–but says further drilling required

LESS than four months after spudding the Kawa-1 exploration well, CGX Energy, through one of its major shareholders, Frontera Energy, has reported that it has encountered hydrocarbon presence.

The Kawa-1 well, named after the iconic mountain overlooking the village of Paramakatoi in the Pakaraima Mountains of Guyana, is located in the northeast quadrant of the Corentyne block, approximately 200 kilometers offshore from Georgetown.

The water depth is approximately 355 meters (1,174 ft.) and the expected total depth of the Kawa-1 well is 6,685 meters (21,932 ft.).

The companies had said that the stacked targets in Kawa-1 are considered analogous to the discoveries immediately adjacent to the Corentyne Block, in Block 58 in Suriname.

According to Frontera, approximately 90 per cent of the planned footage has been drilled and the initial results suggest an active hydrocarbon system is present at the Kawa-1 location.

“Horizon 19, the first of three geological zones targeted by the Joint Venture, has been penetrated. Logging-While-Drilling and cuttings indicate the presence of hydrocarbons in several Campanian and upper Santonian formations.

“The Joint Venture will run the planned 9 5/8″ liner at current depth, then drill ahead to the main Santonian target zone (Horizon 23) and the deeper secondary Santonian target zone (Horizon 25). The initial geological results will be further evaluated by wireline logging at the end of the well as part of the logging programme for the deeper zones,” Frontera said.

Drilling at Kawa-1 is being carried out by Maersk Discoverer semi-submersible drilling rig, but the company said it is taking longer than initially expected with costs projected to rise.
The current cost estimate of the Kawa-1 well is now forecast to be approximately US$115-US$125 million.

“The Joint Venture will provide an update on costs and will issue full exploration results of the Kawa-1 well once total depth has been reached and results have been analysed,” the company said.

It was reported in November that CGX Energy Incorporated managed to accumulate US$59 million to further develop and expand its operations both offshore and onshore Guyana.

The company, in a press statement, said that it offered to holders of its outstanding shares, an aggregate of 45,151,338 common shares, with each requiring a payment of CAN$1.63.

“Following the closing of the offering, CGX has 334,459,000 common shares issued and outstanding,” the company said.

By the time the rights-offering exercise wrapped up on October 28, the company had raised approximately CAN$73,600,000 in gross proceeds, or the equivalent of US$59,600,000.

“Frontera Energy Corporation, an insider and the corporation’s largest shareholder, acquired an aggregate of 45,083,314 common shares pursuant to the exercise of its rights and its standby commitment under the offering,” CGX said.

The company, in its report, said that it intends to use the funds raised for the exploration and development of the Corentyne and Demerara Blocks offshore Guyana, and the Berbice Blocks onshore Guyana, and for the development of the Berbice Deep-Water Port in Guyana.

Back in April, it was reported that Frontera Energy Corporation had injected a US$19 million (approximately G$4.1B) loan into CGX to continue financing its share costs related to the Corentyne, Demerara and Berbice Blocks, as well as the Berbice Deep-Water Port (BDWP) and other budgeted costs, as agreed to by Frontera.

Already, through its wholly-owned subsidiary, Grand Canal Industrial Estates Inc. (GCIE), CGX is engaged in civil works related to the construction of the BDWP on 30 acres of land on the eastern bank of the Berbice River, adjacent to Crab Island.

The project entails the construction of an access road and connecting bridge, the relocation of utilities, and major construction of the site along the Berbice River, as well as the construction of a wharf platform measuring 220 meters in length, and 30 meters in width, with its accompanying 50-metre access trestle.

The capital cost of the project, which is set to be completed by 2023, is currently estimated at US$70 million, with an additional plan to construct heavy-lift and fabrication facilities being contemplated.