Block Energy Plc agreed to a no-cash deal to acquire Schlumberger BV subsidiary Schlumberger Rustaveli Co. Ltd. (SRCL), increasing Block Energy's access to production, reserves, and resources upon regulatory approvals in Georgia and the UK.
Of the three production sharing contracts currently held by SRCL in Georgia, Block Energy will acquire producing Block XIB and exploration Block IX. Schlumberger will apply to relinquish Block X.
Block XIB, in the Kura basin and charged by a well-proven petroleum system, covers 615 sq km and is the largest ever-producing asset in Georgia with over 180 million bbls of oil produced. Production to date has been predominantly from the Middle Eocene the same geological horizon as targeted in West Rustavi, but with greater reservoir thickness, Block Energy said (OGJ Online, Sept. 12, 2017). Four wells have been drilled since 2009, three drilled pre-2017 by a former licensee and one, PAT-E1, in 2018-2019 by Schlumberger whose focus was appraisal of the natural gas in the Lower Eocene and Upper Cretaceous.
A state-owned underground gas storage project lies within the boundaries of the block and is close to the 600 bcf structure recently appraised by Schlumberger. The Baku-Tbilisi-Ceyhan and South Caucasus pipelines pass through the block.
Exploration Block IX covers an area of 1,925 sq km with 454 km of 2D seismic acquired in 2010 and 960 km of vintage 2D seismic. The block has 38 legacy wells—two drilled in 2013 containing oil and gas shows—and several oil seeps and numerous prospects and leads with hydrocarbon indicators identified on 2D.
Upon completion, the deal will boost production by 245 b/d, increase 2P reserves of oil and gas by 64 MMboe, and 2C contingent resources by 29 MMboe, and add upside potential of 245 MMboe of prospective resources. In Georgia’s oil and gas fairway, Block Energy will hold a license area of 2,622 sq km.
The agreement includes a central production facility with storage for 36,000 bbl, a workshop, a laboratory, and a compound with an office and warehouse. A term of 14 years remains on both permits with possible extensions of 5 years.
Terms of the deal will be satisfied by the issue of share options.
