CGX lauds Guyana as being endowed with petroleum wealth
–Says overall, increase in exploration activity is good for the growth of the Guyana economy.
CGX Resources Inc. was founded in 1997 by Mr. John Cullen, a Canadian Citizen, and Dr. Edris Kamal Dookie, a Guyanese Citizen. The company received and or acquired a number of Petroleum Prospecting Licenses (PPL) in 1998 – The Pomeroon PPL, The Corentyne PPL, The Annex PPL (now Demerara PPL), the Berbice PPL and a 25% interest in Georgetown PPL.
CGX currently holds an interest in three Petroleum Agreements (the Corentyne, Berbice and Demerara Blocks) covering approximately 3.3 million gross acres offshore and onshore Guyana. The Pomeroon PPL was voluntarily released by the company in 2012 due to border sensitivities.
The Georgetown PPL expired in November 2012.Incidentally, the current Exxon Mobil PPL on which hydrocarbons have been discovered was also granted in 1999. Both CGX and Exxon Mobil have been in this basin a long time.
The company is a public company, and is traded as CGX Energy Inc., under the ticker symbol OYL, on the Toronto Venture Stock Exchange. This means that the company is owned by its shareholders, who change quite regularly, and its board of directors serves at the pleasure of those shareholders and is elected annually at the company’s annual general meeting.
The company’s shareholders are not secret, and can be determined by a simple application to the Ontario Securities Commission. It operates under very strict reporting guidelines, set by the Toronto Stock Exchange and the Ontario Securities Commission.
Being a public company allows any individual, including Guyanese nationals that meet the guidelines set out by the exchange, to trade in CGX’s shares.
In an interview with the News Room (NR) , we get to know more about the company and its operations here through one of the directors, Dr. Suresh Narine (SN).
NR: Dr. Narine, you wear many hats, as is well known in Guyana – how did you get involved with CGX?
SN: My own involvement with the company began in January 2012, when I was invited by its board and founders to join the board of directors. At the time, I was not very familiar with petroleum exploration companies, although I understood very well the Physics of seismic exploration and the Chemistries involved. My interest at that time related more to the company’s environmental footprint and its social responsibility programs.
So I agreed to join the board as the Chair of the Health, Safety and Environmental Committee and the Corporate Social Responsibility Committee. In December 2012, I was asked by my fellow board members to assume the Executive Chairmanship of the company during a particularly difficult financial period in the company’s history.
We had drilled the Eagle Shallow well which did not yield commercial hydrocarbons, and our partnership well with Repsol, Tullow and YPF, the Jaguar well on the Georgetown license, had to be plugged and abandoned before we reached the planned total depth of the well, due to very high pressures. The company’s stock plummeted after this disappointment to our shareholders, and during this difficult period, I was asked to assume the Executive Chairmanship, to help tide the company over these troubled waters.
In February 2013, we were able to secure a major funder, Pacific Rubiales Energy Corporation (PRE), after an intense period of negotiation. I joined the 4 person Executive Committee of the Board of Directors, and became the Co-Chairman of CGX Energy, in the re-constituted board following the funding arrangement with PRE.
NR: Despite CGX Energy being a small company compared to, for example, Exxon Mobil, you have a very large footprint in Guyana and a very recognizable brand, why is that?
SN: Perhaps because out of all the companies existing in the basin, CGX Energy has been the most active in terms of exploration, and perhaps also because we have been the most active in Corporate Social Responsibility partnerships with Guyanese.
We have to date spent more than US $350 Million on exploration in the basin; this is more than any other company has spent to date in this basin on exploration. We are solely focused on our Guyana acreages, so all of our activities are concentrated here. We have drilled six wells in total – the Horseshoe Well (this one is famous because we were chased off of that well before we acquired total depth by a Surinamese gunboat).
Actually, it is little known, but during this period when Suriname challenged our national borders, CGX stood with the people and Government of Guyana in its appeal to the United Nations Law of the Sea Tribunal, and footed the entire legal bill, amounting to approximately US$10 Million. Of course, Guyana was victorious and so it was money well spent.
We also drilled the Eagle Shallow well, and held a 25 % partnership in the Jaguar well. Horseshoe, Jaguar and Eagle Shallow were all drilled offshore in the sea. We also drilled three onshore wells – the Hermitge, Albion and Yakusari wells.Since I got involved in 2012, we have spent more than US$ 0.5 Million on our corporate social responsibility initiatives, mostly in the educational sector in Guyana.
We are the only oil exploration company operating here, with a Guyanese country manager, a Guyanese Co-Chairman and additional Guyanese board member, Dr. Dennis Pieters (a petroleum engineer by training). It’s perhaps no wonder we are considered by many to be Guyana’s national oil exploration company.
NR: I was surprised to learn that CGX owns a wharf facility and a staging facility, in Berbice. How does this fit in with your exploration business?
SN: Shore facilities are of crucial importance to both exploration and production of petroleum offshore. We own a 16 acre logistics yard, in Palmyra, Berbice, and a deep water harbor facility at the mouth of the Berbice River. Whilst most exploration companies would normally seek to rent such facilities, CGX chose to develop them from scratch because of our focus on national development and investment in the future of Guyana. These facilities have all necessary environmental and commercial licenses. The facilities are owned, operated and managed by CGX’s wholly owned subsidiary, Grand Canal Estates. The facilities are not only focused on petroleum – we anticipate that these facilities shall also serve the infrastructure road projects which are being contemplated from Brazil to Guyana, and also our Agricultural and mineral industries. We have lately received significant interest from other companies to partner with us on further developing these facilities, and we will be consulting with the Government to ensure that these facilities are developed in a fashion which allows us as a country to take full advantage of a commercial deep water facility.
NR: What does the Exxon discovery of a rich hydrocarbon system mean to CGX?
SN: This is of course welcome and wonderful news, not to just CGX, but to all Guyanese. To CGX, it is an endorsement of the efforts we have made over the past 18 years, and it finally has definitively shown what we at CGX have known all along: Guyana is endowed with petroleum wealth. Our most sincere and hearty congratulations are extended to Exxon Mobil and its partners in this well. From a purely CGX perspective, this is indeed great news, given the close proximity of Exxon Mobil’s Liza-1 well to our two offshore blocks (Corentyne and Demerara). Our next planned well on our Corentyne basin targets and has always targeted, even before the Exxon discovery, similar geological objectivesas did the Liza-1 well. This discovery will now allow CGX and other companies in the basin to better calibrate their exploration efforts, and to a great extent reduces the exploration risk in the basin. This all will result in increased chances of other companies also finding hydrocarbons in their own acreages, and will result in increased exploration activity in the basin.
Overall, increase in exploration activity is good for the growth of the Guyana economy.