CGX says final cost of Kawa-1 well is US$141 million, analysis of results still ongoing

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CGX Energy said in a statement released on Wednesday that it has safely completed exploration activities at the Kawa-1 well. The well has now been safely plugged and abandoned and the Maersk Discoverer drilling rig has been released from the Kawa-1 location. The company said only a single lost time injury was recorded throughout the exploration operations.

“The final cost of the Kawa-1 exploration well was $141 million,” CGX and partner Frontera stated.

The Kawa-1 well was drilled to a total depth of 21,578 feet (6,577 metres) in the northern section of the Corentyne block. Drilling results confirm the presence of an active hydrocarbon system at the Kawa-1 location. Successful wireline logging runs confirmed net pay of approximately 200 feet (61 metres) within Maastrichtian, Campanian, Santonian and Coniacian horizons. These intervals are similar in age and can be correlated using regional seismic data to recent successes in Block 58 in Suriname and Stabroek Block in Guyana.

CGX said no MDT data or sidewall core samples were retrieved and the joint venture partners have engaged an independent third-party to complete further detailed studies and laboratory analysis on drilling cuttings from the Santonian, Campanian and Maastrichtian intervals and well-bore fluid samples to evaluate in situ hydrocarbons.

“Preliminary results from the Santonian interval indicate the presence of liquid hydrocarbons in the reservoir. Results from the Campanian and Maastrichtian intervals are pending,” CGX said.

The company pointed out that the Kawa-1 well results have improved the Joint Venture’s understanding of the operational and geological complexities of the basin and will help reduce the technical risks of the Wei-1 exploration well.

“Given the initial positive results at the Kawa-1 well the Joint Venture is moving forward with its second exploration well, Wei-1 on the Corentyne block,” CGX said.

The Joint Venture has begun the integration of detailed seismic and lithological analysis and pore pressure studies from the Kawa-1 well into drilling preparations in advance of spudding the Wei-1 exploration well which will be spud in the second half of 2022. The Wei-1 exploration well will target Campanian and Santonian aged stacked channels in the western fan complex in the northern section of the Corentyne block. Data from both the Kawa-1 and Wei-1 wells will inform future activities and potential appraisal/development decisions.

CGX said it is currently assessing several strategic opportunities to obtain additional financing to meet the costs of the drilling program.

Demerara

On February 4, 2022, the Joint Venture announced that as a result of the initial positive results at the Kawa-1 exploration well, it will focus on the significant exploration opportunities in the Corentyne block and will not engage in drilling activities on the Demerara block in 2022. On February 21, 2022, the Minister of Natural Resources informed the joint venture that the 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. CGX said it will seek further dialogue with the Ministry of Natural Resources regarding this guidance.

Berbice

On February 4, 2022, the Company, through its 62% owned subsidiary ON Energy Inc. notified the Ministry of Natural Resources that, given the focus on developing the Corentyne Block, operational considerations and investment priorities, ON Energy is unable to drill an exploration well on the Berbice Block in 2022; proposed that seismic acquisition on the block be shifted to commence in January 2023 and sought the Minister’s guidance on this matter.

“The Minister of Natural Resources has informed ON Energy that he expects the Company to drill one exploration well on the Berbice block and acquire seismic on the block prior to the expiry of the Berbice Petroleum Prospecting License and associated Petroleum Agreement,” CGX stated.

The company said it will seek further dialogue with the Ministry of Natural resources regarding this guidance.

Berbice Deep Water Port

Civil works continue on the wholly-owned Berbice Deep Water Port, with an Access Bridge from the Corentyne Highway completed, Access Road from Corentyne Highway to the port site completed, delivery of electricity to the port site completed, delivery of Potable Water to the port site completed, quayside laydown yard 60% completed and rip rap flood protection 95% completed.

Requests for proposals have been advertised for the wharf platform and access trestle, capital dredging program, design and construction of all gates, buildings and fences, design and construction of firefighting and first aid structures and covered storage areas.

CGX said currently, evaluations of submitted proposals for the capital dredging and construction of the wharf platform and access trestle are underway.

“To date, all contractors on the project have been 100% local Guyanese companies and all efforts are being expended to ensure that this focus on local content is maintained throughout the project,” CGX stated.

CGX is a Canadian-based oil and gas exploration company focused on the exploration of oil in the Guyana-Suriname Basin and the development of a deep-water port in the Berbice, Guyana.

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