CGX Energy and Frontera Energy have announced a bid to hold on to the Corentyne Block, just days before a deadline that could see them relinquish the acreage if government approval is not secured.
“The Joint Venture has submitted a Notice of Potential Commercial Interest… for the Wei-1 discovery to the Government of Guyana, which preserves the Joint Venture’s interests in the License,” the companies said in June 26 release.
Applicable law indicates that such a notice if approved, would facilitate a period of appraisal for the operator to evaluate the commercial viability of the discovery. Once satisfied, the operator can submit a declaration to the government that the discovery is commercially viable. The operator would then have to apply for a production license before the appraisal period ends.
CGX drilled the Wei-1 well in 2023 as part of its appraisal program for the Kawa-1 discovery. The appraisal area constitutes 994 square kilometers. CGX had to relinquish the rest of the Corentyne Block because the original 10-year Corentyne license ran its course.
The Kawa-1 appraisal program is due to end on Friday, June 28, 2024. The releases by CGX and Frontera did not indicate government approval of the new appraisal program, which is needed for them to keep the area expected to be delineated as the Wei-1 appraisal area.
The JV said it has, with the Guyana government, “engaged in regular, constructive and collaborative conversations throughout the Joint Venture’s tenure on the Corentyne block, including discussions regarding conditions under which further activities could be performed by the Joint Venture in the Corentyne block.”
It said it looks forward to completing these discussions in an expeditious manner and will provide an update as soon as is practicable.
CGX and Frontera have sought strategic options for the Corentyne Block by engaging Houlihan Lokey, an investment bank. This move included considering a potential farm down of their Corentyne stakes to alleviate the burden of CGX’s deteriorating financial position.
Based on its most recent public statements on the matter, CGX owns a 27.48% stake in the Corentyne Block, reduced from 66.66% due to multiple deals to secure funding for its obligations. Frontera, initially a minority stakeholder, holds 72.52%. In addition to taking the majority shareholding in the block, Frontera has also acquired 76.05% of shares in CGX, granting it significant control over CGX’s corporate transactions.
