Massive volume spike last friday with great news received from company.
Chart notes within it.

BLOE key points – from Asha (Twitter: @asha231214)

Mcap             £8m
Cash raised in June 18 on Listing on AIM £5m gross at 4p; currently trading at 3p

Estimated cash: £2.5m
Calc:
Cash from placing net estimate: £4.5m
Less: cash burn £300k/2017 accounts gives £300k x 4 = £1.2m used since June
Less: $500K for additional 20% in W Rustavi licence = £400k
Less: Upfront Drill hire $500k = £400k
Cash estimate currently = £2.5m
Possible additional cost:
For extra 6 months drill hire not due yet $250k = £200k

ASSETS
1. 100% Norio (development field) and 90% Satskhenisi (currently producing 15 bopd)

1.1mmbbl 2P net oil             reserves to BLOE
32 mmbbls 2C net oil             resources to BLOE
Gross NPV $26.9m

2. 25% West Rustavi (development stage) to be increased to 75% with the 2 side track drills in Q4 via earn in

0.34 mmbbls 2P oil             reserve net to BLOE
456 bcf 2C gas resource             net to BLOE
28 mmbbls 2C oil             resource             to BLOE
Unrisked project value to BLOE of $600m at 50% recovery rate

KEY POINTS

Funded to recomplete 10 wells and side track 3 wells targeting production to 900bopd (break even is at 120bopd) by Q1 19

Low costs in Georgia and existing wells being worked over using horizontal side tracks

Gas provides the big upside – first retest of W Rustavi well in late Q4/Q1 which has flowed in previous test and attributed to the 456bcf net resource             . However Oil             resource             vs the mcap             is also v attractive. The low cost and low breakeven means the company will start to generate free cashflow from the first workovers in q4.

Schlumberger             currently drilling adjacent to W Rustavi license which could generate significant interest.

Gas pipelines and infrastructure exist in close proximity to W Rustavi and Georgia needs a cheap domestic source of gas supply as it imports 100% of it’s gas from Azerbaijan

Gas offtake signed with Bago, the largest established private gas supplier and purchaser in country to take minimum 1000bcf from BLOE’s W Rustavi field. Bago have significant capacity and expertise and are an excellent relationship for BLOE as they have got a strong interest in assisting the company in terms of setting up infrastructure to market BLOE’s gas when ready.
Bago will take as much gas as BLOE can supply from their field.

“In addition, Bago is considering financing wholly, or in part, required gas infrastructure at West Rustavi, including pipeline tie backs to local infrastructure and gas processing plant solutions”

This would mean BLOE would not need to come back to market to fund the field development. In addition if need be Paul Haywood believes that due to government support, debt and structured finance would also be also available options.
Rns dated 5 Oct 18

CATALYSTS

Work program to commence start October according to rns dated 24 Sep saying the first A50 rig will be mobilised within days.

Q4 plan

Norio and Satskhenisi
Work to be done on Norio and Satskhenisi (N&S) first aiming to get to 250 – 300bopd production (Risk factor 75%) using A50 rigs. Rigs will then move to West Rustavi. N&S will provide free cash flow from production by Q1 19 as break even is so low at 120 bopd.

West Rustavi
ZJ40 rig will be used for:
2 high impact side track wells into existing well bores which have produced oil             and gas
Aim to produce 650b/day from the 2 side tracks (from Proactive preso 4 Sep)
Risk Factor 75%

Will result in increasing earn in to 75%
Will validate field development plan
Will transfer 2C contingent gas and oil             resource             into reserves

BIG catalyst – A50 hired rig will be used to retest the Lower Eocene which has been assigned net unrisked 2C contingent resource             of 291 bcf and 3.5mmbbls of condensate.

This lies on trend to the same play being targeted by Schlumberger             in neighbouring fields.
As per the Proactive preso this “will be chased” in Q4 18 /Q1 19 after the Norio drills.
This could be moved forward on positive Schlumberger             results according to Vox podcast 5 Oct 18.

COSTS and NET BACKS

Profitable operations
Gas
Estimated cost of gas development and production at West Rustavi is c.US$2.00/Mcf which equates to operating netbacks of c.US$2.6/Mcf (assuming a 75% working interest) – Georgia currently purchases its gas for c.US$5.5 /Mcf
With a netback of c.US$2.6/Mcf and conservative 50% recovery the Board believes this translates into a c.US$600m project value to the Company for W Rustavi

Oil            
Existing oil             production costs approximately US$25 per barrel and is sold at Brent minus US$10 per barrel – target of 900 barrels
So at Brent $70 less $10 less cost $25 = $35/barrel net back
300 days x $35 x 650bopd = $6.8m = £5.2m
X 75% WI = $5.1m = £ 4m profit just at W Rustavi
Note W Rustavi production subject to FDP             approval

For N & S estimated profit would be $70-$10-$25 = $35/barrel
300 days x $35 x 250bopd = c$2.63m = c£2m

Risks
Shares have been consolidated since these placings so these are at 4.25p in today’s money [NEX placing of £250k (29,411,765 shares at 0.85) pre IPO ; a further £90k issued to MYN pre IPO , (10,588,235 at 0.85)]

Other major shareholders derisking

Jurisdictional risks: Georgia, recent government changes but any possible delays mitigated by need for domestic gas source so state is keen to move forward with the gas appraisal

Overhead supply from IPO

Low liquidity issues

For reference:
September Presentation
http://www.blockenergy.co.uk/wp-content/uploads/2018/09/block_energy_corporate_presentation_sep_18.pdf

Interview and presentation
https://www.youtube.com/watch?v=uBn-887-slI
https://t.co/zqqyW8M1rI
https://t.co/m2OYfEKzZs