Participating Interest In Corentyne Block Now
32% CGX And 68% Frontera
The Joint Venture Anticipates Spudding the
Wei-1 Exploration Well in October
2022
CGX and Frontera Agree To Convert May 2021 and March
2022 Loans Into Participating Interest In Corentyne
TORONTO, July 22,
2022 /CNW/ - CGX Energy Inc. (TSXV: OYL)
("CGX") and Frontera Energy Corporation (TSX: FEC)
("Frontera"), joint venture partners (the "Joint
Venture") in the Petroleum Prospecting License for the
Corentyne block offshore Guyana,
announces today that the companies have entered into an agreement
to amend the Joint Operating Agreement originally signed between
CGX and a subsidiary of Frontera on January
30, 2019, as amended (the "Agreement"), effectively
farming into the Corentyne block and securing funding for the Wei-1
exploration well. The Agreement remains subject to certain
conditions precedent, including approval of the TSX Venture
Exchange (which is subject to the receipt by CGX of a formal
valuation), TSX acceptance of the Agreement, and certain
confirmations from the Government of Guyana relating to the petroleum agreement for
the Corentyne block.
"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 license 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," said Professor
Suresh Narine, Executive Co-Chairman
of CGX.
"Frontera is excited to complete this agreement with CGX, and
continue our work together on the Corentyne Block," said
Orlando Cabrales, Chief Executive
Officer of Frontera. "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."
As part of the Agreement, CGX will transfer 29.73% 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 and up to an additional
US$29 million of certain Kawa-1
exploration well, Wei-1 pre-drill, and other costs. In addition,
CGX shall assign an additional 4.94% of its participating interest
in the Corentyne block to Frontera as consideration for the
repayment of the outstanding principal amounts under (i) the
previously announced US$19 million
convertible loan to CGX dated May 28,
2021, as amended, and (ii) the previously announced
US$35 million convertible loan to CGX
dated March 10, 2022, as amended, and
a cash payment of US$3.8 million. As
a result of this agreement, CGX will have a 32.00% participating
interest and Frontera will have a 68.00% participating interest in
the Corentyne block .
The transactions described herein between Frontera and CGX are
related party transactions under Multilateral Instrument 61-101 but
are exempt from the obligations to obtain a formal valuation and
approval from a minority of shareholders. Nevertheless, CGX is in
the process of obtaining a formal valuation for the Corentyne block
in connection with the Agreement, in accordance with the TSX
Venture Exchange requirements. The material change report to be
filed by CGX in connection with this news release will contain the
required disclosure regarding such exemptions and the formal
valuation for the Corentyne block obtained by CGX.
NEITHER THE TORONTO
STOCK EXCHANGE, TSX VENTURE
EXCHANGE NOR THEIR REGULATION SERVICES PROVIDERS (AS THAT TERM IS
DEFINED IN THE POLICIES OF THE TORONTO STOCK
EXCHANGE AND TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THIS RELEASE.
Wei-1 Exploration Well
Final preparations are underway in advance of spudding the Joint
Venture's second exploration well, called Wei-1, in October 2022, subject to rig release from a
third-party operator. The necessary long lead materials have been
secured and are being mobilized. As of July
15, 2022, 95% of key drilling staff that executed the Kawa-1
exploration well remain contracted for the Wei-1 exploration well.
An independent operations readiness review has been completed with
no significant obstacles to spud.
The Wei-1 exploration well will be located approximately 14
kilometres northwest of the Kawa-1 exploration well in the
Corentyne block, approximately 200 kilometres offshore from
Georgetown, Guyana. The Wei-1 exploration well will be
drilled in water depth of approximately 1,912 feet (583 metres) to
an anticipated total depth of 20,500 feet (6,248 metres) and will
target Campanian and Santonian aged stacked channels in a western
channel complex in the northern section of the Corentyne block.
CGX Resources Inc. ("CGX Resources"), operator of the
Corentyne Block, has again contracted (the "Drilling
Contract") the Maersk Discoverer to drill the Wei-1 exploration
well, maintaining continuity in the exploration program during a
period of high demand in the region and consistency in working with
a team familiar with the rig, which is important from a health and
safety, efficiency and operational perspective.
In conjunction with the Drilling Contract between CGX Resources
and Maersk, Frontera anticipates entering into a parent company
guarantee (the "Guarantee") with Maersk for certain
obligations in connection with the day rates under the Drilling
Contract on behalf of CGX Resources, up to a maximum of
US$30 million subject to a sliding
scale mechanism in connection with payments made under the Drilling
Contract. Frontera and CGX entered into an agreement pursuant to
which all amounts drawn under the Guarantee that are attributed to
CGX Resources' share of the Joint Venture costs shall be guaranteed
by CGX until such time as all conditions precedent to the Agreement
have been satisfied.
About CGX
CGX is a Canadian-based oil and gas exploration company focused
on the exploration of oil in the Guyana-Suriname Basin and the
development of a deep-water port in Berbice, Guyana.
About Frontera
Frontera Energy Corporation is a Canadian public company
involved in the exploration, development, production,
transportation, storage and sale of oil and natural gas in
South America, including related
investments in both upstream and midstream facilities. The Company
has a diversified portfolio of assets with interests in 33
exploration and production blocks in Colombia, Ecuador and Guyana, and pipeline and port facilities in
Colombia. Frontera is committed to
conducting business safely and in a socially, environmentally and
ethically responsible manner.
If you would like to receive News Releases via email as soon as
they are published, please subscribe here:
http://fronteraenergy.mediaroom.com/subscribe.
Corporate Presentation
See Frontera Energy's corporate presentation at:
https://www.fronteraenergy.ca/reports-presentations/
Social Media
Follow Frontera Energy social media channels at the following
links:
Twitter: https://twitter.com/fronteraenergy?lang=en
Facebook: https://es-la.facebook.com/FronteraEnergy/
LinkedIn: https://co.linkedin.com/company/frontera-energy-corp
Advisories
Cautionary Note Concerning Forward-Looking
Statements:
This press release contains forward-looking information
within the meaning of Canadian securities laws. Forward-looking
information relates to activities, events or developments that CGX
and Frontera believe, expect or anticipate will or may occur in the
future. Forward-looking information in this press release includes,
without limitation, statements relating to the anticipated change
in the parties' participating interests in the Corentyne block
under the Agreement, including as a result of additional funding
obligations of Frontera for the Wei-1 exploration well and the
anticipated discharge of an aggregate US$54
million under outstanding convertibles loans to CGX, the
parties' expectations as to drilling plans, operational readiness
and timing for spudding the Wei-1 exploration well, the necessary
governmental and regulatory approvals to be obtained in connection
with the Agreement, (including certain confirmations from the
Government of Guyana relating to
the petroleum agreement for the Corentyne block, approval of the
TSX Venture Exchange (which is subject to the receipt by CGX of a
formal valuation) and TSX acceptance of the Agreement), and a
parent company guarantee required in connection with drilling of
the Wei-1 exploration well. All information other than historical
fact is forward-looking information.
Forward-looking information reflects the current
expectations, assumptions and beliefs of CGX, and Frontera based on
information currently available to them and considers the
experience of CGX and Frontera and their perception of historical
trends. Although CGX and Frontera believe that the assumptions
inherent in the forward-looking information are reasonable,
forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be placed on
such information. Forward-looking information is subject to a
number of risks and uncertainties, some that are similar to other
oil and gas companies and some that are unique to CGX and Frontera.
The actual results of CGX or Frontera may differ materially from
those expressed or implied by the forward-looking information, and
even if such actual results are realized or substantially realized,
there can be no assurance that they will have the expected
consequences to, or effects on, either of CGX or Frontera. The
annual information form of Frontera for the year ended December 31, 2021, and CGX and Frontera's
management's discussion and analysis for the year ended
December 31, 2021, and quarter ended
March 31, 2022, and other documents
each of CGX and Frontera files from time to time with securities
regulatory authorities describe the risks, uncertainties, material
assumptions and other factors that could influence actual results
and such factors are incorporated herein by reference. Copies of
these documents are available without charge by referring to each
company's profile on SEDAR at www.sedar.com. All forward-looking
information speaks only as of the date on which it is made and,
except as may be required by applicable securities laws, each of
CGX and Frontera disclaims any intent or obligation to update any
forward-looking information, whether as a result of new
information, future events or results or otherwise.
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content:https://www.prnewswire.com/news-releases/cgx-energy-and-frontera-energy-announce-transaction-for-the-corentyne-block-that-secures-funding-for-the-wei-1-exploration-well-301591652.html
SOURCE Frontera Energy Corporation
