CGX oil search comes up empty
-Suresh Narine new Chairman in major shakeup
-company spends extra US$21M
By Leonard Gildarie
Guyana’s hope of striking oil in commercial quantities suffered a major setback with Canadian-owned,
CGX Energy Inc. announcing yesterday that its drilling has not found any oil in commercial quantities at the Corentyne offshore site.
The company has since announced plans for drilling another well in that concession. It also announced a major shakeup, appointing Guyanese-born professor, Dr. Suresh Narine, as the new Chairman.
The Eagle-1 well was initially budgeted for 60 days of drilling but experienced weather delays and mechanical issues which extended operations for an additional 30 days. “The initial cost estimate for the Eagle-1 well was $55 million. However with the delays, the Eagle-1 well is now estimated to cost $71 million. As a result, the company will need to raise approximately $20 million in the near term.”
CGX reportedly said that it was spending around US$500,000 daily to have Ocean Saratoga rig anchored in the Corentyne concession.
According to CGX, the drilling found water. “Hence, CMR (combinable magnetic resonance) and MDT (modular formation dynamics) were run and both logs identified the presence of good quality sandstone reservoirs that unfortunately proved to be water bearing.”
Guyana is said to be one of the attractive under-explored basin in the world with a potential of 15.2 billion barrels of oil. Estimates place annual production targets at 50 million barrels.
The country will now be pinning its hopes for oil on the Jaguar-1 well which is currently being drilled well on the Georgetown block. CGX has a 25 per cent interest with its partners Repsol Exploración S.A (operator), YPF Guyana Limited and Tullow plc.
According to CGX, yesterday, the Corentyne Eagle-1 well reached total depth of 4,328 metres on April 25. The company had planned to drill to a depth of 4,250 metres.
“Further analyses will be conducted to verify the geological age of the drilled section as well as the chemical composition of the recovered fluids.”
At the Georgetown well, being drilled by the Atwood Beacon jack-up drill, CGX in its statement said that work continues.
“Total depth for the well is projected at 6,500 metres to test the Turonian geologic zone. The Jaguar-1 well was spud on February 9, 2012 and is expected to take 180 days. Drilling operations are progressing as planned.”
According to Kerry Sully, CGX’s President and CEO, “Although the results of the Eagle-1 well are disappointing for all stakeholders, this test has gathered valuable information that will assist CGX with determining the drilling location for its next well on the Corentyne PPL and for other future targets.”
Regarding its future plans, the company said that already, its geosciences team has been interpreting the recently acquired 3D and additional prospects have been identified.
“In addition, the team has established that the up-dip termination of our Eagle Deep Turonian prospect is at a shallower depth than originally anticipated.
Now that the Eagle-1 well has finished drilling and in response to expressions of interest, CGX is re-opening the data room to re-start the joint venture process.”
The disappointing drill results would come almost 12 years after Suriname controversially ejected a CGX rig in June 2000 off Corentyne, sparking a diplomatic spat that ended up with the United Nations where an award was made, paving the way for Guyana to restart its oil exploration there.
At the time, Suriname had claimed that the rig was in its territorial waters.
Meanwhile, CGX yesterday in a separate statement also revealed that effective May 4, Stephen Hermeston was no longer President and Chief Executive Officer.
Kerry Sully has since been named acting President and Chief Executive Officer with immediate effect. Sully held the positions in CGX from 1998 until June 2011 when he was appointed Executive Chairman of the Company.
Sully, according to CGX, has over 40 years of industry experience and has played an instrumental role in the company’s development for over 14 years. “The company has initiated a search for a new permanent President and CEO.”
Also effective May 4, CGX appointed Dr. Suresh Narine, an independent director of the company as the new Chairman. CGX said that Narine was named in 2011 as one of Canada’s Top 40 Under-40 Leaders, and is originally from Guyana.
Narine, CGX said, has an impressive academic career that includes numerous awards including one in 2011 from the Guyana Government for his contributions to Science and Technology in Canada and for his contributions in this field towards the development of Guyana, received in 2011.
In 2005, Professor Narine accepted a presidential appointment as the Director of Guyana’s Institute of Applied Science and Technology (IAST), a role which he maintains, together with his academic appointment as Senior Professor at Trent University, his alma mater, in the Departments of Physics and Astronomy and Chemistry and as Director of the Trent Centre for Biomaterials Research.