CGX Energy Inc (CGXEF)

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Proximity of Joe discovery in Orinduik Block moves CGX to speed up drilling programme
 Sep 30, 2019  News 0 Comments

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By Kiana Wilburg
CGX Resources Inc. (CRI), along with its joint venture partner, Frontera Energy Corporation (FEC) has made another adjustment to its drilling programme following the latest oil discovery in a nearby block.
Just a few weeks ago, Tullow Oil, which is the Operator of the Orinduik Block, announced its second commercial discovery which was made at the Joe-1 well. That discovery is the first to be made in rocks that are of a relatively young geological age.
Based on a series of releases and statements that have been issued in the last few months, it is evident that the Joe-1 well is just a few miles from CGX’s Demerara Block.
CGX appears to be taking advantage of the positive signals the Joe discovery sends for its prospects and is therefore drilling its first well on the Demerara Block in 2020, putting it one year ahead of its drilling schedule.
Also in 2020, CGX would be drilling its first exploratory well in the Corentyne Block, following further forensic seismic investigation of the northern region of the block.
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CGX Executive Chairman, Professor Suresh Narine
It would appear that this seismic survey is being done to gain a better understanding of the block’s geological systems and how those correlate with two nearby finds in the ExxonMobil operated Stabroek Block.
A perusal of the locations of Exxon discoveries show that the Pluma well is just two miles away from CGX’s Corentyne block, while the Haimara is sitting a mere five miles away. The Pluma-1 well is estimated to hold at least 300M barrels of oil says Wood Mackenzie. Haimara-1 potentially holds 800M barrels of oil equivalent reserves.
This newspaper understands that CGX would be utilizing the services of PGS Geophysical SA (“PGS”) to provide acquisition and processing of the 3D seismic survey covering approximately 582 km2 of the northern portion of the Corentyne Block. The survey is expected to commence in mid-October 2019 and be completed by November 27, 2019. This is in line with CRI’s re-sequenced work plan on the Corentyne Block, which requires it to complete a seismic survey by November 27, 2019 and the drilling of an exploration well by November 2020.
This newspaper understands that PGS plans to use an integrated acquisition and imaging approach, for reliable operation and fast turnaround of the seismic data. A Ramform Titan-class seismic vessel will be used to complete the acquisition, ensuring a high level of safety and operational reliability. In addition to this, GeoStreamer acquisition technology will enable advanced imaging techniques to provide structural imaging to support drilling decisions.
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While Executive Chairman of CRI, Professor Suresh Narine or any of CGX’s officials could not be reached for extensive commentary, Professor Narine in a statement to the press confirmed that recent discoveries in proximity to the northern region of the Corentyne Block and in the shallow water east of the Demerara Block, present a compelling endorsement of CRI’s re-sequenced plans to drill exploration wells back-to-back on its Corentyne and Demerara Blocks in 2020.
Professor Narine said that CRI’s arrangement with PGS will allow the company to take advantage of PGS’ previous experience in this region of the basin to both acquire and process 3D seismic which is crucial to its understanding of the northern region of the Corentyne Block.
In the meantime, Professor Narine said that CRI has been streamlining its prospects in the Demerara Block based on the 3D seismic campaign it conducted over the Demerara Block in 2014. He said that the arrangement with the Contractor will allow CRI to utilize funds previously committed to the Ralph Coffman rig to drill the Utakwaaka well to any of the Contractor’s rigs that are utilized to drill the Corentyne and Demerara Blocks in 2020.
In conclusion, Dr. Professor Narine said, “…I wish to thank our partners and shareholders for their continued support of the Company as we move towards realizing a 21-year vision and commitment to the Guyana basin….”
FINANCIAL POSITION
Along with its re-sequenced work programme, CGX a few months ago, had provided an update on its financial position, specifically disclosing details from its unaudited consolidated financial statements for the second quarter of 2019, together with its Management, Discussion and Analysis – Quarterly Highlights.
CGX reminded that on May 3, 2019, the Government approved the farm-in joint venture agreements (‘JOAs’ ) covering two shallow-water offshore Petroleum Prospecting Licenses in Guyana, in the Corentyne and Demerara blocks, between CRI and Frontera Energy Guyana Corporation (FEGC). CGX said that the JOAs provided for a transfer of a 33.333% interest in both the Corentyne and Demerara Petroleum Prospecting Licenses and Petroleum Agreements in exchange for a US$33,333,000 signing bonus. Under the JOAs, FEGC will pay one-third of the applicable costs plus an additional 8.333% of the company’s direct drilling costs for the initial exploratory commitment wells in the two blocks subject to certain thresholds.
Further, on May 28, 2019, CGX noted that the transfers of the 33.333% interest in both the Corentyne and Demerara Prospecting Licenses were completed. It said that the transfers were effective on May 20, 2019. As a result, on May 28, 2019, CGX said that the Company received US$8,500,851, being the net of the US$33,333,000 signing bonus due from FEGC, less the amount of US$24,832,149 of the outstanding debt owed to FEGC by the Company.
For the six month period ended June 30, 2019, the company said it improved its working capital deficiency by $56,525,771 and recorded cash on hand as at June 30, 2019, of $22,574,722.
It also said that it incurred net exploration and evaluation expenditures of $5,256,609 during the six month period ended June 30, 2019, primarily due to activities being undertaken to satisfy work commitments under CRI’s Corentyne block Petroleum Agreement.

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