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CGX Energy Inc V.OYL

Alternate Symbol(s):  CGXEF

CGX Energy Inc. is a Canada-based oil and gas exploration company. It is focused on the exploration of oil in the Guyana-Suriname Basin and the development of a deep-water port in Berbice, Guyana. The Company, through one of its subsidiaries, holds an interest in a Petroleum Prospecting Licence (PPL) and related Petroleum Agreement (PA) on the Corentyne block in the Guyana Basin, offshore Guyana. The Company, through its subsidiary Grand Canal Industrial Estates, is constructing the Berbice Deep Water Port. This facility, located on the eastern bank of the Berbice River, adjacent to and north of Crab Island in Region 6, Guyana, is being constructed on 30 acres with 400 m of river frontage. Its subsidiaries include CGX Resources Inc., GCIE Holdings Limited and CGX Energy Management Corp. It is the operator of the Corentyne block and holds a 27.48% working interest. Its Wei-1 exploration well is located west of the Kawa-1 discovery in the northern region of the Corentyne block.


TSXV:OYL - Post by User

Bullboard Posts
Post by OIL_RUNon Aug 04, 2012 5:56am
893 Views
Post# 20184340

PRE - INCENTIVE & ALIGNED INTERESTS

PRE - INCENTIVE & ALIGNED INTERESTS

With respect to the recent transactions between PRE and CGX - it may be important to look at the 'aligned interests' both companies have as well as their 'forward looking incentives'.

 

First, PRE has invested over $70M in CGX and own approximately 35% of the company.  The only way PRE is going to be able to make a return off this $70M investment is to get CGX's share price to move upwards.

 

Second, by virtue of the outstanding warrants - PRE should have a 'near term incentive' to get CGX's share price to trade over .60.  If the share price move over .60, PRE will be able to increase their ownership position from 35% to over 40% (by virture of exercising their warrants). 

 

Now, if you are looking at this from PRE's position, I am sure they want to see CGX succeed, not fail.  Also, PRE certainly does not want CGX to give away these blocks for little of nothing.  PRE, I would think, would want CGX to retain as much interest as possible moving forward in all of their blocks.  Especially, in light of recovering light oil from two turbidite fans while drilling the Jaguar-1.  PRE knows what they are sitting on with this play - PRE would not have made the investment if they did not believe in it.

 

I do not know how this will play out at the end of the day.  However, I do know CGX has a 'big brother' to back them up now - and the 'big brother' has ample cash flow coming in from existing operations / great balance sheet. 

 

Interests between both companies are alignedIncentives between both companies are in place.  This sets the playing field for a positive outcome, in my opinion.  Look forward to the future.

 

 

Bullboard Posts