Frontera Q1 earnings .... surprising no one postedExtract taken from the Frontera Q1 2021 Earnings report.
I'll now turn the call over to Orlando Cabrales, who will discuss our first quarter 2021 operating and financial results.
Orlando Cabrales.
First..... Other business disclosed in Brazil/
Secondly, I'm excited about the advances we are making to realize our substantial exploration opportunities. On April 21 of this year, Frontera, through its majority owned subsidiary a joint venture with CGX Energy announced that CGX as operator of the Corentyne block offshore Guyana enter into an agreement with Maersk Drilling Holdings Singapore for the provision of a semi-submersible drill drilling unit the Maersk Discoverer and associated services to drill the Kawa-1 well. The joint venture is preparing to drill the offshore Kawa-1 well early in the third quarter of this year. The primary target for the Kawa-1 well is a Santonian age, a stratigraphic trap, interpreted to be analogous to the discoveries immediately to the east on block -- to the east on Block 58 in Suriname. The Kawa-1 well is anticipated to be drilled on a total depth of approximately 6500 meters in a water depth of approximately 3700 meters.
Frontera Q1 2021 Earnings report - Question-and-Answer Session
Operator
Thank you. [Operator Instructions] We will pause for just a moment to compile the Q&A roster. [Operator Instructions] And your first question will be from Anish Kapadia at Hannam. Please go ahead.
Anish Kapadia
Hi, thanks for taking my questions. I had a couple of questions around here on if you can help. First of all, could you just explain how the $25 million deed of guarantee will work in Guyana, just talk a bit more around that structure and why that's in place? And my second question is, is more to do with your exposure into the Guyana well, you've got some very significant cost exposure at the moment. Can you explain your thinking about around drilling these wells with your current equity versus potentially farming down to reduce some of the risks? Thank you.
Orlando Cabrales
Let me take that question part of the question and maybe the -- yes, I can now start with that. Well, we consider -- we continue sorry to consider a range of strategic options to progress our exploration program in Guyana. That should maximize and look to maximize the value for our shareholders. In our Guyana exploration guidance as you know for CapEx collars are ranged from the $40 million to $90 million which show you that we are building in the flexibility to accommodate various strategic options to progress the exploration program.
So, at this point-in-time Frontera is comfortable with a 33 participation interest on the block. We look forward through a joint venture with CGX to start the Kawa-1 well, here being the third quarter as I already had mentioned in my remarks. We are excited about the Guyana Basin, is a leading offshore oil opportunity that has affected interest from some of the biggest oil and gas companies in the world. We are excited also about the world class perceptivity of our blocks. So, that is what I can say at this point in time.
And the guarantee as I mentioned in my remarks, where we are targeting first spot the world in this quarter CGX signed the disagreement with Maersk back in on April 2021. And so, under that arrangement Frontera provided our company a parent company guarantee which covers the operating rates under the CGX Maersk contract. So, that was the rationale of the guarantee. And that, has a sliding scale. So, as we make progress on the execution of the contract, the amount of the guarantee will be reduced in quantity and to a minimum of $10 million. So, I don't know Gabriel if you want to say anything more on that. But that would be my response to your question. Well, thank you for that.
Gabriel Alba
Yes. I will just add to what Orlando has said that that indeed, Frontera and CGX continue to move forward. Doesn't mean that there could be some other potential avenues in the context of strategic opportunity to catch up but at the moment, we're comfortable continue to move forward. And in the context of the warranty, it was well negotiated in its normal course. And as Orlando has said it gets reduced as progress takes place.
Anish Kapadia
And just one quick follow-up on that. You've got the option for second well on the Demerara block. And what's going to be the deciding factors to whether you go ahead with that second well, is it whether you can get some extra funding in from a third-party to drill it or is it to do with success in the first well, just to try and understand what would kind of what are the decision points that you have in terms of drilling that second well?
Gabriel Alba
Orlando if you want, I can start with the answer.
Orlando Cabrales
Yes, sure.
Gabriel Alba
I mean, we have not depended on third-party to conduct any of the current ongoing steps on exploration but both of the blocks the Corentyne or Demerara. So, we don't depend on third-parties to execute on those blocks. Technically, the team has been very excited about what the analysis is delivering but I think it's difficult to speculate what would I mean what would be the further steps. But from Frontera side it has probably been disclosed. It's prepared to continue to move on it on a standalone basis.
Anish Kapadia
Great. Thanks very much.
Operator
Thank you. [Operator Instructions] There are no other questions registered at this time.