CGX Energy Inc. and Frontera Energy Corporation, partners in a joint venture (JV) operating the Corentyne acreage offshore Guyana, have experienced notable declines in their stock values.
CGX’s TSE stock (OYL.V) plunged 60% from CA$0.92 on November 9 to CA$0.37 on November 14, before slightly increasing to CA$0.42 on November 17.
Frontera’s TSE stock (FEC.TO) dropped 22% from CA$11.27 to CA$8.82 on November 10. Frontera closed November 17 with CA$9.01. At this low, Frontera initiated a share repurchase program, approved by the Toronto Stock Exchange. The company plans to buy back up to 3,949,454 common shares, representing about 10% of its public float, starting from November 21, 2023, to November 20, 2024.
This downturn followed a November 9 announcement detailing the results of the JV’s exploration and plans for the acreage in Guyana, which seemed to disappoint investors. The joint press release announced the discovery of 114 feet of net pay at the Wei-1 well in the Corentyne block. This discovery contributes to a total net pay of 342 feet in the area, following the Kawa-1 discovery, announced in 2022. The JV said Wei-1 uncovered 13 feet of net pay in the maastrichtian, 61 feet in the campanian, and 40 feet in the santonian.
Notably, the JV had said in June that it discovered 210 feet of hydrocarbon-bearing sands in the santonian, its primary target. Sara Konstantine from Boomtown tuned into Frontera’s third quarter earnings call for an explanation of the santonian’s net pay, given the difference. Victor Vega, Frontera’s corporate vice president for field development, reservoir management and exploration, told her they did not release the pay number in June because they were still analyzing the core data.
It was also revealed, during a November 14 press conference, by Guyana’s Minister of Natural Resources, Vickram Bharrat, that most of the 6,200 square-kilometer (sq. km) Corentyne block was relinquished to the state. This reflects the expiry of the 10-year period of the JV’s exploration license, leaving it with 993.9 sq. km of the northern section of the block, approved for appraisal.
CGX Energy, as the operator of the Corentyne license, holds a 27.3% interest, while Frontera holds a 72.7% majority. The joint venture is now focused on the remaining area approved for appraisal, aiming to establish the commercial viability of its discovery.