Frontera Energy Corporation and CGX Energy Inc announced late last night that they have agreed to a US$19 million loan that will enable the latter to continue financing its share of the costs related to the Corentyne, Demerara, and Berbice blocks; the Berbice Deepwater Port; and other budgeted costs as agreed to by Frontera.
Following the signing of the deal, Orlando Cabrales, Chief Executive Officer (CEO)of Frontera said that CGX is a critical partner as regards accessing growth opportunities for both companies in developing world-class assets offshore Guyana.
He further noted that completing the loan agreement with CGX is an important step forward while adding that the partnership remains firmly on track to spud its first offshore Guyana well as planned in the second half of this year.
In supporting the foregoing, Professor Suresh Narine, Executive Co-Chairman of CGX said, “These are exciting times for CGX, the Joint Venture, and our stakeholders as we get closer to spudding Kawa-1. We have exciting exploration plans for the Kawa-1 and Makarapan-1 wells on the Corentyne and Demerara Blocks and, importantly, we are developing the infrastructure necessary to support and enhance broader energy and trade industry activity through the Berbice Deepwater Port Project…”
Guyana Standard understands that the loan to CGX will be available for drawdown in tranches on a non-revolving basis until October 31, 2021, or the date on which CGX (or its subsidiaries) enters into a binding transaction that provides funds to repay the amounts outstanding under the loan.
The loan, together with all interest accrued, will be due and payable on June 30, 2022, or such a later date as determined by Frontera, at its sole discretion. Interest payable on the principal amount outstanding shall accrue at a rate of 9.7% per annum payable monthly in cash, with interest on overdue interest. If the Loan is extended by Frontera past June 30, 2022, at its sole discretion, the new interest rate will be 15% per annum.
Both parties noted that the Loan will be secured by all the assets of CGX.
Guyana Standard understands that the loan agreement also includes a standby fee of 2% multiplied by the daily average amount of unused commitment under the Loan payable quarterly in arrears by CGX during the drawdown period.
