CGX Energy has been given a further extension to finalise the Joint Operating Agreement (JOA) it has with Frontera Energy for the Corentyne Block and the US$19 million loan it also took to cover its Guyana projects.
Both have been extended to November 30, Frontera said on Monday.
CGX entered the JOA with Frontera to increase the latter’s participating interest in the offshore Corentyne Block in exchange for funding.
The agreement will increase Frontera’s 33.3% stake in the Corentyne acreage significantly and secure financing for the Wei-1 exploration well to be drilled later this year. CGX will have a 32% participating interest and Frontera will have a 68% participating interest in the Block.
CGX will transfer 29.73% of its participating interest in the Corentyne block to Frontera in exchange for Frontera funding the Joint Venture’s costs associated with the Wei-1 exploration well for up to US$130 million and up to an additional US$29 million of certain Kawa-1, Wei-1 pre-drill, and other costs.
The Agreement remains subject to certain conditions precedent, including approval of the TSX Venture Exchange (which is subject to the receipt by CGX of a formal valuation), TSX acceptance of the Agreement, and certain confirmations from the Government of Guyana relating to the petroleum agreement for the Corentyne block.
In addition, CGX shall assign an additional 4.94% of its participating interest in the Corentyne block to Frontera as consideration for the repayment of the outstanding principal amounts under the previously announced US$19 million convertible loan to CGX dated May 28, 2021, as amended, and the previously announced US$35 million convertible loan to CGX dated March 10, 2022, as amended, and a cash payment of US$3.8 million.
Meanwhile, this is the second extension CGX got for the US$19 million loan. The first was on July 31, 2022.
The funds are for the Berbice Deepwater Port and other budgeted expenses.
CGX recently related to the public that “certain delays” pushed back its expected completion of the Port.
This has not found favour with the Guyana government.
While the Port was expected to be completed in the fourth quarter of 2022, CGX said this is now unlikely. A revised timeline has not been given.