Drilling of Wei-1 well to commence in October 2022
– as CGX secures funds by selling majority in Corentyne Block
Drilling of the Wei-1 well in the Corentyne Block is scheduled to commence in October of 2022 and is made possible by Canadian oil company CGX Energy Incorporated selling its majority stake in the Corentyne Block to its joint venture partner Frontera Energy.
According to the company in a recent release, they expect to spud the Wei-1 well in October. They explained that final preparations are underway before they spud the well, which will be the second exploration well from the joint ventures.
CGX has retained the Maersk Discoverer to drill the Wei-1 exploration well. It is Maersk that drilled their first well, the Kawa-1 well, last year. As it is now, the participating interest in the Corentyne Block is now 32 per cent for CGX and 68 per cent for Frontera, after CGX decided to sell its majority stake.
It was explained that as part of the agreement, CGX will transfer 29.73 per cent of its participating 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.
Additionally, Frontera will provide up to an additional US$29 million for the Kawa-1 exploration well, Wei-1 pre-drill, and other costs. According to Executive Co-Chairman of CGX, Professor Suresh Narine, this deal will allow his company to secure funding for exploration activities.
“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 licence and the opportunity set that is now before us following the discovery of hydrocarbons at the Kawa-1 exploration well.”
“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,” Narine also said.
Meanwhile, Chief Executive Officer (CEO) Orlando Cabrales made it clear that Frontera is excited about the agreement, which allows the two companies to continue their joint venture activities in the Corentyne Block.
“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,” Cabrales explained.
It was further explained by the company that the agreement remains subject to getting approval from TSX Venture Exchange (Toronto Stock Exchange), a formal valuation of the Corentyne Block, and regulatory approval from the Government of Guyana.
It was only earlier this month that CGX underwent a major shakeup in management. These changes included the naming of a new Chief Financial Officer (CFO), George Davis, who will be taking over from Hill York Poon. Poon will be retained as CGX’s Director of Finance. Meanwhile, Paul Langlois has been appointed as the new Exploration Manager.
CGX and Frontera Energy Corporation, its joint venture partner, had previously commissioned an independent report which had revealed that they were potentially sitting on 4.9 million barrels of oil equivalent (BOE) in the Demerara and Corentyne oil blocks under their control.
In February of this year, the partners had announced an oil find of 177 feet of oil-bearing reserves at the Kawa-1 well in the Corentyne Block. Since then, however, the company has been making moves to scale back its presence in the other blocks.
It was announced that CGX had reached an agreement with the Government to relinquish larger sections of the Demerara and Corentyne Blocks, which will potentially go to auction in September.
Both the Corentyne and Demerara Blocks have been in CGX’s hands for some time without being drilled. Back in May 2019, the Strategic Joint Venture between CGX and Frontera was approved to farm in to two shallow-water offshore Petroleum Prospecting Licences for the Corentyne and Demerara Blocks.
These blocks 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.