CGX sitting on potential 4.9M barrels of oil offshore Guyana – report

…but says no certainty on whether oil recoverable, viable

By Jarryl Bryan

CGX’s holdings offshore Guyana

An independent report commissioned by CGX Energy Incorporated says that the company is potentially sitting on 4.9 million Barrels of Oil Equivalent (BOE) in the Demerara and Corentyne, Guyana oil blocks. However, there is no certainty that the company can recover the oil or that it is even commercially viable.
CGX, which has a joint venture with Frontera Energy Corporation, had contracted McDaniel and Associates in September of last year to evaluate its holdings in the Corentyne and Demerara Blocks. According to a press release distributed by MENAFN-Newsfile Corp, an independent prospective resource study has since been completed into CGX’s holdings.
According to the report, there are a total of 32 prospects in the two blocks, inclusive of 27 in the Corentyne Block and five in the Demerara Block. These prospects or potential wells potentially have 4.940 million BOE un-risked and 884 million BOE in them.
An unrisked prospect, however, is one where the volume of oil is predicted on the basis that everything goes as planned and the oil is commercially viable and recoverable. And the report makes it clear that it cannot give such certainty.
“There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. The unrisked total is not representative of the portfolio Unrisked Total and is provided to give an indication of the resources range assuming all of the prospects are successful,” the statement said.
According to the statement, quantifying the chance of recovery is a multifaceted business that required McDaniel to consider the legal, regulatory, market access, political and social factors, as well as CGX’s commitment to finance and develop the venture.
“McDaniel has determined that the chance of discovery is estimated to be between 18 per cent and 51 per cent and the chance of development between 50 and 70 per cent, based on an evaluation of the risks relevant to the blocks,” the statement added.
The statement also carried with it a quote from Gabriel de Alba, Co-Chairman of the Board of Directors of CGX, who described the Guyana basin in which the co-venturers are operational as a “leading offshore opportunity.
“As confirmed by the independent resource valuation commissioned, the Guyana basin offers the Joint Venture access to a leading offshore oil opportunity. We expect a robust Guyana work programme with the advancement of our exploration wells, as we continue executing on our plan to realise this value for our shareholders,” she was quoted as saying.
Last year November, CGX Energy Incorporated had announced its decision to relinquish 24.96 acres of land at the estuary of the Berbice River that was earmarked for its deepwater project, following negotiations with the Government of Guyana.
The company also revealed that the Government, following discussions on the drilling delays in the Corentyne oil block, had agreed to give CGX a one-year extension until November 27, 2021, by which time they are expected to commence drilling in the Corentyne Block.
Back in May 2019, the former Government had approved a Strategic Joint Venture between CGX Energy Inc and Frontera Energy Corporation to farm into two shallow-water offshore Petroleum Prospecting Licences for the Corentyne and Demerara Blocks – both of which are adjacent to ExxonMobil’s Stabroek Block, where multiple discoveries have been made.
The farm-in joint venture allowed Frontera to acquire a 33.333 per cent working interest in the two blocks. The agreement should have seen CGX’s Utakwaaka well in the Corentyne Block being drilled by November 27, 2019, with an additional exploration well being drilled by November 27, 2022. In the Demerara Block, an exploration well was supposed to have been drilled by February 12, 2021, with a further exploration well being drilled by February 12, 2023.
However, CGX is yet to drill a well in the Corentyne Block, something which the current Government has expressed concern over. This situation persists even as a number of new companies have expressed an interest in Guyana’s oil blocks.