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CGX arranges to borrow $35mn from parent

company to cover cost of Guyana projects

CGX Energy (Canada) has arranged to cover
its share of costs for several projects in Guyana
under a financing agreement with its parent
company Frontera Energy.
Frontera revealed that it had struck a deal
with CGX in a statement dated March 11. Under
the new agreement, it said, the latter company
will be able to borrow up to $35mn for the pur-
pose of financing its portion of expenses related
to exploration work at the offshore Corentyne
block, the construction of the Berbice deepwa-
ter port facility and other budgeted expenses as
agreed with Frontera.
CGX’s assets will serve as security for the
loan, it noted.
Frontera went on to say that CGX would be
able to access the loan funds in tranches on a
non-revolving basis, either until July 31, 2022,
or until it has withdrawn the maximum amount
permitted, whichever occurs first. It also stated
that the credit was due to be repaid on July 31
of this year and would carry an interest rate of
9.7% per annum.
The repayment date can be postponed, it
added, but if so, the interest rate will be increased
to 15% per annum.
According to the statement, the financing
agreement also includes provisions for early
repayment at CGX’s discretion and options for
using stock to settle arrearages.
Frontera and CGX are shareholders in the Georgetown says the partners must drill at Demerare and Berbice (Image: Frontera)
Corentyne and Demerara blocks offshore Guy-
ana. They have divided equity in the two projects project. “We are pleased to complete this financ-
66.67% to CGX and 33.33% to Frontera, which ing agreement in support of our joint venture
is also the majority shareholder in the former as we build momentum towards spudding the
company. The partners have found oil in Kawa- Wei-1 exploration well in the second half of this
1, their first exploration well at Corentyne, and year,” Cabrales remarked. “These are exciting
are gearing up to drill Wei-1, the block’s second times for our joint venture, and we look forward
exploration well, later this year. To date, though, to working with our partner CGX as we build
they have not made any concrete plans for on our recent exploration success at the Kawa-1
exploration drilling at Demerara. exploration well and generating value for our
Meanwhile, CGX is working to build the shareholders and the people of Guyana in one
Berbice Deepwater Port through its whol- of the most exciting basins in the world.”
ly-owned subsidiary Grand Canal Industrial Professor Suresh Narine, the executive
Estates (GCIE). co-chairman of CGX, also expressed optimism
This port facility, which will be built at a site about developments related to Corentyne. “The
nearly 5 km away from the mouth of the Berbice Kawa-1 exploration well represents a trans-
River, will support oil and gas projects in Guy- formative discovery for CGX, in partnership
ana’s offshore zone. with Frontera,” he said. “With positive results
GCIE has indicated that it will make the port and data supporting the 200 feet [61 metres] of
available to oil companies involved in separate net pay indicated, we have de-risked our explo-
projects offshore Guyana and its neighbour to ration programme and can continue to move
the east, Suriname. forward with our overall plans, beginning with
Orlando Cabrales, the CEO of Frontera, Wei-1. We look forward to adding to our posi-
said he expected the financing agreement with tive momentum and creating value and oppor-
CGX to lend extra momentum to the Corentyne tunity for our stakeholders.” ™

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