comments please

To all those people in the know.
Could you comment on how this will affect HDR
Thanks in advance - (I hope my geography is right)

From oilbarrel.com
01.06.2004
Canadian Junior CGX Prepares To Drill Its Highly Prospective Acreage Onshore Guyana Ahead Of The Major Companies
CGX Energy is a junior Canadian oil and gas company quoted on the Toronto Venture Exchange which has established premier exposure in the Guyana Basin. In 2000 the US geological survey estimated this basin had the second largest resource potential in the world for unexplored basins (15 billion barrels of oil and 42 trillion cubic feet of gas.) The Guyana basin is surrounded by large fields in Trinidad, Venezuela and Suriname. Geologically the plays offshore are turbidite (sea floor fans) of the cretaceous era. The turbidite type of accumulation has amounted to more than 1 billion barrels of recoverable oil per prospect in some cases. In the last few years, several deep water, turbidite oilfields have been discovered around the world but particularly off the West Coast of Africa and offshore Brazil.

So why has the basin hardly been drilled? Well, in 2000 CGX was about to drill two of its prospects, Wishbone and Eagle, on the offshore Corentyne block, when a gunboat from Suriname drove the company off the drill sites. The area has been the subject of dispute ever since.

CGX did not cut and run, however. Instead it extended its acreage by buying interests in the offshore Georgetown block (25 per cent) and the Pomeroon block (100 per cent), also offshore. It also acquired an 85 per cent interest in the 800,000 acre Berbice field onshore Guyana. In all, CGX has assembled a position of 9.8 million gross acres (7.7 million net). By being quick and nimble CGX has managed to establish an unparalled asset position ahead of the major oil companies in a highly prospective basin at a time when the major companies are actively seeking new sources of oil.

The current area of focus is the onshore Berbice block. The company’s partner here is On Energy which is made up of a group of local Guayanese investors. The company has 14.5 per cent of the block and will be the operator on the field. The partners are using the Tambaredjo and Calcutta fields both onshore Suriname as prototype Paleocene and Eocene oil prospects. The Tambaredjo field is thought to have 900 million barrels of medium heavy oil (15 to 17 API degree) with 170 million barrels recoverable. The Calcutta field has 14 million recoverable.

Starting in September 2003, regional aeromagnetic and gravity data together with geomicrobal and geochemical surveys have defined over 20 anomalous leads on the Berbice block with estimated unrisked potential for approximately 350 million barrels of oil. CGX has subsequently acquired over 200 km of 2D seismic drillable targets, at a cost of US$1.2 million. It will raise US$3 million through new equity to drill six new wells in the second half of 2004. CGX is headed by American Kerry Scully who has long experience of the area.

Spokesperson Charlotte May explains. “You have to note that the Berbice estimate is based on Tamaredjo where the recovery rate is 18.9 per cent, or about 1.4 million barrels per square kilometre. The 350 million barrels for Berbice is based on the anomalies which have been identified which cover an area of 250 sq kms, which multiplied by 1.4 equals 350 million. But we really don’t know what the recovery rate will be because we have not drilled anything yet.”

As always with small pure explorers you have to make the warning that this is a high risk proposition. The company could find nothing. The point is that because the shares are relatively undiluted, any kind of success could have a marked impression on the share price. Toronto brokers Octagon have estimated that a 10 per cent success rate with Berbice could mean a share price of US$2.50. The highest the shares have been in the past 12 months has been US$0.99.

In February 2004 Guayana moved to have its offshore maritime boundary dispute with Suriname settled under the UN “Law of the Sea” convention. CGX could get a crack at the massive offshore structures in due course, where there could be a lot more oil than there is onshore. You never know until you drill, but this is certainly one to watch.