Sunday, September 7, 2025

CGX Energy Sources Short Term US$35 Million Loan From Frontera

CGX Energy (TSXV: OYL) appears to be getting bailed out by its largest shareholder. The firm late last night announced that Frontera Energy (TSX: FEC), whom owns a 77% stake in the company, would be providing it with a loan for its ongoing operations.

The loan from Frontera, whom is also a joint venture partner in the firms flagship Corentyne block off the shore of Guyana, will see up to US$35 million lent to CGX. Funds from the project are to be used for its share of costs on exploration of the Corentyne block, as well as in relation to the Berbice Deepwater Port and other budgeted costs.

While the funds are to be used partially for costs related to Corentyne, it appears that relates to the recently completed exploration via the Kawa-1 well, which cost the joint venture upwards of $140 million, yet left shareholders unhappy last week after the company plugged and abandoned the well without conducting any flow tests. The company intends to resume exploration via the Wei-1 exploration well in the second half of this year.

The timeline for that second well however doesn’t exactly jive with the terms of the loan agreement. The debt obtained last night is available for drawdown in tranches until July 31, 2022, which is also the due date of the loan – unless it is postponed by Frontera, whom has sole discretion over the matter. Interest on the loan accrues at 9.7% per annum and is payable monthly, however if the loan is extended past the due date the rate jumps to 15% per annum.

What’s more, is Frontera will be making bank off the arrangement even if full funds are not drawn, as a standby fee of 2% per annum on any funds not drawn in excess of US$19 million will also apply.

Frontera has the option to convert the principal of the loan into CFX shares at a price of C$3.10 per share on or after the due date. CGX Energy meanwhile can repay the loan with 15 days notice at any time until the due date, and must repay the debt if they issue any shares in the company without Frontera’s consent.

In guidance released last month, Frontera indicated that it intends exploration at the Corentyne block to amount to between $110 and $130 million, most of which is related to the drilling of the Wei-1 well. The Berbice Deepwater Port meanwhile is expected to cost CGX between $5 and $10 million – meaning the company still has to find significantly more capital for the exploration program planned for this year.

CGX reportedly had a cash position of $15.2 million as of December 31, while trade and other payables amounted to $41.9 million.

CGX Energy last traded at $1.84 on the TSX Venture.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Goliath Resources Hits 10.60 g/t Gold Over 22.82 Metres, Highest Grade Results In Third Distinct Rock Package At Surebet Discovery

Four Countries Control the Fertilizer That Feeds the World | Sage Potash

$10,000 Gold Is Just A Question of Time | Florian Grummes

Recommended

ESGold Outlines $24.3 Million NPV For Tailings Reprocessing Project

First Majestic Encounters 711 g/t Silver Equivalent Over 8.0 Metres In Ongoing Exploration At Los Gatos

Related News

CGX Energy Reports 210 Feet Of Hydrocarbon Bearing Sands In Santonian Horizon

CGX Energy (TSXV: OYL) has seen its joint venture with Frontera Energy (TSX: FEC) hit...

Wednesday, June 28, 2023, 08:35:01 AM

CGX Energy Obtains Extension For Spudding Of Wei-1 From Goverment Of Guyana

CGX Energy (TSXV: OYL) this morning in partnership with Frontera Energy (TSX: FEC) announced that...

Monday, November 28, 2022, 09:11:34 AM

CGX Energy Announces 200ft Net Pay For Kawa-1, Abandons 2022 Exploration Plans For Demerara

CGX Energy (TSXV: OYL) this morning released slightly more details on its Kawa-1 well, which...

Monday, February 14, 2022, 08:50:42 AM

CGX Energy Reviewing Strategic Options For Corentyne Block After 35 Metres Of Net Pay Hit In Wei-1 Well

CGX Energy (TSXV: OYL), along with its joint venture partner Frontera Energy (TSX: FEC), is...

Friday, November 10, 2023, 08:25:58 AM

CGX Energy To Hand Over Up To 4.7% Interest In Corentyne To Frontera

CGX Energy (TSXV: OYL) is again giving up an ownership percentage in the Corentyne block,...

Friday, August 11, 2023, 09:33:34 AM