results of JSR-01 DEEP testing programme have demonstrated the Company's concept of unswept oil in the Patardzeuli field.

·    The well is currently on production at 45 bopd.

·    The encouraging results mean the Company will continue to pursue Project II, the Patardzeuli full-field redevelopment.

Well JSR-01 DEEP is the Company's first Project II appraisal well located in the southwest of the Patardzeuli field.  The well was drilled 470m deeper than the donor JSR-01 well, close to the original oil-water contact.  Drilled at an inclined angle, it allowed the testing of different zones to help evaluate the remaining oil potential, which will inform future drilling and redevelopment plans. The field was acquired by the Company in 2020, and had produced 98 million barrels of oil between 1975 and 1985.

JSR-01 DEEP Testing Results

The testing programme was designed to evaluate fluid levels and prove commercially productive oil zones.

Over a period of two months commencing on the 21st October, the Company tested three overlapping reservoir sections under rod pump and electric submersible pump.  The final test which has been on pump since the 9^th of December, is producing at a rate of 45 bopd and will now be handed over to production.

The results of the testing programme have demonstrated that there is unswept commercial oil in the Middle Eocene of the Patardzeuli field.  The Company is now in a position to advance Project II, from both a subsurface and operational perspective.

Future Plans for Project II

The results of JSR-01 DEEP are being incorporated into the subsurface model prior to an update of the Patardzeuli contingent resources.  This will support full-field redevelopment plans through the deepening of existing vertical wells and the design and execution of horizontal wells.

Unswept oil in the field will be initially targeted by low-cost drilling techniques using the Company's recently upgraded A-80 service rig for an initial well-deepening programme across the field (with average costs per deepening operation anticipated to be in the USD 100k region).  An opportunity set of 15 existing vertical wells is being ranked to define the optimal deepening candidates.  

Following the deepening of these wells, the Company will then focus on horizontal drilling, designed to sweep larger undrained areas and deliver superior productivity versus vertical wells, as demonstrated in the West Rustavi/Krtsanisi and Ninotsminda fields.

Commenting, Paul Haywood, Chief Executive Officer of Block Energy plc, said:

"We are pleased with the results of the appraisal programme on JSR-01 DEEP. I would like to thank the operational and subsurface teams, who employed drilling techniques and reservoir characterisation technologies not previously used in Georgia to advance this project. They have delivered a comprehensive and successful testing programme that has allowed us to gain further confidence in the commerciality of Project II full-field redevelopment potential."

Stephen James BSc, MBA, PhD (Block's Subsurface Manager) has reviewed the reserve, resource and production information contained in this announcement. Dr James is a geoscientist with over 40 years' of experience in field development and reservoir management.

 **ENDS**

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED.  ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

For further information please visit http://www.blockenergy.co.uk/ or contact:

Notes to editors

Block Energy plc is an AIM-listed independent oil and gas company focused on production and development in Georgia, applying innovative technology to realise the full potential of previously discovered fields.

Block has a 100% working interest in Georgian onshore licence blocks IX and XI^B. Licence block XI^B is Georgia's most productive block. During the mid-1980s, production peaked at 67,000 bopd and cumulative production reached 100 MMbbls and 80 MMbbls of oil from the Patardzeuli and Samgori fields, respectively. The remaining 2P reserves across block XI^B are 64 MMboe, comprising 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe. (Source: CPR Bayphase Limited: 1 July 2015). Additionally, following an internal technical study designed to evaluate and quantify the undrained oil potential of the Middle Eocene within the Patardzeuli field, the Company has estimated gross unrisked 2C contingent resources of 200 MMbbls of oil.

The Company has a 100% working interest in licence block XI^F containing the West Rustavi onshore oil and gas field. Multiple wells have tested oil and gas from a range of geological horizons. The field has so far produced over 75 Mbbls of light sweet crude and has 1.07 MMbbls of gross 2P oil reserves in the Middle Eocene. It also has 38 MMbbls of gross unrisked 2C contingent resources of oil and 608 Bcf of gross unrisked 2C contingent resources of gas in the Middle, Upper and Lower Eocene formations (Source: CPR Gustavson Associates: 1 January 2018, ERCE 2022).

In 2022, a Competent Person's Report provided by ERCE, ascribed 3P reserves of 3.01 million barrels, with an NPV project value of USD 57 million, to just a portion of the West Rustavi/Krtsanisi Middle Eocene reservoir.

Block also holds 100% and 90% working interests respectively in the onshore oil producing Norio and Satskhenisi fields.

The Company offers a clear entry point for investors to gain exposure to Georgia's growing economy and the strong regional demand for oil and gas.

Glossary

·    bbls: barrels. A barrel is 35 imperial gallons.

·    Bcf: billion cubic feet.

·    boe: barrels of oil equivalent.

·    boepd: barrels of oil equivalent per day.

·    bopd: barrels of oil per day.

·    Mbbls: thousand barrels.

·    Mboe: thousand barrels of oil equivalent.

·    Mcf: thousand cubic feet.

·    MMbbls: million barrels.

·    MMboe: million barrels of oil equivalent.

·    MMcf: million cubic feet.