Block Energy (AIM:BLOE) has executed a binding Framework Agreement to farm out Project III to Zhijiang Sanning Energy, with Sanning taking a 51% participating interest in the Lower Eocene and deeper horizons of the XIB and XIF PSCs and carrying up to USD 75 million of appraisal and early‑facilities expenditure.
Under the deal, Sanning will fund a US$13m firm appraisal programme for the Patardzueli‑Samgori field and, subject to successful results, carry a further estimated US$12m for an early gas processing facility and sales pipeline. At Sanning’s election, it may fund an optional Rustavi/Teleti appraisal and initial facilities programme, currently estimated at US$50m. Block will retain 49% and remain operator throughout appraisal, and keeps 100% ownership of Projects I, II, IV, CCS and existing production.
Project III holds 2.77 TCF 2C contingent gas resources (Block Energy, 2024) and an estimated gross success‑case NPV10 of US$2.2bn; initial converted wells target c.20 MMCF/d (≈3,300 boepd) with a phased 2C plateau potential up to 500 MMCF/d.
The Transaction Documents are to be finalised in H2 and remain subject to Georgian and Chinese governmental approvals, AIM regulatory and shareholder approvals, and customary conditions.
"This is a major step forward for Block and a defining milestone for Project III. The agreement provides a clear pathway to secure substantial third‑party capital for appraisal and early gas monetisation, whilst preserving significant upside for our shareholders through our retained interest and continued operatorship. Just as importantly, we see this as the foundation of a broader strategic partnership. Block brings upstream capability, while Sanning brings downstream demand, infrastructure ambition and commercial depth. We believe this partnership has the potential to extend beyond Georgia as we continue to expand our new ventures strategy." Paul Haywood, Chief Executive Officer of Block Energy plc, said.
