FACTS & OPINIONS Tough week for CGX. Let's review the facts:
1. From communications with Charlotte (CGX) - we know Repsol needed more than 15% to continue operating the Georgetown block. As such, CGX sold 5% of their interest to Repsol. Recall, this was signed off by both parties - but, needed Guyana's approval.
3. For whatever reason - the deal did not go through.
4. If you look at the recent November presentation from Repsol and Tullow - the Georgetown Block continue to be a 'core exploration area' for both companies.
5. Last week, Tullow issued a press release (followed up by a Q&A session) stating they have let their interest in the Georgetown Block expire (note, the Georgetown Block expired in November 2012). In addition, Tullow clarified during their Q&A session last week they are focused on oil exploration (not gas). Though, they are looking at opportunities in Guyana and the wider region.
6. Seperately, YPF and Repsol are very much at each other's throat. Numerous law suits continue to be filed by Repsol. I want to emphasize this point - Repsol (several months ago) even filed a lawsuit against Chevron. Reason being, Chevron joint ventured (or bought into) a YPF asset in Argentina - which Repsol once had interest in.
PERSONAL OPINION:
1. Who knows what is going on behind closed doors... But, if I were CGX (and Guyana for that matter) - I would be more keen on teaming up with Tullow than Repsol. Tullow, has drilled more exploration wells along the trans-atlantic margin than any other exploration company (and have been very successful). Tullow knows what they are doing and their track record speaks for themselves. Repsol, in my opinion, do not have the same experience (or success) pursuing this play type compared to Tullow...period.
2. Without doubt - I think YPF wants out of their international holding (including Guyana). If you look at their corproate strategy and recent presentation, YPF is focused on one thing - getting domestic activity and production levels up. YPY has recently raised capital to meet their domestic drilling requirements, initated JV partners, and will likely disposed of non-core (international) assets.
Hence, if YPF wants out - it was a very smart move to let the Georgetown license expire. Certainly, do not want Repsol coming back and filing lawsuits (like what happened with Chevron) against the Georgetown future partnership.
Just my thoughts and opinions. Take with a grain of salt.