October 10, 2010

CGX's prospects to become clearer when other companies start drilling

Guyana Chronicle

President and CEO of CGX Energy Inc. Mr. Kerry Sully says his company’s prospects for drilling offshore Guyana will benefit from the experiences of other companies which are to begin activities this month, although his operation will not begin until second quarter of 2011. Speaking last Tuesday during an interview with David Pescod on the programme ‘Stocktalk: Late Edition’, Sully said: “The really exciting part is that we will first benefit as an area play by the end of October with drilling by others ...The first well is going to be drilled by Murphy, starting in late October to test the [site] that is analogous to the prospect that we are going to drill with our partners Repsol, YPF and Tullow.

Murphy’s second well, he said, “is a shallow test in the [site] that we view as a look-a-like to our Eagle Eocene test. Once that drilling is done, the rig will move to drill for Inpex, a Japanese company. They are going to be drilling close to our acreage into the Cretaceous and testing a couple of different formations. Any success by either Murphy or Inpex will increase the confidence of success in our drilling.”

Further, Sully is upbeat about the prospects from a cost perspective, and this is something not common to other oil exploration sites around the world.

“One of the good things about our opportunities is that the capital costs and operating costs per barrel are going to be low. Also, we are in an attractive fiscal regime and as a result, this property would probably be economic at US$30.00 crude. Today, there are fewer places in the world where that would be the case,” he said.

Sully, at another interview, said he believes that the offshore region of Guyana and Suriname is now becoming one of the most attractive basins in the world, and that because of the BP oil-spill mishap in the Gulf of Mexico, companies are looking to opportunities in other places.

CGX holds three licences offshore Guyana, stretching some 400km from the Venezuelan border in the north, to the Suriname border in the south. Using 2-D seismic technology, CGX has identified with five giant targets offshore, and undertook a 2,375 sq km 3-D seismic programme on its offshore Corentyne and Georgetown licenses.

An independent report from Gustavson Associates showed CGX held a resource estimate of 2.8 billion barrels on three prospects on the Corentyne Concession.

In 2000, Surinamese gunboats booted the CGX oil rig from its drill site, setting off a barrage of diplomatic and other efforts aimed at resolving the matter. But in September 2007, the Hamburg-based United Nations International Arbitral Tribunal on the Law of the Sea announced its decision, and made an award that found favour with the Government of Guyana and CGX Energy Inc.