Frontera Energy Corporation, the Canadian company which farmed into the Corentyne Block in 2019 and now works alongside CGX Resources inc., said today that it made a net income or profit of US$13.5M during the second quarter compared with a net income of US$102.2M in the prior quarter. It said the decline is due to a number of increased investments in Guyana. These pertain to those costs which could not be handled by its cash-strapped partner.
Frontera noted too that it is tightening its 2022 production guidance to 41,000-43,000 barrels of oil per day in global assets outside of Guyana. It also increased its total capital expenditure guidance for the year to US$435-US$495 million, primarily as a result of its increased working interest in the Corentyne block in Guyana.
Subsequent to the quarter, it was announced that Frontera and CGX had entered into an agreement to amend the Joint Operating Agreement originally signed on January 30, 2019. That deal had allowed for Frontera to effectively farm into the Corentyne block. As a result of the amendment, CGX will have a reduced working interest totalling 32.00% and Frontera will have a 68.00% participating interest.
While the agreement remains subject to certain conditions precedent, including approval of the Toronto Stock Exchange and certain confirmations from the Government of Guyana, Frontera agreed to certain fiscal transfers to CGX in exchange for the increased interest in the Corentyne block. Guyana Standard understands that Frontera will cover CGX’s share of costs that were outstanding for the Kawa-1 well that was drilled in the Corentyne Block, along with expenses for the upcoming Wei-1 well. It will also clear off outstanding debt owed to it by CGX.
On May 9, 2022, Frontera and CGX, had announced the discovery of 228 feet (69 metres) of net pay across the Maastrichtian, Campanian, Santonian and Coniacian horizons at the Kawa-1 exploration well. Third-party analyses indicated the presence of light oil. Frontera said the findings are consistent with discoveries reported by other operators adjacent to the Corentyne block, adding that it further de-risks equivalent oil targets anticipated at the Wei-1 exploration well.
Guyana Standard understands that final preparation is underway in advance of spudding the Wei-1, in October 2022, subject to rig release from a third-party operator. The Wei-1 exploration well will be located approximately 14 kilometres northwest of the Kawa-1 exploration well in the Corentyne block, approximately 200 kilometres offshore from Georgetown, Guyana. It will be drilled in water depth of approximately 1,912 feet (583 metres) to an anticipated total depth of 20,500 (6,248 metres).
