13. Guyana Offshore – CGX back in game

Guyana - Berbice Canyon and Basin Plain - Gustavson Associates 2008 - Fig 4-9 - MCAL
Guyana - Berbice Canyon and Basin Plain - Gustavson Associates 2008 - Fig 4-9 - MCAL
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Guyana – Berbice Canyon and Basin Plain – Gustavson Associates 2008 – Fig 4-9 – MCAL

13. Guyana Offshore – CGX back in game – V.290717

Contents (4):

0. Arrangement (Petroleum Prospecting License) of Guyana with CGX and ExxonMobil – My note -July 28, 2017

1. CGX back in the game; looking to drill 6 wells over next 2yrs offshore Guyana – from Oil Now – April 23, 2017

2. CGX Energy to restructure debt ahead of future oil exploration in de-risked Guyana basin – from Business News – May 2, 2017

3. CGX acreage, prospects, leads map – from CGX Energy Inc. – July 2017

4. http://www.cgxenergy.com/cmsAssets/docs/analysts/Tudor%20Pickering%20Holt%20Co%20International%20LLP/TudorPickeringHoltCo-TheGuianas-Mar18-11.pdf

0) Arrangement (Petroleum Prospecting License) Guyana Government with CGX and ExxonMobil.

The contents of the arrangement that the Guyana Government in 1999, has signed and apparently recently renegotiated with ExxonMobil, has never been published.

Therefore there is a lot of uncertainty and public discussions on transparency going on regarding this important item.

This to know how much money Guyana would get from its offshore production.

Previously, in 1998 Guyana signed an arrangement (PPL) with CGX.

My educated-guess is that the arrangement signed with ExxonMobil in 1999 could resemble the arrangement signed previously with CGX.

The contents of this PPL can be found by researching Internet publications.

The Petroleum Prospecting License (PPL) was signed between CGX Energy,Inc.(Company) and the Government of Guyana (Government) on June 24, 1998.

The main articles are:

Cost recovery production allocation is as follows.

Maximum Cost Recovery is 75% during the first 3 years, afterwards 65%.

Profit Oil Split (Developer Share): During the first 5 years, 50% for the first 40,000 b/d. And 47% for Production above 40,000 b/d. After 5 years, 45 % for all production.

The Developer does not pay income tax. The PPL provides that the income tax is paid from the Government’s share of the profit oil.

The Company has an exemption from VAT, exercise taxes, duties, fees, levies and from property tax.

The Company does not pay royalty. This is considered to be included in the Government’s share of profit oil.

Training expenses of US$ 40,000 per year are required, only during the exploration period. These are qualified as exploration expenses.

Annual license rental payments of US$ 40,000 per year are required during the exploration and production period.

In my opinion this represents a very good deal (arrangement) for the Company.

And a rather ” inconvenient deal ” for the Government.

Tip that can benefit a country with billions of US$:

Always be so diligent to first design, negotiate and only later sign your own PSC.

Customised with those clauses and articles you wish to have.

Consult e.g. with a clever and seasoned PSC and E&P specialists and advisors with worldwide experience. Once signed it is extremely difficult to change and adapt it substantially.

From what I perceive from publications the Government did recently renegotiate the original PPL with ExxonMobil and obtained somewhat better conditions.

Including a royalty and a 50% – 50% overall share.

One would assume that the original 1999 PPL was rather favourable for ExxonMobil. Given that it was signed in a period when there was relatively little interest of IOC’s in offshore Guyana.

As is usual in such cases and in high risk, still non-oil-proven basins, it is to be assumed that Guyana has granted rather favourable (“soft”) conditions to ExxonMobil. In order to attract exploration investments with a clear work program, including seismic and drilling.

Now that it has become a proven basin, it is a different ball game.

Contracts with new entrants could be negotiated with a much better share for Guyana.

By focussing on items such as the royalty percentage, ring fencing, the ceiling for cost recovery. By drastically optimising its profit share, from the ‘ profit oil “, immediately after the IOC has recouped its investments from the ” cost oil ” .

Financial engineering, valuation and cash flow modelling, in tandem with the expected production profiles from the fields are fundamental in this respect.

The main objective of Guyana should be to maximise its petroleum wealth by encouraging appropriate levels of offshore activities.

To this end Guyana must design a robust fiscal system with for example the following characteristics. It should provide a fair return for both the state and the international companies. It has to be clear and avoid undue speculation, just as is now frequently surfacing in the press. Administration has to be efficient without undue rules, permits and burdens. At the same time it should provide enough flexibility and create a healthy, competitive competition and market efficiency.

A much different Petroleum Sharing Contract is certainly highly recommended in my opinion.

Marcel Chin-A-Lien – Advisor Petroleum Exploration & Production, Business-Commercial-Policy Development, PSC’s.

”  All-in-1 Consultant,  Available-to-Serve-You.

For grounded, vintage stewardship to successfully find lots of oil, mineral resources, develop your business and get sustained value for money ?

See <Contact & Contract Me> at marcelchinalien@gmail.com “.

Doei, salu2, ciao, até logo, grüssen, cordialement, salut, добрый день, ajoo, tur kos bon mi dushi hendenan na Switi Sranan i mi famiri na switi Korsou, tan bun allamala !

1) CGX back in the game; looking to drill 6 wells over next 2yrs offshore Guyana
By Oil Now – April 23, 2017

CGX holds the 2nd highest number of blocks in the Guyana-Suriname Basin.
Canadian-based oil and gas exploration company CGX Energy Inc. will soon recommence exploration work offshore Guyana and aims to drill as much as 6 wells over the next two years. CGX had come up empty-handed on previous attempts to hit a payload offshore the South American country, and that, coupled with changing financial conditions with its major shareholder, Pacific Exploration, saw a halt in further exploration activities.

But all that has changed. ExxonMobil and its partners have derisked the area by making significant discoveries of high quality crude in a location known as the Stabroek Block and prudent financial management has seen the fortunes of CGX/Pacific Exploration improving, moving from zero market capitalization to $2.5 billion.

Dr. Suresh Narine, CGX Chairman, says the company is now making a major comeback.

Photo:

Guyana Offshore - CGX - MCAL
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Guyana Offshore – CGX – MCAL

Dr. Suresh Narine speaking at Guyana’s first oil and gas conference in March
“This is an extremely healthy company and suddenly CGX is back in the game,” Dr. Narine said.

The oil and gas junior has spent the past four months redoing its geology and is on the verge of recommencing drilling. “Our work plan calls for two wells offshore within the next 2 years. I can tell you that we are looking at six,” he said.

The CGX Chairman made these disclosures to participants of Guyana’s first oil and gas conference and exposition held in March at the Guyana Marriott Hotel. The conference, the next of which is scheduled for March 18-20, 2018, was organized by the Guyana Oil and Gas Association (GOGA).

2) CGX Energy to restructure debt ahead of future oil exploration in de-risked Guyana basin

The cash-strapped Canadian oil exploration company, CGX Energy, continues to borrow monies from its shareholder to stay afloat, and indicated that future oil exploration offshore Guyana would depend on restructuring its multi-million debts to several companies.

Now that American oil-giant, ExxonMobil, has found more than two billion barrels of oil offshore Guyana, CGX Energy hopes that will be an incentive for debt restructuring and further exploration. “While the global downturn in petroleum prices has significantly affected the company over the past two years, the de-risking of the Guyana basin through multiple large discoveries has simultaneously provided enough buoyancy to allow the company to take steps to restructure its debt and prepare to continue exploration,” CGX  said.

The highly indebted CGX Energy has suffered a delay in carrying out further exploration offshore Guyana and hopes that government will favourably consider its request for a new date. “Pursuant to the terms of the Petroleum Prospecting Licences (“PPL“) governing the Corentyne Block, the Company is currently negotiating the terms of an extension of the spud date for its next exploration well on the block. The previous spud date was July 1, 2016,” the company said.

CGX  says it continues to negotiate with its trade creditors, including with respect to the approximately $14.4 million owed to Japan Drilling Co., Ltd. (excluding interest), approximately $9.5 million owed to Prospector PTE. Ltd. (excluding interest), and the approximately $2.9 million owed to Teikoku Oil (Suriname) Co., Ltd. (excluding interest), with a view to determining how to address these significant payables in light of depressed oil prices.

Between March 2016 and April 2017, the company has borrowed a total of 7.1 million Canadian dollars from its major shareholder, Pacific Exploration & Production Corporation, to fund  mainly “monthly general and administrative expenses.” If CGX Energy does not pay the loans, which attract interest rates of 5 percent, then Pacific “has the right to take a pledge of shares of CGX’s subsidiaries.”

The company also announced that Executive Director, Professor Suresh Narine has been given the green-light to purchase shares in the company.

“In conjunction with his appointment, the Board of Directors has agreed to grant Professor Narine incentive stock options to purchase 1,000,000 common shares of the Company. The stock options will be granted on May 2, 2017 pursuant to the Company’s stock option plan and will be exercisable at a price equal to the closing market price on such date.  The options will expire on May 2, 2022,” CGX Energy said in announcing the release of its audited consolidated financial results 2016.

3) CGX acreage map – from cgxenergy.ca/At-A-Glance.aspx – July 27, 2017

Guyana - CGX - acreage map - MCAL
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Guyana – CGX – acreage map – MCAL
Guyana - CGX - Prospects and Plays - MCAL
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Guyana – CGX – Prospects and Plays – MCAL
Guyana - CGX prospects - Gustavson Associates 2008 - Fig 4-3 - MCAL
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Guyana – CGX prospects – Gustavson Associates 2008 – Fig 4-3 – MCAL

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Guyana - CGX prospects - Gustavson Associates 2008 - Fig 4-3 - MCAL
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Guyana Basin – Stratigraphic Column – CGX 2007 – MCAL

 

Guyana – CGX – Seismic section illustrating basin play concepts and main targets

Guyana - CGX - Equatorial Atlantic Margin Play - MCAL
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Guyana – CGX – Equatorial Atlantic Margin Play – MCAL
Guyana - Berbice Canyon and Basin Plain - Gustavson Associates 2008 - Fig 4-9 - MCAL
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Guyana – Berbice Canyon and Basin Plain – Gustavson Associates 2008 – Fig 4-9 – MCAL

4)

 

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