Thursday 16 May 2019 2:06 pm

Block Energy raises £12m to fund better than expected new well

Block Energy today completed a £12m fundraise this morning after the company found it needed more money to explore a well which proved much more fruitful than first thought.

The Aim-listed oil explorer said it had placed around 109m new shares at 11p each, a discount of nearly 16 per cent on yesterday’s closing price.

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Shares were trading down 3.8 per cent this afternoon to 12.55p, but still ahead of the 11p placing price.

“The funds will essentially be used to accelerate the production ramp up at the West Rustavi oil and gas field, including up to four new development wells and an expansion of production capacity to 4,000 to 5,000 barrels of oil per day,” said James Midgley, an analyst at Block’s broker Mirabaud.

Georgia-focused Block was given its first major boost since listing a little under a year ago in April when its West Rustavi well showed results significantly above expectations.

Tests indicated the well would produce more than three times higher than expected and, the company said, one of the best results in the country.

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“We are delighted to have secured support for an ambitious work programme to develop our West Rustavi licence, the potential of which was confirmed by last month's excellent oil production test rates,” said chief executive Paul Haywood.

He added: “The funds raised also give us the freedom to explore fresh opportunities: we are a young, ambitious company keen to apply the low cost, innovative drilling technologies we have deployed in Georgia to new ventures in the region and beyond. Today marks a major step forward for Block as we move towards our objective of becoming one of Aim’s newest mid-tier oil and gas producers.”