CGX Going Forward What a day... after 20yrs, this certainly was one of the biggest press releases in the company history. Amazing what can happen over a period of a couple years when the government applies pressure to start getting something accomplished. Hopefully next week and leading into Wei-1 spud over the coming months, new investors start buying shares and we see a increase in market cap.
However one slices it, a ~$357MM CAD ($276MM USD) market cap for CGX right now is a joke. Worthless management aside (and yes that likely is playing a role in the current suppresed market cap!), the forward catalysts are still significant:
i) Economic potential Wei-1. Offsetting discoveries to the north in Pluma (121ft of oil sanstone) and Lau Lau (315ft of multiple hydrocarbon bearing reservoirs), along with Kawa in Corentyne (228 ft of multiple hydrocarbon bearing reservoirs), suggest Wei-1 has a massive upside.
* As always, multiple appraisal wells are needed following any exploration discovery. I have no idea what Frontera's strategy is here with both Kawa and Wei. Clearly they are hoping/praying they find an additional third party who is willing to pay good money for upside potential via appraisal wells. But I do not foresee any circumstances where Frontera would ever drill appraisal wells. So with that, Wei-1 is truly a make or break well for the current JV. They need a Lau Lau type discovery, with certainly more oil than condendate.
2) No DEBT and money to drill Wei-1. In essence, Wei-1 is being drilled for "free" (after a fairly significant exchange in Corentyne WI). Certainly not inmaterial. For years, minority investors have always struggled with how CGX would fund their day-to-day operators. Least now, CGX can move forward for the remainder of 2022 and see what happens without financing as a major conern.
3) Port. At some point, this bloody thing will get completed and start generating revenue. Perhaps the additional cash payment of $3.8MM USD (as part of the deal for Frontera to gain an additional 4.94% WI) will go towards the port completion? Hopefully they say something next week at the AGM.
4) Past exploration/data acquisition costs. CGX has spent big money over the past 20yrs in Guyana acquirining data (e.g., seismic) and driling wells. Much of this is a potential tax write-off in the event CGX were ever to produce any oil in Guyana. Certainly this would be something of some value to any future companies... I sure hope CGX kept all this and never gave up any in the recent deal announced today.
So all told, CGX fights to live another day and still has big upside. I just hope we can get some momentum going again and we can see a share price jump to over $2 CAD. From a personal standpoint, I thank God everyday I at least sold last September at $2-2.10 and made some nice profit. I, of course, bought in again over the fall and have current shares averaging around $1.2-1.4 in various accounts. To say I feel like a massive loser for not selling out at over $3 back in February would be a major understatement. Hopefully some luck can occur again and we will see $2 or $3 again. The catalysts are there... hopefully this management team, and by virtue myself, doesen't screw it up.