Exploration and appraisal in Georgia continues to gain momentum, with the latest joint venture (JV) between Blake Oil & Gas (UK) and MND Group (Czech Republic) highlighting growing interest amongst independents in the underexplored acreage.
While aspects of the business environment in Georgia remain onerous (as our Risk/Reward Ratings suggest), the government's willingness to attract expertise and capital to develop its oil and gas sector - and break its reliance on imports - has prompted the establishment of a clear regulatory and legal energy framework and has greatly reduced above-ground risks. This has drawn in a plethora of independents over recent years. MND Group joins Frontera Resources and Range Resources (among others) in exploring in Georgia. As E&A activity increases and prospectivity is assessed we anticipate interest in Georgia to grow.
|Lagging Behind Its Peers|
|BMI's Risk/Reward Ratings, Scores out of 100|
Under the terms of the JV, MND Group will acquire a 50% equity in Blake's three subsidiaries ( see table below) that own and operate the production sharing contracts (PSCs), for nearly US$100mn. Blake will retain operatorship of the PSCs. This will allow MND Group to realise its aspiration of becoming a CEE-focused E&P company (and could also catalyse the divestment of its assets in Pakistan and Yemen).
|Contingent Recoverable Resources - P50||Size||Blake subsidiary, 100%|
|Source: Blake Oil & Gas|
|Ninotsminda PSC||Manavi oil discovery||Liquids||130mn bbl||113km 2 (entire PSC)||Ninotsminda Oil Company Limited|
|Nazvrevi PSC||Liquids||787km 2||CanArgo (Nazvrevi) Limited|
|Norio PSA||Block XIC (Norio oil discovery)||Liquids (Oligocene era)||210mn bbl||508km 2||CanArgo Norio Limited|
|Liquids (Middle Eocene era)||196mn bbl|
Competent Person's Reports from Dutch company Netherland, Sewell & Associates, Inc. have shown high prospectivity across Blake's acreage, particularly in the Ninotsminda and Norio PSCs. According to the company's website, technical audits estimate that the three PSCs could contain total combined reserves and best guess contingent recoverable resources of 357mn barrels of oil equivalent (boe), with further exploration upside of 2,151mn boe in place. However, in spite of success during initial appraisal ventures, Blake has also encountered several technical difficulties which have significantly stalled exploration and appraisal. For Blake, this JV means sharing the cost, operational and technical risks of its E&A programme.