Cash-strapped CGX moves to reassert itself

May 03, 2017 News

Cash-strapped CGX Energy Inc. is making moves to reassert itself as a major force in the country’s oil industry.
With almost US$28M owed to creditors, the company which came up empty on two attempts

CGX local chief, Professor Suresh Narine.

for oil, yesterday made it clear it is preparing to play a dominant role.
It yesterday released its audited consolidated financial results for the year ended December 31, 2016, together with its Management Discussion and Analysis.
Professor Suresh Narine, Chairman of CGX Energy, who was recently appointed its Executive Director, Guyana on April 14, 2017, commented: “While the global downturn in petroleum prices has significantly affected the company over the past two years, the de-risking of the Guyana basin through multiple large discoveries has simultaneously provided enough buoyancy to allow the company to take steps to restructure its debt and prepare to continue exploration.” The Canadian company, which has concessions offshore Berbice, said it has been aided significantly in this regard through the support of its major shareholder, Pacific Exploration & Production Corporation, which was successfully restructured after being also affected by the downturn in prices.
“The next several months are important ones for the company as we restructure and begin preparing to play our role in the further exploration of the Guyana basin. I wish to thank the Ministry of Natural Resources and the Guyana Geology and Mines Commission for their cooperation and collaboration, especially over the past 12 months.”
The company said it has entered into loan agreements for over US$7M with Pacific Exploration & Production Corp.
Pacific has the right to take a pledge of shares of CGX’s subsidiaries in an event of default under one of the agreements.
With regards to its Petroleum Prospecting Licences (“PPL”) governing the Corentyne Block, the company said it is currently negotiating the terms of an extension of the spud date for its next exploration well on the block.
The previous spud date was July 1, 2016. The company is also currently negotiating extensions on its commitments of its Demerara and Berbice PPLs.
“The Company continues to negotiate with its trade creditors, including with respect to the approximately $14.4 million owed to Japan Drilling Co., Ltd. (excluding interest), approximately $9.5 million owed to Prospector PTE. Ltd. (excluding interest), and the approximately $2.9 million owed to Teikoku Oil (Suriname) Co., Ltd. (excluding interest), with a view to determining how to address these significant payables in light of depressed oil prices. For further information regarding these payables, please see the Company’s financial statements.”
CGX Energy had also announced that on April 14, 2017 its Board of Directors appointed Professor Suresh Narine, as its Executive Director, Guyana, subject to regulatory approval. Professor Narine will remain as a director of the company.
“In conjunction with his appointment, the Board of Directors has agreed to grant Professor Narine incentive stock options to purchase 1,000,000 common shares of the Company. The stock options will be granted on May 2, 2017 pursuant to the Company’s stock option plan and will be exercisable at a price equal to the closing market price on such date. The options will expire on May 2, 2022.”
US-owned ExxonMobil has announced plans to start production in 2020 following a major find in its concessions in 2015. A number of other wells have confirmed the find in the off-shore concessions.

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