CGX raises US$35 million for new well on Corentyne Block, other activities in Guyana

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CGX Energy Inc. and Frontera Energy Corporation announced on Friday that they have entered into a financing agreement for a US$35 million loan that will enable CGX to continue to finance part of its share of costs related to the Corentyne Block, the Berbice Deepwater Port, and other budgeted costs as agreed to with Frontera.

“We are pleased to complete this financing agreement in support of our joint venture as we build momentum towards spudding the Wei-1 exploration well in the second half of this year,” said Orlando Cabrales, Chief Executive Officer of Frontera. “These are exciting times for our joint venture, and we look forward to working with our partner, CGX, as we build on our recent exploration success at the Kawa-1 exploration well and generating value for our shareholders and the people of Guyana in one of the most exciting basins in the world.”

The loan agreement follows the Kawa-1 discovery on the Corentyne Block which encountered 200 feet of net pay. The well was plugged and abandoned by the explorers who said it was always planned as a “finder well” vs “keeper well”. CGX has said the Kawa-1 well was drilled to test the hydrocarbon generation, reservoir presence and trap models, and establish preliminary prospectivity regarding subsurface conditions (pressures, temperatures, fluids, reservoir quality). CGX and Frontera have not yet indicated whether the Wei-1 exploration well is also being spudded as a “finder well”, and if a discovery is made, if it will also be plugged and abandoned.

CGX Energy Executive Co-Chairman, Suresh Narine said in the loan agreement announcement that Kawa- 1 represents a transformative discovery for CGX, in partnership with Frontera. “With positive results and data supporting the 200 feet of net pay indicated, we have de-risked our exploration program and can continue to move forward with our overall plans, beginning with Wei-1.”

Narine said the partners look forward to adding to their positive momentum and creating value and opportunity for stakeholders.

CGX did not provide further details in the announcement on Friday about its work commitments on the Berbice and Demerara Blocks. The company had previously indicated that it would be looking to focus its energies on the Corentyne Block instead of carrying out these other work commitments.

However, the Guyana government is not in favour of such a course of action and wants the company to honour its obligations for the Berbice and Demerara Blocks.

According to CGX’s latest financial statements, it said that on February 21, 2022, the Minister of Natural Resources, Vickram Bharrat informed the joint venture that two commitment exploration wells must be drilled on the Demerara Block per the terms of the Demerara Petroleum Prospecting License and associated Petroleum Agreement prior to February 12, 2023.

Mr. Bharrat has also indicated that authorities expect that one exploration well on the Berbice Block will be drilled and seismic acquired on the acreage prior to the expiry of the Berbice Petroleum Prospecting License and associated Petroleum Agreement.

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