Oil investors meet President as CGX prepares for another major shot in Guyana basin

Canadian-based oil and gas exploration company CGX will soon be taking another shot in the Guyana basin, through a joint venture with its major shareholder Pacific Rubiales.

Today CGX announced that it has entered into a binding term sheet with Pacific Rubiales Energy Corp. (Pacific Rubiales) and having recently acquired newly re-issued Corentyne, Demerara and Berbice licences, the way has been paved for the company to “cultivate exploration.”  Pacific Rubiales has also decided to pay off debts owed by CGX for oil exploration in the Guyana Basin.

CGX Executive Chairman Dr. Suresh Narine who accompanied a team of executives from both companies to a meeting with President Donald Ramotar today said the priority is on an aggressive work plan that amounts to hundreds of millions of US dollars.

President Donald Ramotar with a team of officials from CGX and Pacific Rubiales. Among them are Minister of Natural Resources and the Environment Robert Persaud and CGX Executive Chairman Dr. Suresh Narine (second from right)

“With Pacific’s increased interest in CGX, it means that we have untapped technical expertise in this basin which is second to none,” Dr. Narine said in an invited comment to the Government Information Agency (GINA).

Pacific Rubiales is regarded as the largest independent oil company in Latin America with success ratios in Columbia of 83 percent, and similar records at bases in Peru, Brazil, Guatemala and Papua New Guinea.

The company owns 100% of MetaPetroleum Corp, which operates the Rubiales, Piriri and Quifa heavy oil fields in the Llanos Basin, and 100% of Pacific Stratus Energy Colombia Corp., which operates the La Creciente natural gas field in the northwestern area of Colombia, according to a CGX release issued today.

It’s Chief Executive Officer (CEO) Ronald Pantin who was part of the team visiting President Ramotar described Guyana’s territory as one with great oil prospects and with the company’s additional investment pursuits in agriculture, iron and the gold mining sector, it is also hoping to make inroads.

The CGX release stated that Pacific Rubiales currently owns shares representing 35.06% of the Company’s issued and outstanding common shares and is an insider of the Company.

“Assuming Pacific Rubiales subscribes for all of the Units pursuant to the Minimum Offering and that no other Units are sold pursuant to the private placement, Pacific Rubiales will hold 60% of the Company’s issued and outstanding common shares (and approximately 70% assuming the exercise of all of the Warrants issued to Pacific Rubiales),” the release stated.

President Donald Ramotar and Minister of Natural Resources and the Environment Robert Persaud in discussion with a team of officials from CGX and Pacific Rubiales

The company was expected to announce today exactly when it will recommence drilling, and according to Dr. Narine, it will be more vocal in its relations with the public and social responsibility.

Despite not being successful at the last exploration attempt, optimism is still high about the basin’s oil resource potential of 13.6 billion barrels according to an estimate by the United States Geological Survey in their assessment of undiscovered conventional oil and gas resources of South America and the Caribbean.

The results of the survey had spawned the interest of reputable oil exploration companies that like CGX, Repsol, Tullow Oil, YPF and Exxon Mobile through independently or through joint venture operating.

CGX intensified its pursuit after its semi-submarine rig arrived from the Gulf of Mexico last year January but after coming up empty at one of the locations, the company didn’t lose hope.

The Guyana Government remains focused on keeping the basin active with the hope of a discovery that has potential to leapfrog Guyana as a major oil and gas producer, according to Minister of Natural Resources and the Environment Robert Persaud who was also part of today’s talks.

Having been granted the licences and established partnership with a reputable affiliate, Minister Persaud believes the way has been paved for activities to kick start within the requisite time frame.

“There is some level of impatience, but we understand also that there are certain efforts that have to be made prior, but we are confident and we trust … the company and its partners in this regard,” Minister Persaud said.

On February 13, CGX announced its receipt of two new petroleum prospecting licences from the Guyana Government, for CGX Resources Inc, and ON Energy Inc (ON Energy), respectively.