CGX Energy Inc. (TSXV: OYL) ("CGX") and Frontera Energy Corporation (TSX: FEC) ("Frontera") announced today that the Government of The Cooperative Republic of Guyana has approved the farm-in joint venture agreement covering two shallow water offshore Petroleum Prospecting Licenses in Guyana, the Corentyne and Demerara blocks.
Under the terms of the farm-in joint venture agreement between Frontera and a wholly owned subsidiary of CGX, CGX Resources Inc., Frontera will acquire a 33.333% working interest in the two blocks in exchanged for a US$33.3 million signing bonus, paid by way of offset of $24.6 million of debt payable to Frontera by CGX plus a cash payment of US$8.7 million paid by Frontera to CGX. Frontera has agreed to pay one-third of the applicable costs under the joint ventures plus an additional 8.333% of CGX’s direct drilling costs for the initial exploratory commitment wells in the two blocks. CGX is the operator assigned to the blocks.
Professor Suresh Narine, Executive Chairman and Executive Director (Guyana), CGX, said:
“CGX is one of the pioneer explorers in the Guyana basin, celebrating its 20th year in 2018; it is widely regarded as Guyana’s indigenous oil company. I would like to thank the Government of The Cooperative Republic of Guyana for the approval of this pivotal joint venture by Frontera into the Corentyne and Demerara blocks. Coupled with the recently concluded successful rights offering financing, this partnership allows CGX to significantly clean up its balance sheet and resume with vigor its exploration of the continental shelf in the Guyana basin. As oil and gas begins to play a pivotal role in the transformation of The Cooperative Republic of Guyana, CGX is delighted to be positioned to claim its place in the development of Guyana and this exciting new industry. Frontera has been carefully chosen as a partner with which CGX will continue to undertake this task: because of their financial strength, technical capacity and respect for CGX’s culture and its fundamental role in templating good corporate citizenship and corporate responsibility for E&P companies operating in The Cooperative Republic of Guyana.”
Gabriel de Alba, Chairman of the Board of Directors of Frontera, added:
“As an important next step of our strategic joint venture with CGX, we are grateful to have received this approval from the Government of The Cooperative Republic of Guyana for the development of the Corentyne and Demerara blocks. Together, our companies are well positioned to advance exploration and development of these two attractive blocks in one of the most exciting offshore basins in the world. The approval of this joint venture confirms CGX’s deep roots in the country, which when combined with Frontera’s technical depth and financial strength create great opportunities for the benefit of CGX, Frontera and the people of The Cooperative Republic of Guyana. This joint venture forms an important part of Frontera’s plans to invest in long-term growth opportunities.”
Richard Herbert, Chief Executive Officer of Frontera, commented:
“We are very excited to be moving forward with our joint venture partner CGX on this important project for both of our companies and for the people of The Cooperative Republic of Guyana. Given the strong track record of discoveries in the adjacent Starbroek block and our own technical studies of seismic and well data within the two blocks, we are very encouraged about the opportunity on both the Corentyne and Demerara Blocks. We look forward to moving into the drilling phase to test the potential of the two blocks in the coming months.”
Corentyne Petroleum Agreement
The Corentyne block contains 1,125,000 net acres offshore The Cooperative Republic of Guyana in shallow water, adjacent to the ExxonMobil Stabroek block, which has encountered 13 discoveries since May 2015. The Utakwaaka well must be drilled by November 27, 2019 with an additional exploration well to be drilled by November 27, 2022.
Demerara Petroleum Agreement
The Demerara block contains 750,000 net acres offshore The Cooperative Republic of Guyana in shallow water, adjacent to the ExxonMobil Stabroek block which has encountered 13 discoveries since May 2015. An exploration well is required to be drilled on the block by February 12, 2021 with a further exploration well by February 12, 2023.
Source: Company Press Release