Close of Bookbuild and results of Fundraising

3 December 2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 ("MAR"). UPON PUBLICATION OF THIS ANNOUNCEMENT, THIS INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Block Energy PLC

("Block Energy" or "the Company")

Close of Accelerated Bookbuild and results of Fundraising

Further to the announcement made yesterday, Block Energy plc (AIM: BLOE), the production company focused on Georgia, is pleased to announce it has completed a placing of, and subscription for, 176,000,000 new Ordinary Shares ("New Shares"), raising approximately £5.28 million (before expenses) with investors at an Issue Price of 3 pence per share ("Fundraising").

The Fundraising comprised the issue of 144,666,667 New Shares pursuant to a placing ("Placing") and the issue of 31,333,333 New Shares pursuant to direct subscriptions with the Company ("Subscription"). Mirabaud Securities Limited ("Mirabaud") acted as sole bookrunner and broker in connection with the Placing.

The Issue Price represents a discount of approximately 19.1 per cent to the 5-day volume weighted average price at close of business on 2 December 2020.

The Fundraising is conditional upon, inter alia, approval by Shareholders at the General Meeting of the Resolutions. The Resolutions will provide the Company with the authority to allot and issue, the New Shares. It is expected that the New Shares will be admitted to trading on AIM at 8.00 a.m. on or around 31 December 2020.

Upon Admission, the Enlarged Share Capital is expected to be 614,542,093 Ordinary Shares. On this basis, the New Shares will represent approximately 28.64 per cent. of the Company's Enlarged Share Capital.

Expected Use of Proceeds

The Company is undertaking the Fundraising in order to fund the implementation of the first phase of a new, two-phase development strategy, following its acquisition of Schlumberger Rustaveli Company Limited ("SRCL").

Pursuant to the first phase of the development strategy ("First Phase"), which is to be undertaken during the course of the next 12 months, the Group intends to:

·    Restart the two existing wells at West Rustavi, WR-38Z and WR-16aZ, to resume oil production and commence gas sales from the newly commissioned early production facility.

·    Continue base production from existing wells in Block XI^B, Norio and Satskhenisi.

·    Drill one new well under the West Rustavi PSA ("WR-BA").

·    Re-enter an existing well under the Block XI^B PSA ("JKT-1") and drill a new horizontal sidetrack.

·    target an initial production rate of 550 bopd at each of WR-BA and JKT-1.

·    Workover of existing well WR-16aZ at West Rustavi, including the installation of an electrical submersible pump, to target increased production of oil and gas.

The two wells proposed to be drilled in the First Phase are intended to further increase production and cashflow from West Rustavi and Block XI^B in order to target in excess of US$40 million net present value of future cash flows.

Following completion of the First Phase, the Group intends to undertake the following works as the second phase of the development strategy ("Second Phase"):

·    Drill a further four wells commencing at the end of 2021 and during the course of 2022.

·    One of these four wells will be under the West Rustavi PSA ("WR-BB") and the other three will be under the Block XI^B PSA - "RUS-BA" in the Rustavi oil field and "PAT-BA" and "PAT-BB" in the Patardzeuli oil field.

The Directors believe that the Company is excellently placed to create asset value and cash by implementing the defined development strategy set out above.

Notice of General Meeting

A Circular explaining the background to and reasons for the Fundraising and containing the Notice of General Meeting is expected to be posted to Shareholders shortly. A copy of the Circular and Notice of General Meeting will be notified once published and thereafter be made available on the Company's website: www.blockenergy.co.uk.

Capitalised terms not otherwise defined in this announcement shall have the same meaning ascribed to such terms in the announcement released on 2 December 2020 unless the context requires otherwise.

Chief Executive Officer Paul Haywood commented: 

"I am pleased to be able to announce the successful completion of our placing today. The equity raise enables Block to deploy capital into its significant portfolio, which has been strengthened by the recent acquisition of SRCL. As part of the First Phase capital deployment, Block will restart production at the West Rustavi field, drill a new well in West Rustavi and perform a re-entry of a well in the recently acquired XI^B licence area. Both wells will be tied into the newly commissioned early production facility, targeting a production rate in excess of 1,000 boepd, which will significantly increase Block's net free cash flow.  The Second Phase will see a further four wells drilled in the Group's portfolio, adding further production and establishing Block as a significant oil and gas producer. I would like to thank all our shareholders for their continued support and welcome our new shareholders as we begin a new phase of development."