December 30, 2007

CGX may start offshore drilling at Corentyne in 2008

Stabroek News

GEORGETOWN, GUYANA - CGX Energy Inc may commence offshore drilling earlier than previously announced if all goes well with the finalisation of a joint venture/partnership arrangement.

The company has also announced that it has retained Jefferies Randall & Dewey, a division of Jefferies & Company, Incorporated, as its advisor to market the joint venture opportunity on its Corentyne Petroleum Prospecting Licence (PPL) located offshore Guyana.

Upon the settling of the maritime dispute with Suriname in September, the company signalled its intention to recommence its offshore activities.

At the time, CGX's President and CEO Kerry Sully had indicated that drilling should commence in 2009. But speaking to this newspaper on Friday from his Vancouver office, Sully said that if the company - in a joint venture effort - is able to procure a seismic rig earlier than expected, then the drilling may very well commence before 2009.

According to Sully, the company has not yet acquired a rig for its seismic work, which may cost as much as US$15 million. He said although rigs and related equipment were still in high demand, the situation was better than it was "last summer" now that there was a slowing down of drilling activities in the Gulf of Mexico.

Sully said the shooting of 500 square kilometres of 3D seismic before drilling made a lot of sense since this would accurately pinpoint the opportunities for oil better than the 2D seismic - done around 1999 - could have.

"We have funds in place to complete [the seismic work] ourselves, but our preference is to farm-out the 3D seismic with a commitment to drill a deep exploration well," Sully said on the company's website.  He said too that during the last year, CGX had received a number of unsolicited expressions of interest from international oil and gas companies regarding the possibility of participating in the exploration of the Corentyne Petroleum Prospecting License (PPL), pending the resolution of the maritime border between Guyana and Suriname. "We are encouraged by the level of interest that has been expressed and are confident that the experience and capabilities of Jefferies Randall & Dewey will bring added value to the process."

"The Company, with the assistance of Jefferies Randall & Dewey, is preparing a virtual data room of confidential information and plans to solicit joint venture proposals in the first quarter of 2008. However there can be no assurance that the marketing process will result in any agreements or transactions."

He told this newspaper: "We remain very confident that the 3D seismic will yield positive results for drilling. We have a continuing dialogue with the Government of Guyana and with the Guyana Geology and Mines Commission (GGMC) and this is going very well."

In June 2000, a jack-up drilling rig leased by CGX from an American drilling contractor and operating under licence from the Government of Guyana was forced off its Eagle drilling location by Surinamese navy gunboats. Sully had said after the announcement of the decision that it was "extremely positive for CGX", as it concluded that 93 per cent of CGX's Corentyne Licence and 100 per cent of its Georgetown Licence fell in the territory awarded to Guyana.