Frontera Energy Corporation will soon hold a 72.7% Participating Interest (PI) in Guyana’s Corentyne Block as per an amended Joint Operating Agreement (JOA) with CGX Energy, its partner.
The amendment, CGX announced on August 10, will effectively see Frontera farming into the Corentyne Block to cover “unexpected additional costs of the Wei-1 well due to delays associated with the late release of the rig by a third-party, costs associated with a lost sampling tool, and the drilling of the bypass well.”
CGX said it will have to transfer 4.7% of its PI to Frontera in exchange for funding its additional expected outstanding share of the JV’s costs associated with the Wei-1 well “for up to approximately US$16.5 million.”
“As a result of this agreement, if the maximum amount is transferred by CGX, the Company will have a 27.3% participating interest,” it said in a statement.
The new deal remains subject to regulatory approvals, including approval of the TSX Venture Exchange.
Frontera’s pre-deal stake in the Corentyne Block is 68%.
CGX had revised initial Wei-1 drilling costs from an estimate of US$160 million to a range of US$175 million – US$190 million. That was further revised to approximately $190-$195 million to complete the logging runs, finish well operations, and release the rig.
CGX’s Wei-1 discovery in the Maastrichtian and the Campanian intervals showed a combined 77 feet of net pay. Preliminary investigations have identified 210 feet of hydrocarbon-bearing sands within the Santonian, the primary interval. These findings are yet to be confirmed as no physical samples were obtained.
The CGX exploration campaigns in recent years have been the most promising for a development outside of the prolific Stabroek Block where ExxonMobil has found over 11 billion barrels of oil equivalent resources. The Ministry of Natural Resources said in June that further evaluation will determine the potential commercial viability of the Wei-1 discovery in the Corentyne Block. While CGX Energy Incorporated and Frontera Energy Corporation have made significant progress in their exploration efforts, an additional 2-3 months of analysis are needed to confirm net pay in the Santonian interval.
