12 May 2023

Block Energy plc

("Block" or the "Company")

Amended Secured Loan Facility & Related Party Transactions

As announced on 2 February 2023, Block Energy plc, the production and development company focused on Georgia, closed a senior secured loan facility ("Loan Facility") of USD 1.06 million (c. £0.86 million on 2 February 2023).

The Loan Facility permitted the Company to borrow an additional contingent amount of up to USD 2.00 million during the term of the loan from the USD 1.06 million already committed, with the existing lenders having a right of first refusal for a period of 20 business days to participate in any extension.  

The Company has now increased the Loan Facility by USD 0.94 million (c. £0.75 million on 10 May 2023), and entered into an updated Loan Agreement, with the only changes made to reflect the increased amount of the Loan Facility and to allow new lenders to participate in the current tranche, together with those of the existing lenders who have elected to participate.

The funds raised will provide liquidity to maintain momentum around scheduled crude liftings allowing the Company to accelerate the procurement of materials for the drilling of its next Project I wells. The first in the drilling sequence is KRT-45Z, located approximately 1,500 metres from the recently drilled and successful WR-B01Za well and will be spud in July.

Commenting, Phil Dimmock, Chairman of Block Energy plc, said:

"Existing Group production is now over 620 boepd (April average rate), and it is important that we keep the momentum going with the drilling campaign. The success of both JKT-01 and WR-B01Za has given us great confidence as to the full potential of Project I. These additional funds assist in the timely procurement and execution of the next development wells. We look forward to updating shareholders on further developments in due course."

The further USD 0.94 million is being lent on the same terms as the initial Loan Facility, that being for a term of 18 months from the date on which the Loan Facility was initially drawn down (2 February 2023), at which point the principal is repayable in full. The Loan Facility carries an interest rate of 16% p.a., payable quarterly in arrears in cash.  The Company may elect to repay amounts outstanding under the Loan at the end of each quarter, in part or in full, subject to a 2% early repayment fee concerning the outstanding principal amount.

The Company has provided a debenture to the lenders as security, providing a fixed and floating charge over the Company's property and assets.

Each lender will receive warrants exercisable at any point during the three years from the Closing Date of the original agreement (2 February 2023). The exercise price of each warrant shall be 1.92 pence per ordinary share. The number of warrants issued to each lender shall correspond to an exercise value equal to 50% of their respective loan commitment under the Loan Facility. Therefore, the number of warrants to be issued to lenders as part of the USD 0.94 million loan in aggregate is 19,352,394.

Related Party Transactions

The Company's Chief Executive Officer, Paul Haywood, has provided a further USD 25,000 of the Loan Facility (in addition to the USD 90,000 already committed). Its current Chief Operating Officer and former board director, Ken Seymour, has provided a further USD 25,000 of the Loan Facility (in addition to the USD 100,000 already committed).

Mr Haywood and Dr Seymour are each treated as a related party of the Company pursuant to the AIM Rules. Consequently, the participation of Mr Haywood and Mr Seymour in the provision of the Loan Facility constitutes related party transactions for the purposes of AIM Rule 13.

The Independent Directors (Jeremy Asher and Philip Dimmock) consider, having consulted with SPARK Advisory Partners Limited, the Company's nominated adviser, that the terms of the amended Loan Facility and the related parties' participation in the Loan Facility are fair and reasonable insofar as Shareholders are concerned.

**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.

Notification and public disclosure of transactions by persons discharging managerial responsibilities ("PDMRs") and persons closely associated ("PCA") with them.

Notification and public disclosure of transactions by persons discharging managerial responsibilities ("PDMRs") and persons closely associated ("PCA") with them.