Last Updated on Tuesday, 2 May 2017, 13:33 by Denis Chabrol
The cash-strapped Canadian oil exploration company, CGX Energy, continues to borrow monies from its shareholder to stay afloat, and indicated that future oil exploration offshore Guyana would depend on restructuring its multi-million debts to several companies.
Now that American oil-giant, ExxonMobil, has found more than two billion barrels of oil offshore Guyana, CGX Energy hopes that will be an incentive for debt restructuring and further exploration. “While the global downturn in petroleum prices has significantly affected the company over the past two years, the de-risking of the Guyana basin through multiple large discoveries has simultaneously provided enough buoyancy to allow the company to take steps to restructure its debt and prepare to continue exploration,” CGX said.
The highly indebted CGX Energy has suffered a delay in carrying out further exploration offshore Guyana and hopes that government will favourably consider its request for a new date. “Pursuant to the terms of the Petroleum Prospecting Licences (“PPL“) governing the Corentyne Block, the Company is currently negotiating the terms of an extension of the spud date for its next exploration well on the block. The previous spud date was July 1, 2016,” the company said.
CGX says it continues to negotiate with its trade creditors, including with respect to the approximately $14.4 million owed to Japan Drilling Co., Ltd. (excluding interest), approximately $9.5 million owed to Prospector PTE. Ltd. (excluding interest), and the approximately $2.9 million owed to Teikoku Oil (Suriname) Co., Ltd. (excluding interest), with a view to determining how to address these significant payables in light of depressed oil prices.
Between March 2016 and April 2017, the company has borrowed a total of 7.1 million Canadian dollars from its major shareholder,Pacific Exploration & Production Corporation, to fund mainly “monthly general and administrative expenses.” If CGX Energy does not pay the loans, which attract interest rates of 5 percent, then Pacific “has the right to take a pledge of shares of CGX’s subsidiaries.”
The company also announced that Executive Director, Professor Suresh Narine has been given the green-light to purchase shares in the company.
“In conjunction with his appointment, the Board of Directors has agreed to grant Professor Narine incentive stock options to purchase 1,000,000 common shares of the Company. The stock options will be granted on May 2, 2017 pursuant to the Company’s stock option plan and will be exercisable at a price equal to the closing market price on such date. The options will expire on May 2, 2022,” CGX Energy said in announcing the release of its audited consolidated financial results 2016.