Annual Report and Financial
Statements
Year ended 31 December 2024
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
1
Contents
Company Information ............................................................................................................................................. 2
Strategic Report ...................................................................................................................................................... 3
Strategy and Business Model ............................................................................................................................. 3
Chairman’s Statement ...................................................................................................................................... 14
Chief Executive Officer’s Statement ................................................................................................................. 15
Financial Review ............................................................................................................................................... 17
Principal Risks and Uncertainties ..................................................................................................................... 19
Statement of Corporate Responsibility ............................................................................................................ 25
Board of Directors ............................................................................................................................................ 28
Report of the Directors ......................................................................................................................................... 29
Governance Report ............................................................................................................................................... 32
Remuneration Report ........................................................................................................................................... 38
Independent Auditor’s Report to the Members of Block Energy PLC ................................................................... 42
Financial Statements ............................................................................................................................................. 48
Consolidated Statement of Consolidated Income for the Year Ended 31st December 2024 ............................ 48
Consolidated Statement of Financial Position for the Year Ended 31st December 2024 .................................. 49
Consolidated Statement of Changes in Equity for the Year Ended 31st December 2024 ................................. 50
Consolidated Statement of Cashflows for the Year Ended 31st December 2024 .............................................. 51
Notes Forming Part of the Consolidated Financial Statements ........................................................................ 52
Parent Company Statement of Financial Position for the Year Ended 31st December 2024 ............................ 76
Parent Company Statement of Changes in Equity for the Year Ended 31st December 2024 ............................ 77
Parent Company Statement of Cashflows for the Year Ended 31st December 2024 ........................................ 78
Notes Forming Part of the Parent Company Financial Statements .................................................................. 79
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Company Information
Officers and Advisors
Directors
Paul Haywood
Chief Executive Officer
Philip Dimmock
Independent Non-Executive Chairman
Jeremy Asher
Independent Senior Non-Executive Director
UK Office
33 Cavendish Square
London
W3G 0PW
UK company number: 05356303
www.blockenergy.co.uk
Company Secretary and Registered Office
Orana Corporate LLP
25 Eccleston Place
London
SW1W 9NF
Block Energy Plc is quoted on AIM (Symbol BLOE)
Advisors
Broker
Tennyson Securities
A trading name of Shard Capital Partners LLP
20 Fenchurch Street
London
EC3M 3BY
Registrar
Share Registrars Limited
3 The Millennium Centre
Crosby Way
Farnham
Surrey
GU9 7XX
Nominated Advisor
Spark Advisory Partners Limited
5 St John’s Lane
London
EC1M 4BH
Bank
Barclays Bank PLC
1 Churchill Place
Canary Wharf
London
E14 5HP
Independent Auditor
PKF Littlejohn LLP
15 Westferry Circus
London
E14 4HD
Public Relations
Celicourt Communications Limited
4 Bream’s Buildings
London
EC4A 1HP
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Strategic Report
Strategy and Business Model
Block Energy PLC strategically manages a diversified and robust portfolio of assets in Georgia, designed to
systematically convert resources into reserves, reserves into production, and ultimately deliver significant
shareholder value.
The portfolio spans seven Production Sharing Contracts ("PSCs") covering multiple stages of the Exploration and
Production ("E&P") lifecycle, featuring both producing fields and high-impact exploration opportunities. The
Company structures these assets as distinct Projects, to clearly communicate their strategic intent and potential.
Project I – West Rustavi/Krtsanisi (Middle Eocene): This core production and development asset has delivered
consistent results, with six successful wells drilled between 2018 and 2024, supported by comprehensive
subsurface analysis and operational improvements. An independent reserve report (ERCE, 2022) over a portion
of the field known as the ‘Krtsanisi Anticline’ confirmed gross reserves (3P) of 3.01 MMbbl oil and 2.14 BCF gas.
Current plans to implement 'slim-hole' drilling technologies promise to significantly reduce costs across a full
field development programme and sustain profitable production.
Project II – Patardzueli-Samgori (Middle Eocene): A prolific oil field, discovered in the 1970s and developed into
the early 1980s, the field produced approximately 180 MMbbl over a period of 8 years. Project II offers
substantial redevelopment potential based upon an analysis of original oil in place vs. recovery to date. The asset
holds a significant remaining gross 2C contingent resource of 235 MMbbl (Block Energy, 2022). The Company is
leveraging its comprehensive subsurface evaluations and suitable enhanced oil recovery techniques to attract
partners for redevelopment of the field.
Project III - Patardzueli-Samgori, Rustavi, Teleti, South Dome (Lower Eocene, Upper Cretaceous): Project III is a
transformative appraisal programme targeting substantial gas resources in deeper reservoirs of the Patardzueli-
Samgori, Rustavi, Teleti, and South Dome fields. The fields collectively host a gross 2C contingent resource of
2.77 TCF with a notable Net Present Value (NPV) of approximately $1.65 billion (Block Energy, 2024). Fully costed
and defined appraisal and development plans are in place for the three discovered fields, with work ongoing on
the recently acquired South Dome field. An independent assessment of the contingent resources in the
Patardzeuli-Samgori field indicates gross 2C recoverable resources of 1,074 BCF (OPC, 2024). An ongoing farm-
out process has attracted multiple industry participants, underscoring the project’s significant commercial
viability and strategic importance.
Project IV – Exploration Prospects (Chokrak, Maikop, Oligoacene, Upper Eocene, Middle Eocene): Project IV
encompasses a highly prospective exploration programme primarily focused on the Martkopi Terrace prospect
within the XIQ licence. This prospect alone offers substantial gross mean unrisked recoverable of 267.2 MMbbl
oil and 213.4 BCF gas (DeGoyler MacNaughton, 2023). Block holds an initial 10% interest in the XIQ licence with
an option to increase this to 22%. Block’s collaboration with the operator and active negotiations for farm-in
partners further reinforce the attractiveness and strategic value of Project IV.
Carbon Capture and Storage (CCS) – Patardzueli-Samgori, South Dome (Middle Eocene): Block’s pioneering CCS
initiative, in collaboration with JSC Rustavi Azot (Indorama Corporation), positions the Company at the forefront
of regional carbon management. Independent studies have confirmed significant CO₂ sequestration potential of
up to 256 million tonnes (OPC, 2023). The Company is focused on ensuring disciplined capital allocation and
ongoing enhancement of shareholder returns.
The accompanying asset map illustrates the strategic locations and potential of Block Energy’s diverse asset base:
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Figure 1 - Location of Block Energy assets
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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The Company’s Projects and assets are as follows:
Project
Associated Field(s)
Associated
PSC(s)
Reservoir
Hydrocarbon
Type
Project Stage
Company
Participating
Interest
Project I
West
Rustavi/Krtsanisi
XIB/XIF
Middle Eocene
Oil and Gas
Production &
development
100%
Project II
Patardzueli-Samgori
XIB
Middle Eocene
Oil
Field
redevelopment
100%
Project III
Patardzueli-Samgori,
Rustavi, Teleti, South
Dome (Prospect)
XIB/XIF
Lower Eocene,
Upper Cretaceous
Gas
Appraisal &
Exploration
100%
Project
IV*
Martkopi Terrace
(Prospect), Norio
Intermediate
(Prospect), Norio
Deep (Prospect),
Norio East (Prospect)
IX, XIQ, South
Samgori
Middle Eocene,
Chodrak, Maikop
Oil & Gas
Exploration
100% (IX), 10%
(XIQ), Option
(South
Samgori)
CCS✝
Patardzueli-Samgori
XIB
Middle Eocene
Carbon Dioxide
Pilot
100%
n/a
Norio
Norio
Maikop
Oil
Production
100%
n/a
Satskhenisi
Satskhenisi
Maikop
Oil
Production
90%
*Project IV:
•
Block Energy holds 100% of the IX PSC.
•
Block Energy holds 10% of the XIQ PSC, with Georgia Oil and Gas Limited holding 68% (Operator) and Georgian Oil and
Gas Corporation holding 22%.
•
Block Energy holds an option to acquire an interest in the South Samgori PSC from Georgia Oil and Gas.
✝CCS:
•
Block Energy holds 100% of the XIB PSC. The Company is partnered with JSC Rustavi Azot, a subsidiary of Indorama
Corporation Pte Ltd, on a pilot study.
The Company’s reserves and resources are as follows:
Field/Project
Type
Units
Reserves/Resources
Block Energy
Interest
Source
Reserves
1P (Gross)
2P (Gross)
3P (Gross)
Mean
(%)
Krtsanisi Anticline (Project
I)
Oil
MMbbl
0.19
1.07
3.01
-
100%
ERCE. 2022 (5 well
programme)
Gas
BCF
0.34
1.07
2.14
-
100%
Contingent Resources
1C (Gross)
2C (Gross)
3C (Gross)
Mean
West Rustavi/Krtsanisi (Full
Field Project I)
Oil
MMbbl
12.5
19.5
27.5
-
100%
Block Energy, 2022
Gas
BCF
79.6
123.6
180.6
-
100%
Patardzueli-Samgori
(Project II)
Oil
MMbbl
105.1
235.0
396.0
-
100%
Block Energy, 2022
Patardzueli-Samgori
(Project III)
Gas
BCF
926.0
1,072.0
1,222.0
1,073.0
100%
OPC, 2024
Rustavi (Project III)
Gas
BCF
884.0
1,062.0
1,245.0
1,064.0
100%
Block Energy, 2024
Teleti (Project III)
Gas
BCF
493.0
638.0
802.0
644.0
100%
Block Energy, 2024
Prospective Resources
1U (Gross)
2U (Gross)
3U (Gross)
Mean
South Dome (Project III)
Gas
BCF
501
574
651
-
100%
Block Energy, 2025
Martkopi Terrace (Project
IV, XIQ)
Oil
MMbbl
135.8
239.4
420.4
267.2
10%
DeGoyler
MacNaughton, 2023
Gas
BCF
105.6
193.3
337.9
213.4
Remainder XIQ Prospects
& Leads
Oil
MMbbl
49.4
120.9
315.0
165.5
10%
Gas
BCF
72.2
139.0
330.9
179.8
Carbon Storage
Low
Mid
High
-
Patardzueli-Samgori (CCS)
CO2 Storage
MT
57.0
151.5
246.0
-
100%
OPC, 2023
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Project I
Project I is the development of the Middle Eocene reservoir of the West Rustavi/Krtsanisi field which is located
within the XIF & XIB licence blocks (both of which are wholly held by the Company).
The Company has conducted significant operational and subsurface activity on the field since acquiring XIF in a
staged transaction commencing in 2018 and XIB in 2020. The Company has undertaken a 3D seismic survey and
drilled six successful wells between 2018 and 2024 (being WR-16aZ, WR-38Z, WR-B01a, JKT-1Z, WR-B01Z and
WR-34Z). The Company has also installed and operates a production facility on the WR-16aZ wellsite and has
developed a pipeline network of multiphase pipelines in the field. It monetises gas through a local third-party
owned gas network.
In 2022, Block engaged independent reserve auditors, ERC Equipoise (“ERCE”) to audit a development plan
associated with the first phase of development of the field, incorporating a total of five wells. The report,
published in July 2022 assigns gross 3P reserves of 3.01 MMbbl and 2.14 BCF to the five well development area.
Performance from the wells associated with this reserve report (being JKT-1Z, WR-B01Z and WR-34Z) has been
in line with expectations, giving confidence to continue with the development of the field. Internal contingent
resources for the field (published in 2022) ascribe 19.5 MMbbl in the 2C case, demonstrating significant upside.
An update to the internal contingent resource report as well as the work on a full field development plan is
ongoing.
In 2024, additional subsurface work has been undertaken as well as various operational initiatives including
workovers to maintain production rates. Plans are well advanced for additional drilling on Project I, with the ‘slim
hole’ engineering design and risk register completed which would see a significant reduction in drilling expenses
as compared to the previous well design. The ‘slim hole’ technology allows the Company’s own A-80 heavy
workover rig to be used for drilling.
Figure 2 - Project I 3D Reservoir Model
Project I is a robust, geoscience led project which has benefited from directional drilling and production
operations. With commercial production from the field in place since 2019 and six successful wells drilled,
supported by an independent reserve evaluation, the Company believes that the asset’s development strategy
is sound.
The Project delivers material cashflows to the Company, which are then reinvested in the development of its
higher impact projects within the portfolio.
The Company’s plans to continue development of Project I by way of drilling additional sidetracks/new wells
utilising the ‘slim hole’ well design, supported by the ongoing geophysical and subsurface work to improve
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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understanding of the complex reservoir architecture. Production and development costs associated with the
asset are low and there is material upside available in the broader Project I area which contains 19.5 MMbbl
gross 2C contingent resources (Block Energy, 2022).
Project II
Project II is focused on redeveloping the Patardzueli-Samgori field at Middle Eocene level in licence XIB.
Patardzueli-Samgori produced at high rates (c. 70,000 bopd) in the 1970s-1980s before production suddenly
ceased in the late 1980s, due to poor reservoir management practices and lack of capital investment.
Approximately 180 MMbbl was produced during this time. Successful wells in this field were high-rate producers,
with initial production rates in excess of 5,000 bopd.
Remaining contingent resource estimates (Block Energy, 2022) ascribe a gross 2C contingent resource of 235
MMbbl (within Patardzueli-Samgori). In 2022, the Company deepened the JSR-01 well seeking to prove that
deeper oil resources existed within the field. The well initially produced oil (and remains on intermittent
production), informing the Company’s longer term appraisal programme.
During 2024, the Company has been in discussions with various service providers and enhanced oil recovery
(“EOR”) specialists around potential field redevelopment strategies and applicable technologies and therefore
subsurface evaluation and engineering work on Project II was completed in the year in support of these
discussions, strengthening the Company’s ability to embark on an organised farmout campaign, in due course.
Figure 3 - Project II fault confidence seismic attribute map (classical & AI interpretations) with cumulative production from
legacy wells
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Project III
Project III comprises the appraisal and monetisation of the substantial discovered gas resources (2.77 TCF 2C
gross contingent resources with an associated net present value (“NPV”) 10 of $1.65 billion); (Block Energy, 2024)
at deeper intervals in the Company’s XIF and XIB licences. These volumes are located within the Lower Eocene
and Upper Cretaceous reservoirs.
Four fields have been identified within this Project: Patardzueli-Samgori, Rustavi, Teleti and South Dome (“the
Fields”). Three of the fields (being Patardzueli-Samgori, Rustavi and Teleti) have gas proven on test from previous
drilling. More than 15 wells have either discovered and/or produced gas from these reservoirs, with some tests
being at high commercial rates. The Company acquired the operational rights to South Dome (“South Dome” or
“SSD”) in 2025, which to date has not been drilled to Lower Eocene or Upper Cretaceous reservoir depth but
which is highly prospective.
Figure 4 - Project III field map at Lower Eocene depth
The Company completed internal contingent resource estimates for these fields in 2023/4 and as part of this
work developed costed appraisal and full-field development plans. This work (on Patardzueli-Samgori) was
audited to PRMS standards by a leading geoscience consultancy, Oilfield Production Consultants (OPC) Limited
(“OPC”), with the results of the audit being announced in early 2024.
OPC concluded that the Block Energy internal contingent resource estimations and methodologies were
consistent with industry practice and in line with PRMS guidance.
Following the OPC report, the Company launched a farm-out process, seeking capital from industry to complete
an appraisal campaign on the Patardzueli-Samgori field. The Company engaged a reputable UK-based upstream
advisor, to manage an independent process in order to secure the best possible transaction for shareholders.
This farm-out process is ongoing with good interest shown from a range of potential partners across industry.
The Company remains in active discussions and due diligence processes with multiple parties around a potential
farm-in to the Project III fields.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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The target reservoirs are naturally fractured clastics (Lower Eocene) and carbonates (Upper Cretaceous) and are
of significant thickness (1.0 km and 0.5 km in the Lower Eocene and Upper Cretaceous respectively). Significant
subsurface work to identify the scale of the resource as well as the development concept has been completed.
The fields benefit from full 3D seismic coverage as well as previous drilling, including the PAT-E1 well drilled by
Schlumberger in 2018. Commercially, the field is well positioned for monetisation, with the major South
Caucuses Pipeline (“SCP”), transporting gas to Turkey and Europe within 15 km from the location of the planned
Gas Processing Plant.
2C gross contingent resources for the fields are a total of 2.77 TCF (1,072 BCF Patardzueli-Samgori, OPC 2024;
1,062 BCF Rustavi, Block Energy 2024; 638 BCF Teleti, Block Energy 2024). 2U gross prospective resources within
South Dome (to which the operational rights were acquired in 2025) are 574 BCF (Block Energy, 2025).
Project IV
Project IV is an exploration programme which commenced in 2022 with the farm-out of two portions of Block
XIB to Georgia Oil and Gas Limited (“GOGL”) in a transaction which saw GOGL fund the acquisition and processing
of 210 km new 2D seismic data and the reprocessing of 1,000 km existing seismic data within the Didi Lilo and
South Samgori areas (previously part of XIB). This transaction was announced in 2022 and completed in Q1 2023.
In 2023, GOGL, as the operator, continued exploration study work and data interpretation for the leads and
prospects identified within both Didi Lilo and South Samgori. The primary achievement on this Project in 2023
was the completion of a DeGoyler MacNaughton independent prospective resource report which ascribed gross
unrisked mean prospective resources to the Martkopi Terrace prospect of 267.2 MMbbl and 213.4 BCF gas. Total
gross unrisked mean prospective resources in the DeGoyler MacNaughton report stand at 451.5 MMbbl and
823.3 BCF.
In 2024, GOGL and Block worked to unitise multiple PSCs (being XIC, XIK, XIM, XIN, XIQ and Didi Lilo) into a single
enlarged PSC, XIQ in order to better position the asset for a potential farm-out. Block acquired a 10% interest in
this licence in 2025 by way of exercising an option granted by GOGL in 2024. Block retains a further option to
acquire an additional 12% in the XIQ licence (to take the total to 22% if exercised).
The 2025 work programme on XIQ focuses on the Martkopi Terrace prospect, which is a large prospect located
to the north of Patardzueli-Samgori. A re-entry of Martkopi-10, which was drilled in the Soviet period but did not
reach the Middle Eocene reservoir, is planned in 2025 with the objective being to assess its suitability for
deepening or side-tracking. Block has already met its financial commitments with respect to its interest in XIQ
for 2025.
GOGL is continuing farm-out efforts on Project IV and is in advanced negotiations with third parties on a potential
farm-in to XIQ.
Similar efforts to unitise several PSCs with respect to the South Samgori area are ongoing and Block retains a
back-in right through an Option Agreement should this process be successful.
In addition to the partnership with GOGL on XIQ and South Samgori, the Company also holds a 100% interest in
exploration licence IX, which is believed to contain large exploration potential. The minimum work programme
on IX is complete and the Company continues to undertake geological studies on the licence, to define suitable
next steps.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Figure 5 - Project IV Martkopi Terrace Top Middle Eocene Structure Map (courtesy GOGL)
WEST RUSTAVI
SOUTH DOME
TELETI
RUSTAVI
MARTKOPI TERRACE
SAMGORI-PATARDZEULI-NINOTSMINDA
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Carbon Capture and Storage (CCS)
In 2023, the Company engaged OPC to undertake a study of the Patardzueli-Samgori Middle Eocene reservoir for
carbon sequestration potential. The study was led by Professor Eric Oelkers, a leading expert in the field of water-
rock interactions and a co-founder of Carbfix, an operational carbon sequestration project in Iceland utilising the
same technology as that proposed for Patardzueli-Samgori Middle Eocene.
The OPC report concluded that the field has the potential to store up to 256 million tons (“MT”) of CO2 through
the injection of CO2 dissolved into water. This reservoir could become one of the largest CO₂ storage sites in
Eastern Europe, offering a new revenue stream and demonstrating our ESG commitment
Following a Memorandum of Understanding (“MOU”) signed with JSC Rustavi Azot (“Rustavi Azot”), a subsidiary
of Indorama Corporation Pte Ltd, the Company commenced Phase 2 studies on the CCS project in November
2024. These studies include desktop, field and laboratory work and a planned CO2 injection test and monitoring
and verification process expected to commence in 2025. Work to date on this project has exceeded expectation,
with the laboratory results and water injection test as part of Phase 2 both delivering successful results as
announced in Q1 2025. Work is ongoing to finalise the surface facility design and monitoring and verification
plan in advance of the planned pilot injection of CO2 into the reservoir. Rustavi Azot will be providing the CO2 for
the pilot injection.
Given the proposed technology and the significant existing well stock in Patardzueli-Samgori field that could
easily be reconverted to CO2 injection, the costs estimated by OPC per ton of carbon stored were low, significantly
lower than typical carbon storage projects.
The CCS Project is located within Georgia’s industrial hub and benefits from being in proximity (less than 25 km)
to sources of significant industrial CO2 emissions, including a fertiliser plant, two gas-fired power stations and an
oil refinery in addition to other smaller emitters all offering the potential to capture and transport CO2 via pipeline
or liquefication process to the Company’s CCS pilot location.
The Company plans further development of this project throughout 2025 - in line with its long-term sustainability
goals.
Figure 6 – X-Ray Spectroscopy Analysis of Middle Eocene Rock Samples
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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The four Projects and the CCS opportunity give the Company a robust and balanced platform for growth. Block’s
activities range from low-cost development work focused on short-term cashflow to delivering on a major farm-
out process targeted at unlocking a multi TCF gas resource. The portfolio encompasses exploration upside as well
as a major sustainability-driven project. The Company’s focus is on delivering these high-impact Projects with
disciplined allocation of capital in order to provide strong shareholder returns.
Block continued to make progress in executing its four Project strategy in the year ended 31 December 2024:
•
Continued focus on strong Health, Safety, Environment and Social (“HSES”) practices, with further updates
to its HSES plans, training matrixes and leadership development.
o Delivered 283,205 operational man-hours with one Lost Time Incident (“LTI”); (2023: 299,824 with one
LTI).
•
Improved cash position and stable overall financial performance:
o The Company remained cashflow positive, with the cash position again improving to $1,136,000
($713,000 in 2023 and $450,000 in 2022).
o Decrease in G&A and other costs, despite higher Project III, CCS and Project IV related costs, reflecting
ongoing cost and operational discipline within the business.
o Strategic decision to pause Project I drilling in the year, based on strong cash position, cash
requirements and marginally lower than expected natural production decline.
o Revenue of $7,533,000 (2023: $8,366,000) reflecting natural production decline and marginally lower
commodity pricing.
o Positive EBITDA of US$ 1.06 million (2023: US$ 1.47 million), in line with expectation.
•
Focus on high-impact projects saw continued good progress:
o Published an independent engineering report on the Patardzueli-Samgori field (as part of Project III),
ascribing 1,074 BCF 2C contingent resources to the field and a project net present value (10) of US$ 501
million
o Published updated internal contingent resource reports on Rustavi and Teleti Project III, supporting a
combined Project III project net present value (10) of US$1.67 billion.
o Launched the farm-out campaign for Project III, with good uptake from potential industry partners with
farm-out discussions and due diligence activity ongoing.
o Published an independent evaluation of the carbon storage potential of the Patardzueli-Samgori Middle
Eocene as part of the CCS project.
o Signed a Memorandum of Understanding with JSC Rustavi Azot (“Rustavi Azot”), a subsidiary of
Indorama Corporation Pte Ltd with respect to pilot studies on the CCS opportunity.
o Commenced Phase 2 studies on the CCS project.
o Completed work on the new ‘slim hole’ well engineering for Project I.
o Farmout of Project IV progressing.
•
Robust production, better than expected and in-line with the 2022 ERCE reserve report:
o Total group production of 131,579 barrels of crude oil (2023: 151,184 barrels).
o Total Group gas production of 274 MMCF (2023: 283 MMCF).
o Average annual production of 485 boepd (2023: 543 boepd).
o Production reflected natural decline, which was marginally better than expected, and the strategic
decision to pause Project I drilling, to focus financial & human resources on the high-impact projects.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
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Chairman’s Statement
Dear Shareholder,
Last year was characterised by further progress in the delivery of the Company’s high impact strategy,
underpinned by an improving cash position. Realisation of value from high impact assets, such as those being
developed by Block, inevitably takes time. This can overshadow the progress being made behind the scenes.
The Company is now at an inflection point, with several material catalysts possibly coming to fruition over the
coming year. These include the farmout of Project III, commercialisation of the Company’s CCS project, following
the pilot injection of carbon, and the farmout of project IV.
Reaching this point is a testament to the strategy in place, which has sought to balance progress in the high
impact projects, with a balance sheet able to support these initiatives. It is also a reflection of the strength of the
management team, which has successfully adapted the business by streamlining the Company and maintaining
an unwavering focus on value.
Putting this in context, it is important to recognise that Block is delivering on the back of internally generated
cashflows and has not sought an injection of additional equity capital for over 4 years. In the listed E&P space,
this places Block in a relatively unique position.
The team in Georgia should be congratulated for their hard work in driving the Company’s various projects
forward while maintaining safety and protecting the environment. Having spent time with them on the ground
in Georgia, I have witnessed their dedication first hand, and I would like to extend my thanks for their effort and
commitment.
Their success and progress are supported by close and productive relationships with the Georgian authorities
and commercial partners. These relationships are invaluable, having been built over many years, creating a sense
of mutual trust and confidence.
Relationships aside, Georgia remains a positive environment in which to work and invest. It is pro-business, and
investment is underpinned by a well-functioning political and legal system, which protects the right of ownership,
while encouraging risk investment and business development.
Georgia sits at a crossroads for energy distribution and trade between east and west. It, as such, has easy market
access, via established infrastructure, that runs close to the Company’s licences. That, combined with a strong
and positive culture, make it highly attractive to foreign investment. This is reflected in the country’s GDP growth,
which has far outstripped that of the wider EU.
The professionalism of the team is further reflected in the Company’s safety record. Safety remains the foremost
priority for the Company at all levels. It remains the first item on the agenda at all Board meetings and is based
on a clear system of responsibility and reporting, which starts on the ground each day during the daily briefing.
The Board believes the strategy in place is the right one and that over time it will deliver on the material value
inherent within the Company’s assets. It is a strategy that is showing evident progress, while effectively balancing
the risk and reward profile for investors and Block. The Board looks forward to continuing to support and guide
the team in the year ahead and to updating shareholders further on the Company’s progress.
Philip Dimmock
Non-Executive Chairman
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
15
Chief Executive Officer’s Statement
Dear Shareholder,
Block Energy PLC made substantial progress in 2024, successfully advancing our multi-project strategy and
delivering another year of positive cash flow. Our unwavering commitment to safety, environmental stewardship,
and proactive community engagement continues to reinforce our reputation as a responsible and sustainable
energy company.
Health, Safety, and Sustainability remain fundamental pillars of our operations. Despite an intensive operational
schedule involving over 283,000 man-hours, we recorded only one minor Lost Time Incident (LTI) during the year.
This excellent safety performance is a direct result of our robust management systems and deeply embedded
safety culture. Additionally, we have significantly strengthened ties with local communities through targeted
employment initiatives, comprehensive training programs, and collaborative social projects.
Project III remains central to our strategic growth, highlighted by the publication of an Independent Engineering
Report (IER) in early 2024. This report and Block’s internal contingent resource estimates identified over 2.77 TCF
of 2C contingent recoverable gas resources across the Patardzeuli-Samgori, Rustavi, and Teleti fields, with an
estimated Net Present Value of $1.65 billion. The ensuing farm-out process has attracted considerable industry
interest. The Company remains in active discussions and due diligence processes with multiple parties around a
potential farm-in to the Project III fields.
Project IV, through licence XIQ, represents another compelling farm-out opportunity, advanced by operator
Georgia Oil and Gas Limited ("GOGL"). Ongoing discussions aim to secure a fully carried exploration programme,
encompassing 3D seismic acquisition and targeted exploration drilling. Block Energy currently holds an initial
10% interest in XIQ, with an option to increase this to 22%. The licence includes the highly prospective Martkopi
Terrace prospect, independently assessed to contain mean unrisked recoverable prospective resources of 267.2
million barrels of oil, with total XIQ licence resources estimated at 451.5 MMbbl of oil and 823.3 BCF of gas
(DeGoyler MacNaughton, 2023). Block has fully funded its current obligations under the initial work programme
and continues to actively pursue further unitisation opportunities in the South Samgori area alongside GOGL.
Project II is emerging as a promising farm-out candidate complemented by the significant remaining oil potential
within the field of 235 MMbbl 2C resources (Block Energy, 2022), prompting us to actively explore strategic
partnerships that will advance this project. The development of Project II further aligns with our goal of
diversifying revenue streams across our high-value asset portfolio.
Our Carbon Capture and Storage (CCS) initiative, developed in partnership with JSC Rustavi Azot, a subsidiary of
Indorama Corporation, has made notable advancements throughout the period. Early studies have affirmed our
reservoirs' exceptional capacity for large-scale carbon sequestration, placing it among Eastern Europe's highest-
ranking storage potentials. Current workstreams are focused on establishing clear pathways toward commercial
viability within both mandatory and voluntary carbon markets, aiming to position Block Energy as a pioneering
force in regional carbon management.
Strategically, in 2024, we intentionally paused further drilling on Project I, choosing to reallocate capital and
human resources towards advancing higher-value, transformative projects. Nevertheless, we remain prepared
to recommence drilling operations to sustain stable production levels above corporate breakeven thresholds as
needed. Our disciplined financial management and rigorous approach to cost control continue to underpin this
strategic flexibility.
Financially, we improved our cash position year-on-year through prudent financial and operational management,
despite lower revenues received. We anticipated production from Project I (and therefore revenue in the year)
to decline through the strategic decision to pause drilling and developed the budget and 2024 objectives with
this in mind. At year-end, we had US$ 1.14 million in cash (2023: US$ 0.71 million), oil inventory of 11.1 Mbbl
(2023: 16.6 Mbbl) and delivered positive EBITDA in the year of US$ 1.06 million (2023: US$ 1.47 million), which
was in line with expectation.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
16
To enhance our financial flexibility, we successfully extended our existing US$ 2.0 million senior secured loan
facility to February 2026, ensuring that we have ample working capital to reinvest cashflows into our high-impact
projects in order to drive value creation for our shareholders. This was achieved through spending on Projects
III, CCS and II and the 2025 acquisition of an interest in the XIQ PSC (Project IV).
We acknowledge prevailing market conditions have created a disconnect between our intrinsic asset values and
current market capitalisation. Independent resource assessments, however, clearly highlight the considerable
upside within our portfolio. Our ongoing operational progress is explicitly aimed at bridging this valuation gap
and delivering substantial shareholder value.
Looking ahead to 2025, we anticipate several critical milestones, including the advancement and
commercialisation of Projects III and IV, alongside meaningful progress on Project II and further developments
in our CCS initiatives. These opportunities offer material avenues for value creation, and we approach each with
measured optimism and strategic prudence.
We sincerely appreciate your continued support and look forward to providing regular updates as we progress
through a promising year.
Warm regards,
Paul Haywood
Chief Executive Officer
Block Energy PLC
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
17
Financial Review
Income Statement
The Group’s revenue from oil and gas sales decreased to $7,533,000 (2023: $8,366,000) primarily due to lower
production levels from Project I. The current year revenue from sales of crude oil of $6,678,000 (2023:
$7,413,000) comprised the sale of 97,961 barrels (2023: 106,000 barrels), which equated to an average revenue
per barrel of $68.20 (2023: $69.93).
During the year, the Group produced 131,579 barrels of crude oil (2023: 151,185 barrels). Gas production stood
at 274 MMCF (2023: 282 MMCF). This gross production figure includes the State of Georgia’s share of production
before cost recovery and profit sharing.
The natural decline seen in Project I wells in the year was less than expected and no new wells were drilled in
2024 as part of a focus on developing the Company’s high impact Projects including Project III and CCS.
Production performance remains in line (slightly biased to the upside) with the 2022 ERCE reserve report type
curves.
Strategically, the Company took the decision to pause drilling on Project I in order to pursue its high-impact
projects. The Company remained cashflow positive and whilst not requiring any further external finance in the
year, the existing loan facility was extended until February 2026.
The Group had 11,060 barrels of crude oil inventory as at 31 December 2024 (31 December 2023: 16,611 barrels).
In the year, the Group sold gas to the value of $855,000 (2023: $953,000).
The total comprehensive loss for the year was $609,000 (2023: $2,213,000). The improvement on prior year is
primarily associated with the one-off $2,210,000 impairment charge in 2023, associated with the decision to
fully impair Norio and Satskhenisi, although both cost of sales and administrative costs decreased in 2024 as
compared to the prior year as the cost savings initiatives were completed.
With respect to operating activities before impairment, the Group delivered a loss of $202,000 (2023: profit of
$74,000). EBITDA decreased to $1,061,000 (2023: $1,469,000) and this was mainly attributed to reduced
revenues due to lower production levels and a slight reduction in average oil and gas prices over the year.
The Company continues to closely monitor costs, operational performance and efficiency. Cost of sales (before
depreciation and depletion of oil and gas assets) fell by $308,000 (from $3,826,000 to $3,518,000). Other
administrative costs fell by $89,000 (from $2,657,00 to $2,568,000) and share based payments also fell by
$28,000 (from $414,000 to $386,000) in the year. These savings were achieved even with increased spending on
the development of Projects III and CCS, as well as corporate activity associated with the Project III farm-out, the
unitisation of licences associated with Project IV and new ventures activity.
Overall, in 2024, the Company’s financial performance remained stable and significant progress was made in the
development of the high-impact projects, which are seen as key catalysts for the growth in shareholder value.
Liquidity, Counterparty Risk and Going Concern
The Group monitors its cash position, cash forecasts and liquidity regularly and has a conservative approach to
cash management, with surplus cash held on term deposits with major financial institutions.
The directors have prepared cash flow forecasts for a period of 12 months from the date of signing these financial
statements. The Group’s forecasts are reviewed regularly to assess whether any actions to curtail expenditure or
cut costs are required.
The Group’s operations presently generate sufficient revenues to cover operating costs and capital expenditures,
supporting the continued preparation of the Group’s accounts on a going concern basis.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
18
The directors are nevertheless conscious that oil prices have been volatile during the past few years and could
rise or fall in the year ahead, and that future production levels depend on both depletion rates from existing
wells and the success of future drilling.
The directors also recognise that the outstanding $2.0 million secured loan is due for full redemption in February
2026 and that there are scenarios in which the Company may not be in a position to settle this liability on time.
Nonetheless, the directors remain confident that the loan can either be repaid or renegotiated, or that new
lenders could take a portion, or that other financing options will become available to the Company, and therefore
judge that the Company retains sufficient flexibility and optionality around the loan to prepare the accounts on
a going concern basis.
As part of their going concern assessment, the directors have examined multiple scenarios in which oil prices
and/or future production levels fall substantially and have concluded that it remains possible that future
revenues in at least some scenarios might not cover all operating costs and planned capital expenditures, creating
a material uncertainty that may cast doubt over the Group’s ability to continue as a going concern. Whilst
acknowledging this material uncertainty, the directors remain confident of making further cost savings if required
and, therefore, the directors consider it appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include the adjustments that would result if the Group were unable to continue
as a going concern.
Impairment
There was no impairment recognised in the year (2023: $2,210,000).
Cash Generative Units
The Company currently reports on the basis of Cash Generative Units (“CGUs”) associated with West Rustavi,
Rustaveli, Norio and Satskhenisi.
The Company continues to review the appropriateness of reporting on the basis of these named CGUs given its
well-communicated multi-project strategy. It is expected that in 2025, based upon potential corporate
development activity, that the Company will either report on the basis of a singular CGU (owing to the proximity
of the licences and fields) or alternatively on a Projects basis (owing to the different stage of development
between Projects I, II, III, IV and CCS).
Results and Dividends
The results for the year and the financial position of the Group are shown in the following financial statements:
•
The Group has incurred a pre-tax loss of $609,000 (2023: loss of $2,213,000).
•
The Group achieved positive EBITDA of $1,061,000 (2023: $1,469,000).
•
The Group has net assets of $25,313,000 (2023: $25,706,000).
•
The Directors do not recommend the payment of a dividend (2023: $nil).
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
19
Principal Risks and Uncertainties
There are general risks associated with the oil and gas extraction industry as well as those specific to Block Energy.
The Board through the Audit and Risk Committee regularly reviews the risks to which the Company is exposed
and endeavours to mitigate these risks as far as it can. Given the current size and simplicity of the business, the
Board considers that there is no immediate necessity to establish an independent audit function.
The following summary outlines the principal risks and uncertainties facing the Company at its present stage of
development:
Description
Impact
Mitigation
Strategic Risk
Regional and political
tensions could have an
adverse effect on the local
economy and our business.
Georgia shares borders with Russia,
Azerbaijan, Armenia and Turkey and
could be adversely affected by political
unrest either internally or in
surrounding countries. Internal unrest
or policy shifts in Georgia could disrupt
operations and deter investment.
Regional conflicts or sanctions may
also affect trade routes and the overall
business climate.
The Board monitors all political
developments on an ongoing basis
and receives regular reports from
senior management in Georgia
around the political and security
situation. This ensures that good
relations are maintained with the
government and swift action can be
taken if required.
Risks related to challenges in
monetising assets at a
favourable valuation, an
unclear commercialisation
strategy, and potential
negative perceptions of
project deliverability by
prospective partners or
investors.
Inability to monetise assets when
needed may place pressure on the
company’s cash position, impact
project funding, and limit the ability to
raise capital. This could affect
management credibility, lead to
negative market sentiment, and
constrain future growth or shareholder
value creation.
To reduce the likelihood of
monetisation challenges, the
Company benchmarks its projects
against market opportunities,
maintains contingency plans, and
actively engages with third parties.
To reduce the impact, it focuses on
strong project economics, adapts
to macroeconomic conditions,
facilitates buyer relationships with
host governments, and ensures
transparency with potential equity
investors.
The risk of not meeting
expectations of key
stakeholders, including
investors, partners,
governments, and local
communities.
Disputes with local communities can
disrupt operations and, in extreme
cases, lead to civil unrest or criminal
activity, negatively affecting our
financial performance, operational
continuity, and reputation.
Additionally, failure to meet
shareholder or investor expectations
may result in loss of capital, reduced
investor confidence, and reputational
damage. There are also potential
health, safety, and environmental
(“HSE”) risks to local communities that
must be carefully managed to maintain
our social licence to operate.
The Company adopts a shared
value approach and maintains
strong, transparent relationships
with stakeholders—including local
communities, governments, and
shareholders—supported by
ongoing engagement, ethical
conduct, and a proactive ESG
strategy. Regular monitoring of
public sentiment, timely disclosure
of material information, and
investment in community initiatives
further strengthen trust and reduce
the risk of reputational or
operational disruption. These
measures also help mitigate the
impact by preserving stakeholder
confidence and ensuring resilience
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
20
during periods of scrutiny or
unrest.
Key Personnel and Talent
Management Risk
Loss of key personnel or inability to
attract and retain skilled staff could
disrupt business continuity, delay
project delivery, and impair strategic
execution. It may also weaken
leadership effectiveness, reduce
organisational performance, and
impact investor confidence.
The Company recognises its people
as a core asset and aligns
compensation with investor
outcomes to support retention and
motivation. Organisational
capability is strengthened through
structured resource planning,
succession planning, leadership
development, and ongoing training.
These initiatives reduce the
likelihood of key personnel loss and
mitigate the impact by ensuring
continuity, resilience, and depth
across critical roles.
The risk of a takeover that
does not align with the long-
term interests of
shareholders and
stakeholders, potentially
benefiting only select
individuals at the expense of
broader value creation.
The risk of a takeover that undervalues
the Company may result in significant
loss of value for investors and missed
long-term growth opportunities. Such
a transaction could lead to asset
stripping, disruption of strategic plans,
or even the winding down of
operations, ultimately undermining
shareholder and stakeholder interests.
The Company actively monitors
potential bidders and maintains
open dialogue with investors,
peers, and advisors to stay alert to
takeover interest. Regular
shareholder analysis, clear equity
value communication, and updated
valuations help defend against
approaches that undervalue the
business. By continuously unlocking
asset value and maintaining strong
stakeholder relationships, the
Company is better positioned to
reduce the impact of any
unsolicited or undervalued bids.
Financial Risk
Oil and gas prices may
decrease significantly.
Significant decreases in oil or gas
prices over a sustained period would
negatively affect the Group’s cash
flows, operating results and financial
performance. It would also impact
asset valuations and project
economics.
The Company mitigates exposure
to commodity price volatility by
maintaining a strong cash position
and preserving financial flexibility
across its portfolio. Development
plans are regularly reassessed to
align with current price
environments, while capex and
overheads are managed prudently.
New opportunities are evaluated
with downside pricing scenarios in
mind, reducing both the likelihood
and impact of adverse price
movements.
Currency exchange rate and
interest fluctuations may
negatively affect the
Company.
The Group’s consolidated financial
statements are presented in United
States Dollars. The major portion of
both revenues and costs are
denominated in United States Dollars
also. However, part of its revenues is
The Company actively manages its
debt portfolio to limit exposure
and, where possible, secures fixed
interest debt to reduce volatility.
Holding cash reserves in U.S.
Dollars provides a natural hedge
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
21
expressed and certain costs are
incurred in British Pounds Sterling,
Georgian Lari and other currencies.
Changes in exchange rates may impact
the Group’s cost base and financial
reporting.
aligned with the Group’s USD-
based operations, while balances in
other currencies support local
needs. Cash is kept in current or
short-term deposits to preserve
liquidity and manage currency-
related impacts.
The Company may face
challenges in accessing
capital, or securing it at a
reasonable cost.
Limited access to reasonably priced
capital could increase the cost of
financing, reduce free cashflow, reduce
project valuations, and restrict the
Company’s ability to fund growth. This
may hinder execution of the
development strategy, impair asset
monetisation, and weaken overall
shareholder returns.
The Company mitigates capital
access risk by maintaining funding
flexibility through diversification of
capital sources, prudent debt use,
and disciplined asset selection.
Capital allocation is guided by
regular commercial reviews, with
investment directed only to
projects that demonstrate strong
value potential. In parallel, the
Company rigorously reviews its
capital investment programme,
applies robust procurement
processes, and monitors cost
performance to ensure spending
remains efficient and aligned with
strategic priorities—building on a
strong track record of delivering
projects within budget.
Inability to repay loans
and/or fund exploration
work - resulting in inability
to deliver the business
strategy.
Defaulting on planned repayments
could put underlying assets at risk and
force the Company to seek additional
debt or equity financing under
unfavourable terms, reducing value for
shareholders. This may slow value
creation and lead to a loss of
stakeholder confidence and support.
The Company reduces the
likelihood of default by focusing its
budget on priority assets,
maintaining a disciplined annual
budgeting process, and regularly
reviewing cash flow, working
capital, and funding options to
ensure financial commitments can
be met. Board-approved work
programmes and monthly financial
reviews support proactive risk
management. In the event of
funding pressure, portfolio
flexibility through farmouts or asset
sales helps mitigate the impact.
The risk that the
counterparties may be
unable to lift and sell the
Company’s oil. Related to
this is also credit risk.
The Company is reliant on two major
counterparties for all revenue, creating
a risk of non-receipt of funds if either
fails to lift or pay for product. While
credit risk from financially distressed
third parties exists, the greater
concern is the inability to monetise
production due to market or logistical
constraints faced by the buyer.
The Company reduces the
likelihood of non-lifting or non-
payment by maintaining regular
engagement with existing buyers,
monitoring market conditions, and
identifying potential alternative
offtake partners. To reduce impact,
it holds sufficient cash reserves to
manage through temporary
disruptions in revenue.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
22
Operational Risk
Risk of reduced asset life
and underperformance due
to inefficient operations and
high costs.
If new assets fail to deliver expected
reserves or production rates, the
Company may face higher-than-
anticipated appraisal and development
costs, delaying growth and limiting
reserve replacement. This could lead
to a loss of investor and market
confidence, reduced technical
credibility with host governments, and
potential divestment of assets below
intrinsic value, ultimately triggering a
reassessment of the Company's
strategy and business plan.
The Company reduces the
likelihood of underperforming
assets by focusing on technically
led acquisition strategies, using
advanced subsurface analysis,
peer-reviewed evaluations, and
expert input to guide decision-
making. Rigorous risk assessments,
post-drill reviews, and alignment
with strategic growth goals ensure
only high-potential, cost-effective
opportunities are pursued. Impact
is further mitigated through
disciplined portfolio management,
selective asset exits and
maintaining a diverse asset base to
balance performance risk.
Subsurface and Drilling
Operations Risk.
Operational delays or failures may lead
to reduced cash flow, missed project
milestones, and increased costs,
negatively affecting the Company’s
financial performance and market
valuation. Prolonged disruptions or
regulatory issues could damage
stakeholder confidence, delay value
creation, and compromise the
Company’s ability to meet strategic
objectives.
The Company reduces the
likelihood of operational delays by
employing a highly qualified
subsurface team, using advanced
analysis techniques, and ensuring
rigorous contractor selection
through its procurement process.
Ongoing market reviews and
experienced personnel enable fast,
effective responses to drilling
opportunities. Impact is mitigated
through cost-efficient drilling
strategies, such as slim-hole wells,
and the use of advanced seismic
and AI technologies to improve
well success rates.
Data Control and
Cybersecurity Risk.
A loss of access to critical subsurface
data would significantly disrupt
operations, delaying or halting
exploration and development
activities. Cybersecurity breaches or
system failures could result in
commercial loss, environmental or
safety incidents, and operational
downtime. Loss of intellectual property
through staff departure or
compromised systems may reduce the
Company’s technical advantage and
strategic flexibility.
The Company mitigates data and
cybersecurity risks by regularly
reviewing third-party provider
security, ensuring key subsurface
data remains accessible, and
monitoring system vulnerabilities.
Strict internal policies govern the
use of Company systems, reducing
exposure to breaches. In the event
of disruption, impact is minimised
through off-site data storage, cloud
backups, and contingency
measures to maintain operational
continuity.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
23
HSES Risks
Accidents and risks
associated with operations
(e.g. blowout, fire, injury).
Serious accidents can result in a shut-
down of operations, injury or loss of
life, damage to equipment or property,
damage to the environment and a loss
of credibility and/or licence.
The Company has a robust HSES
framework, supported by a
dedicated full-time HSES
department, regular staff training,
and a Board-level HSES Committee
that actively oversees performance
and incident response. HSES is
deeply embedded in the
Company’s culture and contracts,
with policies including daily safety
meetings, PPE provision,
observation cards, equipment
inspections, and on-site medical
support during drilling. Regular
reviews, an Emergency Response
Plan, and insurance coverage help
reduce the likelihood and impact of
incidents, ensuring operational
safety and preparedness.
Environmental
contamination caused by oil
and water spills or gas
leakages.
A significant environmental incident
could result in harm to people and the
environment, lead to reputational
damage—potentially attracting local or
global media attention—and cause
production downtime and revenue
loss.
The Company reduces
environmental incident risk
through robust HSES systems, best-
practice well integrity standards,
spill response plans, and strict
operational procedures. Field-
based staff receive regular training
to improve environmental
awareness and reduce
contamination risks, while routine
inspections and infrastructure
upgrades minimise the chance of
spills or equipment failure.
Oversight is further strengthened
by a Board-level ESG committee,
reinforcing the Company’s
commitment to environmental
stewardship and continuous
improvement. Insurance coverage
is in place to help mitigate financial
impacts if an incident occurs.
Climate Change and Energy
Transition Risk.
The energy transition may lead to
falling hydrocarbon demand and
prices, increased regulatory and
reporting costs, and rising pressure
from stakeholders to meet climate
targets. Failure to comply could result
in fines, reputational damage, and loss
of investor confidence and capital.
The Company integrates
environmental objectives into its
strategy by focusing on low-cost,
high-value resource monetisation
with minimal environmental
impact. It actively advances its
carbon position through improved
reporting, flaring reduction, and
the ongoing investment into its
Carbon Capture and Storage (CCS)
initiative. Ongoing engagement
with stakeholders helps preserve
investor confidence and mitigate
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
24
the impact of increasing climate-
related scrutiny and regulation.
Legal and Compliance Risks
Risk of Fraud, Corruption, or
Sanctions Breach by the
Company or Associated
Persons.
Accusations or findings of fraud,
corruption, or sanctions breaches
could lead to severe reputational
damage, triggering the withdrawal of
support from shareholders,
governments, lenders, and partners.
Investigations may cause significant
business disruption and result in legal
outcomes such as fines, director
disqualifications, or deferred
prosecution agreements. In extreme
cases, this could lead to the loss of key
assets, PSCs, or entire projects.
The Company reduces the
likelihood of fraud, corruption, or
sanctions breaches through robust
policies, thorough due diligence
processes, mandatory training, and
a strong internal control
framework—including
whistleblowing channels, annual
certification and regular policy
reviews. All counterparties are
assessed for legal and sanctions
risk, and contracts include
protective clauses. In the event of
an incident, insurance coverage
provides a financial safety net,
provided compliance frameworks
have been followed.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
25
Statement of Corporate Responsibility
Block Energy PLC has a practical and open approach to Corporate Responsibility: our programme is focused on
doing the right thing, managing risk and investing sustainably in the community in which we operate.
Impact of Culture on Decision Making
Our investment decisions carefully consider environmental and social impacts and how such impacts are best
managed for all stakeholders. Our operations should not compromise the well-being of current or future
generations. This responsible behaviour is a crucial element for our long-term business success.
For Block Energy this means:
•
Acting with respect for people, communities and the environment;
•
Acting honestly and openly with all stakeholders, fully respecting the rule of law and human rights;
•
Contributing to the economic and cultural development goals of Georgia;
•
Integrating sustainability and Corporate Responsibility into our strategy, planning, implementation
and management systems;
•
Providing clear public reporting on our management systems and performance.
The Company has prepared several detailed Environmental Impact Statements (“EIS”) to cover its operations.
These have been submitted to and discussed with the Georgian authorities.
Health, Safety, Environmental and Social Performance
The Company strives for continuous improvement and Block Energy is committed to maintaining high standards
of health, safety, environmental and social performance (“HSES”) across all its oil and gas operations. To achieve
this, as an integral part of our business, we:
•
Have established a board-level HSE and ESG committee which meets regularly.
•
Identify, assess and manage HSES risks to people, the environment and assets in order to avoid adverse
direct or indirect effects from our operations.
•
Ensure that our operations comply, at a minimum, with applicable health, safety, environmental and
social laws and regulations, as well as best practicable industry standards.
•
Maintain high ethical standards in carrying out our business activities.
•
Provide the necessary leadership, training and resources to enable effective HSES management
throughout our organisation.
•
Strive to prevent and minimise the impact of our operations on the environment.
•
Ensure continuous improvement of HSES performance by setting objectives and targets and apply
focused auditing, reviews and external benchmarking.
•
We select competent staff, contractors and suppliers to manage and support the business.
•
Ensure that the highest priority is placed on emergency preparedness and contingency planning and
that any plans are tested regularly to ensure that any incidents are responded to in a timely and
effective manner.
•
Foster a culture where accidents, incidents and near misses are reported and investigated and that
lessons learned are shared.
•
Consult with and respond to the concerns of our stakeholder on our health, safety environmental and
social performance.
•
Ensure that HSES policy is communicated to all staff and contractors and that it is clearly displayed in
all Block Energy premises and operational sites and made publicly available.
•
Empower the Company’s directors, employees and contractors to take responsibility for maintaining
high HSES standards.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
26
Section 172 (1) Statement and Stakeholder Engagement
The Directors believe they have acted in the way most likely to promote the success of the Company for the
benefit of its members as a whole, as required by s172 of the Companies Act 2006.
We understand that our long-term success depends on our relationships with our stakeholders. We strive to
provide our stakeholders with timely and effective information, responses and support. The following table
summarises how we identify and seek to meet their needs, interests and expectations.
Stakeholder
Reason For Engagement
How We Engage
Employees. Our
capacity to design
and execute our
strategy depends
on the health,
development and
retention of our
dedicated and
skilled staff.
Transparent and regular
communications with our
staff is essential for ensuring
an understanding of
commitment to the
Company’s objectives.
As an oil and gas exploration
and production company we
have particular health,
safety, environmental and
social obligations (see
“Communities and
Environment” below).
Management in London and Georgia have daily team
meetings. The wider international team has a weekly
meeting. The Executive Director and senior
management make regular trips to Georgia to work
with our staff onsite. The management team have
regular one-on-ones with every staff member and
transparent performance targets are mutually agreed.
We also undertake training and development sessions
(particularly around HSES, compliance and event
prevention) and ensure that our staff are properly
motivated and included within the Company’s aims and
objectives.
Shareholders. We
provide
transparent,
accessible,
regular and
balanced
information to
our shareholders
and investors to
ensure support
and confidence.
Understanding the
perspectives of our
shareholders and their
sentiment regarding the
business, its prospects and
the performance of
management as well as
meeting regulatory
requirements.
We publish announcements on the London Stock
Exchange’s website and our website and across our
online channels.
Interviews with our directors and senior management
are published as videos or podcasts and accessible to a
large audience. We operate an investor mailing list
subscription service. We issue regular updates to our
corporate presentation. We attend investor relation
events and meet with industry analysts. We publish our
annual and interim accounts and are physically available
for any shareholder at the AGM. We hold one-to-one
sessions with our largest shareholders.
Industry Bodies,
Local and
National
Governments.
Our operations
and business
practices must
meet certain legal
and regulatory
requirements.
We work hard to meet our
regulatory obligations to
retain our good standing
with regulators, the
Georgian government and
the wider oil and gas sector.
Our relationship with the
local and national
government is a key to our
success and has taken a long
time to develop.
We adhere to Georgian state regulations and since
inception, have maintained good standing on all
interests associated with its working interest in all
Production Sharing Contracts. We commit to fulfilling
our AIM obligations. We engage an independent
auditor to perform an audit of the Company’s processes
and financial risks. We engage an independent auditor
in Georgia to ensure our local financial reporting meets
local standards and regulations. We have developed
comprehensive Market Abuse Regulations (“MAR”) and
anti-bribery policies. We take legal compliance
extremely seriously.
Communities and
Environment. Our
operations are
embedded in a
We understand that our
operations can have
negative effects on the local
economy or environment if
We have written HSES policies and ensure that all staff
and contractors adhere to such policies. HSES
performance is embedded into the director’s and senior
management’s performance targets. We have a strong
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
27
complex local
economic and
environmental
ecosystem.
not properly managed and if
risks are not properly
mitigated. We place the
highest focus on ensuring
that our operations are
conducted in a safe,
responsible manner and
that we make a positive
contribution to local
communities.
focus on HSES and ensure that it is embedded in to all
of our operational and management processes and
receive daily reports on HSES compliance. We
investigate all HSES policy breaches and work to remedy
them.
We maintain two board-level committees, the HSE
Committee and the ESG Committee which are tasked
with further developing our policies, compliance and
performance. We monitor and report emissions and
environmental performance. We work with National
and Local government to support the communities in
the areas where we operate and invest in local
community programmes. We provide employment and
personal development opportunities for all employees,
whilst further extending this support, into the local
communities in which we operate. We also maintain a
website for our operating company, Block Operating
Company, in the Georgian language to ensure local
communities and more broadly, people of Georgia, can
remain informed on our Company’s activity.
Suppliers. We
engage
contractors and
purchase from a
wide range of
suppliers, around
the globe.
We recognise that our
suppliers and contractors
are essential to our
operational and financial
success and understand that
third parties working on our
operations can impact our
HSES policies.
We integrate our MAR, anti-bribery and HSES policies
into all agreements with contractors. Where contractors
are working in our operations, we ensure that HSES
briefings and training are undertaken.
We have robust financial processes for settling our
invoices with our contractors and service providers and
take care to ensure we source products and services
from ethical suppliers. Where possible and
commercially competitive, we try to ensure goods are
sourced locally, so to support local businesses.
The Board is responsible for establishing and communicating policies and procedures for risk management and
internal controls. We recognise that risk management is an essential business practice, and we work to balance
risk, return, threat and opportunity. We maintain a detailed risk register which is routinely reviewed by the Audit
and Risk Committee and the Board.
Climate Change
In today’s oil and gas sector stakeholders and investors are keenly interested in the theme of climate change and
we can assure them that Block is wholly committed to good environmental stewardship. We have a robust
approach to corporate responsibility and sustainability issues, underpinned by our commitment to high
standards of health and safety and environmental stewardship.
Consistent with our strategy, we aim to flare zero gas and reduce our carbon dioxide emissions as much as
possible. We have established a Board-level ESG committee with a remit to build on and improve our
environmental processes and policies. In 2024, we continued our work on a carbon capture storage project in
line with our long-term sustainability goals and in early 2025, we completed an agreement with JSC Rustavi Azot
to investigate capture and sequestration of carbon from the emissions from their fertiliser factory within our
Patardzeuli-Samgori Middle Eocene reservoir.
We are aware of the changing regulatory landscape in the UK, particularly with the incorporation of disclosures
under the Task Force on Climate-Related Financial Disclosures (“TCFD”) to LSE main board companies and we
will comply with any requirements imposed by the AIM Rules for Companies.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
28
Board of Directors
The current Board consists of three directors: two independent non-executive directors and an executive
director.
Paul Haywood | Chief Executive Officer
Committee Memberships: Nominations Committee, ESG Committee, HSE Committee.
Paul is the founder of Block Energy and has more than 13 years’ experience in the Georgian oil and gas sector,
having identified, managed and completed the acquisition, development and sale of several oil and gas assets
before establishing Block Energy. More broadly, Paul has spent much of his career building growth projects,
leveraging a cross-functional skill set encompassing strategy, implementation, capital and transaction
management. Paul is currently a non-executive director of AIM quoted Synergia Energy plc, where he is Chairman
of the Remuneration Committee and resource focused advisory firm, Plutus Strategies.
Key skills and competencies: vast capital markets and global energy experience, Georgia knowledge and strong
project delivery record.
Philip Dimmock | Non-Executive Chairman
Committee memberships: Remuneration Committee (Chair); Nominations Committee (Chair); Audit and Risk
Committee; Disclosure Committee; Technical Committee; HSE Committee (Chair)
Philip spent a significant part of his career at BP in a wide variety of senior positions, including manager of the
Forties oil field. Subsequently, his executive roles included Vice President International/Managing Director UK at
Ranger Oil Ltd/Canadian Natural Resources and Vice President Operations at Vanco Energy. In non-executive
board positions, Philip was a director of Nautical Petroleum Plc and the Senior Independent Director of Gulf
Keystone Petroleum Ltd. He currently serves as Adviser to Oando Energy Resources Inc. Philip has an MA in
Physics from the University of Oxford.
Key skills and competencies: extensive oil and gas sector experience and knowledge, career board member
Jeremy Asher | Senior Independent Non-Executive Director
Committee memberships: Audit and Risk Committee (Chair); Nominations Committee; Remuneration Committee;
Disclosure Committee
Jeremy is Chairman & CEO of Tower Resources plc. In recent years he served as a director of NYSE-listed Pacific
Drilling SA, Deputy Chairman of London-listed Gulf Keystone Petroleum Ltd, and as a director of TASE-listed Oil
Refineries Ltd. Previously he co-headed the global oil products business at Marc Rich & Co (now Glencore AG)
and then acquired and developed a 275,000 b/d oil refinery in Germany, before serving as CEO of PA Consulting
Group and advising and investing in numerous companies in the energy sector. He holds a BSc (Econ) from the
London School of Economics and an MBA from the Harvard Business School.
Key skills and competencies: extensive oil and gas sector experience, professional consultant and manager
The Strategic Report was approved by the Directors and signed on behalf of the board on the 21 May 2025.
Paul Haywood
Director
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
29
Report of the Directors
The Directors present their report and the audited financial statements of Block Energy PLC (“the Company”) for
the year ended 31st December 2024.
Principal Activity
The principal activity of the Company is oil and gas exploration, development and production.
Incorporation and Admission to Trading on AIM
The Company was incorporated on 8th February 2005 and was admitted to trading on AIM on 11th June 2018.
Results and Dividends
The results for the year are set out on page 17.
This Report covers the year ended 31st December 2024.
The Directors do not recommend the payment of a dividend (2023: $nil).
Review of Business and Future Developments
A review of the business and likely future development of the Company is set out in the Chief Executive Officer’s
Statement on pages 15-16.
Going Concern
The directors have prepared cash flow forecasts for a period of 12 months from the date of signing these financial
statements. Further information is set out in Note 1 to this Report.
Risk Management
Risk management is integral to the business with management continuously monitoring and managing risk
within the relevant business areas. Every material decision is preceded by an evaluation of the applicable
commercial and operational risks. Regular reviews of risks and management of these are undertaken and
presented to the Board. The Group maintains an Audit and Risk Committee and a Risk Register.
Principal Risks and Uncertainties
The principal risks the Board have reviewed are disclosed on pages 19-24 of this Report.
Share Capital
Details of shares issued by the Company during the year are set out in Note 18 to the Financial Statements.
Directors and Directors’ Interests
The Directors of the Company who served during the year ended 31st December 2024 are listed below, and the
current Board member’s biographies are on page 28 of this Report.
Paul Haywood
Chief Executive Officer
Philip Dimmock
Independent Non-Executive Chairman
Jeremy Asher
Independent Senior Non-Executive Director
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
30
Details of Directors’ interests in shares are disclosed on page 40 of this Report.
Director’s and Officers’ Liability Insurance
The Group provided director’s and officer’s liability insurance at a cost of $21,000 (2023: $25,000).
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under the law, the
Directors have elected to prepare the Group and Company financial statements in accordance with UK adopted
International Accounting Standards. Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and
Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial
statements in accordance with the rules of the London Stock exchange for companies trading securities on AIM.
In preparing these Financial Statements, the Directors are required to:
•
Select suitable accounting policies and then apply them consistently;
•
Make judgements and accounting estimates that are reasonable and prudent;
•
State whether applicable UK-adopted international accounting standards have been followed, in
accordance with the provisions of the Companies Act (2006), subject to any material departures
disclosed and explained in the financial statements; and
•
Prepare the financial statements on a going concern basis unless it is inappropriate to assume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act (2006). They are also responsible for safeguarding the assets of the Company and that they are
taking reasonable steps for the prevention and detection of fraud or other irregularities.
Website Publication
The Directors are responsible for ensuring the Annual Report and Financial Statements are made available on a
website. Financial statements are published on the Company’s website in accordance with the relevant
legislation in the United Kingdom governing the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the Financial
Statements contained therein.
Governance Statement
We have chosen to adhere to the updated Quoted Companies Alliance Corporate Governance Code for Small
and Medium Size Quoted Companies (2024 version); (“QCA Code”). Our full statement of compliance with the
QCA Code is provided in the Governance Report on pages 32-37 of this Report.
Section 172 (1) Statement and Engagement with Stakeholders
How we comply with Section 172 of the Companies Act 2006 and engage with Stakeholders is set out in the
Statement of Corporate Responsibility on pages 25 - 27 of this Report.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
31
Engagement With Shareholders
The Directors attach great importance to maintaining good relationships with shareholders and the Company is
active in regularly communicating with both its institutional and private shareholders. The Company also issued
regular updates to shareholders. Market sensitive information is notified in accordance with the AIM Rules for
Companies and the Market Abuse Regulation.
Political Contributions
During the year ended 31st December 2024, political donations totalled $nil (2023: $nil).
Financial Instruments
The main financial risks arising from the Group’s activities are liquidity risk, commodity price risk, increased costs
and currency risk. These are monitored by the Board in line with the Company’s Risk Register.
Budgets and cashflow forecasts are regularly prepared and fund-raising initiatives undertaken as and when
required. Risk is inherent in the nature of the business and is managed to the best of the Board’s ability. Further
details on financial instruments are shown in note 23.
Auditors and Disclosure of Information to Auditors
All of the current Directors have taken all of the steps that they ought to have taken to make themselves aware
of any information needed by the relevant Auditors for the purposes of their audit and to establish that the
Auditors are aware of that information. The Directors are not aware of any relevant audit information of which
the Auditors are unaware.
PKF Littlejohn LLP have expressed their willingness to continue in office and a resolution to re-appoint them will
be proposed at the Annual General Meeting.
The Report of the Directors was approved and authorised for issue on 21 May 2025.
Paul Haywood
Director
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
32
Governance Report
Corporate Governance Statement
We believe in the value and importance of good corporate governance and hold ourselves accountable to all our
stakeholders - shareholders, staff, contractors, clients, suppliers and the communities within which we operate.
High standards of Corporate Governance were maintained in 2024, continuing into the current year, The Board
meets every two months for a thorough review all aspects of the business and the strategy and, in between, to
consider and approve individual investment decisions or to resolve standalone situations. The Board Committees
also meet frequently.
QCA Corporate Governance Code (2023)
On 13 November 2023, the Quoted Companies Alliance (“QCA”) published a revised QCA Corporate Governance
Code 2023 (the “Revised Code”). The Revised Code maintains its ten-principle structure, but increases emphasis
on environmental, social, and governance (“ESG”) factors, remuneration policies, and the importance of
corporate culture, as well as continuous communication with shareholders and stakeholders. The QCA has
clarified its expectation for companies to consider how they apply each principle in the revised Code and provide
clear and well-reasoned discourses to shareholders explaining the approach taken (including, if relevant, where
they have chosen not to apply the Revised Code).
The revised QCA Code will apply to all companies for financial years beginning on or after 1 April 2024. However,
the Board has decided to adopt this Revised Code early. The report below sets out how it meets the Revised
Code.
QCA Code Principles & the Company’s Response
Principle One: ‘Establish a purpose, strategy and business model which promote long-term value for
shareholders’ (previously One)
Block Energy’s purpose is to deliver shareholder value through the development of its high-impact strategic
projects. The Company is developing valuable intellectual property with regard to the specific geology of the
region in which it operates in and is undertaking exploration and appraisal activities within the portfolio to meet
this goal whilst remaining cashflow positive from existing production operations.
Georgia has long been recognised as a business-friendly country, with historically high rankings in global ease of
doing business indices. It possesses proven but underdeveloped reserves of oil and gas, attracting growing
interest from major energy companies. Georgia remains committed to European integration having already
achieved EU Candidate status. Despite recent setbacks it still aims to achieve full membership by 2030. Continued
progress depends on meeting EU benchmarks for governance and democratic reform.
Our objective to deliver shareholder value in the medium to long term is based on the continued
commercialisation of our existing projects and the identification and development of new projects within and
outside of Georgia to secure the Company’s growth and long-term future.
We have designed a robust business model to implement our strategy, and this is set out in the strategic report
on pages 3 to 28.
The Company continuously investigates and evaluates new production and exploration opportunities in Georgia,
Africa, Europe and near Asia which have near term cash generation potential and where it can leverage on the
skill set of its UK and Georgian staff.
We maintain a robust M&A screening framework and assess opportunities from a technical, commercial,
economic and strategic perspective. We are an ambitious operating company and seek to grow our portfolio
both organically and inorganically.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
33
Principle Two: ‘Promote a corporate culture that is based on ethical values and behaviours’ (previously Eight)
Our core values underpin our long-term growth:
•
We continually develop and nurture good relationships with our stakeholders: staff, shareholders,
suppliers, national and local governments and the communities within which our operations are
embedded.
•
We are an agile and ambitious company. We have a team carefully selected for their skills and
experience, we are committed to our values and we are dedicated to the successful execution of our
current and future strategy.
•
We endeavour to develop individual members of our staff and the team as a whole.
•
We are committed to employing cost-effective technology and processes to achieve our objectives and
deliver value to our stakeholders.
•
We are courteous, honest and straightforward in all our dealings, honouring diversity, individuality and
personal differences and are committed to observing the highest personal, professional and ethical
standards in conducting our business.
•
We are acutely conscious of our particular responsibilities as an oil and gas producer. Our HSES
obligations are the first operations-related agenda item at all of our daily and weekly meetings as well
as our Board meetings and we employ a full-time HSES department in Georgia to develop and manage
our HSES processes.
•
We recognise the risks posed by climate change and are committed to playing a responsible role as an
oil and gas producer. We are actively exploring initiatives such as carbon capture to reduce our
environmental impact.
Our values are expressed and communicated regularly to staff through internal communications and forums.
They are included in our employment contracts, induction processes and training programmes.
The Board believes that the promotion of our core values across the Company’s operations gives Block a critical
competitive advantage, improving our internal efficiency and the quality of our stakeholder relationships.
Principle Three: ‘Seek to understand and meet shareholder needs and expectations’ (previously Two)
The Board strives to keep shareholders informed with clear and transparent information on the Company’s
operations, strategy and financial position. Details of all shareholder communications are provided on the
Company’s website, in compliance with AIM Rules. RNS updates, reports, circulars, videos, podcasts and
presentations are all published on the Company’s website or social media channels.
Primary responsibility for investor relations rests with the Chief Executive Officer, supported by the other
Directors and senior management. Since Block Energy began trading on AIM on 11th June 2018, the Company
has used multiple channels to understand the needs and expectations of its shareholder base.
The AGM is one of our many forums for dialogue with shareholders and we encourage all shareholders to attend
and participate. The members of the Board attend the AGM, when possible, and are available to answer
questions raised by shareholders.
In addition to maintaining digital communications channels, the Company maintains a dedicated email address
(info@blockenergy.co.uk) which investors can use to contact the Company, and a mailing list. These are displayed
prominently on our website together with our address and telephone number. All enquiries received are
reviewed and distributed as appropriate. We also contract an experienced financial communications company
to assist with our communications activities.
The Directors continually review our engagement with shareholders and our communications approach.
The Directors take every opportunity to communicate our purpose, strategy and business plan to existing and
potential institutional investors. We routinely make presentations to institutions and industry analysts,
particularly after the announcement of significant news. We keep in touch with institutional investors through a
combination of formal meetings, participation at investor conferences, roadshows and informal briefing by
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
34
management. The majority of meetings with shareholders and potential investors are arranged by the Company’s
brokers or directly with the Company. The brokers provide frequent feedback to the Company to assist in
understanding sentiment and market expectation.
Principle Four: ‘Take into account wider stakeholder interests, including social and environmental
responsibilities and their implications for long-term success’ (previously Three)
We understand that our long-term success depends on our relationships with our stakeholders. We set out our
stakeholder engagement process in our Statement of Corporate Responsibility on pages 25-27 of this Report.
The revised Code calls for a stronger emphasis on ESG factors and their integration into the company’s decision-
making process.
The company integrates ESG factors into its strategy and operations, particularly focusing on environmental
sustainability and social responsibility. Block Energy collaborates closely with Georgian authorities, investing in
community programs and job creation. In the year we have worked with the Tbilisi Technical Institute to provide
paid internships to students.
In early 2025, the Company completed an agreement with JSC Rustavi Azot to investigate capture and
sequestration of carbon from the emissions from their fertiliser factory within our Patardzeuli-Samgori Middle
Eocene reservoir. This marks a pleasing step towards reducing our carbon footprint and showcasing the
company’s commitment to reducing its environmental impact.
The Company continues to implement initiatives aimed at reducing emissions of methane and carbon dioxide
from its field operations and motor vehicles. In 2024, the Company installed an in-house oil processing facility
for the Patardzueli field which utilises previously vented gas to feed a heat exchanged for oil processing, reducing
methane emissions.
Principle Five: ‘Embed effective risk management, internal controls and assurance activities, considering both
opportunities and threats, throughout the organisation’ (previously Four)
The Board is responsible for establishing and communicating robust systems to manage risk and implement
internal control. We recognise that risk management is an essential business practice: we work to balance risk
and return, threat and opportunity.
Risk assessments are carried out for future prospects and new risks (for existing projects) are identified through
periodic assessments. This involves both internal teams and where necessary, external consultants who can
provide fresh insights and identify emerging risks. The Company monitors industry trends and regulatory
changes, especially those related to environmental legislation and sustainability standards. This helps in
proactively identifying and assessing climate-related risks that could impact compliance, operational costs, or
reputation.
The Board regularly reviews risk management strategies as part of its governance responsibilities. This process
ensures that emerging risks are identified, communicated, and addressed effectively across the organisation. The
Company uses cost effective technology to measure and contain geological risk. It maintains regular dialogue
with central and local government bodies to identify and contain sovereign risk.
The following Committees play a crucial role in executing these governance functions.
Audit and Risk Committee
The Audit and Risk Committee meets to consider the scope of the annual audit and the interim financial
statements and to assess the effectiveness of the Company’s system of internal controls. It reviews the results of
the external audit, its cost effectiveness, the objectives of the auditor and the independence of the auditor.
Given the present size of the Company, the Audit and Risk Committee considers that an internal audit function
is not currently justified. The Audit and Risk Committee currently comprises Jeremy Asher (Chair) and Philip
Dimmock.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
35
Remuneration Committee
The Remuneration Committee reviews the performance of the Executive Director and makes recommendations
to the Board on matters relating to his remuneration and terms of employment. The Remuneration Committee
also makes recommendations to the Board on proposals for granting share options and other equity incentives
pursuant to the share option scheme. The Board sets the remuneration and terms and conditions of appointment
of the non-executive Directors of the Group. The Executive Director is invited to attend for agenda items that
require his contribution although he does not take part in any discussion on his own benefits and remuneration.
The Remuneration Committee also has oversight over the remuneration policies for all staff. The Remuneration
Committee currently comprises Philip Dimmock (Chair) and Jeremy Asher.
Nominations Committee
The Nominations Committee considers appointments to the Board, senior management positions and succession
planning. The Nominations Committee currently comprises Philip Dimmock (Chair), Jeremy Asher and Paul
Haywood. The Committee met informally through the year after Board meetings.
Disclosure Committee
The Disclosure Committee has the primary responsibility and authority to make decisions on disclosure delay for
the purposes of the Market Abuse Regulations (“MAR”). The Disclosure Committee currently comprises Jeremy
Asher (Chair) and Philip Dimmock.
Technical Committee
The Technical Committee meets every two months, and sometimes more frequently on an informal basis, to
consider surface and sub-surface technical and operational matters. The Technical Committee currently
comprises Guram Maisuradze (non-Board Chair) and Philip Dimmock.
Health, Safety and Environment (HSE) Committee
The HSE Committee aims to meet at least quarterly and reviews the Company’s HSE policies, performance and
goals. The Committee meets in the event of any serious HSE lapse to review the causes and identify remedial
action. The HSE Committee currently comprises Philip Dimmock (Chair), and Paul Haywood.
Environmental, Social and Governance (ESG) Committee
The ESG Committee meets during the year and reviews the Company’s environmental and social impact,
including monitoring the Company’s emissions, any unplanned flaring of gas and the Company’s social impact.
The ESG Committee currently comprises Philip Dimmock (Chair), Jeremy Asher and Paul Haywood.
Principle Six ‘Establish and maintain the Board as a well-functioning, balanced team led by the Chair’
(previously Five)
The members of the Board have a collective responsibility and legal obligation to promote the interests of the
Company and are jointly responsible for defining corporate governance arrangements. Ultimate responsibility
for the quality of, and approach to, corporate governance lies with the Chair.
The Board currently consists of three Directors, one executive and two independent non-executives, including
the Chair. To support its work, the Board has established several committees, as detailed above in this Report. In
accordance with the revised Code, the Board acknowledges its current lack of diversity, largely due to the limited
pool of qualified candidates. However, it is committed to prioritising diversity considerations in future
appointment should the Board’s size increase.
Board meetings are held regularly (at least one formal meeting every two months). All Directors, executive and
non-executive, are required to attend and to make every effort to attend in person. They are also required to be
available at other times as necessary for face-to-face and telephonic and video conference meetings with staff
and investors.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
36
Executive and non-executive Director attendance at Board and committee meetings during the year ended 31
December 2024 is summarised below:
Director
Board
Meetings
Audit & Risk
Committee
Remuneration
Committee
Technical
Committee
HSE
Committee
ESG
Committee
Philip
Dimmock
8/8
4/4
3/3
6/6
1/1
1/1
Jeremy
Asher
8/8
4/4
3/3
6/6
-
-
Paul
Haywood
7/7
-
-
6/6
1/1
1/1
The Board follows a regular schedule to address key business, financial and operational matters. Relevant papers
are provided in advance for review. Each committee has compiled a work plan to ensure that all Board
responsibilities are covered. The Chair ensures Directors receive accurate and timely information for decision
making. Board meetings are minuted, with all presented papers included. Directors can have concerns minuted
and seek independent advice at the Company’s expense, if needed.
The Directors also visit Georgia regularly to meet staff and stakeholders. In addition to these formal events, the
Directors frequently discuss day-to-day Company matters in person and by conference call. The number of days
committed to the Company is challenging to quantify because the Directors make themselves available as
required.
The revised Code also recommends that shareholders vote annually on the re-election of all board members.
However, the Company does not resubmit the entire Board each year. Our articles require one-third of the Board
to be submitted for re-election annually. With only three directors, removal of more than one director at any
time could cause unnecessary disruption, so while we acknowledge the new recommendation, we continue with
our current approach.
Principle Seven: ‘Maintain appropriate governance structures and ensure that individually and collectively the
directors have the necessary up-to-date experience, skills and capabilities’ (previously Six and Nine)
Together, the Directors have broad and deep experience in the governance of publicly listed companies, HSES
management, well and production operations, petroleum reservoir engineering, oil and gas field development,
contractual negotiation, commercial and financial experience and government and community relations. Two of
our Directors have previous experience working in Georgia and all of our Directors have publicly listed company
board experience.
Profiles of our executive and non-executive Directors, demonstrating their suitability for the responsibilities with
which they have been entrusted, are available in this Report on page 28 and on our website.
The Board believes its blend of experience, skills, personal qualities and capabilities is sufficient to support
effective strategy execution, with Directors staying updated through seminars, industry events, and professional
advice.
The Nominations Committee regularly reviews Board expertise and appoints new directors as needed. Directors
are kept informed on governance and AIM regulations and receive training from the Nominated Advisor and
lawyers upon appointment. They also have access to the Company’s advisors, Secretary, and external experts as
needed.
The Board provides the Company’s strategic leadership and operates within the scope of a robust corporate
governance framework. It ensures delivery of long-term shareholder value by setting and promoting the culture,
values and practices that operate throughout the business, and by defining the Company’s strategic goals. The
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
37
Board delegates certain defined responsibilities to its Committees as described in detail on pages 34-35 of this
Report.
Principle Eight: ‘Evaluate board performance based on clear and relevant objectives, seeking continuous
improvement’ (previously Seven)
The performance of each member of the Board (and senior management) is evaluated either formally or
informally, to assess their contribution to the Company’s success. The Board is collectively responsible for the
evaluation of the performance of each member. The Executive Director is incentivised to seek continuous
improvement and innovation through remuneration schemes linked to share price and, ultimately, Company
performance.
Evaluating board performance against annual objectives is challenging and costly for a small board, but we will
undertake this process with external expertise if and when deemed necessary.
Principle Nine ‘Establish a remuneration policy which is supportive of long-term value creation and the
company’s purpose, strategy and culture’ (new principle)
The revised Code emphasises the importance of aligning remuneration policies with the Company’s purpose,
strategy, and culture, ensuring they incentivise management to focus on long-term sustainable growth. It also
recommends that shareholders have a voice in remuneration policies and reporting. The Remuneration
Committee will take this new principle into account as it sets Board remuneration for the coming year. The
Committee believes that its long-term incentive plan is consistent with this Principle, ensuring that remuneration
structures are transparent and support long-term value creation for shareholders.
Principle Ten: ‘Communicate how the company is governed and is performing by maintaining a dialogue with
shareholders and other key stakeholders’
We provide regular updates on governance and performance through periodic RNS’ and publication of both our
annual and interim reports. We ensure that all this information is available on our website and is understandable
for all stakeholders.
We use a variety of communication channels and maintain an up-to-date website which includes all relevant
governance documents. The Company has an active shareholder dialogue, especially with institutional and major
shareholders and is looking for ways to improve its communications with retail investors. Currently, the latter
shareholders have the opportunity to meet, vote on governance matters and ask questions at the AGM.
The annual report and website clearly communicate our Board composition and corporate governance policies.
They also set out our view on risks and opportunities and our financial information. We seek to actively engage
with our shareholders and stakeholders, maintaining regular dialogue with our advisors to address any issues or
concerns they may have.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
38
Remuneration Report
This Remuneration Report covers the year ended 31 December 2024 when the Committee comprised Philip
Dimmock (Chair) and Jeremy Asher. At times, Paul Haywood attended as a guest and during the year, the
Remuneration Committee formally met three times.
Remuneration Policy
The Remuneration Committee, in forming its policy on remuneration, gives due consideration to the needs of
the Group, the shareholders and the provisions of the QCA Corporate Governance Code. The ongoing policy of
the Remuneration Committee is to provide competitive remuneration packages to enable the Group to retain
and motivate its key executives and to cost-effectively incentivise them to deliver long-term shareholder value.
The Remuneration Committee keeps itself informed of relevant developments and best practice in the field of
remuneration and seeks advice where appropriate from external advisers. It maintains oversight of the
remuneration of staff, which is the responsibility of the Chief Executive Officer.
It is the aim of the Remuneration Committee to reward key executives for delivering value for the Group and for
shareholders. The Remuneration Committee also applies the broader principle that Block Energy’s executive
remuneration should be competitive with the remuneration of Directors of comparable companies.
The remuneration policy for the non-executive Directors is determined by the Board, considering best practice
and the Articles of Association.
Components of the Remuneration Package
The main components of the remuneration package for executive Directors and senior management are:
•
Base salary;
•
Pension and other benefits;
•
Performance-related annual cash bonus scheme; and
•
Long-term incentive plan (“LTIP’’).
Base salary
The policy is to pay a fair and reasonable base salary, set around the median level of comparable companies. The
base salary is reviewed annually by the Remuneration Committee, having regard to the performance of the
Company and economic conditions and any changes to an individual’s job scope.
Pension and other benefits
The Company contributes 10% of base salary to the pensions of the executive Director.
During 2025, the Company is considering providing other benefits, such as insurance products, to some of its
employees.
Performance-related cash bonus scheme
Each year, the Remuneration Committee develops a set of individual and corporate key performance indicators
(“KPIs”) with the aim of measuring performance accurately and consistently and then rewarding performance
appropriately.
For executives and staff, the KPIs are weighted 60% for the individual KPIs and 40% for the corporate ones. The
CEO has up to 150% of his base salary available for a bonus payment.
Senior managers can receive up to 50% of their base salary as a bonus.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
39
For each KPI, performance measures are established for Threshold, Target and Stretch levels. There is also
provision for a degree of discretion for the Board of Directors, including circumstances where no bonuses will be
paid regardless of performance.
Description of Corporate KPIs for the year ended 31 December 2024
•
HSESG Performance - sought to reward top performance across all sections of the business and was
measured by the number of lost time incidents and the delivery & implementation of the updated
HSESG plan. During the period there was one major lost time incident and therefore this target measure
was not achieved.
•
Production (on existing wells) – production targets were set and the Stretch measure was reached as
baseline production was 8% above budget.
•
New Georgian Ventures – targets were set to execute at least one of the new Georgian Ventures. The
CCS venture was executed and therefore the Stretch measure target was achieved.
•
Operating costs budget performance – targets were set to bring operating costs down against those
budgeted. A Stretch level was achieved.
Description of Chief Executive Officer’s individual KPIs for the year ended 31 December 2024
•
New Ventures: The Group completed the acquisition of a 10% participating interest in the XIQ PSC with
an option to increase this to 22%. Stretch level was achieved.
•
Strategic Financing: Business growth requires additional funding. In the prior year, a $2M loan was
secured to finance new work programmes and avoid highly dilutive equity; this loan was successfully
restructured in the current year. Threshold level was achieved.
•
Personal Development: Participated in regular training and workshops to enhance strategic thinking
and meet ongoing professional development goals. Stretch level was achieved.
•
HSE & Governance Leadership: Regular monthly HSE meetings have been held with active CEO
participation, and two workshops have been conducted to address the concerns raised and improve
process and performance. Stretch level was achieved.
Description of KPIs for the year ending 31 December 2025
For 2025, the KPIs for the CEO remain aligned with the Company’s objectives for the year ending 31 December
2025 at both Corporate and Individual levels. The weighting of Individual KPIs remains at 60% and the weighting
of Corporate KPIs remains at 40% of the total. At the Corporate Level, the KPIs are based on production, work
programme and cost management, in addition to HSE excellence.
At the individual level, KPIs for the Chief Executive Officer will continue to be based on the development of New
Ventures, Strategic Financing, Personal and Strategic Development and HSE & Governance Leadership. The
Remuneration Committee will ensure that these KPIs are well defined for the coming reporting period.
Long-Term Incentive Plan (“LTIP”)
The LTIP aligns executive Director interests with those of shareholders and drives superior long-term
performance. Under the LTIP, executive Directors and other members of the management team may be awarded
share options that vest over a three-year period and have an exercise period of ten years. The vesting of any LTIP
awards granted to executive Directors continues to be conditional on certain performance milestones being
satisfied.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
40
Directors’ Remuneration
Year
ended 31
December
2024
Year
ended 31
December
2023
Salary
Bonus
Fees
Pension
LTIP
Total
Total
$
$
$
$
$
$
$
Non-Executive Directors
Jeremy Asher
-
-
55,053
-
-
55,053
56,450
Philip Dimmock
-
-
68,575
-
-
68,575
71,252
Kenneth Seymour
-
-
-
-
-
-
1,977
Executive Directors
Paul Haywood
284,244
296,4251
-
28,424
23,950
633,042
547,972
Total
284,244
296,425
123,628
28,424
23,950
756,670
677,651
1 Paid in equity in March 2025
Directors’ Interests in Shares
The directors who held office at the end of the year had the following interests in the Ordinary Shares of the
Company:
31 December 2024
31 December 2023
Non-Executive Directors
Jeremy Asher
2,437,830
2,347,830
Philip Dimmock
3,982,674
3,982,674
Executive Directors
Paul Haywood
44,770,4521
12,544,381
Total
51,190,956
18,874,885
1This holding is at the date of these report and accounts.
The Directors held 6.65% of the total share capital of the Company (2023: 2.6%) at the date of these report and
accounts.
Directors’ Interests in Options
The Directors who held office at the end of the year had the following interests in options to acquire Ordinary
Shares of the Company:
31 December 2024
31 December 2023
Non-Executive Directors
Jeremy Asher
-
-
Philip Dimmock
928,612
928,612
Executive Directors
Paul Haywood
76,809,783
61,948,032
Total
77,738,395
62,876,644
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
41
A detailed breakdown of Directors’ interests in options is set out below:
Director
Grant date
Expiry date
Life
Number
Exercise price
(years)
(pence)
Paul Haywood
9 June 2018
11 June 2028
10.0
7,756,428
4.0
Paul Haywood
1 March 2021
1 March 2031
10.0
6,000,000
4.0
Paul Haywood
6 April 2021 to
3 December 2021
6 April 2031 to 3
December 2031
10.0
2,564,462
0.0
Paul Haywood
4 January 2022 to
1 December 2022
4 January 2032 to
1 December 2032
10.0
16,774,469
0.0
Paul Haywood
8 April 2022
8 April 2032
10.0
14,500,000
1.325
Paul Haywood
4 January 2023 to 5
April 2023
4 January 2033 to
5 April 2033
10.0
14,352,673
0.0
Paul Haywood
29 May 2024
29 May 2034
10.0
14,861,751
0.0
Philip Dimmock
6 April 2021 to
3 December 2021
6 April 2031 to
3 December 2031
10.0
732,700
0.0
Philip Dimmock
4 January 2022
4 January 2032
10.0
195,912
0.0
Total
77,738,395
Philip Dimmock
Chairman of the Remuneration Committee
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
42
Independent Auditor’s Report to the Members of Block Energy PLC
Opinion
We have audited the financial statements of Block Energy plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2024 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and
notes to the financial statements, including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and UK-adopted international accounting standards
and as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 December 2024 and of the group’s loss for the year then ended ;
•
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
•
the parent company financial statements have been properly prepared in accordance with UK-adopted
international accounting standards and as applied in accordance with the provisions of the Companies
Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 of the financial statements which references the reliance upon the oil and gas
production, oil prices and the success of future drilling to generate sufficient revenue to continue to fund the
Group’s cash requirements and the impact of potential downside scenarios on the Group’s ability to cover its
ongoing operating costs. Should such downside scenarios occur the Group and Parent Company would be
required to secure further funding. We also note that the outstanding $2.0m secured loan is due for full
redemption in February 2026 and that there are scenarios in which the Company may not be in a position to
settle this liability on time. As stated in note 1, these conditions are necessarily considered to represent a material
uncertainty that may cast significant doubt over the Group's and the Parent Company’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included:
-
Critically assessing the Directors' financial forecasts through comparing actual outcomes in the
current year against prior forecasts. Underlying key assumptions, including revenue, production
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
43
volumes, operating and capital expenditure were assessed by considering factors such as
commitments, historical revenue profiles, historical actuals and forecasted production levels, and
operating expenditure historic actuals in order to assess the reasonableness of the forecasts.
-
Considering sensitivities over various sales volumes.
-
Assessing the reasonableness of key assumptions underpinning the forecasts by reference to Brent
crude oil prices, Georgian gas prices, current production sharing agreements, expenditure and
commitments and considered the implications of the trends in the global economy on the Group.
Where appropriate, confirming the key inputs to publicly available information and underlying source
documentation.
-
Performing sensitivity analysis on the cash flow forecast to consider the available headroom under
different reasonably possible scenarios such as a decrease in oil and gas prices, an increase in
exchange rate, and lower than anticipated initial production rates from new wells.
-
Making enquiries of Management and Directors and reviewing Board minutes and key operational
contracts to assess the completeness of commitments considered in the cash flow forecasts.
-
Reviewing post year end information such as minutes of board meetings and Regulatory New Service
(RNS) Announcements.
-
Evaluating the adequacy of disclosures made in the financial statements in respect of going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our application of materiality
Entity
Basis for materiality
Materiality
Block Energy Plc – Group
2% of net asset (2023: 2% of net
assets)
$499,000 (2023: $549,000)
Parent company
2% of net assets (2023: 2% of net
assets)
$450,000 (2023: $461,000)
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a
whole.
Based on our professional judgement, we consider net assets to be the most significant determinant of the
group’s and parent company’s financial performance used by shareholders as the group continues to progress
its oil and gas development assets and the parent company continues to support the group’s oil and gas
development activities.
Whilst materiality for the group financial statements as a whole was set at $499k (2023: $549k), material
components of the group were audited to a level of performance materiality ranging between $209k - $279k
(2023: $323k to $147k) to ensure sufficient coverage of key balances. We apply the concept of materiality both
in planning and performing our audit, and in evaluating the effect of misstatements. At the planning stage
materiality is used to determine the financial statement areas that are included within the scope of our audit
and the extent of sample sizes during the audit.
We agreed with management that we would report to the Audit Committee all individual audit differences
identified during the course of our audit in excess of $24k (2023: $27k) for the financial statements as a whole
and $22k (2023: $23k) for the parent company. We also agreed to report differences below these thresholds
that, in our view warranted reporting on qualitative grounds.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
44
Our approach to the audit
Our group audit scope focused on the principal areas of operation being the UK and Georgia.
Our Group audit scope focused on the companies within the Group which hold the Group’s assets being Block
Energy Plc, Georgian New Ventures Inc and Block Rustaveli Limited Georgia which were all subject to a full scope
audit and Block Operating Company LLC, Block Norioskhevi Limited, and Block Rustaveli Limited (BVI) which to
were subject to a specific scope audit whereby procedures were performed on one or more classes of
transactions, account balances or disclosures. Together with the Group consolidation, which was also subject to
a full scope audit, these represented the main components of the Group. All audit work on the components was
conducted by the Group audit team with the assistance of staff from the local Georgian PKF Member Firm.
The remaining components of the Group were considered non-significant and were principally subject to
analytical review procedures. These procedures were performed by the Group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section we have determined the matters
described below to be the key audit matters to be communicated in our report.
Key Audit Matter
How our scope addressed this matter
Carrying value of oil and gas development assets –
Group and Parent (note 2 and 12)
The Group’s development and production assets
which are categorised within property, plant and
equipment, represent the most significant asset on
the consolidated statement of financial position
amounting to $22.1m as at 31 December 2024
(2023: $22.7m). Management and the Directors
are required to assess whether there are any
potential impairment triggers which would
indicate that the carrying value of the assets may
not be recoverable for each cash generating unit.
The indicators of impairment assessment in relation
to the development and production assets under
the relevant accounting standard and the resulting
assessment of the assets’ recoverable amount
require the exercise of significant judgement by
Management and the Directors. Given the
significance of the assets to the Group’s
consolidated statement of financial position and
the significant management judgements and
estimates involved in this area, we considered this
a key audit matter.
Our work in this area included:
•
Obtaining evidence regarding the compliance
with licence terms and that they remain in good
standing.
•
Reviewing third party reports obtained from
Directors and Management’s experts relating to
the reserves and resources impacting the
impairment model and indicators.
•
Reviewing Management’s IAS 36 impairment
indicator review paper and critically challenge
the key judgements.
•
Reviewing of the Competent Person Reports and
other external and internal reserve reports in
place and assess their scope of work, including
an evaluation of their competence, capabilities
and independence.
•
A review of management’s internal production
forecasts to the CPR in place and assess the
appropriateness of any differences which arise.
•
Agreeing the key assumptions used by the
directors and management in determining the
recoverable amount of the development &
production asset, such as oil price and discount
rates and compared to industry averages and
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
45
benchmarked against publicly available
information. We considered assumptions such
as production levels and sales in the light of
historic results and underlying agreements such
as the production sharing agreements.
•
Confirming the development and producing
asset disclosures are in line with the
requirements of the applicable financial
reporting framework.
Carrying value of investments in subsidiaries and
loans due from subsidiary companies in the Parent
Company (Note 2 and 3)
Under International Accounting Standard 36
‘Impairment of Assets’, companies are required to
assess whether there is any indication that an
asset may be impaired at each reporting date. Key
judgements and assumptions regarding the
impairment of investments include the timing,
extent and probability of future cash flow from its
subsidiary companies.
The Parent Company also has loans due from
subsidiary companies amounting to $22m (2023:
$23m), which are assessed in accordance with IFRS
9.
As at 31 December 2024, the investments
represent a significant balance of $6.4m (2023:
$6.5m) on the Company balance sheet and there is
a risk it could be impaired and that intragroup
loans may not be recoverable as a result of the
subsidiary companies incurring losses.
Our work in this area included:
•
Reconfirming ownership documents for
investments in subsidiaries held by the parent
company.
•
Reviewing management’s assessment of
impairment indicators as per IAS 36 Impairment
of Assets and challenging management on key
assumptions and judgements therein.
•
Assessing the appropriateness of the
methodology applied by management in their
assessment of the recoverable amount of
intragroup loans by comparing it to the Group’s
accounting policy.
•
Reviewing management’s assessment of the
intragroup balance receivables in respect of the
requirements set out in IFRS 9 Financial
Instruments.
•
Checking that intragroup loans have been
reconciled and confirm that there are no
material differences.
•
Evaluating the presentation and disclosures in
the financial statements.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
46
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of
the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below:
•
We obtained an understanding of the group and parent company and the sector in which they operate
to identify laws and regulations that could reasonably be expected to have a direct effect on the
financial statements. We obtained our understanding in this regard through discussions with
management about the potential instances of non-compliance with laws and regulations both in the
UK and in overseas subsidiaries. We also selected a specific audit team based on experience with
auditing entities within this industry of a similar size.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
47
•
We determined the principal laws and regulations relevant to the group and parent company in this
regard to be those arising from:
o
Companies Act 2006
o
AIM Rules
o
Local industry regulations in Georgia
o
Local tax and employment law
•
We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations. These
procedures included, but were not limited to:
o
Making enquiries of management
o
A review of Board minutes
o
A review of legal ledger accounts
o
A review of Regulatory News Service (RNS) announcements
•
We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, that the estimates, judgements and assumptions applied by management in the
assessment of carrying value of development assets and investment balances gave the greatest
potential for management bias, that there is potential for fraud in relation to revenue recognition, we
addressed this by reviewing the appropriateness of revenue recognition policies in line with IFRS 15.
There were no other significant fraud risks.
•
As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation. This
risk increases the more that compliance with a law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the
company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
21 May 2025
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
48
Financial Statements
Consolidated Statement of Consolidated Income for the Year Ended 31st December 2024
Note
Year ended 31
December 2024
Year ended 31
December 2023
Continuing operations
$'000
$'000
Revenue
4
7,533
8,366
Cost of sales
3
(3,518)
(3,826)
Depreciation and depletion of oil and gas assets
5
(1,236)
(1,374)
Total cost of sales
(4,754)
(5,200)
Gross profit
2,779
3,166
Other administrative costs
6
(2,568)
(2,657)
Share based payments charge
22
(386)
(414)
Foreign exchange movement
(27)
(21)
Results from operating activities before impairment
(202)
74
Impairment on non-core oil and gas assets
12
-
(2,210)
Total operating loss
(202)
(2,136)
Other income
8
35
26
Finance income
33
7
Finance expense
9
(475)
(110)
(407)
(77)
Loss for the year before taxation
(609)
(2,213)
Taxation
10
-
-
Loss for the year from continuing operations
(attributable to the equity holders of the parent)
(609)
(2,213)
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on translation of foreign operations
(135)
74
Total comprehensive loss for the year (attributable to
the equity holders of the parent)
(744)
(2,139)
Loss per share basic and diluted
11
(0.08)c
(0.31)c
Earnings before interest, tax, depreciation and
amortisation (EBITDA)
3a
1,061
1,469
All activities relate to continuing operations.
The notes on pages 52 to 75 form part of these consolidated financial statements.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
49
Consolidated Statement of Financial Position for the Year Ended 31st December 2024
31 December 2024
31 December 2023
Note
$'000
$'000
Non-current assets
Intangible assets
268
50
Property, plant and equipment
12
22,976
23,851
Total non-current assets
23,244
23,901
Current assets
Inventory
13
4,299
4,377
Trade and other receivables
14
804
971
Cash and cash equivalents
15
1,136
713
Total current assets
6,239
6,061
Total assets
29,483
29,962
Equity and liabilities
Capital and reserves attributable to equity
holders of the Parent Company:
Share capital
18
3,733
3,705
Share premium
19
34,879
34,856
Other reserves
20
5,066
4,766
Foreign exchange reserve
633
768
Accumulated deficit
(18,998)
(18,389)
Total equity
25,313
25,706
Non-current liabilities
Borrowings
16
2,000
-
Total non-current liabilities
2,000
-
Current liabilities
Trade and other payables
16
1,237
1,176
Borrowings
16
-
2,000
Provisions
17
933
1,080
Total current liabilities
2,170
4,256
Total liabilities
4,170
4,256
Total equity and liabilities
29,483
29,962
The financial statements were approved by the Board of Directors and authorised for issue on 21 May 2025 and
were signed on its behalf by:
Paul Haywood
Director
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
50
The notes on pages 52 to 75 form part of these consolidated financial statement
Consolidated Statement of Changes in Equity for the Year Ended 31st December 2024
The notes on pages 52 to 75 form part of these consolidated financial statements.
Share
Capital
$’000
Share
Premium
$’000
Accumulated
Deficit
$’000
Other
Reserves
$’000
Foreign
Exchange
Reserve
$’000
Total Equity
$’000
Balance at 31 December
2022
3,565
34,765
(16,349)
4,525
694
27,200
Loss for the year
-
-
(2,213)
-
-
(2,213)
Exchange differences on
translation of foreign
operations
-
-
-
-
74
74
Total comprehensive loss
for the year
-
-
(2,213)
-
74
(2,139)
Issue of shares
133
91
-
-
-
224
Share based payments
-
-
-
414
-
414
Options exercised
7
-
-
-
-
7
Options expired
-
-
173
(173)
-
-
Total transactions with
owners
140
91
173
241
-
645
Balance at 31 December
2023
3,705
34,856
(18,389)
4,766
768
25,706
Loss for the year
-
-
(609)
-
-
(609)
Exchange differences on
translation of foreign
operations
-
-
-
-
(135)
(135)
Total comprehensive loss
for the year
-
-
(609)
(135)
(744)
Issue of shares
28
23
-
-
-
51
Share based payments
-
-
-
632
-
632
Shares held by EBT
-
-
-
(332)
-
(332)
Total transactions with
owners
28
23
-
300
-
351
Balance at 31 December
2024
3,733
34,879
(18,998)
5,066
633
25,313
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
51
Consolidated Statement of Cashflows for the Year Ended 31st December 2024
Note
Year ended
31 December 2024
$'000
Year ended
31 December 2023
$'000
Cash flow from operating activities
Loss for the year before tax
(609)
(2,213)
Adjustments for:
Depreciation and depletion
5
1,236
1,374
Impairment
12
-
2,210
Finance charges
475
110
Disposal of PP&E at nil value
12
-
89
Finance income
9
(33)
(7)
Other income and finance income
8
(35)
(26)
Creditors paid in shares
31
108
Share based payments expense
7
386
414
Foreign exchange movement
(47)
22
Operating cash flows before movements in working
capital
1,404
2,081
Decrease/(increase) in trade and other receivables
167
(411)
Increase in trade and other payables
(252)
(516)
Decrease in inventory
78
414
Net cash flow from operating activities
1,397
1,568
Cash flow from investing activities
Income received
6
33
Expenditure in respect of Intangible assets
(218)
(50)
Expenditure in respect of PP&E
12
(445)
(3,040)
Net cash used in investing activities
(657)
(3,057)
Cash flow from financing activities
Proceeds from borrowings
16
-
2,000
Interest paid
9
(311)
(248)
Net cash (outflow)/inflow from financing activities
(311)
1,752
Net increase in cash and cash equivalents in the year
429
263
Cash and cash equivalents at start of year
713
450
Effects of foreign exchange rate changes on cash and
cash equivalents
(6)
-
Cash and cash equivalents at end of year
1,136
713
The notes on pages 52 to 75 form part of these consolidated financial statements.
Significant non-cash transactions
The only significant non-cash transactions were the issue of shares and share options detailed in notes 18 and 22.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
52
Notes Forming Part of the Consolidated Financial Statements
Corporate Information
Block Energy Plc (“Block Energy”) gained admission to trading on AIM on 11th June 2018, trading under the
symbol of BLOE.
The Consolidated financial statements of the Group, which comprises Block Energy Plc and its subsidiaries, for
the year ended 31 December 2024 were authorised for issue in accordance with a resolution of the Directors on
21 May 2025. Block Energy is a Company incorporated in the UK whose shares are publicly traded. The address
of the registered office is given in the officers and advisers section of this report. The Company's administrative
office is in London, UK.
The nature of the Company's operations and its principal activities are set out in the Strategic Report on pages 3
to 28 and the Report of the Directors on pages 29 to 31.
1.
Significant Accounting Policies
IAS 8 requires that management shall use its judgement in developing and applying accounting policies that
result in information which is relevant to the economic decision-making needs of users, that are reliable,
free from bias, prudent, complete and represent faithfully the financial position, financial performance and
cash flows of the entity.
Basis of Preparation
The principal accounting policies adopted in the preparation of these consolidated financial statements are
set out below. The policies have been consistently applied to all the years presented, unless otherwise
stated. All amounts presented are in thousands of US dollars unless otherwise stated. Foreign operations
are included in accordance with the policies set out below.
The consolidated financial statements have been prepared in accordance with UK-adopted international
accounting standards and as regards the Company financial statements, as applied in accordance with the
requirements of the Companies Act 2006. The Financial Statements have also been prepared under the
historical cost convention, as modified by the revaluation of financial assets at fair value through profit or
loss.
The preparation of financial statements in accordance with UK-adopted international accounting standards
requires management to make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting
estimates may be necessary if there are changes in the circumstances on which the estimate was based, or
as a result of new information or more experience. Such changes are recognised in the period in which the
estimate is revised.
New and Amended Standards Adopted by the Group
There were no new or amended accounting standards that required the Group to change its accounting
policies for the year ended 31 December 2024 and no new standards, amendments or interpretations were
adopted by the Group.
New Accounting Standards Issued but not yet Effective
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
53
The standards and interpretations that are relevant to the Group, issued, but not yet effective, up to the
date of the Financial Statements are listed below. The Group intends to adopt these standards, if applicable,
when they become effective.
The Directors have evaluated the impact of transition to the above standards and do not consider that there
will be a material impact of transition on the financial statements.
Change in Crude Oil Inventory Valuation Policy
During the current financial year, the Group changed its accounting policy and departed from IAS 2
Inventories for the valuation of its crude oil inventory. Previously, inventories were valued at the lower of
cost and net realisable value. Under the new policy, inventories are now measured at their net realisable
value, which is Brent market price less the contracted discount. The Company believe that this provides a
more representative view of realisable value, aligns more accurately with internal management reporting
and removes the judgemental approach of allocation of certain costs.
This change has been applied prospectively from 1 January 2024 and no restatement of prior period figures
has been made.
Management believes the new policy provides more relevant and reliable information due to the active
market and short turnover cycle of oil products. This departure is made in accordance with IAS 1.20, as
continued compliance with IAS 2 was thought to be misleading.
Had IAS 2 been applied, inventory would have been $59,000 lower and profit before tax $59,000 lower.
Basis of Consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these
elements of control. De-facto control exists in situations where the Company has the practical ability to
Standard
Effective date
Overview
IFRS 18
Presentation and
Disclosure in
Financial
Statements and
IFRS 19 Subsidiaries
without Public
Accountability:
Disclosures
1 January 2027
IFRS 18 (replacing IAS 1) introduces new profit or loss
presentation requirements to enhance comparability. Early
adoption is allowed, but UK/EU endorsement is pending (UK
expected late 2025).
IFRS 19 allows eligible subsidiaries to apply IFRS with reduced
disclosures, simplifying group reporting. Early adoption is
permitted, but special rules apply if adopted before IFRS 18.
UK/EU endorsement is also pending, with UK considerations
for FRS 101’s framework.
Company size
thresholds
6 April 2025
From 6 April 2025, UK company size thresholds will increase by
~50%, reducing reporting requirements for some businesses.
Obsolete directors’ report rules will be removed, and a 2025
consultation will explore further reporting simplifications.
UK Sustainability
Reporting
Standards
1 January 2026
(expected no
earlier)
The
UK
Government's
endorsement
of
ISSB’s
IFRS
Sustainability Disclosure Standards is expected in early 2025,
with UK Sustainability Reporting Standards (UK SRS) available
by Q1 2025. The FCA may require UK-listed companies to apply
UK SRS, while the Government will decide on broader
mandatory disclosures. UK SRS will be effective no earlier than
1 January 2026 and align with existing TCFD-based regulations,
aiming to avoid reporting duplication.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
54
direct the relevant activities of the investee without holding the majority of the voting rights. In determining
whether de-facto control exists the Company considers all relevant facts and circumstances, including:
• The size of the Company’s voting rights relative to both the size and dispersion of other parties who
hold voting rights;
• Substantive potential voting rights held by the Company and by other parties;
• Other contractual arrangements; and
• Historic patterns in voting attendance.
Business Combinations
The consolidated financial statements incorporate the results of business combinations using the purchase
method. In the consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the acquisition date. The difference
between the consideration paid and the acquired net assets is recognised as goodwill. The results of
acquired operations are included in the consolidated income statement from the date on which control is
obtained. Any difference arising between the fair value and the tax base of the acquiree’s assets and
liabilities that give rise to a deductible difference result in recognition of deferred tax liability. No deferred
tax liability is recognised on goodwill.
Acquisitions
The Group and Company measure consideration at the acquisition date as:
• The fair value of the consideration transferred; plus
• The recognised amount of any non-controlling interests in the acquiree
• Plus, if the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets
acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Cost related to the acquisition, other than those associated with the issue of debt or equity securities, that
the Group incurs in connection with a business combination, are expensed as incurred.
Asset Acquisition
Acquisitions of mineral exploration licences through the acquisition of non-operational corporate structures
that do not represent a business and therefore do not meet the definition of a business combination, are
accounted for as the acquisition of an asset. An example of such would be increases in working interests in
licences.
The consideration for the asset is allocated to the assets based on their relative fair values at the date of
acquisition.
Going Concern
The directors have prepared cash flow forecasts for a period of 12 months from the date of signing these
financial statements. The Group’s forecasts are reviewed regularly to assess whether any actions to curtail
expenditure or cut costs are required.
The Group’s operations presently generate sufficient revenues to cover operating costs and capital
expenditures, supporting the continued preparation of the Group’s accounts on a going concern basis.
The directors are nevertheless conscious that oil prices have been volatile during the past few years and
could rise further but could also fall back in the year ahead, and that future production levels depend on
both depletion rates from existing wells and the success of future drilling.
The directors also recognise that the outstanding $2.0 million secured loan is due for full redemption in
February 2026 and that there are scenarios in which the Company may not be in a position to settle this
liability. Nonetheless, the directors remain confident that the loan can either be repaid, or renegotiated, or
that new lenders could take a portion, or that other financing options will be available to the Company and
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
55
therefore judge that the Company retains sufficient flexibility and optionality around the loan to prepare
the accounts on a going concern basis.
As part of their going concern assessment, the directors have examined multiple scenarios in which oil
prices and/or future production levels fall substantially and have concluded that it remains possible that
future revenues in at least some scenarios might not cover all operating costs and planned capital
expenditures, creating a material uncertainty that may cast doubt over the Group’s ability to continue as
a going concern. Whilst acknowledging this material uncertainty, the directors remain confident of making
further cost savings if required and, therefore, the directors consider it appropriate to prepare the financial
statements on a going concern basis. The financial statements do not include the adjustments that would
result if the Group were unable to continue as a going concern.
Intangible Assets
Exploration and Evaluation costs
The Group applies the full cost method of accounting for Exploration and Evaluation (E&E) costs, having
regard to the requirements of IFRS 6 ‘Exploration for and Evaluation of Mineral Resources’. Under the full
cost method of accounting, costs of exploring and evaluating properties are accumulated and capitalised
by reference to appropriate cash generating units (“CGUs”). Such CGU’s are based on geographic areas such
as a licence area, type or a basin and are not larger than an operating segment - as defined by IFRS 8
‘Operating segments.
E&E costs are initially capitalised within ‘Intangible assets’, such E&E costs may include costs of licence
acquisition, technical services and studies, seismic acquisition, exploration drilling and testing, but do not
include costs incurred prior to having obtained the legal rights to explore an area, which are expensed
directly to the statement of comprehensive income as they are incurred. Plant and equipment assets
acquired for use in exploration and evaluation activities are classified as property, plant and equipment.
However, to the extent that such an asset is consumed in developing an unproven oil and gas asset, the
amount reflecting that consumption is recorded as part of the cost of the unproven oil and gas asset.
Exploration and unproven oil and gas assets related to each exploration license/prospect are not amortised
but are carried forward until the technical feasibility and commercial feasibility of extracting a mineral
resource are demonstrated.
Impairment of Exploration and Evaluation assets
All capitalised exploration and evaluation assets and property, plant and equipment are monitored for
indications of impairment. Where a potential impairment is indicated, assessment is made for the Group
of assets representing a cash generating unit.
In accordance with IFRS 6 the Group firstly considers the following facts and circumstances in their
assessment of whether the Group’s exploration and evaluation assets may be impaired, whether:
• the period for which the Group has the right to explore in a specific area has expired during the period
or will expire in the near future, and is not expected to be renewed;
• unexpected geological occurrences render the resource uneconomic;
• a significant fall in realised prices or oil and gas price benchmarks render the project uneconomic; or
• an increase in operating costs occurs.
If any such facts or circumstances are noted, the Group perform an impairment test in accordance with the
provisions of IAS 36.
The aggregate carrying value is compared against the expected recoverable amount of the cash generating
unit. The recoverable amount is the higher of value in use and the fair value less costs to sell. An impairment
loss is reversed if the asset’s or cash-generating unit’s recoverable amount exceeds its carrying amount. A
reversal of impairment loss is recognised in the profit or loss immediately.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
56
Property, Plant and Equipment – Development and Production (D&P) Assets
Capitalisation
The costs associated with determining the existence of commercial reserves are capitalised in accordance
with the preceding policy and transferred to property, plant and equipment as development assets
following impairment testing. All costs incurred after the technical feasibility and commercial viability of
producing hydrocarbons have been demonstrated are capitalised within development assets on a field-by-
field basis. Subsequent expenditure is only capitalised where it either enhances the economic benefits of
the development asset or replaces part of the existing development asset (where the remaining cost of the
original part is expensed through the income statement). Costs of borrowing related to the ongoing
construction of development and production assets and facilities are capitalised during the construction
phase. Capitalisation of interest ceases once an asset is ready for production.
Depreciation
Capitalised oil assets are not subject to depreciation until commercial production starts. Depreciation is
calculated on a unit-of-production basis in order to write off the cost of an asset as the reserves that it
represents are produced and sold. Any periodic reassessment of reserves will affect the depreciation rate
on a prospective basis. The unit-of-production depreciation rate is calculated on a field-by-field basis using
proved, developed reserves as the denominator and capitalised costs as the numerator. The numerator
includes an estimate of the costs expected to be incurred to bring proved, developed, not-producing
reserves into production. Infrastructure that is common to a number of fields, such as gathering systems,
treatment plants and pipelines are depreciated on a unit-of-production basis using an aggregate measure
of reserves or on a straight-line basis depending on the expected pattern of use of the underlying asset.
Proven Oil and Gas Properties
Oil and gas properties are stated at cost less accumulated depreciation and impairment losses. The initial
cost comprises the purchase price or construction cost including any directly attributable cost of bringing
the asset into operation and any estimated decommissioning provision.
Once a project reaches the stage of commercial production and production permits are received, the
carrying values of the relevant exploration and evaluation asset are assessed for impairment and
transferred to proven oil and gas properties and included within property plant and equipment.
Proven oil and gas properties are accounted for in accordance with provisions of the cost model under IAS
16 “Property Plant and Equipment” and are depleted on unit of production basis based on the estimated
proven and probable reserves of the pool to which they relate.
Impairment of Development and Production Assets
A review is performed for any indication that the value of the Group’s D&P assets may be impaired such as:
• significant changes with an adverse effect in the market or economic conditions which will impact
the assets; or
• obsolescence or physical damage of an asset; or
• an asset becoming idle or plans to dispose of the asset before the previously expected date; or
• evidence is available from internal reporting that indicates that the economic performance of an
asset is or will be worse than expected.
For D&P assets when there are such indications, an impairment test is carried out on the CGU. CGUs are
identified in accordance with IAS 36 ‘Impairment of Assets’, where cash flows are largely independent of
other significant asset Groups and are normally, but not always, single development or production areas.
When an impairment is identified, the depletion is charged through the Consolidated Statement of
Comprehensive Income if the net book value of capitalised costs relating to the CGU exceeds the associated
estimated future discounted cash flows of the related commercial oil reserves.
The CGU’s identified by the company are Corporate along with West Rustavi, Rustaveli, Satskhenisi and
Norio given they are independent projects under individual Production Sharing Contracts (“PSCs”). An
assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment charges may no longer exist or may have decreased. If such an indication exists, the Group
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
57
estimates the recoverable amount. A previously recognised impairment charge is reversed only if there has
been a change in the estimates used to determine the assets recoverable amount since the last impairment
charge was recognised. If this is the case the carrying amount of the asset is increased to its recoverable
amount, not to exceed the carrying amount that would have been determined, net of depreciation, had no
impairment charges been recognised for the asset in prior years.
Property, Plant and Equipment and Depreciation
Property, plant and equipment which are awaiting use in the drilling campaigns, and storage, are recorded
at historical cost less accumulated depreciation. Property, plant and equipment are depreciated using the
straight-line method over their estimated useful lives, as follows:
•
PP&E - 6 years
The carrying value of Property, plant and equipment is assessed annually and any impairment charge is
charged to the Consolidated Statement of Comprehensive income.
Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal computers, small items of office furniture and
telephones). For these leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are consumed.
Inventories
Crude oil inventories are stated at Brent less any contractual discounts. This is adjusted if the sale of
inventories after that date gives additional evidence about its net realisable value at the balance sheet date.
The cost of crude oil is expensed in the period in which the related revenue is recognised.
Inventories of drilling tubulars and drilling chemicals are valued at the lower of cost or net realisable value,
where cost represents the weighted average unit cost for inventory lines on a line-by-line basis. Cost
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to
their present location and condition.
Decommissioning Provision
Provisions for decommissioning are recognised in full when wells have been suspended, or facilities have
been installed.
A corresponding amount equivalent to the provision is also recognised as part of the cost of either the
related oil and gas exploration and evaluation asset or property, plant and equipment as appropriate. The
amount recognised is the estimated cost of decommissioning, discounted to its net present value, and is
reassessed each year in accordance with local conditions and requirements.
Changes in the estimated timing of decommissioning or decommissioning cost estimates are dealt with
prospectively by recording an adjustment to the provision, and a corresponding adjustment to the related
asset.
The unwinding of the discount on the decommissioning provision is included as a finance cost.
Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take over one
accounting period to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings, pending their expenditure
on qualifying assets, is deducted from the borrowing costs eligible for capitalisation.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
58
Other borrowing costs are expensed in the period in which they are incurred.
Taxation and Deferred Tax
Income tax expense represents the sum of the current tax and deferred tax charge for the period.
The Group's liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the reporting date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
financial information and the corresponding tax bases and is accounted for using the balance sheet liability
method.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Judgement is applied in making assumptions about future taxable income, including oil and gas prices,
production, rehabilitation costs and expenditure to determine the extent to which the Group recognises
deferred tax assets, as well as the anticipated timing of the utilisation of the losses.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted and are expected
to apply in the period when the liability is settled, or the asset realised. Deferred tax is charged or credited
to the statement of comprehensive income, except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in equity.
Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies are translated into US dollars at the rates
of exchange prevailing at the reporting date: $1.29 /£1 (2023: $1.27/£1). Transactions in foreign currencies
are translated at the exchange rate ruling at the date of the transaction. Exchange differences are taken to
the Statement of Comprehensive Income.
The Company’s functional currency is the pound sterling and its presentational currency is the US dollar
and accordingly the financial statements have also been prepared in US dollars. The functional currencies
of Block Norioskhevi Ltd, Satskhenisi Limited, Georgia New Ventures Inc and Block Rustaveli Limited are the
US dollar and the functional currencies of their branches in Georgia are the Georgian Lari.
Foreign Operations
The assets are translated into US dollars at the exchange rate at the reporting date and income and
expenses of the foreign operations are translated at the average exchange rates. Exchange differences
arising on translation are recognised in other comprehensive income and presented in the other reserves
category in equity.
Determination of Functional Currency and Presentational Currency
The determination of an entity’s functional currency is assessed on an entity by entity basis. A company’s
functional currency is defined as the currency of the primary economic environment in which the entity
operates. The functional currency of the Parent Company is the pound sterling, because it operates in the
UK, where the majority of its transactions are in pounds sterling. The functional currencies of Block
Norioskhevi Ltd, Satskhenisi Limited, Georgia New Ventures Inc and Block Rustaveli Limited are the US
dollar, because the majority of their transactions by value is in US dollars, and the functional currencies of
their branches in Georgia are the Georgian Lari, because the majority of their transactions by value is in
Georgian Lari.
The presentational currency of the Group for year ended 31 December 2024 is US dollars. The
presentational currency is an accounting policy choice.
Revenue
Revenue from contracts with customers is recognised when the Group satisfies its performance obligation
of transferring control of oil or gas to a customer. Transfer of control is usually concurrent with both transfer
of title and the customer taking physical possession of the oil or gas, which is determined by reference to
the oil or gas sales agreement. This performance obligation is satisfied at that point in time.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
59
The transaction price is agreed between the Group and the customer, with the amount of revenue
recognised being determined by considering the terms of the Production Sharing Contract (“PSC”) and the
oil sales agreement for each oil sale or the gas sales agreement for each gas sale.
Finance Income and Expenses
Finance costs are accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable. Finance expenses comprise interest or finance costs on borrowings.
Financial Instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group
becomes party to the contractual provisions of the instrument.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. All assets and liabilities, for which fair
value is measured or disclosed in the Financial Statements, are categorised within the fair value hierarchy,
described as follows, based on the lowest-level input that is significant to the fair value measurement as a
whole:
Level 1 – quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 – valuation techniques for which the lowest-level input that is significant to the fair value
measurement is directly or indirectly observable; and
Level 3 – valuation techniques for which the lowest-level input that is significant to the fair value
measurement is unobservable.
Financial Assets
Financial assets are initially recognised at fair value, and subsequently measured at amortised cost, less any
allowances for losses using the expected credit loss model, being the difference between all contractual
cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group
expects to receive.
Impairment provisions for receivables from related parties and loans to related parties are recognised based
on a forward-looking expected credit loss model. The methodology used to determine the amount of the
provision is based on whether there has been a significant increase in credit risk since initial recognition of
the financial asset.
For those where the credit risk has not increased significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit losses along with the gross interest income
are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along
with interest income on a net basis are recognised.
Financial Liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit and loss (FVTPL) or
as other financial liabilities. The Group derecognises financial liabilities when, and only when, the Group’s
obligations are discharged or cancelled, or they expire.
Financial liabilities are classified at FVTPL when the financial liability is either held for trading or it is
designated at FVTPL. A financial liability is classified as held for trading if it has been incurred principally for
the purpose of repurchasing it in the near term or is a derivative that is not a designated or effective hedging
instrument.
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair
value recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest
paid on the financial liability.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
60
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs
and are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
Share Based Payments
The fair value of options granted to Directors and others in respect of services provided is recognised as an
expense in the Statement of Comprehensive Income with a corresponding increase in equity reserves –
‘other reserves’.
On exercise of, or expiry of unexercised share options, the proportion of the share-based payment reserve
relevant to those options is transferred from other reserves to the accumulated deficit. On exercise, equity
is also increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the accounting periods which the option becomes
unconditional.
The fair value of options are calculated using the Black-Scholes model, taking into account the terms and
conditions upon which the options were granted. Vesting conditions are non-market and there are no
market vesting conditions. These vesting conditions are included in the assumptions about the number of
options that are expected to vest. At the end of each reporting period, the Company revises its estimate of
the number of options that are expected to vest. The exercise price is fixed at the date of grant and no
compensation is due at the date of grant. Where equity instruments are granted to persons other than
employees, the statement of comprehensive income is charged with the fair value of the goods and services
received.
Warrants issued for services rendered are accounted for in accordance with IFRS 2 recognising either the
costs of the service if it can be reliably measured or the fair value of the warrant (using the Black-Scholes
model). The fair value is recognised as an expense in the accounting period that the warrant is granted and
there is no revision to this estimate in future accounting periods.
Warrants issued as part of share issues have been determined as equity instruments under IAS 32. Since
the fair value of the shares issued at the same time is equal to the price paid, these warrants, by deduction,
are considered to have been issued at nil value.
Employee Benefit Trust (EBT)
The Group has consolidated its Employee Benefit Trust in the current year as it is under its control. Shares
held by the EBT are recorded in equity as a deduction in Other Reserves. When the Group issues shares to
the EBT to satisfy employee share-based payments, the shares are recorded at cost in Other Reserves,
consistent with the share-based payment expense recognised. This accounting treatment aligns the
issuance of shares with the associated IFRS 2 charge recognised in equity.
2.
Critical Accounting Judgments, Estimates and Assumptions
The Group makes estimates and assumptions regarding the future. Estimates and judgements are
continuously evaluated based on historical experiences and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. In the future, actual experience may
deviate from these estimates and assumptions. The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, are described
below.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
61
Recoverable Value of Development & Production assets – Judgement, Estimates and Assumptions
Costs capitalised in respect of the Group’s development and production assets are required to be assessed
for impairment under the provisions of IAS 36. Such an estimate requires the Group to exercise judgement
in respect of the indicators of impairment and also in respect of inputs used in the models which are used
to support the carrying value of the assets. Such inputs include estimates of oil and gas reserves, production
profiles, oil price, oil quality discount, capital expenditure (including an allocation of salary costs), inflation
rates, and pre-tax discount rates that reflect current market assessments of (a) the time value of money;
and (b) the risks specific to the asset for which the future cash flow estimates have not been adjusted. The
Directors concluded that there were no indications of impairment in the current year.
Asset Decommissioning Provisions – Estimates and Assumptions
The Group’s activities are subject to various laws and regulations governing the protection of the
environment. The Group recognises management’s best estimate of the asset decommissioning costs in the
period in which they are incurred. Such estimates of costs include pre-tax discount rates that reflect current
market assessments of (a) the time value of money; and (b) the risks specific to the asset for which the
future cash flow estimates have not been adjusted. Actual costs incurred in future periods could differ
materially from the estimates.
Additionally, future changes to environmental laws and regulations, life of development and production
assets, estimates and discount rates could affect the carrying amount of this provision. The Board assessed
the extent of decommissioning required as at 31 December 2024 and concluded that a provision of
$933,000 (2023: $1,080,000) should be recognised in respect of future decommissioning obligations at
Rustaveli, West Rustavi, Satskhenisi and Norio (see note 17).
Share Options and Warrants – Estimates and Assumptions
Share options issued by the Group relate to the Block Energy Plc Share Option Plan and warrants issued
relates to the cost of borrowing. The grant date fair value of such options and warrants is calculated using
a Black-Scholes model whose input assumptions are derived from market and other internal estimates.
The key estimates include volatility rates and the expected life of the options, together with the likelihood
of non-market performance conditions being achieved (see note 22).
Impairment of Investments and Loans to Subsidiaries – Parent Company only
The Company assesses at each reporting date whether there is any objective evidence that
investments/receivables in subsidiaries are impaired. To determine whether there is objective evidence of
impairment, a considerable amount of estimation is required in assessing the ultimate realisation of these
investments/receivables, including valuation, creditworthiness and future cashflow. Although no
impairment of investments was indicated at year end the Company identified certain intercompany
receivables as being impaired.
During the year the Company carried out an assessment of the expected credit loss arising on intercompany
receivables. This was calculated as a total loss allowance of $8,402,000 (2023: $8,097,000) therefore an
additional amount of $305,000 (2023: $4,387,000) was provided for in the current year parent company
financial statements.
3.
Segmental Disclosures
IFRS 8 requires segmental information for the Group on the basis of information reported to the chief
operating decision maker for decision making purposes. The Company considers this role as being
performed by the Board of Directors. The Group’s operations are focused on oil and gas development and
production activities (Oil and Gas Extraction segment) in Georgia and has a corporate head office in the UK
(Corporate segment). Based on risks and returns the Directors consider that there are two operating
segments that they use to assess the Group’s performance and allocate resources being the Oil and Gas
Extraction in Georgia, and the corporate segment including unallocated costs.
The Board of Directors primarily uses a measure of adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA), see below, to assess the performance of the operating sectors.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
62
3 a)
Adjusted EBITDA
Adjusted EBITDA excludes discontinued operations and the effects of significant items of income and
expenditure which might have an impact on the quality of earnings, such as restructuring costs, legal
expenses, and impairments where the impairment is the result of an isolated, non-recurring event.
Adjusted EBITDA reconciles to operating profit before income tax as follows:
3 b)
Other profit and loss disclosures
Oil and Gas
Extraction
Corporate
and other
Group
Total
Year ended 31 December 2024
$'000
$'000
$'000
Revenue
7,533
-
7,533
Cost of sales
(3,518)
-
(3,518)
Depreciation and depletion
(1,235)
(1)
(1,236)
Administrative costs
(944)
(1,624)
(2,568)
Share based payments
(312)
(74)
(386)
Finance and other income
64
4
68
Net Finance costs and Forex
(92)
(410)
(502)
Profit/(loss) from operating activities
1,496
(2,105)
(609)
Total non-current assets
23,240
4
23,244
Year ended 31 December 2023
$'000
$'000
$'000
Revenue
8,366
-
8,366
Cost of sales
(3,826)
-
(3,826)
Depreciation and depletion
(1,373)
(1)
(1,374)
Impairment
(2,210)
-
(2,210)
Administrative costs
(1,209)
(1,862)
(3,071)
Finance and other income
19
14
33
Net Finance costs and Forex
(69)
(62)
(131)
Loss from operating activities
(302)
(1,911)
(2,213)
Total non-current assets
23,901
-
23,901
Adjusted EBITDA
31 December
2024
$'000
31 December
2023
$'000
Oil and Gas extraction – Georgia
2,758
3,331
Corporate and other
(1,697)
(1,862)
Total adjusted EBITDA
1,061
1,469
31 December
2024
$'000
31 December
2023
$'000
Total adjusted EBITDA
1,061
1,469
Depreciation and depletion
(1,236)
(1,374)
Impairment
-
(2,210)
Finance and other income
68
33
Finance costs and foreign exchange
(502)
(131)
Loss before income tax from continuing operations
(609)
(2,213)
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
63
3 c)
Segment assets and liabilities
Segmental Liabilities
31 December
2024
31 December
2023
$'000
$'000
Oil extraction – Georgia
1,514
1,522
Corporate and other
2,656
2,734
4,170
4,256
4.
Revenue
Year ended
31 December
2024
$'000
Year ended
31 December
2023
$'000
Crude oil revenue
6,678
7,413
Gas revenue
855
953
7,533
8,366
5.
Depreciation and Depletion on Oil and Gas assets
Year ended
31 December
2024
$'000
Year ended
31 December
2023
$'000
Depreciation of PP&E
311
307
Depletion of oil and gas assets
925
1,067
1,236
1,374
6.
Expenses by nature
Year ended
31 December
2024
Year ended
31 December
2023
$’000
$’000
Employee benefit expense
1,367
1,413
Share option charge
386
414
Professional and legal
557
465
Fees to Auditor in respect of the Group audit
115
97
Regulatory fees
28
30
Operating lease expense
79
68
Office and other costs
422
584
2,954
3,071
Segmental Assets
31 December
2024
$'000
31 December
2023
$'000
Oil extraction – Georgia
29,050
29,452
Corporate and other
433
510
29,483
29,962
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
64
7.
Directors and employees
Year ended
31 December
2024
$’000
Year ended
31 December
2023
$’000
Employment costs (inc. Directors’ remuneration):
Wages and salaries
1,637
1,286
Pensions
33
30
Social security costs
58
97
1,728
1,413
Share based payments
386
414
2,114
1,827
The share-based payments comprised the fair value of options granted to Directors and employees in
respect of services provided.
Wages and salaries include amounts that are recharged between subsidiaries. Some of these costs are then
capitalised as development and production assets ($193,000), reported within cost of sales ($168,000) and
the remainder are classified in administration expenses ($1,367,000).
The average monthly number of employees during 2024 was 114 (2023: 147) split as follows:
Year ended
31 December
2024
Year ended
31 December
2023
Management
5
8
Technical
94
110
Administration
15
29
114
147
Year ended
31 December
2024
$’000
Year ended
31 December
2023
$’000
Amounts attributable to the highest paid Director:
Director’s salary and bonus
581
466
Pension
28
15
Share based payments
24
67
633
548
Key management and personnel are considered to be the Directors.
8.
Other income
Year ended
31 December
2024
$’000
Year ended
31 December
2023
$’000
Other income
4
26
Impairment reversal
31
-
35
26
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
65
9.
Finance Expense
Year ended
31 December
2024
$’000
Year ended
31 December
2023
$’000
Interest paid and payable on borrowings (note 16)
311
248
Warrant cost of borrowings (note 21)
244
125
Arrangement fee
-
55
555
428
Less borrowing costs capitalised (note 12)
(124)
(361)
431
67
Unwinding of decommissioning provision (note 17)
44
43
475
110
10. Taxation
Based on the results for the year, there is no charge to UK or foreign tax. This is reconciled to the accounting
loss as follows:
UK taxation
Year ended
31 December
2024
$'000
Year ended
31 December
2023
$'000
UK Group loss on ordinary activities
(609)
(2,213)
Loss before taxation at the average UK standard rate of
25% (2023:23.5%)
(143)
(520)
Effect of:
Zero tax rate income
(1,883)
(1,966)
Disallowable expenses
89
125
Tax losses for which no deferred income tax asset was
recognised
2,581
4,304
Current tax
-
-
The Group offsets deferred tax assets and liabilities if, and only if, it has a legally enforceable right to offset
current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related
to corporation taxes levied by the same tax authority. Due to the tax rates applicable in the jurisdictions of
the Group’s subsidiary entities (being 0% in both years) no deferred tax liabilities or assets are considered
to arise.
The Group has not recognised deferred income tax assets for tax losses carried forward for entities in which
it is not considered probable that there will be sufficient future taxable profits available for offset.
Unrecognised deferred income tax assets relate to unused tax losses. The Company has UK corporation tax
losses available to carry forward against future profits of approximately $ 7,307,000 (2023: $ 6,698,000 -
estimated).
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
66
11. Loss Per Share
The calculation for loss per Ordinary Share (basic and diluted) is based on the consolidated loss attributable
to the equity shareholders of the Company is as follows:
Year ended
31 December
2024
Year ended
31 December
2023
Loss attributable to equity Shareholders ($’000)
(609)
(2,213)
Weighted average number of Ordinary Shares
729,860,105
702,875,778
Loss per Ordinary share ($/cents)
(0.08)c
(0.31)c
Loss and diluted loss per Ordinary Share are calculated using the weighted average number of Ordinary
Shares in issue during the year. Diluted share loss per share has not been calculated as the options and
warrants have no dilutive effect given the loss arising in the year.
12. Property, Plant and Equipment
Development &
Production
Assets
PPE/Computer /
Office Equipment
/ Motor Vehicles
Total
$'000
$'000
$'000
Cost
At 1 January 2023
29,115
2,072
31,187
Additions*
3,286
115
3,401
Disposals
-
(151)
(151)
Change in decommissioning provision
(686)
-
(686)
Foreign exchange movements
4
(4)
-
At 31 December 2023
31,719
2,032
33,751
Additions*
408
161
569
Disposals
-
(27)
(27)
Change in decommissioning provision
(160)
-
(160)
Foreign exchange movements
-
(9)
(9)
At 31 December 2024
31,967
2,157
34,124
Accumulated depreciation
At 1 January 2023
5,711
661
6,372
Disposals
(3)
(54)
(57)
Charge for the year
1,067
307
1,374
Impairment
2,210
-
2,210
At 31 December 2023
8,985
914
9,899
Disposals
-
5
5
Charge for the year
925
311
1,236
Foreign exchange movements
(1)
9
8
At 31 December 2024
9,909
1,239
11,148
Carrying Amount
At 31 December 2023
22,733
1,118
23,851
At 31 December 2024
22,058
918
22,976
*This includes additions of $124,000 (2023: $361,000) which relates to capitalised borrowing costs.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
67
Carrying amount of property plant and equipment by cash generative unit (CGU):
Norio
Satsk
henisi
West
Rustavi
Rustaveli
Corporate
Total
$'000
$'000
$'000
$’000
$'000
$'000
Carrying amount:
At 31 December 2024
8
-
16,530
5,952
486
22,976
At 31 December 2023
14
28
16,967
6,403
439
23,851
The impairment charge in prior year of $2.2m arose on the production and development assets held by Norio
and Satskhenisi following a decision to define these assets as non-core to the business operations. This was a
result of an extensive review of the cost of operations and decision not to allocate additional capital for the
further development of these CGUs. Following this decision, the oil and gas assets at Norio and Satskhenisi
were written down to $nil. The remaining assets within this CGU relate to non-oil and gas assets only.
13. Inventory
31 December
2024
$’000
31 December
2023
$’000
Spare parts and consumables
3,230
3,286
Crude oil
1,069
1,091
4,299
4,377
14. Trade and Other Receivables
31 December
2024
$’000
31 December
2023
$’000
Trade debtors
574
233
Other receivables
118
420
Prepayments
112
318
804
971
The fair value at amortised cost is considered to be equivalent to the book value as none of these
receivables are considered to be impaired.
15. Cash and Cash Equivalents
31 December
2024
$’000
31 December
2023
$’000
Cash and cash equivalents
1,136
713
Cash and cash equivalents consist of balances in bank accounts used for normal operational activities. The
vast majority of the cash was held in an institution with a Standard & Poor's credit rating of A-1.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
68
16. Trade and Other Payables
31 December
2024
$’000
31 December
2023
$’000
Trade and other payables
740
1,041
Accruals
497
135
1,237
1,176
Trade and other payables principally comprise amounts outstanding for corporate services and operational
expenditure.
In 2023, the Company entered into a $2,000,000 (2022: $nil) loan with a simple interest rate of 16%
becoming payable every quarter. This was drawn down in two tranches, with $1,060,000 being drawn down
on 1 February 2023 and the remainder of $940,000 being drawn down on 10 May 2023. The maturity date
of this loan was set at 18 months from the date of the drawdowns and so has been recognised as a short-
term loan in the prior year accounts.
On 31 July 2024, the Company announced the extension of this loan facility for a further 18 months to 2
February 2026, with each lender receiving further warrants with an exercise price of 0.85p and expiry date
of 30 July 2027. 91,185,133 warrants were issued which corresponds to an exercise value equal to 50% of
the total loan commitments under this facility. More details of these warrants and their valuation are set
out in note 21. The loan has been reclassified into non-current liabilities in the current year to reflect this
extension.
The loan was advanced for the purpose of the drilling of side tracks and associated works as part of the
Company’s Project development strategy in relation to the development of the Middle Eocene reservoir
within West Rustavi/Krtsanisi (Project I).
17. Provisions
Decommissioning provision
31 December
2024
$’000
31 December
2023
$’000
Brought forward
1,080
1,723
Unwinding of discount on provision
44
43
Change in decommissioning provision in the year
(191)
(686)
Carried forward
933
1,080
Decommissioning provisions are based on management estimates of work and the judgement of the
Directors. By its nature, the detailed scope of work required, and timing of such work is uncertain.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
69
18. Share Capital
Called up, allotted, issued and fully paid
No. Ordinary
Shares
No. Deferred
Shares
Nominal Value
$
As at 31 December 2022
680,362,741
2,095,165,355
3,565,575
Issue of equity on 4 January 2023
764,340
-
2,353
Issue of equity on 6 February 2023
5,622,613
-
16,922
Issue of equity on 7 March 2023
924,997
-
2,855
Issue of equity on 5 April 2023
1,876,413
-
5,896
Issue of equity on 03 August 2023
35,124,708
-
111,798
As at 31 December 2023
724,675,812
2,095,165,355
3,705,399
Issue of equity on 28 May 2024
2,264,648
-
7,220
Issue of equity on 28 May 2024
6,455,477
-
20,580
As at 31 December 2024
733,395,937
2,095,165,355
3,733,199
On 28 May 2024, the Company issued 2,264,648 Ordinary Shares to two service providers in lieu of cash
settlement for services provided to the Company with a total value of £24,000 ($30,604).
On 28 May 2024, the Company issued 6,455,477 Ordinary Shares to the Employee Benefit Trust at par value.
---
On 4 January 2023, the Company issued 414,879 Ordinary Shares to two service providers in lieu of cash
settlement for services provided to the Company with a total value of £5,145 ($6,335).
On 4 January 2023, the Company issued 349,461 Ordinary Shares to three Non-Executive Directors, on
exercise of their nil cost options.
On 3 February 2023, the Company issued 296,556 Ordinary Shares to three Non-Executive Directors on
exercise of their nil cost options.
On 6 February 2023, the Company issued 5,173,662 Ordinary Shares to the Employee Benefit Trust at par
value.
On 6 February 2023, the Company issued 152,395 Ordinary Shares to two service providers in lieu of cash
settlement for services provided to the Company with a total value of £2,421 ($2,915).
On 7 March 2023, the Company issued 646,849 Ordinary Shares to two service providers in lieu of cash
settlement for services provided to the Company with a total value of £7,783 ($9,608).
On 7 March 2023, the Company issued 278,148 Ordinary Shares to two Non-Executive Directors, on exercise
of their nil cost options.
On 5 April 2023, the Company issued 1,400,025 Ordinary Shares to two Non-Executive Directors, on exercise
of their nil cost options.
On 5 April 2023, the Company issued 476,388 Ordinary Shares to two service providers in lieu of cash
settlement for services provided to the Company with a total value of £4,783 ($6,011).
On 3 August 2023, the Company issued 30,000,000 Ordinary shares to the Employment Benefit Trust at par
value.
On 3 August 2023, the Company issued 5,124,708 Ordinary shares to three service providers in lieu of cash
settlement for services provided to the Company with a total value of £68,589 ($87,326).
---
The Ordinary Shares consist of full voting, dividend and capital distribution rights and they do not confer
any rights for redemption. The Deferred Shares have no entitlement to receive dividends or to participate
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
70
in any way in the income or profits of the Company, nor is there entitlement to receive notice of, speak at,
or vote at any general meeting or annual general meeting.
19. Share Premium Account
$’000
Balance at 1 January 2024
34,856
Premium arising on issue of equity shares
23
Balance at 31 December 2024
34,879
$’000
Balance at 1 January 2023
34,765
Premium arising on issue of equity shares
91
Balance at 31 December 2023
34,856
20. Reserves
The following describes the nature and purpose of each reserve within owners’ equity.
Reserves
Description and purpose
Share capital
Amount subscribed for share capital at nominal value.
Share premium
account
Amount subscribed for share capital in excess of nominal value, less attributable
costs.
Other reserves
The other reserves comprises the fair value of all share options and warrants which
have been charged over the vesting period, net of the amount relating to share
options which have expired, been cancelled and have vested. It also comprises the
shares issued to the EBT so their value is matched against the options charged to this
reserve. This movement has been shown in the Consolidated Statement of the
Changes in Equity and is also set out in the table below
Foreign exchange
reserve
Exchange differences on translating the net assets of foreign operations
Accumulated
deficit
Cumulative net gains and losses recognised in the income statement and in respect
of foreign exchange.
Other Reserves
$’000
Balance at 1 January 2024
4,766
Share based payments
320
Share based payments – 2023 Bonus payments
312
Netting of EBT loan
(332)
Balance at 31 December 2024
5,066
Balance at 1 January 2023
4,525
Share based payments
414
Options movement
(173)
Balance at 31 December 2023
4,766
The Employee Benefit Trust (EBT) loan has been netted off against reserves as the shares held by the trust
are considered part of the group and, accordingly, have been treated like treasury shares for consolidation
purposes.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
71
21. Warrants
Number of
Warrants
31 December 2024
weighted average
exercise price
Number of
Warrants
31 December 2023
weighted average
exercise price
Outstanding at the
beginning of the year
54,241,837
2.2p
10,809,194
4p
Granted in the year
91,185,133
0.85p
44,682,643
1.8p
Expired in the year
-
-
(1,250,000)
4p
Outstanding at the
end of the year
145,426,970
1.33p
54,241,837
2.2p
As at 31 December 2024, all warrants were available to exercise and were exercisable at prices between
0.85p and 12.5p (31 December 2023: 1.7p and 12.5p). The weighted average life of the warrants is 2.0 years
(31 December 2023: 2.1 years).
The warrants granted during the year related to the cost of borrowing and therefore a fair value was
calculated using the Black Scholes Model. This resulted in fair value charge of $244,000 being assigned to
the warrants granted to the lenders. The inputs used for the model are shown below in note 22.
22. Share Based Payments
During the year, the Group operated a Block Energy Plc Share Option Plan (Share Option Scheme).
Under IFRS 2, an expense is recognised in the statement of comprehensive income for share based
payments, to recognise their fair value at the date of grant. The application of IFRS 2 gave rise to a charge
of $386,000 for the year ended 31 December 2024. The equivalent charge for the year ended 31 December
2023 was $414,000. The Group recognised total expenses (all of which related to equity settled share-
based payment transactions) under the current plans of:
Year ended
31 December
2024
Year ended
31 December
2023
$'000
$'000
Share option scheme
386
414
386
414
Share Option Scheme
The vesting period varies between 0 days to 3 years. The options expire if they remain unexercised after the
exercise period has lapsed and have been valued using the Black Scholes model.
The following table sets out details of all outstanding options granted under the Share Option Scheme.
2024
2024
2023
2023
Options
Weighted
average
exercise price
Options
Weighted
average exercise
price
Outstanding at beginning of year
99,785,841
$0.01
100,106,152
$0.02
Granted during the year
30,909,737
$0.01
26,701,508
$0.01
Exercised during the year
-
-
8,540,800
$0.00
Expired during the year
300,001
$0.02
18,481,019
$0.03
Outstanding at the end of the year
130,395,579
$0.01
99,785,841
$0.01
Exercisable at the end of the year
95,190,127
83,823,460
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
72
The weighted average exercise price of the share options exercisable at 31 December 2024 is $0.01 (31
December 2023: $0.01). The weighted average contractual life of the share-based payments outstanding at
31 December 2024 is 9.44 years (31 December 2023: 9.16 years).
The estimated fair values of these share options, and the inputs used in the Black-Scholes model to calculate
those fair values are as follows:
Date of grant
Number
of options
Estimated
fair value
Share
price
Exercise
price
Expected
volatility
Expected
life
Risk free
rate
Exp.
dividends
30 June 2017
1,200,000
$0.04
$0.01
$0.03
84%
5.5 years
1.16%
0%
6 April 2018
4,400,000
$0.05
$0.04
$0.03
84%
10 years
1.34%
0%
11 June 2018
18,098,332
$0.04
$0.05
$0.05
84%
10 years
1.23%
0%
21 October 2019
6,325,000
$0.05
$0.06
$0.15
109%
9.0 years
0.63%
0%
1 March 2021
10,800,00
$0.04
$0.04
$0.06
192%
9.5 years
0%
0%
8 April 2022
25,200,000
$0.01
$0.02
$0.02
105%
10 years
1.75%
0%
28 May 2024
8,301,887
$0.01
$0.013
$0.013
70.5%
10 years
4.55%
0%
Number
of warrants
31 December 2020
8,750,167
$0.04
$0.04
$0.04
190%
5 years
0%
0%
1 February 2023
25,330,249
$0.003
$0.012
$0.017
70.5%
3 years
3.76%
0%
10 May 2023
19,352,394
$0.003
$0.013
$0.019
70.5%
3 years
3.57%
0%
2 August 2024
91,185,133
$0.004
$0.009
$0.009
70.5%
3 years
3.71%
0%
All share-based payment charges are calculated using the fair value of options.
For the options and warrants granted in 2023 and 2024, expected volatility was determined by reviewing
benchmark values from comparator companies. For the options granted prior to 2023, expected volatility
was determined by reference to the volatility of historic trading prices of the Company’s shares.
23. Financial Instruments
Capital Risk Management
The Company manages its capital to ensure that entities in the Group will be able to continue as a going
concern while maximising the return to stakeholders. The overall strategy of the Company and the Group
is to minimise costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising
issued share capital, foreign exchange and other reserves and retained earnings as disclosed in the
Consolidated Statement of Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the most significant of which are
interest, credit, foreign exchange and liquidity risks. The management of these risks is vested to the Board
of Directors.
The sensitivity has been prepared assuming the liability outstanding was outstanding for the whole period.
In all cases presented, a negative number in profit and loss represents an increase in finance
expense/decrease in interest income.
Credit Risk
Credit risk is the risk that the Group will suffer a financial loss as a result of another party failing to discharge
an obligation and arises from cash and other liquid investments deposited with banks and financial
institutions and receivables from the sale of crude oil.
For deposits lodged at banks and financial institutions these are all held through a recognised financial
institution. The maximum exposure to credit risk is $1,136,000 (2022: $ 713,000). The Group does not hold
any collateral as security.
The carrying value of cash and cash equivalents and financial assets represents the Group’s maximum
exposure to credit risk at year end. The Group has no material financial assets that are past due.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
73
The Company has made unsecured loans at a simple interest rate of 5% to its subsidiary companies. The
loans are repayable on demand. A small amount of these loans have been made to subsidiaries which
though revenue generating are not profit making, therefore there is a risk that they will not be fully
recoverable. An assessment of the expected credit loss arising on intercompany loans is detailed in note 6
to the parent Company financial statements.
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market risk for the Company comprises of currency risk (discussed below) and
interest rate risk. Since there are no variable interest-bearing loans in the Group (the Group Borrowings
are set at a fixed rate of 16%), no risk is therefore identified.
Currency Risk
Foreign currency risk can only arise on financial instruments that are denominated in a currency other than
the functional currency in which they are measured. Translation-related risks are therefore not included in
the assessment of the entity’s exposure to currency risks. Translation exposures arise from financial and
non-financial items held by an entity (for example, a subsidiary) with a functional currency different from
the Group’s presentational currency. However, foreign currency-denominated inter-company receivables
and payables which do not form part of a net investment in a foreign operation would be included in the
sensitivity analysis for foreign currency risks; this is because, even though the balances eliminate in the
consolidated balance sheet, the effect on profit or loss of their revaluation under IAS 21 is not fully
eliminated.
A 10% increase in the strength of the pound sterling against the US dollar would cause an estimated increase
of $94,000 (2023: $221,000 increase) in the loss after tax of the Group for the year ended 31 December
2024, with a 10% weakening causing an equal and opposite decrease. The impact on equity is the same as
the impact on loss after tax.
The Group’s cash and cash equivalents and liquid investments are mainly held in US dollars, pounds sterling
and Georgian Lari. At 31 December 2024, 1% (2023: 16%) of the Group’s cash and cash equivalents and
liquid investments were held in pounds sterling, 67% (2023: 78%) in Georgian Lari and 32% (2023: 6%) in
US dollars.
Liquidity Risk
Liquidity risk arises from the possibility that the Group and its subsidiaries might encounter difficulty in
settling its debts or otherwise meeting its obligations related to financial liabilities. In addition to equity
funding, additional borrowings have been secured in the past to finance operations. The Company manages
this risk by monitoring its financial resources and carefully plans its expenditure programmes. Financial
liabilities of the Group comprise trade payables which mature in less than twelve months.
Type
<3 months
1-3months
1-2 years
Total
$’000
$’000
$’000
Trade payables
1,237
-
-
1,237
Borrowings
-
-
2,000
2,000
Total
1,237
-
2,000
3,237
24. Categories of Financial Instruments
In terms of financial instruments, these solely comprise of those measured at amortised cost and are as
follows:
31 December
2024
$’000
31 December
2023
$’000
Liabilities at amortised cost
740
1,042
Borrowings at amortised cost
2,000
2,000
2,740
3,042
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
74
Cash and cash equivalents at amortised cost
1,136
713
Financial assets at amortised cost
804
971
1,940
1,684
A fixed and floating charge has been placed over the assets owned by the Group as security for the $2m
borrowings taken out in the year. This will be discharged in full on payment of these secured liabilities.
25. Subsidiaries
At 31 December 2023 and 2024, the Group consists of the following subsidiaries, which are wholly owned
by the Company.
Company
Country of
Incorporation
Proportion of
voting rights and
equity interest
Block Norioskhevi Ltd
British Virgin Islands
100%
Satskhenisi Ltd
Marshall Islands
100%
Georgia New Ventures Inc.
Bahamas
100%
Block Operating Company LLC
Georgia
100%
Block Rustaveli Limited
British Virgin Islands
100%
Didi Lilo & Nakarala Limited
British Virgin Islands
100%
Subsidiaries - Nature of business
The principal activity of Georgia New Ventures Inc, Satskhenisi Ltd, Block Norioskhevi Ltd, Block Rustaveli
Limited and Didi Lilo & Nakarala Limited is oil and gas development and production.
The principal activity of Block Operating Company LLC is to be the operator of the oil and gas licenses held
in Georgia.
Registered office
The registered office of Georgia New Ventures Inc. is Bolam House, King and George Streets, P.O. Box CB
11.343, Nassau, Bahamas.
The registered office of Satskhenisi Ltd is Trust Company Complex, Ajeltake road, Ajeltake Island, Majuro,
Marshall Islands MH96960.
The registered office of Block Rustaveli Limited, Block Norioskhevi Ltd and Didi Lilo & Nakarala Limited is
Aleman, Cordero, Galindo & Lee Trust (BVI) Limited, 3rd Floor, Yamraj Building, Market Square, P.O. Box
3175, Road Town, Tortola, British Virgin Islands.
The registered office of Block Operating Company LLC is 13A Tamarashvili Street, Tbilisi 0162, Georgia.
26. Commitments
Commitments at the reporting date that have not been provided for were as follows:
Operating lease commitment
At year end the total of future minimum lease payments under non-cancellable operating leases for each
of the following periods was:
31 December
2024
$'000
31 December
2023
$'000
Within 1 year
69
81
Between 1 and 5 years
-
-
Total
69
81
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
75
Short term leases are leases with a lease term of 12 months or less without a purchase option and are
recognised on a straight-line basis as an expense in the profit or loss account.
27. Related Party Transactions
The Directors consider that there is no ultimate controlling party.
Key management personnel comprise of the Directors and details of their remuneration are set out in Note
7 and the Remuneration Report.
The Company extended its $2m loan facility during the year with further warrants granted to lenders. This
included the following related parties, who also received further warrants as set out below:
Paul Haywood - $115,000 loan facility
5,243,145 warrants at a fair value cost of $14,000
28. Events Occurring After Year End
On 7 February 2025, the Company announced the issue of bonus options and shares for senior executives
within the Company. These had been accrued in the accounts at year end. The Remuneration Committee
elected to settle the bonuses by way of issue of 35,912,008 ordinary shares of 0.25p each ("Ordinary
Shares") and 10,548,289 nil-cost options over Ordinary Shares ("Options"). The number of Ordinary Shares
and Options has been determined by dividing the respective bonus by the Volume Weighted Average Price
("VWAP") of the Company's Ordinary Shares for January 2025 which equals 0.7385p per Ordinary Share.
On 27 March 2025, the Company announced the acquisition of a 10% participating interest in the XIQ
Production Sharing Contract with an option to increase to 22%. The consideration was $1, with the
Company being responsible for contributing its share of the 2025 work programme which is $77,000. This
was acquired through the 100% acquisition of the subsidiary GOG SLADS Limited, a company incorporated
in the British Virgin Islands on 12 March 2020 under BVI company number 2033094.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
76
Parent Company Statement of Financial Position for the Year Ended 31st December 2024
Company number: 05356303
Note
2024
$’000
2023
$’000
Non- current assets
Investments
2
6,422
6,533
Property, plant and equipment
4
-
6,426
6,533
Current assets
Trade and other receivables
3
21,994
23,017
Cash and cash equivalents
4
379
157
Total current assets
22,373
23,174
Total assets
28,799
29,707
Capital and reserves attributable to equity
shareholders
Share capital
5
3,733
3,705
Share premium
5
34,879
34,856
Other reserves
5
5,066
4,766
Foreign exchange reserve
(89)
59
Accumulated deficit
(17,446)
(16,413)
Total equity
26,143
26,973
Non-current liabilities
Borrowings
11
2,000
-
Total non-current liabilities
2,000
-
Current liabilities
Trade and other payables
6
656
734
Borrowings
11
-
2,000
Total current liabilities
656
2,734
Total liabilities
2,656
2,734
Total equity and liabilities
28,799
29,707
The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 by choosing
not to present its individual Statement of Comprehensive Income and related notes that form part of these
approved financial statements.
The Company’s loss for the year from continuing operations is $ 1,033,000 (2023: loss of $ 4,929,000).
The financial statements were approved by the Board of Directors and authorised for issue on 21 May 2025 and
were signed on its behalf by:
Paul Haywood
Director
The notes on pages 79 to 82 form part of these financial statements.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
77
Parent Company Statement of Changes in Equity for the Year Ended 31st December 2024
Share
capital
Share
premium
Accumulated
deficit
Other
reserve
Foreign
currency
reserve
Total
equity
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 31 December 2022
3,565
34,765
(11,657)
4,525
(360)
30,838
Comprehensive income
Loss for the year
-
-
(4,929)
-
-
(4,929)
Exchange differences on
translation of foreign operations
-
-
-
-
419
419
Total comprehensive income for
the year
-
-
(4,929)
-
419
(4,510)
Transactions with owners
recognised directly in equity
Shares issued
133
91
-
-
-
224
Share based payments
-
-
-
414
-
414
Options exercised
7
-
-
-
-
7
Options expired
-
-
173
(173)
-
-
Total transactions with owners
140
91
173
241
-
645
Balance at 31 December 2023
3,705
34,856
(16,413)
4,766
59
26,973
Comprehensive income
Loss for the year
-
-
(1,033)
-
-
(1,033)
Exchange differences on
translation of foreign operations
-
-
-
-
(148)
(148)
Total comprehensive income for
the year
-
-
(1,033)
-
(148)
(1,181)
Transactions with owners
recognised directly in equity
Shares issued
28
23
-
-
-
51
Share based payments
-
-
-
632
-
632
Shares held by EBT
(332)
Total transactions with owners
28
23
-
300
-
683
Balance at 31 December 2024
3,733
34,879
(17,446)
5,066
(89)
26,475
The notes on pages 79 to 82 form part of these financial statements.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
78
Parent Company Statement of Cashflows for the Year Ended 31st December 2024
Note
2024
$’000
2023
$’000
Cash flow from operating activities
Loss for the year before income tax
(1,033)
(4,929)
Adjustments for:
Depreciation
1
1
Intercompany interest and other income
(1,381)
(1,383)
Finance expense
431
66
Increase in ECL provisions for loans
10
305
4,387
Creditors paid in shares
31
108
Share based payments expense
353
362
Foreign exchange movement
(19)
-
Operating cash flows before movements in working
capital
(1,312)
(1,388)
Decrease/(increase) in trade and other receivables
3
303
(56)
Decrease in trade and other payables
6
(79)
(90)
Net cash used in operating activities
(1,088)
(1,534)
Cash flow from investing activities
Finance and other income
4
14
Inter-Group amounts received/ (drawn down)
1,617
(187)
Net cash used in investing activities
1,621
(173)
Cash flow from financing activities
Proceeds from borrowings
11
-
2,000
Finance costs
(311)
(248)
Net cash inflow from financing activities
(311)
1,752
Net increase in cash and cash equivalents in the
year
222
45
Cash and cash equivalents at start of year
157
112
Effects of foreign exchange
-
-
Cash and cash equivalents at end of year
4
379
157
The notes on pages 79 to 82 form part of these financial statements.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
79
Notes Forming Part of the Parent Company Financial Statements
1.
Accounting policies
Basis of Preparation
These financial statements have been prepared on a historical cost basis and in accordance with UK-
adopted international accounting standards and as regards the Company financial statements, as applied
in accordance with the requirements of the Companies Act 2006. All accounting policies are consistent with
those adopted by the Group. These accounting policies are detailed in the notes to the consolidated
financial statements, note 1. Any deviations from these Group policies by the Company are detailed below.
Going Concern
The Directors have prepared cash flow forecasts for a period of 24 months from the date of signing these
financial statements. More details are included in note 1 to the consolidated financial statements.
Investments in Subsidiaries
Investments in subsidiaries are recorded at cost. The Company assesses investments for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
If any such indication of impairment exists, the Company makes an estimate of its recoverable amount.
Where the carrying amount of an investment exceeds its recoverable amount, the investment is considered
impaired and is written down to its recoverable amount. Where these circumstances have reversed, the
impairment previously made is reversed to the extent of the original cost of the investment.
2.
Investments
Shares in Group undertakings
2024
$’000
2023
$’000
Balance at 1 January
6,533
6,209
FX movement on translation of assets
(111)
324
Balance at 31 December
6,422
6,533
Investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid.
At 31 December 2024, the carrying amount of the Company’s net assets of $26,143,000 (2023:
$26,973,000) exceeded the Group’s net assets of $25,313,000 (2022: $25,706,000). This is identified by
IAS 36 Impairment of Assets as an indicator that assets may be impaired. Following a review of the assets
held by the Company, the Directors do not believe an impairment is necessary at this time, but will keep
this under review.
3.
Trade and Other Receivables
2024
$’000
2023
$’000
Prepayments
12
14
Other receivables
37
339
Amounts due from Group undertakings
21,945
22,664
21,994
23,017
All of the above amounts are due within one year.
All trade and other receivables are denominated in pounds sterling. Amounts due from Group undertakings
are denominated in US dollars and repayable on demand. The Company charges 5% interest per annum on
intercompany loans.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
80
Under IFRS 9, the Expected Credit Loss (“ECL”) Model is required to be applied to the intercompany loans
receivable from subsidiary companies, which are held at amortised cost. An assessment of the expected
credit loss arising on intercompany loans has been calculated and a cumulative loss allowance of $8,402,000
has been provided for in the parent Company financial statements ($8,097,000 in 2023). No further
impairment was indicated in the current year.
The prior year debtor of £332,000 due from the Company’s EBT was reclassified in the year to Other
Reserves to match the shares issued to the EBT against the cost of the share options issued to employees.
4.
Cash at Bank
2024
$’000
2023
$’000
Cash and cash equivalents
379
157
Cash and cash equivalents consist of balances in bank accounts used for normal operational activities. The
bank account is held within an institution with a credit rating of A-1.
At 31 December 2024, 2% (2023: 74%) of the cash balances held by the Company were held in UK Sterling,
97% (2023: 21%) in US Dollar and the remaining in other currencies, 1% (2023: 5%).
5.
Share Capital and Reserves
Details of share capital and reserve movements in the year are set out in notes 18 and 20 to the
consolidated financial statements.
6.
Trade and Other Payables
2024
$’000
2023
$’000
Trade and other payables
128
236
Accruals and other creditors
528
498
656
734
Trade and other payables at 31 December 2023 comprised balances in US dollars and pounds sterling.
7.
Categories of Financial Instruments
In terms of financial instruments, these solely comprise of those measured at amortised cost and are as
follows:
31 December
2024
31 December
2023
$’000
$’000
Trade and other payables
158
599
Borrowings
2,000
2,000
Total financial liabilities at amortised cost
2,158
2,599
The carrying amounts of trade and other payables and the Borrowings are considered to be the same as
their fair values due to their short-term nature. Details of the Borrowings are set out in note 16 to the
consolidated financial statements.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
81
31 December
2024
31 December
2023
$’000
$’000
Other receivables
381
353
Amounts due from Group undertakings
21,945
22,664
Cash and cash equivalents at amortised cost
379
157
Total financial assets at amortised cost
22,705
23,174
The amounts due from Group undertakings includes a loss allowance of $8,097,000 (2022: $3,710,000).
The loans are repayable on demand and include a 5% (2022: 5%) per annum interest rate charge. They are
all denominated in US dollars, which differs from the parent Company’s functional currency of pounds
sterling, and therefore there is an exposure to foreign currency risk. There is no exposure to price risk as
the underlying investments are expected to be held to maturity.
8. Financial and Capital Risk Management
The Company’s exposure to financial risks is managed as part of the Group. Full details about the Group’s
exposure to financial risks and how these risks could affect the Group’s future financial performance are
given in note 23 to the consolidated financial statements. Information specific to the Company is given
below.
Credit Risk
For deposits lodged at banks and financial institutions these are all held through a recognised financial
institution. The maximum exposure to credit risk is $379,000 (2023: $157,000). The Company does not hold
any collateral as security.
The Company has made unsecured interest payable loans to its subsidiary companies and repayments have
commenced during the year. Although the loans are repayable on demand, they are unlikely to be fully
repaid until the projects become more developed and the subsidiaries start to generate increased revenues.
An assessment of the expected credit loss arising on intercompany loans has been calculated and a loss
allowance of $8,402,000 (2023: $8,097,000) has been provided for in the parent Company financial
statements.
Currency Risk
Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Company undertakes transactions denominated in currencies other than its functional currency (which
is the pound sterling). For transactions denominated in US dollars, the Company manages this risk by
holding US dollar against actual or expected US dollar commitments to act as an economic hedge against
exchange rate movements.
The Company’s cash and cash equivalents and liquid investments are mainly held in pounds sterling and US
dollars. At 31 December 2024, 1% (2023: 5%) of the Group’s cash and cash equivalents and liquid
investments were held in a currency other than pounds sterling and US dollars. The currency risk is not
considered to be significant and has not been calculated. A 10% movement in the strength of the pound
sterling against the US dollar would increase the net assets of the Company by $2,697,000 (2023:
$2,716,000).
The exposure to other foreign currency exchange movements is not material. This sensitivity analysis
includes foreign currency denominated monetary items and assumes all other variables remain unchanged.
Whilst the effect of any movement in exchange rates upon revaluing foreign currency denominated
monetary items is charged or credited to the income statement, the economic effect of holding pounds
sterling against actual or expected commitments in pounds sterling is an economic hedge against exchange
rate movements.
Block Energy PLC – Annual Report and Financial Statements for the Year Ended 31st December 2024
82
Capital Management
The capital of the Company is managed as part of the capital of the Group as a whole. Full details are
contained in note 23 to the consolidated financial statements.
9.
Commitments
Commitments at the reporting date that have not been provided for were as follows:
UK operating lease commitment
At 31 December 2024, the total of future minimum lease payments under non-cancellable operating
leases for each of the following periods was:
2024
$'000
2023
$'000
Within 1 year
42
52
Between 1 and 5 years
-
-
Total
42
52
Short term leases are leases with a lease term of 12 months or less without a purchase option and are
recognised on a straight-line basis as an expense in the profit or loss account.
10. Related Party Transactions
At 31 December 2024, the following subsidiaries owed the parent Company for payments made and
recovered on their behalf.
• Block Norioskhevi Ltd – $nil (31 December 2023: $nil)
• Georgia New Ventures Inc – $22,291,000 (31 December 2023: $22,794,000)
• Satskhenisi Ltd – $nil (31 December 2023: $nil)
• Block Operating Company LLC – $2,612,000 (31 December 2023: $2,620,000)
• Block Rustaveli Limited - (Debtor of $3,394,000) (31 December 2023: Debtor of $2,811,000)
• Didi Lilo & Nakarala Limited - $68,000 (31 December 2023: $61,000)
An estimated credit loss of $305,000 (2023: $4,387,000) was recognised in the current year in relation to
the loans to Satskhenisi Ltd and Block Norioskhevi Ltd, resulting in their impairment to nil cost outstanding.
The total estimated credit loss recognised to date is $8,402,000 (2023: £8,097,000). Further details on
related party transactions can be found in note 27 to the consolidated financial statements. The disclosure
of fees paid to consultancy companies for key management services can be seen in the Remuneration
Report.
11. Information Included in the Notes to the Consolidated Financial Statements
Some of the information included in the notes to the consolidated financial statements is directly relevant
to the financial statements of the Company. Please refer to the following:
Note 6 – Auditors’ remuneration
Note 16 – Trade and other payables
Note 22 – Share based payments
Note 25 – Subsidiaries
Note 28 – Events occurring after the year end