Canadian Oil and Gas company, CGX Energy, which holds three licenses to operate Guyana has reported an operating loss of US$6.8M for the first six months of 2022.
CGX, through its subsidiaries, holds an interest in three Petroleum Prospecting Licences (PPLs) and related Petroleum Agreements (PAs) known as the Corentyne, Berbice and Demerara Blocks in the Guyana Basin.
In its Interim Management Discussion and Analysis (MS&A) Quarterly Report released this week, CGX said it recorded a net and comprehensive loss of approximately US$6.814M or US$0.02 per share for the six-month period ended June 30, 2022, compared with a net loss of approximately US$3.457M or US$0.01 per share for the same period in 2021.
“Interest expense increased by US$2,262,700 to US$2,638,308 in the six-month period ended June 30, 2022 from US$375,608 for the same period in 2021,” the oil company detailed while explaining that the increase in interest expense was as a result of the interest incurred, amortization of loan costs, and amortization of the 2021 Convertible Loan and the 2022 Convertible Loan.
According to CGX, its general and administrative costs increased by US$325,717. During the first six months of 2021, the company’s general and administrative expense stood at US$993,707, however, it jumped to US$1.3M by the end of the June 30. The rise in expenditure, the company said, is due to increased business development costs linked to strategic options related to financial activities.
Further, the company earned indirect charges from its Joint Venture Partner – Frontera Energy Corporation – in the six-month period totalled US$781,502 compared to US$329,283 for the same period in 2021.
However, strapped for cash, CGX said its ability to continue will be dependent on its ability to acquire additional finances.
“The company has no revenues, so its ability to ensure continuing operations is its ability to obtain necessary financing to complete the acquisition and development of potential oil and gas properties,” the company explained.
However, through its subsidiary, Grand Canal, the company is moving ahead with the construction and development of the Berbice Deep Water Port, located on the eastern bank of the Berbice River.
“Grand Canal expects that the Port will significantly boost local content engagement in the oil and gas sector and add enhanced logistics capacity for import and export, including expandable capacity to accommodate the possibility of increased product flow to and from the southern states of Brazil. Due to its location close to Suriname, the Port’s oil and gas support functions will also help to serve the rapidly growing offshore exploration and development activities in that country’s oil and gas sector,” CGX said.
The deep-water port facility intends to serve as an offshore supply base for the Oil and Gas Industry and as a multi-purpose terminal cargo handling base to service agricultural import and export, containerized and specialized cargo
While drains, roads and bridges have been constructed on the site to facilitate the construction of the Berbice Deep Water Port, construction of the wharf platform and access trestle would take longer than anticipated due to an upgrade in design.
“As a result, it is unlikely that the Offshore Supply Base of the port will be fully operational in Q4, 2022 as previously scheduled,” the company said while noting that a revised schedule for completion is being discussed with the contractor.
Two months ago, the company indicated that given the importance of the Demerara Block to Guyana, it has agreed to relinquish the block through a mutual termination agreement with the Government, however, the terms of that agreement are still to be determined.
“Such termination agreement would allow relinquishment of the Demerara Block in a timely manner, allowing the people of Guyana to benefit from exploration activities under the stewardship of interested parties,” CGX said.
ON Energy, which is a 62.5% owned subsidiary of CGX and holder of the Petroleum Prospective Licence of the Berbice Block, is also in discussion with the Government to relinquish that block.