Interview DAVID PESCOD'S LATE EDITION (OCT. 28TH)AN INTERVIEW WITH JOHN CLARKE: VP BUSINESS DEVELOPMENT FOR CGX ENERGYJohn Clarke was for two years one of Canada’s top-ranked oil and gas analysts. He took an interesting position two years ago with CGX Energy as Vice President, Business Development. We have been following the CGX story for 13 years and it looks like in the next couple of months, finally, we will know whether it was worth the wait and the excitement.David Pescod: John, can you tell us the background of the two plays that you will be looking at shortly and how big they might be?John Clarke: Certainly David. The first play that we will be drilling is the Jaguar prospect, which is on our Georgetown Block in which we hold 25%. This is operated by Repsol and our other partners are Tullow and YPF. The target in this case is the Turonian sea floor fan, which is analogous to the Jubilee field offshore Ghana, and more recently has been migrated to the other side of the Atlantic with Tullow’s successful Zaedyus well in French Guiana. That is the number one target and it is a billion barrel prospect. This is a 700 mmboe prospect according to Angus Mccoss from Tullow, and since the discovery in French Guiana he likens Jaguar to Zaedyus as a super-fan, very similar in size and potential. So, you can look at 700 mmboe to a 1,000 mmboe as a P50 case. The second well that we will be drilling now we have completed our financing, will be a shallower well on our 100%-owned Corentyne Block that we call Eagle Shallow. It has two prospective targets, the primary Eocene, which is a tertiary turbidite fan and a secondary Maastrichtian target. The Eocene turbidite looks good on seismic but is higher up in the section than the Turonian which is a Cretaceous play. Below the Eocene, we have a Maastrichtian prospect that we plan to drill also, and if you remember your history from CGX Energy, this was shown to be a productive horizon in 1975 when Shell drilled the Abary well and lost control of it in the Maastrichtian, but recovered light oil (37 degree API). So, those are the two wells that we will be drilling and the second one is 100% interest and the Eocene target is in the hundreds of millions of barrels range. So not quite as big as the Turonian, but still very important as we have 100% of it.DP: For those who have been following this play for 13 years, other developments in the next week or two might make a difference. Right beside you Inpex, the Japanese firm, is drilling in Suriname. What do we know and what is their timetable?JC: As you know, the rig they are using, the Atwood Beacon, is to come to Georgetown as soon as it’s finished drilling in Suriname. The interesting thing in the Inpex case is that their target is neither the shallow Eocene nor the deeper Turonian, but is in fact an Albian carbonate prospect that has been very successful for OGX in the Campos basin offshore Brazil. This is an 18,000 foot well, and it’s behind schedule, but to the best of our knowledge it should TD early in November. If it is successful, Inpex will have a testing program that could go from two to four weeks and then with that finished, the rig will move over to Guyana from Suriname. So we expect we will be able to spud the well before year-end.DP: Now if Inpex is successful, does that mean the odds are better for CGX Energy?JC: Well, it opens up another play in the Albian, and we have two prospects on our 100% Corentyne PPL and two leads on our 25% Georgetown PPL. So we have the potential for four such Albian accumulations if Inpex is successful. This year we engaged DeGolyer and MacNaughton to do a resource report and the P50 case that they put just on our Corentyne prospects only was a 325 million barrels best estimate.DP: The one thing we are learning about drilling in these waters is that these are not cheap wells and they don’t get done quickly.JC: That has been the experience thus far, although Murphy did drill two wells on time but delays due to waiting on weather delayed moving the rig. It was drilling in the early part of the year and sea conditions were such that the rig could not be moved to the next location. The 70 days of extra time held the rig back before it could be moved to Inpex. Subsequently, Inpex have had delays in drilling, not weather related, but mechanical in nature and they have been drilling rather slowly. We believe they are approaching their primary Albian target having drilled through their secondary Maastrichtian target and should TD soon.DP: How long do you think it’s going to take to drill these two wells for CGX Energy?JC: The CGX well on Corentyne will is the Eagle Shallow well. It will not go down to the high temp, high pressure Turonian zone that we are anticipating on the Jaguar well. Thus, we are planning a 40-day well to approximately 15,000 ft and if we can get a rig into there and spud the well before the end of the year, the results from the Eagle Shallow should come before Jaguar. The Jaguar well is anticipated to take 180 days for the deeper test to approximately 22,500 ft level.DP: And the budget for that well?JC: The budget for the Jaguar well is around $160 million for the deep, HTHP well and approximately $40 million for the Eagle Shallow well.DP: You know it’s amazing when you give numbers like this, that all this money can be spent and yet the oil and gas guys can produce gas for only $1.20 a litre or thereabouts.JC: That comparison gets a little muddy, because the crack spread between crude and the products that are made is hard to predict but usually not terribly healthy - it’s a volume business. Especially in Canada and Europe, product prices are not 100% related to the crack spread, it is more related to the government taxation in whatever zone you are in. So if you go driving in the U.K. or Europe, you will be paying about twice as much for gasoline as you would in Canada, which is a little more than you pay in America. You are not dealing with apples and apples here, so I don’t want to comment on the downstream section of the business. However, with oil prices where they are now (especially if you can get the Brent pricing as opposed to WTI) I think you will get very healthy returns almost everywhere if you are drilling for light sweet crude.