Sunday, June 26, 2022

CGX walks away from 1.1 million acres offshore Guyana, hedging all bets on Corentyne

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Given their inability to honour their work obligations, Frontera Energy Corporation and CGX Energy Inc. have reached an agreement with the Guyana Government to relinquish the Demerara and Berbice Blocks, amounting to a combined 1.1 million acres.

The attention of the Canadian partners will now be focused on the Corentyne Block which delivered a material discovery at the Kawa-1 well.

Frontera said it will continue to integrate its findings from the Kawa-1 well into preparations for the second exploration well, called Wei-1, in the third quarter of 2022. The Wei-1 exploration well will be located approximately 14 kilometres northwest of the Kawa-1 exploration well in the Corentyne block, approximately 200 kilometres offshore from Georgetown, Guyana.

The Wei-1 exploration well will be drilled in water depth of approximately 1,912 feet (583 metres) to a targeted total depth of 20,500 (6,248 metres) and will target Maastrichtian, Campanian and Santonian aged stacked channels in a western channel complex in the northern section of the Corentyne block.

Given the importance of the Demerara block to Guyana, Frontera and CGX said they have, in principle, reached an agreement with the Government to allow for the relinquishment of the Demerara block through a mutual termination agreement which terms remain to be defined and documented. OilNOW understands that such termination agreement would allow the relinquishment of the Demerara block in a timely manner, thereby allowing the people of Guyana to benefit from exploration activities under the stewardship of interested parties.

ON Energy, a 62.5% owned subsidiary of CGX and holder of the Petroleum Prospective Licence of the Berbice block has also been in discussions with the Government of Guyana and reached a similar agreement to that made for the Demerara relinquishment application.

In a notice to the market, Orlando Cabrales, Chief Executive Officer of Frontera said, “The results from the Kawa-1 well have been a significant factor in developing a defined opportunity set for the joint venture partners. It was important to us, as partners to the Government of Guyana, to positively resolve our desire to focus on Corentyne and not allow the Demerara block to be delayed in terms of assessing its potential.

“As a result, we have, in principle, a mutual agreement to relinquish the Demerara block and allow for interested parties to make advances in that area. We would like to express our appreciation to Guyana for this constructive outcome that benefits all parties.”

On the heels of the announcement, Professor Suresh Narine, Executive Co-Chairman of CGX’s Board of Directors, also commented that the company’s long partnership with the Government and the people of Guyana is a critical aspect of its decisions. He said the partners have a significant opportunity on the Corentyne block following the discovery at Kawa-1. Professor Narine said the joint venture is moving ahead rapidly to advance its programme and unlock the potential of the Corentyne block, for the benefit of all stakeholders.

Following the Kawa-1 discovery in the first quarter, CGX had indicated early on to the government that it would not be able to follow through with its commitments on the Demerara and Berbice Blocks. This was primarily due to budget constraints. According to the provisions of its agreements, the partners were expected to drill two wells in Demerara before 2023 and one well along with the acquisition of seismic data in the Berbice concession this year.

Vice President Dr. Bharrat Jagdeo said recently however that it is “none of our business” if the company “can’t raise the money.”

The Ministry of Natural Resources has also been unwavering in its position that CGX and its partner must honour their work commitments irrespective of their desire to focus on the potential of the Corentyne Block.

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