THOUGHTS - AWAIT CLARIFICATIONS Wrote down some notes and thoughts about the recent Jaguar news. Will try to back this up with some articles or historical examples. Below are just my thoughts and opinions - take with a grain of salt...
First, it goes without saying I would strongly advise everyone to focus on Tullow - what they say and do - in the near term. How Tullow responds to this should be the most important indicator for CGX shareholders going forward, in my opinon.
1. Starting with the Tullow news release on July 16. Tullow states, "Whilst the primary Late Cretaceous objective was not reached, samples of light oil were recovered successfully recovered from two Late Cretaceous turbidite sands above the primary objective." As I have stated previosuly, Tullow has always been ultra conservative with their press releases (exploration related). In my opinion, if these fans were water bearing or non-commerical - Tullow would have said so in the press release.
Question - why are the partners being vague about what they have encountered in these 2 higher zones? Come on fellas - do we have a discovery here or not? Uncertain? Non-conclusive? Hmm.. It is possible the reason why the partners are being vague at this time is they want to sit down and speak with Guyana officials about the timing of a possible follow-up exploration program. It is possible that a follow up program on the Georgetown Block might involve more than just 1 well - which will obviously require adequate time, which is something that the partners do not seem to have.
Looming over all of this activity is the expiration of the Georgetown Block, which is November 2012. This is something that needs to be addressed between the partners and Guyana officials. Think about it for a second here...the partners (Tullow & Repsol) are not going to publicly come out and specify in detail what they have found in these 2 upper turbidite fans (where 'light oil' was recovered) when the Georgetown Block will be expiring within the next 4 months. Announcing a discovery in one of the shallower targets wouldn't be a smart move by the partners as other interested parties (and there are many as of late) would certainly be interesting in swooping in to take a stake in this area after November 2012. So, to some extent the partners are somewhat exposed here and will have to remain tight-lipped until the Georgetown Block expiration issues are dealt with and resolved. Certainly the partners do not want to be taking all the risk and then have another "interested part" come in to reap the awards after November 2012.
Look at Inpex, for example, in Suriname - what a mess.....
Also, take a look at the recent article that has been published in Guyana (https://www.demerarawaves.com/index.php/201207164196/Latest/tullow-stops-guyana-drilling-on-safety-concerns.html): "The Guyana government on Monday announced that they are in talks on the possibility of a second well...it added that the Guyana Geology and Mines Commission has been mandated to work with all related parties on a full analysis and determinations from information gathered so far even as it noted that evidence of petroleum occurrences was encountered...Government and operator for the consortium Repsol, continue to be engaged on the way forward, which could include a second well to achieve the intended objective of the Jaguar #1. These discussions have started as it is our intention to see an early restart of early exploration drilling by all the approved parties."
I believe everything will work out here for all parties involved (Guyana and partners). I am hopeful that some type of extension will be granted to the partners. Important to note, if there is some type of resolution that can be reached on the Georgetown Block extension - do not see the need for the partners to be "tight lipped' about releasing positive news (if there is positive news).
I am sure the current Guyana administration (along with the partners of the Georgetown Block) would find it desirable to collectively come out and publicly clarify what exactly they have found in these two upper fans where 'light oil' was recovered.
Who knows - if the extension issues are resolved we just might see the partners issue a follow up press release in the near future as to whether or not they have actually made a commerical discovery in these 2 fans where 'light oil' was found. Imagine what would happen to the SP of CGX...
2. Observe what will be said during the Tullow / Repsol conference call at the end of July. Analysts are going to be all over Tullow for follow up questions related to the Jaguar well and what their next step will be. It will be interesting to see what information Tullow will share to the public.
3. Who was buying and who was selling on July 16? Biggest net sellers were RBC at 2.2M shares, Cormack at 775k, Instinet at 493k. Biggest net buyers were Macquarie at 3.5M, Scotia at 404k, and Canaccord at 308k. Interesting to see our boy Jaime Carrasco at Macquarie at the trough...does not seem he was able to come up for air while on his buying spree of CGX shares.
4. Of course, save the best for last - CGX / PRE financial situation. I will leave this blank - as this is the number one issue that seems to be on everyone's mind and the primary reason why we are at a all time low.