May 01, 2015 News
Canadian oil exploration, CGX Energy Inc., last year recorded a net loss of US$45M, compared to a gain of US$0.6M for year-ended December 31, 2013.
The company is one of several that have concessions to explore for oil in Guyana’s waters.
It has failed in two attempts, including a joint exploration effort with Repsol, to find oil from the wells drilled.
According to Chief Executive Officer (CEO), Dewi Jones, the company last year commenced significant cost-cutting initiatives and these have shown positive results.
Last year, general and administrative costs decreased by more than 50% compared to the previous year.
The company said it will continue to work alongside its major shareholders, Prospector and Pacific Rubiales Energy Corp. to develop Guyana’s offshore and onshore acreage.
“We continue to be very optimistic about our acreage and look forward to seeing the results of exploration drilling in the region in 2015.”
With regards to its seismic survey and strategic equity investment, the company said that in September 2014, it entered into a seismic contract with Prospector PTE. Ltd. to conduct a 3D seismic survey covering approximately 3,100 km2 on the company’s 100% owned Demerara Block as part of its commitments under the Demerara petroleum agreement and petroleum prospecting licence (“PPL”).
The aggregate cost of this seismic survey will be approximately US$18M with US$7M paid to Prospector by way of issuance of 15,534,310 common shares in the capital of the company, US$2.5M paid 30 days after receipt of invoice and the remainder of approximately US$8.5M payable in cash 12 months after the conclusion of the seismic survey.
In October 2014, the company entered into a bridge loan agreement with Pacific Rubiales Energy Corp. in the aggregate principal amount of Can$7.5M.
With regards to its next shot as drilling a well, the company said it entered into an agreement with Japan Drilling Co., Ltd. procuring the use of the jack-up drilling rig known as the “HAKURYU-12” rig.
“In an effort to reduce drilling costs, the company has simultaneously entered into a rig sharing agreement with Teikoku Oil (Suriname) Co., Ltd., a wholly-owned subsidiary of INPEX CORPORATION.”
CGX said that it has been granted approval of an extension from May 31, 2015 to October 31, 2015.
In December 2013, CGX commenced arbitration proceedings against Repsol Exploracion, S.A., its partner in the drilling of a well in the Georgetown Block. A settlement was reached in December.
CGX said it is continuing to secure a joint venture partner for its Corentyne PPL and is actively pursuing this initiative.
“In the short term, the company will likely require additional financing and seek to widen its shareholder base, but still with a view to negotiating farm-out transactions as the primary way to enhance shareholder value. The company is hopeful that exploratory drilling currently underway in Guyana and Suriname will be successful and that a discovery in an adjacent block will have a significant impact on the Company’s share price and on its ability to raise the capital required to complete its existing work commitments in Guyana.”
Guyana currently imports oil for its needs from Venezuela, Curacao, Trinidad and Suriname, among other places.
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