CGX to spend US$90M on 2021 drilling campaign in Guyana

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CGX Energy’s drill campaign, which is scheduled to kick off in the second half of 2021 with two wells being drilled in the Corentyne and Demerara Blocks, is expected to cost the company some US$90 million.

This was revealed by the company on Monday.

According to CGX Energy, the estimated total cost of US$90 million for its 2021 exploration programme is based on presently available information, an indication that this sum could change.

They also gave details of the two wells that will be drilled. The Kawa-1 well, which is earmarked for the Corentyne Block, will be drilled to a depth of approximately 6500 metres in 370-metre-deep water.

“The primary target is a Santonian age, stratigraphic trap, interpreted to be analogous to the discoveries immediately to the east on Block 58 in Suriname. The prospect is named after the iconic mountain overlooking the village of Paramakatoi in the Pakaraima Mountains of Guyana,” the company said.

Meanwhile, the Makarapan-1 exploration well will be drilled in the Demerara to a total depth of approximately 3500 metres in a water depth of approximately 1000 metres, significantly deeper water than the Kawa well.

“The primary target is an Aptian age, sandstone reservoir. The prospect is named after the Precambrian mountain overlooking the Rupununi Savannahs of Guyana,” CGX said in a statement.

CGX and its Joint Venture partner Frontera Energy had previously commissioned an independent report, which had revealed that they are potentially sitting on 4.9 million Barrels of Oil Equivalent (BOE) in the Demerara and Corentyne, Guyana oil blocks.

However, the report had hastened to add that there is no certainty that the company can recover the oil or that it is even commercially viable. According to the report, there are a total of 32 prospects in the two blocks, inclusive of 27 in the Corentyne Block and five in the Demerara Block.

These prospects potentially have 4.940 million BOE un-risked and 884 million BOE in them. An unrisked prospect, however, is one where the volume of oil is predicated on the basis that everything goes as planned and the oil is commercially viable and recoverable. The report makes it clear that it cannot give such certainty.

Last year November, CGX had announced that the Government, following discussions on the drilling delays in the Corentyne oil block, had agreed to give CGX a one-year extension until November 27, 2021, by which time they are expected to commence drilling in the Corentyne Block.

Back in May 2019, the former Government had approved a Strategic Joint Venture between CGX Energy Inc and Frontera Energy Corporation to farm into two shallow-water offshore Petroleum Prospecting Licences for the Corentyne and Demerara Blocks – both of which 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. The agreement should have seen CGX’s Utakwaaka well in the Corentyne Block being drilled by November 27, 2019, with an additional exploration well being drilled by November 27, 2022.

In the Demerara Block, an exploration well was supposed to have been drilled by February 12, 2021, with a further exploration well being drilled by February 12, 2023. However, CGX is yet to drill a well in the Corentyne Block, something which the current Government has expressed concern over. This situation persists even as a number of new companies have expressed an interest in Guyana’s oil blocks.

Additionally, the company had also revealed its decision to relinquish 24.96 acres of land at the estuary of the Berbice River that was earmarked for its deepwater project, following negotiations with the Government of Guyana.