Monday, February 6, 2023

CGX’s drilling of Wei-1 well delayed to fourth quarter

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CGX Energy Inc. said final preparations are underway for the planned spudding of the Wei-1 well in the Corentyne Block in October 2022.

The Wei-1 exploration well, located approximately 14 kilometres northwest of the Kawa-1 exploration well in the Corentyne block, approximately 200 kilometres offshore from Georgetown, Guyana, was initially set for the third quarter.

CGX did not state a reason for the delay, but also announced that it entered into an agreement with its joint venture partner, Frontera Energy Corp., surrendering its majority stake in the Corentyne Block to pay of loans and secure funds for its operations.

For the Wei-1 operation, CGX said the necessary long lead materials have been secured and are being mobilised. It said that as of July 15, 95% of key drilling staff that executed the Kawa-1 exploration well remain contracted for Wei-1 exploration.

“An independent operations readiness review has been completed with no significant obstacles to spud,” CGX said.

The exact drilling date will be subject to release of the Maersk Discoverer from a third-party operator. Use of the rig maintains continuity in the exploration program during a period of high demand in the region and consistency in working with a team familiar with the rig, CGX said. It added that this is important from a health and safety, efficiency, and operational perspective.

In conjunction with the Drilling Contract between CGX Resources and Maersk, Frontera anticipates entering into a parent company guarantee with Maersk for certain obligations in connection with the day rates under the Drilling Contract on behalf of CGX Resources. The guarantee is expected to be for a maximum US$30 million subject to a sliding scale mechanism in connection with payments made under the Drilling Contract. Frontera and CGX entered into an agreement pursuant to which all amounts drawn under the Guarantee that are attributed to CGX Resources’ share of the Joint Venture costs shall be guaranteed by CGX until such time as all conditions precedent to the Agreement have been satisfied.

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

CGX and Frontera revealed earlier this year that findings from the first discovery made in the Corentyne Block at the Kawa-1 well have increased the chance of success at Wei-1 from 29% to 56%.

CGX announced in June that it reached an agreement with the government to relinquish the Demerara and Berbice Blocks, amounting to a combined 1.1 million acres, so it could focus on the Corentyne Block.

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