CGX Energy Inc. and Frontera Energy Corp., joint venture partners in the petroleum prospecting license for the Corentyne block offshore Guyana, agreed to amend their operating agreement.
The new agreement supports CGX's capital needs for the upcoming Wei-1 exploration well and provides Frontera with an increased participating interest in the block. Frontera will fund the JV’s cost associated with Wei-1 for up to $130 million and up to an additional $29 million of certain Kawa-1 exploration well, Wei-1 pre-drill, and other costs. In return, CGX will transfer 29.73% of its participating interest in the Corentyne block.
In addition, CGX will assign an additional 4.94% of its participating interest in the block to Frontera as consideration for the repayment of the outstanding principal amounts under the $19 million convertible loan to CGX dated May 28, 2021, as amended, and the $35 million convertible loan to CGX dated March 10, 2022, as amended, and a cash payment of $3.8 million.
With the agreement, CGX will hold a 32% participating interest and Frontera will have a 68% participating interest in the Corentyne block.
The agreement is subject to certain conditions, including approval of the TSX Venture Exchange and certain confirmations from the Government of Guyana.