Canadian oil explorer, CGX Energy Inc., has put its shareholders on notice that there is no guarantee its efforts to secure financing for a port facility in Guyana would be successful. Even if it is, the company warned that operating it profitably is also uncertain. This was outlined in the explorer’s latest financial statements published August 10, 2023.
CGX’s report notes that it is in the process of evaluating the Wei-1 discovery in the Corentyne Block, along with continuing the construction of a “deepwater” port on the Berbice River in Guyana.
The document states that the business of petroleum and natural gas exploration involves a high degree of risk, as such, there can be no assurance that the company’s exploration programmes will result in profitable operations. Notably, those efforts are being done in conjunction with its Canadian partner, Frontera Energy Corporation.
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“In addition, there is no guarantee that the company will be able to secure the necessary financing to complete the deepwater port project or be able to operate it profitably…” the financial report stated.
CGX explained that the port facility is expected to serve as an offshore supply base for the oil and gas industry as well as a multipurpose terminal to service the agriculture and construction industries. It also aims to enable the provisioning of operators and vendors in territorial waters of both Guyana and Suriname.
The project now targets operation of the cargo terminal aspects during first quarter of 2024 while the operation of oil and gas support base is scheduled for mid-2024, subject to construction schedules, financing, and supply chains.
CGX says US$21.8M already spent on Berbice Deepwater Port; pushing for 2023 completion | OilNOW
Furthermore, the financial statements highlight that CGX has a history of operating losses. As at June 30, 2023, it had a working capital deficiency of US$15,734,454 and an accumulated deficit of US$322,444,294. It also states that the company currently has no revenues, so its ability to ensure continuing operations relates to its ability to obtain necessary financing to complete the exploration and development of oil and gas concessions and the completion of its Berbice port project.
CGX was keen to note that it has been successful in raising financing in the past, and believes in the viability of its strategy.
As at June 30, 2023, Frontera held approximately 76.05% of the issued and outstanding Common Shares of CGX on an undiluted basis and has the voting power to influence the outcome of all corporate transactions.
