CGX mulling farming out 5% of offshore block

Oil explorer, CGX Energy Inc today said that it is contemplating farming out 5% of its interest in an offshore block to a Spanish multinational.

In a statement today CGX said that its wholly owned subsidiary CGX Resources Inc has entered into an agreement that may lead to the farm-out of 5% of its 25%  interest in the Georgetown Block to Repsol Exploración S.A.

This agreement is contingent on the Government of Guyana approving. If cleared, the revised interest, effective September 1, 2012, in the Georgetown Petroleum Prospecting License would be Repsol Exploración S.A. (20%) as operator, CGX Resources Inc. (20%), Tullow Oil plc (30%) and YPF Guyana Limited (30%).

On July 16 this year, Repsol and its partners announced that its six-month drilling operation for the Jaguar-1 well in the Georgetown Block was brought to an end without any commercial oil discovery because it was not safe to go deeper, but  talks with government had already started on re-drilling with a new well-design.

It was the second offshore well this year that has come up dry but the partners signalled that light oil samples recovered hold “significant promise” while government said that the evidence of petroleum occurrences was encouraging to all parties. The second offshore well that came up dry was 100% owned by CGX.

Tens of millions of US$ have been sunk into the two wells. CGX has been engaged in trying to find oil here since 2000.