CGX accumulates US$59M for Guyana operations

CANADIAN oil giant, CGX Energy Incorporated, has managed to accumulate US$59 million to further develop and expand its operations both offshore and onshore Guyana.

The company, in a press statement, said that it offered to holders of its outstanding shares an aggregate of 45,151,338 common shares, with each requiring a payment of CAN$1.63.

“Following the closing of the offering, CGX has 334,459,000 common shares issued and outstanding,” the company said.

By the time the rights-offering exercise wrapped up on October 28, the company had raised approximately CAN$73,600,000 in gross proceeds, or the equivalent of US$59,600,000.

“Frontera Energy Corporation, an insider and the corporation’s largest shareholder, acquired an aggregate of 45,083,314 common shares pursuant to the exercise of its rights and its standby commitment under the offering,” CGX said.

The company, in its report, said that it intends to use the funds raised for the exploration and development of the Corentyne and Demerara Blocks offshore Guyana, and the Berbice Blocks onshore Guyana, and for the development of the Berbice Deep-Water Port in Guyana.

As it is, CGX and Frontera have commenced drilling for oil at the Kawa-1 well, which was spudded by Maersk Drilling Holdings’ Maersk Discoverer, a sixth-generation, semi-submersible which, prior to arriving in Guyana’s waters, was working in Trinidad for another operator.

The Kawa-1 well is located in the north-east quadrant of the Corentyne Block, approximately 200km offshore Georgetown.

The water-depth is approximately 355 meters (1,174 ft.), and the expected total depth of the Kawa-1 well is 6,575 meters (21,700 ft.).

It was reported recently that the estimated cost of the Kawa-1 project is close to US$85 million. The well is expected to reach total depth in the first half of December 2021.

According to CGX, with multiple opportunities based on internal geological studies, the Kawa-1 well targets light oil.

Further, the “stacked” targets in Kawa-1 are considered similar to the discoveries immediately adjacent to the Corentyne Block in Block 58 in Suriname. The Kawa-1 well is expected to de-risk multiple other prospects on the block, which also have “stacked reservoirs.”

Considering the potential of the Corentyne Block, CGX and Frontera said that they will be drilling a second well offshore Guyana under conditions and terms similar to that of Kawa-1.

Back in April, it was reported that Frontera Energy Corporation had injected a US$19 million (approximately G$4.1B) loan into CGX to continue financing its share costs related to the Corentyne, Demerara and Berbice Blocks, as well as the Berbice Deep-Water Port (BDWP) and other budgeted costs, as agreed to by Frontera.

Already, through its wholly-owned subsidiary, Grand Canal Industrial Estates Inc. (GCIE), CGX is engaged in civil works related to the construction of the BDWP on 30 acres of land on the eastern bank of the Berbice River, adjacent to Crab Island.

The project entails the construction of an access road and connecting bridge, the relocation of utilities, and major construction of the site along the Berbice River, as well as the construction of a wharf platform measuring 220 metres in length, and 30 metres in width, with its accompanying 50-metre access trestle.

The capital cost of the project, which is set to be completed by 2023, is currently estimated at US$70 million, with an additional plan to construct heavy-lift and fabrication facilities being contemplated.

The company first announced its plans for the project in 2010, preempting the developments that are expected locally.

The project is also expected to serve the movement of cargo for the agriculture industry. With approximately 30–50 per cent of Guyana’s rice being produced in Regions Five (Mahaica-Berbice) and Six (East Berbice-Corentyne), the BDWP, CGX reasoned, will provide important support to the industry, and service its expected growth.

Specific to cargo handling operations of the port, the Maritime & Transport Business Solutions (MTBS) of Rotterdam, in the Netherlands, conducted a detailed assessment report which predicted revenue generation to reach approximately US$28 million by 2025, and approximately US$37 million by 2030.

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