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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 PlainviewOilon Feb 07, 2022 9:47pm
318 Views
Post# 34407171

RE:RE:I do not see a JV for a while yet

RE:RE:I do not see a JV for a while yet

Other person mentioned it, but any agreements that don't result in a full buyout of CGX/FEC will likely include some sort of carry provision. In other words in addition to hopefully some sort of cash premium for entry, the new partner(s) would pay CGX/FEC's share of capex on the project going forward.  

That's effectively a version of your first option where CGX sells a portion of its working interest to someone. A total sale is unlikely IMO due to premium CGX and shareholders are likely to want on remaining prospects. Obviously if a party is interested in paying an absurd premium they should entertain the offer because remaining prospects still carry risk  

I'm partial to farm-in options where go forward capex is covered for a period of time as a means of payment to buy in to an opportunity. 

The difficulty for CGX and FEC is going to come in from the fact they are small companies. It's very unlikely any large independent or major will let them operate on their behalf. That's way too much risk exposure they would have no control over if something goes wrong. They also won't want to operate at a minority working interest. I have a feeling any deal going forward will likely end up with the larger acquiring company having at least 60% working interest and operatorship. 

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