Operator of the Corentyne Block, CGX Energy Inc., announced that it is surrendering its majority stake to its joint venture partner, Frontera Energy Corporation.
The agreement amends a January 30, 2019 agreement the two had made when Frontera farmed into the Corentyne and Demerara Blocks. The JV partners have since surrendered the Demerara Block to the Guyana government, after time was running out for them to fulfill commitments.
The new agreement increases Frontera’s 33.3% stake in the Corentyne acreage significantly and secures funding for the Wei-1 exploration well to be drilled later this year. As a result of this agreement, CGX will have a 32% participating interest and Frontera will have a 68% participating interest in Corentyne.
As part of the Agreement, 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 exploration well, Wei-1 pre-drill, and other costs. 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.
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.
Professor Suresh Narine, Executive Co-Chairman of CGX said, “We are focused now on the transformational potential of the Corentyne block ahead of spudding the Wei-1 exploration well in October 2022, pending rig release from the current operator.”
In a comment on Frontera’s upped stake, Orlando Cabrales, Chief Executive Officer of Frontera said the Corentyne Block is one of the most exciting exploration areas in the world.
