Block Energy has entered into a conditional agreement with Pilgrim Exploration for an investment associated with the Ndjila and Mpari Production Sharing Contracts in Gabon to be funded by a proposed equity fundraising of new ordinary shares of US$ 6.3 million (c£ 4.65 million) to be completed in two closings.

Highlights

• The Gabon Transaction adds a new geographic area and a new value proposition to the Company's existing Georgia assets.
• 5,331 km² across two contiguous offshore licences.
• Four historical oil discoveries across the licences plus broader Pre- and Post-Salt upside.
• Near-term focus on evaluation of the discovered resources, development planning and partner discussions for drilling.
• Attractive low-cost entry into assets with discovered oil and significant potential upside in an established jurisdiction.
• The Gabon Transaction is supported by Block's existing technical and operational capability and leverages the Board's experience in West Africa to deliver value to shareholders. 
• Proposed fundraise of US$6.3 million at 1.1 pence per share comprising of a placing ("Placing") to be conducted by way of an accelerated bookbuild to be launched immediately following this Announcement and a retail offer ("Retail Offer").
• The Retail Offer of up to 13,636,363 shares to raise £150,000 is for existing shareholders only and further details will be contained in a separate announcement to be released shortly after this RNS.
• Convertible loan to be made to Pilgrim which holds (via subsidiaries) a 90% interest in the underlying Ndjila and Mpari PSCs in Gabon which, upon conversion (subject to any required regulatory approvals being obtained) will result in Block holding a 76.5% economic interest in the PSCs.

Gabon licence map showing Pilgrim acreage and select other operators

Commenting, Paul Haywood, Chief Executive Officer of Block Energy plc said:
"This transaction represents an excellent value-accretive acquisition of discovered oil and high-potential exploration in a well-known oil producing jurisdiction. With an excellent data set and highly encouraging drilling activity by former operators we believe that the assets combine an anchor development opportunity with significant upside and broad running room.

With recent farm-in progress on both Project III and Project IV in Georgia, we believe that the Gabon Transaction provides jurisdictional and geological diversification as well as genuine near-term growth potential for the portfolio and I look forward to updating shareholders on the progress of the technical work programme in due course.

We have been encouraged by the support of the Gabonese authorities for international investment in the hydrocarbon sector and look forward to working with our partners, Pilgrim and the State of Gabon, on the development of the Ndjila and Mpari PSCs."

Commenting, Simon Barry, Chief Executive Officer of Pilgrim Exploration Limited, said:
"First, we would like to thank the Gabonese Ministry of Oil and Gas for the excellent opportunity they have afforded Pilgrim and for the staff of the DGH, whose dedication and professionalism was instrumental in Pilgrim securing the PSCs. Second, we welcome Block Energy, who from the outset saw the potential in Gabon and particularly Pilgrim's assets. We look forward to building on this partnership and prosecuting the work programme for the benefit of all."

Ndjila and Mpari PSCs

The Ndjila and Mpari PSCs (the "PSCs") are located offshore Gabon in the North Gabon basin, a mature hydrocarbon province with established operators, export routes and a long production history.

The licences cover a combined area of 5,331 km2 and contain four historical oil discoveries drilled by prior operators including Texaco, Shell and Tullow.

The Iguega field acts as the anchor field within the acquired portfolio, with historical work completed by Shell on a development concept and the discovery well testing at rates of 3,300 bopd. The licences also include three other oil discoveries that Block will assess for potential follow‑on development.

Ndjila and Mpari Discovery and Prospect Map

The area offers significant potential upside, with multiple mapped leads and prospects identified in both pre‑ and post‑salt sections. The PSCs are supported by a substantial dataset, including near‑full coverage with a modern 3D seismic survey acquired in 2017. This dataset is expected to materially support prospect maturation and development planning within Pilgrim's work programme.

The Company believes that the Gabon Transaction is attractive as it provides a relatively low-cost entry into assets with discovered oil and significant potential upside in an established jurisdiction.

The entry into the PSCs is supported by Block's existing technical and operational capability and leverages the Board's experience in West Africa to deliver value to shareholders. 

The recent investments by companies such as Exxon, BP and Trafigura into Gabon provide confidence around the subsurface and surface merits of the country. Block believes that, following the technical work programme, strong interest in the Ndjila and Mpari PSCs will be generated for asset-level development finance.

The structure of the transaction through which the Company will gain exposure to the PSCs is summarised below.

Initial Technical Work Programme

Under the terms of the Convertible Loan Agreement, Pilgrim will remain the operator of the Gabon PSCs, with technical support from Block.

Pilgrim has defined an initial work programme which has been approved by and will be carried out under the oversight of and with the technical support of the Company which includes:

• Subsurface interpretation and data integration;
• Refinement of the Iguega development concept;
• Evaluation of the three other oil discoveries (Ekouata, Topaz and Pilote);
• Licence-wide mapping (including pre-salt) and prospect ranking; and
• Preparation of the assets for asset level finance for development and exploration work programmes.

 KeyFacts Energy: Block Energy Georgia country profile