RNS Number : 1256G
Block Energy PLC
30 September 2024
 

30 September 2024

 

Block Energy Plc

("Block" or the "Company")

Interim Results for the Six Months Ended 30 June 2024

Block Energy plc, the development and production company focused on Georgia, is pleased to announce the interim results for Block Energy plc and its subsidiaries (the "Group") for the six months ended 30 June 2024.

Highlights:

·   

·   

·   

·   

·   

·   

·   

·   

·   

·   

·    (31 December 2023: $713,000).

Post period events:

On 31 July 2024, the Company announced the extension of its $2.0 million loan facility, with existing lenders, for a further 18 months (to 2 February 2026) on substantially similar terms. The Company also granted a further 91,185,133 warrants in consideration for this loan extension. These warrants are exercisable at any point up until 30 July 2027, and have an exercise price of 0.85 pence per ordinary share.

Block Energy plc's Chief Executive Officer, Paul Haywood, said:

"We continue to focus on the strategy we presented at the end of 2023 to develop our high-impact assets through asset level finance, and to ensure the underlying business remains cashflow positive.

We maintain positive EBITDA, which we have grown compared to the same period last year. Production performance in the second half has improved following the workover of WR-34Z, and we have met our goal of remaining cashflow positive at current oil prices and production rates.

The farm-out of Project III, and its 2.77 TCF 2C contingent resources, is progressing. We have hosted multiple interested parties in the data room, with discussions continuing.

The development of our carbon capture storage project is well underway.

I look forward to updating shareholders on the developments in our portfolio in due course."

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' 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:

Paul Haywood

(Chief Executive Officer)

Block Energy plc

Tel: +44 (0)20 3468 9891

Neil Baldwin

(Nominated Adviser)

Spark Advisory Partners Limited

Tel: +44 (0)20 3368 3554

Peter Krens

(Corporate Broker)

Tennyson Securities

Tel: +44 (0)20 7186 9030

Philip Dennis / Mark Antelme

(Financial PR)

Celicourt Communications

Tel: +44 (0)20 8434 2643

 

Notes to editors

Block Energy plc is an AIM-quoted 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 XIB. Licence block XIB 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 XIB 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 the West Rustavi onshore oil and gas field in licence blocks XIB & XIF. 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 0.9 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).

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.

·    2C: the unrisked best estimate scenario of contingent resources.

·    Contingent Resources: quantities of hydrocarbons which are estimated to be potentially recoverable from known accumulations but are contingent on technical or commercial factors not currently defined.

·    Mbbls: thousand barrels.

·    Mboe: thousand barrels of oil equivalent.

·    MMbbls: million barrels.

·    MMboe: millions of barrels of oil equivalent.

·    MMcf: million cubic feet.

·    Tcf: Trillion cubic feet.

 

 





 

Condensed Consolidated Interim Statement of Comprehensive Income

For the six months period ended 30 June 2024


Notes

6 months ended

6 months ended

 

 

 30 June 2024

30 June 2023

 

 

Unaudited

Unaudited

 

 

$'000

$'000

Continuing operations:

 



Revenue

 

3,690

3,926


 



Cost of sales:

 



Direct costs

 

(1,618)

(1,839)

Decrease in inventory

 

(23)

(135)

Depreciation and depletion of oil and gas assets

6

(590)

(827)

 

 

(2,231)

(2,801)

Gross profit

 

1,459

1,125


 

 

 

Administrative expenses

 

(1,372)

(1,059)

Share based payments

 

(32)

(402)

Foreign exchange movements

 

(41)

10


 

(1,445)

(1,451)

Operating profit/(loss)

 

14

(326)

 

 



Other income

 

3

4

Finance income

 

15

-

Finance expense

 

(30)

(110)

 

 



Profit/(loss) for the period before taxation

 

2

(432)

 

 



Taxation

 

-

-


 



Profit/(loss) for the period from continuing operations (attributable to the equity holders of the parent)

 

2

(432)

 

 



Items that may be reclassified subsequently to profit or loss:

 



Exchange differences on translation of foreign operations

 

 

(113)

17

Total comprehensive loss for the period attributable to the equity holders of the parent

 

(111)

(415)

 

 



Profit/(loss) per share (basic)

5

0.00c

(0.06)c

Profit/(loss) per share (diluted)

5

0.00c

(0.05)c

 

 

 

 

Earnings before interest, tax, depreciation and amortisation (EBITDA)

 

4

645

491



 

Condensed Consolidated Statement of Financial Position

As at 30 June 2024

 

Notes

30 June

2024

31 December 2023

 

 

Unaudited

Audited

 

 

$'000

$'000

Non-current assets

 

 

 

Intangible assets

 

117

50

Property, plant and equipment

6

23,582

23,851


 

23,699

23,901

Current assets

 

 

 

Inventory

 

4,425

4,377

Trade and other receivables

 

1,098

971

Cash and cash equivalents

 

656

713

Total current assets

 

6,179

6,061

Total assets

 

29,878

29,962


 



Equity and liabilities

 

 

 

Capital and reserves attributable to equity holders of the Company:

 



Share capital

8

3,733

3,705

Share premium

 

34,879

34,856

Other reserves

 

5,104

4,766

Foreign exchange reserve

 

655

768 

Accumulated deficit

 

(18,387)

(18,389)

Total equity

 

25,984

  25,706


 



Non-current liabilities

 

 

 

Borrowings

7

2,000

2,000

 

 



Current liabilities

 

 

 

Trade and other payables

 

815

1,176

Provisions

 

1,079

1,080

Total current liabilities

 

1,894

2,256

Total liabilities

 

3,894

4,245

 

 

 

 

Total equity and liabilities

 

29,878

29,962

 



 

Condensed Consolidated Interim Statement of Cash Flows

For the six months period ended 30 June 2024


Notes

6 months ended

6 months ended

 

 

 30 June 2024

 30 June 2023

 

 

Unaudited

Unaudited

 

 

$'000

$'000

 

 



Operating activities

 



Profit/(loss) for the period before income tax

 

2

(432)

Adjustments for:

 



Finance and other income

 

(18)

-

Finance expense

 

30

110

Depreciation and depletion

6

590

827

Share based payments expense

 

32

402

Creditors paid in shares

 

30

-

Foreign exchange movement

 

258

(21)

Net cash flows from operating activities before changes in working capital

 

924

886

Increase in trade and other receivables

 

(127)

(1,009)

Decrease in trade and other payables

 

(363)

(516)

(Increase)/decrease in inventory

 

(48) 

360

Net cashflows from/(used in) operating activities

 

386

(279)

 

 

 


Investing activities

 

 


Expenditure in respect of intangible assets

 

(67)

(50)

Expenditure in respect of PP&E

 

(243)

(1,173)

Cash used in investing activities

 

(310)

(1,223)

 

 

 


Financing activities

 

 


Interest paid

 

(154) 

(86)

Interest and other income

 

18

-

Proceeds from borrowings

 

-

2,000

Net cash flows from/(used in) financing activities

 

(136)

1,914

 

 

 


Net (decrease)/increase in cash and cash equivalents

 

(60)

412

Cash and cash equivalents at start of period

 

713

450

Effects of foreign exchange rate changes on cash and cash equivalents

 

3

20

Cash and cash equivalents at end of period

 

656

882



 

Consolidated Statement of Changes in Equity

As at 30 June 2024


Share
capital

Share premium

Accumulated deficit

Other reserve

Foreign exchange reserve

Total equity

 

$'000

$'000

$'000

$'000

$'000

$'000

Balance at 30 June 2023 (unaudited)

 

 3,593

 

 34,785

 

 (16,651)

 

 4,825

 

 711

 

 27,263

Loss for the period

-

-

(1,781)

-

-

(1,781)

Exchange differences on translation of operations in foreign currency

 

-

-

-

 57

57

Total comprehensive loss for the period

-

-

(1,781)

-

 57

(1,724)

Shares issued

112

71

-

-

-

183

Share based payment as adjusted

-

-

-

(16)

-

(16)

Options expired

-

-

43  

(43)   

-

           -

Total transactions with owners

112

 71

43

 (59)

-

167

Balance at 31 December 2023 (audited)

 3,705

 34,856

 (18,389)

 4,766

 768

 25,706

Profit for the period

-

-

2

-

-

2

Exchange differences on translation of operations in foreign currency

-

-

-

-

(113)

(113)

Total comprehensive profit for the period

-

-

2

-

(113)

(111)

Shares issued

28

23

-

-

-

51

Share based payments accrued in 2023, issued 2024

-

-

-

306

-

306

Share based payments in 2024

-

-

-

32

-

32

Total transactions with owners

28

23

-

338

-

389

Balance at 30 June 2024 (unaudited)

3,733

34,879

(18,387)

5,104

655

25,984

 



 

Notes to the Condensed Consolidated Interim Financial Statements

For the six months period ended 30 June 2024

1.    General information

Block Energy Plc, (the "Company") is a company registered in England and Wales (05356303), with its registered office at Eccleston Yards, 25 Eccleston Place, London SW1W 9NF.

 

The Condensed Consolidated Interim Financial Statements of the Group, which comprises Block Energy plc and its subsidiaries (the "Group"), for the six-month period from 1 January 2024 to 30 June 2024, were approved by the Directors on 30 September 2024.  The Group's principal activity is oil and gas exploration, development and production.

 

The Company's shares are traded on AIM and the trading symbol is BLOE.

 

These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 December 2023 were approved by the Board of Directors on 22 May 2024 and delivered to the Registrar of Companies. The auditor's report on those financial statements was unqualified but did include a reference to the material uncertainty surrounding going concern, to which the auditors drew attention by way of emphasis of matter and did not contain a statement under s498 (2) - (3) of Companies Act 2006.

 

The Company's auditors have not reviewed these condensed consolidated interim financial statements.

 

2.    Basis of preparation

Management has prepared these interim accounts in accordance with IFRS accounting policies as applied at 31 December 2023 (without the disclosure requirements of IFRS). They do not include all of the information required in annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2023 and any public announcements made by Block Energy Plc during the interim reporting period. All amounts presented are in thousands of US dollars unless otherwise stated.

 

The comparatives are the six-month period ended 30 June 2023, except for the Condensed Consolidated Statement of Financial Position, where the comparatives are as at 31 December 2023.

 

The accounting policies adopted in this half-yearly financial report are the same as those adopted in the 2023 Annual Report and Financial Statements. There were no new or amended accounting standards that required the Group to change its accounting policies.  The Directors also considered the impact of standards issued but not yet applied by the Group and do not consider that there will be a material impact of transition on the financial statements. 

 

Going concern

The Directors have prepared cash flow forecasts for a period of 12 months from the date of signing these financial statements. The Group's forecasts are reviewed regularly to assess whether any actions to curtail expenditure or cut costs are required.

 

The Group's operations presently generate sufficient revenues to cover operating costs and capital expenditures, supporting the continued preparation of the Group's accounts on a going concern basis.

The Directors are nevertheless conscious that oil prices have been volatile during the past few years and could rise further but could also fall back in the year ahead, and that future production levels depend on both depletion rates from existing wells and the success of future drilling.

 

As part of their going concern assessment, the Directors have examined multiple scenarios in which oil prices and/or future production levels fall substantially and have concluded that it remains possible that future revenues in at least some scenarios might not cover all operating costs and planned capital expenditures, creating a material uncertainty that may cast doubt over the Group's ability to continue as a going concern.

 

Whilst acknowledging this material uncertainty, the Directors remain confident of making further cost savings if required and, therefore, the Directors consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

 

3.    Operating segments

The Group is engaged in the appraisal and development of oil and gas resources in Georgia and is therefore considered to operate in a single geographical and business segment.

 

4.    Adjusted EBITDA

Adjusted EBITDA

6 months ended

30 June 2024

6 months ended

30 June 2023


$'000

$'000




Oil and gas exploration - Georgia

1,349

1,291

Corporate and other

(704)

(800)

Total adjusted EBITDA

645

491

 

Adjusted EBITDA reconciles to operating profit before income tax as follows:

Total adjusted EBITDA

6 months ended

30 June 2024

6 months ended

30 June 2023


$'000

$'000




Depreciation and depletion

(590)

(827)

Finance and other income

18

4

Finance costs and foreign exchange

(71)

(100)

Profit/(loss) before income tax from continuing operations

 

2

 

(432)

 



 

5.    Earnings per share

The calculation for profit/(loss) per Ordinary share (basic and diluted) is based on the consolidated profit/(loss) attributable to the equity shareholders of the Company is as follows:

 


6 months ended

30 June 2024

6 months ended

30 June 2023

Profit/(loss) attributable to equity Shareholders $

$2,000

$(432,000)

Weighted average number of Ordinary Shares

726,265,669

687,068,781

Profit/(loss) per Ordinary Share ($/cents)**

0.00 cents

(0.06) cents

Weighted average number of Ordinary Shares, Warrants and Options in issue*

885,928,824

885,509,245

Diluted profit/(loss) per Ordinary Share+ ($/cents)

0.00 cents

(0.05) cents

 

*the Options in issue includes the 72,621,352 to be satisfied by shares already issued to the Employee Benefit Trust

 

** Profit per ordinary share was 0.00028 cents

 

6.    Property, plant and equipment

Unaudited

Development &

Production Assets

PPE/Computer/

Office equipment/ Vehicles

Total

Cost

$'000

$'000

$'000

At 1 January 2024

31,719

2,032

33,751

Additions*

287

80

367

Disposals

-

(30)

(30)

Foreign exchange movements

-

(16)

(16)

At 30 June 2024

32,006

2,066

34,072





Accumulated depreciation




At 1 January 2024

8,986

914

 9,900

Charge

444

146

590

At 30 June 2024

9,430

1,060

10,490





Carrying amount




At 30 June 2024

22,576

1,006

23,582

At 31 December 2023

22,733

1,118

23,851

\* This includes additions of $124,000 which relates to capitalised borrowing costs

 

 

 

 

Unaudited

Development &

Production Assets

PPE/Computer/

Office equipment/ Vehicles

Total

Cost

$'000

$'000

$'000

At 1 January 2023

29,115

2,072

 31,187

Additions

 1,111

62

1,173

Disposals

(35)

 (35)

Foreign exchange movements

2

 11

13

At 30 June 2023

 30,228

2,110

32,338

 




Accumulated depreciation




At 1 January 2023

 5,711

 661

6,372

Charge

 682

 145

827  

Disposals

-

(14)

(14)

Foreign exchange movements

(1)

3

2

At 30 June 2023

 6,392  

 795  

 7,187

 




Carrying amount




At 30 June 2023

 23,836

 1,315

 25,151

 

No impairment was recognised in the six months ended 30 June 2024 (2023: Nil).

7.    Borrowings

During the prior year the Company entered into a $2 million loan with a simple interest rate of 16% per annum becoming payable every quarter. The loan was drawn down in two tranches, with $1,060,000 being drawn down on 1 February 2023 and the remainder of $940,000 being drawn down on 10 May 2023. The maturity date was set at 18 months from the date of the drawdowns.

 

$124,000 of this interest charge was capitalised during the half-year to reflect borrowing costs directly associated with assets at pre-commercial production stage.

 

On 31 July 2024, the Company announced the extension of the loan for a further 18 months (to 2 February 2026) on substantially similar terms.  The Company also granted a further 91,185,133 warrants in consideration for this loan extension.  These warrants are exercisable at any time up until 30 July 2027 and have an exercise price of 0.85 pence per ordinary share.

No fees or commissions were paid by the Company as part of the extension of the Loan.

8.    Share capital

The Ordinary Shares consist of full voting, dividend and capital distribution rights and they do not confer any rights for redemption. The Deferred Shares have no entitlement to receive dividends or to participate in any way in the income or profits of the Company, nor is there entitlement to receive notice of, speak at, or vote at any general meeting or annual general meeting.

 

On 30 June 2024, the Company's share capital consisted of 733,395,937 Ordinary Shares (30 June 2023: 689,551,104) and 2,095,165,355 Deferred Shares (30 June 2023: 2,095,165,355).

 

9.    Related party transaction

The Company's Chief Executive Officer, Paul Haywood has provided $115,000 of the Loan referred to above and has received a further 5,243,145 new Warrants for agreeing to the extension. $9,175 (2023: 1H 2023: $6,376) has been paid in interest to Mr Haywood in the first half of 30 June 2024.

 

Mr Haywood is treated as a related party of the Company pursuant to the AIM Rules. Consequently, the participation of Mr Haywood in the provision of the Loan Facility constituted a related party transaction for the purposes of AIM Rule 13.

 

10.  Other matters

A copy of this report is available from the Group's website, www.blockenergy.co.uk

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