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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

Comment by Miftee9on Dec 11, 2021 2:09pm
144 Views
Post# 34221889

RE:RE:RE:RE:RE:RE:My Take

RE:RE:RE:RE:RE:RE:My TakeDirk, in theory yes.  However, assets are recorded as book value not fair market value.  For example, if you own a office tower and you bought it for $1M you would record it as $1M asset and $1M SH equity. (assume you have no other assets or liabilities).  So you have $1M asset and $1M in SH equity.  Over time that building appreciates in value so now it is worth $10M.  Well, the asset is not then recorded as $10M so essentially you have $9M of uncrecorded value on the balance sheet (which would then increases your SH equity by $9M). Once they sell the buildinig they will have $10M in assets (cash) and SH equity of $10M, but only after they sell.
In the case of CGX they have invested millions in preparing for this drill giveing it negative equity of $300M.  Not sure what they have recorded for assets (if anything) on the concession, however if they hit they will have unrecorded value of say $1B (which if recorded would make SH equity move from -$300M to positve $700M).  Only when they sell that asset will you be able to see this realized through a significant increase in cash which will enhance shareholder equity.  Hope that helps.
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