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TORONTO, May 7, 2012 /CNW/ - CGX Energy Inc. (TSX-V - OYL) ("CGX" or the "Company") announces the results of the drilling of the Eagle-1 well on the Company's 100% owned and operated Corentyne Petroleum Prospecting License ("PPL"), offshore Guyana. The Eagle-1 well reached total depth of 4,328 metres on April 25th in the upper Cretaceous Maastrictian geologic zone on an 8 ½ " diameter hole and with synthetic oil based mud drilling fluid. During drilling, the Eagle-1 well encountered oil and gas shows through the objective Eocene and Maastrichtian geologic zones and at the, yet to be confirmed, Oligocene zone indicating an active petroleum system where generated hydrocarbons have migrated through the pre-Miocene section drilled by the well. Although wire-line logs provided encouraging results with high resistivities correlating with sandstones that had encountered oil shows, additional open hole logs were necessary to determine the nature of the fluids in those zones. Hence, CMR (combinable magnetic resonance) and MDT (modular formation dynamics) were run and both logs identified the presence of good quality sandstone reservoirs that unfortunately proved to be water bearing. Further analyses will be conducted to verify the geological age of the drilled section as well as the chemical composition of the recovered fluids.
The Eagle-1 well was initially budgeted for 60 days of drilling but experienced weather delays and mechanical issues which extended operations for approximately an additional 30 days. The initial cost estimate for the Eagle-1 well was $55 million, however with the delays the Eagle-1 well is now estimated to cost $71 million. As a result, the Company will need to raise approximately $20 million in the near term.
The Jaguar-1 well on the Georgetown PPL in which CGX has a 25% interest with partners Repsol Exploración S.A (operator), YPF Guyana Limited and Tullow plc, continues. Total depth for the well is projected at 6,500 metres to test the Turonian geologic zone. The Jaguar-1 well was spud on February 9, 2012 and is expected to take 180 days. Drilling operations are progressing as planned.
Kerry Sully, President and CEO, stated, "Although the results of the Eagle-1 well are disappointing for all stakeholders, this test has gathered valuable information that will assist CGX with determining the drilling location for its next well to be drilled on the Corentyne PPL and for other future targets. The Company's geosciences team has been interpreting the recently acquired 3D and additional prospects have been identified. In addition, the team has established that the up-dip termination of our Eagle Deep Turonian prospect is at a shallower depth than originally anticipated. Now that the Eagle-1 well has finished drilling and in response to expressions of interest, CGX is re-opening the data room to re-start the joint venture process."
CGX Energy is a Canadian-based oil and gas exploration company focused on the exploration of oil in the Guyana-Suriname Basin, an area ranked second in the world for oil and gas prospectivity by the United States Geological Service. CGX is managed by a team of experienced oil and gas and finance professionals from Guyana, Canada, the United States and the United Kingdom.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Forward-Looking Statements:
Certain of the statements in this news release may contain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking information is necessarily based on a number of factors and assumptions that, while considered reasonable by CGX as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of CGX contained in this news release, which may prove to be incorrect, include that the drilling operations at the Eagle-1 well on the Corentyne PPL and the Jaguar-1 well on the Georgetown PPL continue as CGX expects, including with regard to costs, and other factors and assumptions set out in CGX's Annual Information Form for th year ended December 31, 2010 (the "AIF"). Many factors, known and unknown, could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. Forward-looking information is based on the opinions and estimates of management at the date the information is provided, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those contemplated by the forward-looking information. Such risks and uncertainties include, but are not limited to, the inherent risks involved in the exploration and development of oil and natural gas properties and the possibility of unanticipated costs and expenses. For a description of the risks and uncertainties facing CGX and its business and affairs, readers should refer to CGX's AIF and subsequent Management's Discussion and Analysis. CGX does not intend, and does not assume any obligation to update forward-looking information except as required by law. Accordingly, readers are cautioned not to place undue reliance on forward-looking information.
For further information:
Kerry Sully, President and CEO
(604) 733-9647 or ksully@cgxenergy.com
Charlotte May, Communications Manager
(416) 364-3353 or cmay@cgxenergy.com