CGX, a Toronto-based oil and gas firm focused on the Guyana-Suriname Basin, has secured funding for its next offshore exploration well in Guyana's Corentyne block by agreeing to farm out a portion of its interest to its partner Frontera.
As part of the agreement, CGX will transfer 29.73% of its 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.
Also, CGX will assign an additional 4.94% of its stake to Frontera to repay loans previously given to it by Frontera.
As a result of the agreements, CGX will have a 32.00% participating interest, and Frontera will have a 68.00% participating interest in the Corentyne block .
"CGX is pleased to complete this farm-in agreement with Frontera, which enables CGX to strengthen its balance sheet and secure funding for the Wei-1 exploration well. Our continued partnership with Frontera reflects the significant value we have created on the Corentyne license and the opportunity set that is now before us following the discovery of hydrocarbons at the Kawa-1 exploration well [which struck oil earlier this year]. 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," said Professor Suresh Narine, Executive Co-Chairman of CGX.
"Frontera is excited to complete this agreement with CGX, and continue our work together on the Corentyne Block," said Orlando Cabrales, Chief Executive Officer of Frontera. "Building on the Joint Venture's recent light oil and condensate discovery at the Kawa-1 exploration well, the Agreement supports CGX's capital needs for the Wei-1 exploration well and provides Frontera with an increased participating interest in the Corentyne block, which is truly one of the most exciting exploration areas in the world."
Maersk offshore rig for Wei-1 Exploration Well
CGX said that the final preparations were underway in advance of spudding the Joint Venture's second exploration well, called Wei-1, in October 2022, subject to rig release from a third-party operator. According to available information, the rig is currently operating for Shell in Trinidad & Tobago.
"The necessary long lead materials have been secured and are being mobilized. As of July 15, 2022, 95% of key drilling staff that executed the Kawa-1 exploration well remain contracted for the Wei-1 exploration well. An independent operations readiness review has been completed with no significant obstacles to spud," CGX said.
The Wei-1 exploration well will be located approximately 14 kilometers northwest of the Kawa-1 exploration well in the Corentyne block, approximately 200 kilometers offshore from Georgetown, Guyana. The Wei-1 exploration wells will be drilled in water depth of approximately 1,912 feet (583 meters) to an anticipated total depth of 20,500 feet (6,248 meters) and will target Campanian and Santonian aged stacked channels in a western channel complex in the northern section of the Corentyne block.
CGX Resources, operator of the Corentyne Block, said it had again contracted Maersk Drilling Maersk Discoverer semi-submersible drilling rig to drill the Wei-1 exploration well, "maintaining 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, which is important from a health and safety, efficiency and operational perspective."