CGX Energy and Frontera Energy, on 4 December 2018, announced that they have signed a farm-in letter agreement thus enabling the Guyana-focused explorer to finance the drilling costs for two shallow-water offshore blocks in the Guyana-Suriname Basin. The blocks are 100% owned and operated by CGX subsidiary, CGX Resources. CGX has been seeking a farm-in partner for the past few years. Frontera, formerly known as Pacific Rubiales, holds 45.6% in CGX's outstanding shares. The deal is structured as thus: in exchange for a US$ 33.3 million signing bonus, Frontera will gain 33.33% WI in the Corentyne and Demerara blocks. Frontera will also pay for a third of applicable costs, as well as funding an additional 8.333% of CGX's direct drilling costs for the initial exploratory commitment wells in the two blocks. CGX will remain operator, with assistance from Frontera. The farm-in is subject to the necessary regulatory approval.The Corentyne Block is located on the Guyana's eastern maritime border, directly south of ExxonMobil's prolific Stabroek Block. The named Utakwaaka NFW is required to be drilled by 27 November 2019, with an additional well to be drilled by 27 November 2022. ExxonMobil's Pluma 1 NFW, on the Stabroek Block, was announced as a discovery on 3 December 2018. It is located roughly 3km to the north of the Corentyne Block boundary. Exxon and partners also plan to spud the Aimara 1 NFW in mid-December 2018, located roughly 15km to the north of Corentyne.The Demerara Block, awarded in February 2013, is located directly to the south-west of the Stabroek Block, and is adjacent to the Tullow operated Orinduik Block. A commitment exploration well is required by 12 February 2021, with another further well by 12 February 2023. Demerara lies roughly 35km up-dip of Exxon's April 2018 Sorubim 1 NFW on the Stabroek Block, which failed to encounter commercial quantities of hydrocarbons.CGX will repay roughly US$17 million in debt owed to Frontera using the US$ 33.3 million signing bonus. That debt is due by 31 March 2019, but is expected to be paid earlier, by way of offset against the signing bonus. Frontera have also agreed to extend its 25 April 2018 bridge loan to 30 September 2019, to the tune of US$ 8.8 million plus interest. Frontera will seek regulatory approval to have the option to have the outstanding bridge loan repaid in CGX common shares at any point on or before maturity of the loan. Separately, Frontera will also agree to guarantee equity financing of CGX up to US$ 20 million, which will enable CGX to settle its US$ 8 million liabilities with Japan Drilling Co, leaving CGX with net cash of US$ 27 million to fund drilling costs. If Frontera can exercise a conversion right attached to the bridge loan, the Canadian company could increase its ownership from around 45.6% to up to approximately 77.5%.Frontera's acquisition of WI in Corentyne and Demerara would mark the company's first foray into Guyana under its rebranded name. The majority of Frontera's asset are located onshore Colombia, with a few blocks onshore Guatemala and Peru, and a solitary offshore Peruvian block.<P />
CGX Energy and Frontera Energy, on 4 December 2018, announced that they have signed a farm-in letter agreement thus enabling the Guyana-focused explorer to finance the drilling costs for two shallow-water offshore blocks in the Guyana-Suriname Basin. The blocks are 100% owned and operated by CGX subsidiary, CGX Resources. CGX has been seeking a farm-in partner for the past few years. Frontera, formerly known as Pacific Rubiales, holds 45.6% in CGX's outstanding shares. 