CGX Energy, Frontera Energy make “successful” oil discoveries offshore Guyana
(WO) – CGX Energy Inc. and Frontera Energy Corporation, the majority shareholder of CGX and joint venture (the “Joint Venture”) partner of CGX in the Petroleum Prospecting License for the Corentyne block offshore Guyana, announced the discovery of a total of 114 ft (35 m) of net pay at the Wei-1 well on the Corentyne block, approximately 200 km offshore from Georgetown, Guyana.
The Joint Venture believes that the rock quality discovered in the Maastrichtian horizon in the Wei-1 well is analogous to that reported in the Liza Discovery on Stabroek block. Results further demonstrate the potential for a standalone shallow oil resource development across the Corentyne block. The Joint Venture has discovered total net pay of 342 ft (104 m) to date on the Corentyne block.
Wei-1 results. The Wei-1 well, located approximately 14 km northwest of the Joint Venture's previous Kawa-1 discovery, was safely drilled by the Noble Corp Discoverer semi-submersible mobile drilling unit in water depth of approximately 1,912 ft (583 m) to a total depth of 20,450 ft (6,233 m). The Wei-1 well targeted Maastrichtian, Campanian and Santonian aged stacked sands within channel and fan complexes in the northern section of the Corentyne block.
The Joint Venture's data acquisition program at the Wei-1 well included wireline logging, MDT fluid samples and sidewall coring throughout the various intervals. Based on this data acquisition program and additional information provided through the independent laboratory analysis process, the Joint Venture reported the following:
- In the Maastrichtian, Wei-1 test results confirm 13 ft (4 m) of net pay in high quality sandstone reservoir with rock quality consistent with that reported in the Liza discovery on Stabroek block. Fluid samples retrieved from the Maastrichtian and log analysis confirm the presence of sweet medium crude oil with a gas-oil ratio (GOR) of approximate 400 standard cubic feet per barrel.
- In the Campanian, petrophysical analysis confirms 61 ft (19 m) of net pay almost completely contained in one contiguous sand body with good porosity and moveable oil. Oil sampled during MDT testing as well as samples analyzed downhole confirm the presence of light crude oil.
- In the Santonian, petrophysical analysis confirms 40 ft (12 m) of net pay in blocky sands with indications of oil in core samples.
- Current interpretation of the Campanian and Santonian horizons show lower permeability than the high quality Maastrichtian, the Joint Venture believes these horizons may offer additional upside potential in the future.
There were no safety or environmental incidents throughout Wei-1 well operations.
Total costs associated for the Wei-1 well are now estimated to be within $185-$190 million following the successful implementation of several initiatives. Following the agreement reached between CGX and Frontera, the company will transfer up to 4.7% of its participating interest in the Corentyne block in exchange for Frontera's funding CGX’s unexpected additional costs associated with the Wei-1 well, which amount to approximately $16.5 million.
If the maximum transfer occurs, the company will retain a 27.3% participating interest, while Frontera will hold a 72.7% participating interest in the Corentyne block.
Conceptual field development planning completed based on results from the Wei-1 and Kawa-1 wells, the Joint Venture retained SIA, a Subsea 7 – SLB Joint Venture, to complete a conceptual field development plan for the northern portion of the Corentyne block, including subsea architecture, development well planning, production and export facilities and other considerations.
As is normal course following discoveries such as those made by the Joint Venture at Wei-1 and Kawa-1 wells, additional appraisal activities will be required before commerciality can be determined. While such additional appraisal activities will be necessary, as a result of the third-party analysis of the Wei-1 well test results, the Joint Venture believes that a potential development of the Maastrichtian horizon may have lower associated development costs and be completed on a faster timeline than a broader development of both the shallow and deep zones on the entire Corentyne block.
The Joint Venture also announced that Houlihan Lokey, a leading global investment bank and capital markets expert, is supporting active pursuit of strategic options for the Corentyne block, including a potential farm down, as it seeks to develop this potentially transformational oil investment in one of the most attractive oil and gas destinations in the world today, Guyana.
Professor Suresh Narine, Executive Co-Chairman of CGX's Board of Directors, commented, “These are exciting times for the Joint Venture. The Wei-1 well met the Joint Venture’s expectations with the successful discovery of oil. Wei-1 also delivered a tremendous amount of data, which the Joint Venture is now incorporating into its geologic and geophysical models to update its initial evaluation of Kawa, and the potential in the Maastrichtian in particular, as well as its view of the potential of the remaining undrilled prospects including the prospective areas in between the Wei-1 and Kawa-1 wells. Armed with this information, the Joint Venture is levering Houlihan Lokey’s extensive expertise in the global O&G sector to complete a strategic review of options for the Corentyne block in one of the most exciting exploration basins in the world.”