CGX Energy Finally Spuds Wei-1 Well After Months Of Delays
After months of endless delays, CGX Energy (TSXV: OYL) is reporting this morning that it has finally managed to spud its next exploration well off the coast of Guyana.
CGX, in partnership with Frontera Energy (TSX: FEC), has finally begun drilling out the Wei-1 well on its Corentyne block. Found 200 kilometres offshore from Georgetown, the well was initially slated to be spud in the third quarter of 2022, but was subjected to several delays related to financing and the availability of a drilling rig.
A financing package agreed to with Frontera in July pushed the timing of the well back to the fourth quarter, while at the same time the firm lost majority control of the concession. In exchange for US$130 million in funding for the well, as well as US$29 million in additional expenses, CGX gave up a 29.73% interest in the concession. The firm then gave up a firther 4.94% interest in the concession as a means of settling an outstanding US$19 million convertible loan from 2021, as well as a US$35 million loan from 2022.
All told, CGX now has just a 32% stake in the concession as it finally begins working towards developing it. Frontera meanwhile is the majority owner with a 68% stake.
READ: CGX Energy Loses Majority Interest In Corentyne Block In Attempt To Fund Exploration
Signs of a further delay then appeared in November, when CGX revealed that it had requested an extension from the Government of Guyana on the timeline to drill the Corentyne block, with the permit previously expiring on November 27. The extension was granted, giving the firm until January 31 to spud the well.
The well itself is said to target three zones, and will be drilled to a depth of 6,248 metres in waters that are estimated to be 583 metres deep. Total depth is expected to be reached in 4-5 months time. The well itself is located 14 kilometres from the firms Kawa-1 light old and condensate discovery.
An appraisal plan for the northern section of the block meanwhile has been approved by the Government of Guyana, enabling the joint venture to consider future wells under the appraisal program on the property. Further drilling however will be dependent upon the success of the Wei-1 well.
“The Joint Venture is pleased to announce that it has spud the Wei-1 well, offshore Guyana and that the Government of Guyana has approved the Joint Venture’s appraisal program. Wei-1 will appraise both the Kawa-1 discovery as well as explore additional opportunities within the Corentyne Block. The Wei-1 well is on-trend, and well positioned for success with both Kawa-1 and recent peer discoveries immediately adjacent to the northern section of the Corentyne block,” commented Executive Co-Chairman Suresh Narine.
CGX Energy last traded at $1.80 on the TSX Venture.
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