Cost for CGX exploration well climbs to US$125M

Dec 17, 2021 News

…says drilling in Corentyne Block taking longer than expected

Kaieteur News – The Kawa-1 Exploration well being spud in the Corentyne Oil Block Offshore Guyana by CGX Energy Inc. and Frontera Energy Corporation is some 90 percent complete but according to the operators, the well is taking longer than expected.

The Maersk Discoverer semi-submersible oil exploration rig responsible for spudding the Kawa-1 well

As such, the cost for the well has since been revised upwards to between US$115M to US $125M million. The joint venture partners yesterday provided the update to say, “…to date, approximately 90 percent of the planned footage has been drilled and the initial results suggest an active hydrocarbon system is present at the Kawa-1 location.”
Additionally it was noted that Horizon 19, the first of three geological zones targeted by the Joint Venture, has been penetrated.

“Logging-While-Drilling and cuttings, indicate the presence of hydrocarbons in several Campanian and upper Santonian formations,” according to the partners. The Joint Venture partners, in the report, did say they were pleased to report that despite the delays, the drilling operations have recorded only a single lost time injury since August and Covid-19 protocols have resulted in no disruptions to operations and no positive cases detected after arrival on the drilling unit.

Drilling however, “has taken longer than originally forecast and costs are projected to increase.” The companies did note that while the Joint Venture will provide an update on costs and will issue full exploration results of the Kawa-1 well, once total depth has been reached and results have been analyzed, “CGX may be required to seek additional financing in keeping with the ongoing drilling program and is currently assessing several strategic opportunities.”
In August last CGX Energy Inc., had secured a semi-submersible drilling rig to spud the Kawa-1 exploration well in the Corentyne Block.
Kawa-1 well will be targeting a “Santonian age, stratigraphic trap,” interpreted to be similar to the discoveries made recently, immediately to the east on Block 58 in Suriname.
The rig—the Maersk Discoverer—was secured from Maersk Drilling Holdings Singapore Ltd. and is a column stabilised, semi-submersible drilling rig, said to be able to operate in water depths up to 10,000 feet (ft.).
The Kawa-1 well is anticipated to be drilled to a total depth of approximately 6,500 meters, in a water depth of approximately 370 meters.
The rig was contracted for one firm well on the Corentyne Block along with another optional spud in the Demerara Block, according to the partners.
The companies said that the Deed of Guarantee is expected to be provided by Frontera by the end of May.
The funding for the exploration activity was secured through a loan that was provided by Frontera to CGX. That company had announced that it had pledged its Guyana assets in order to secure the loan. The Joint Venture partners have already submitted a bill to Guyana for some US$155M for its first dry well spud, and currently controls the Demerara and Corentyne Blocks.

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