Block Energy has agreed to acquire Schlumberger Rustaveli, a subsidiary of Schlumberger, which holds three production sharing contracts in Georgia.

Through the acquisition, Block Energy gains the producing Block XIB and the exploration Block IX. The third concession, Block X, held by the Schlumberger subsidiary, has been agreed to be relinquished.

Block XIB, which spans 615 km2, is said to be the largest ever-producing asset in Georgia with more than 180 million barrels of oil produced. Located in the Kura Basin, Block XIB has been predominantly producing from the Middle Eocene.

Block IX, on the other hand, spans 1,925 km2 and is covered with 454km of 2D seismic, which was acquired in 2010. The exploration block in Georgia has 38 legacy wells, with two wells which were drilled in 2013 having oil and gas shows, said Block Energy.

How the addition of the two blocks will help Block Energy

The company said that the transaction will help it significantly boost its access to production, reserves, and resources, while increasing its acreage by more than 30 times. Furthermore, the deal is said to be an important milestone towards helping the company to become the leading independent oil and gas producer in Georgia.

Upon completion of the deal, the company will immediately increase its production by 245 barrels of oil per day (bopd), 2P reserves of oil and gas by 64 million barrel of oil equivalent (mboe), 2C contingent resources by 29 million boe. The deal will also add significant upside potential of 245 million boe of prospective resources, said the company.

The transaction will increase Block Energy’s total licence area to 2,622 km2.

Block Energy CEO Paul Haywood said: “A critical component of this transaction is that it will be completed with no cash consideration, using options on our own share capital.

“The Acquisition demonstrates management’s ability to identify, compete for and secure the right deals for its shareholders in an environment posing unprecedented challenges for the industry.”

Closing of the deal will be subject to regulatory approvals in Georgia and also in the UK.