(Frontera, 16.Feb.2021) — Frontera Energy Corporation and CGX Energy Inc., joint venture partners, announced completion of an independent Prospective Resource study and report in respect of the Corentyne North Area, Corentyne Main Area and Demerara block, offshore Guyana. The Joint Venture is also pleased to announce the successful rescheduling of the Joint Venture’s work commitments with respect to its Petroleum Prospecting License (“PPL”) for the Demerara block offshore Guyana.
“We thank the Government of Guyana for its continued support and partnership, which are essential to the long-term success of this strategic initiative for the benefit of all stakeholders.” said Gabriel De Alba Chairman of the Board of Directors. “As confirmed by the independent resource evaluation commissioned, the Guyana basin offers the Joint Venture access to a leading offshore oil opportunity. We expect a robust Guyana work program with the advancement of our exploration wells, as we continue executing on our plan to realize this value for our shareholders.”
“The independent prospective resource study reaffirms our excitement about the world-class prospectivity of the Corentyne and Demerara blocks offshore Guyana ,” said Richard Herbert , Chief Executive Officer, Frontera. “With the support of the Guyanese government in rephasing our exploration plans, we are eagerly progressing our work programs for Corentyne and Demerara.”
Independent Prospective Resource Evaluation
The Joint Venture contracted McDaniel & Associates Consultants Ltd, an independent external qualified resource evaluator, to conduct a resource evaluation on its concessions in the offshore Corentyne and Demerara blocks in Guyana in the Guyana-Suriname basin. Frontera holds a direct working interest of 33.3% in both the offshore Corentyne and Demerara blocks and, taken together with its CGX share ownership of 73.8%, results in a total consolidated working interest of 82.6% in the blocks.
McDaniel’s evaluation was prepared as of 31 August 2020 , in accordance with definitions of the National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (” NI 51-101 “) of the Canadian Securities Administrators and the Canadian Oil and Gas Evaluation Handbook (” COGE Handbook “).
A total of 32 prospects were identified by McDaniel in both blocks (27 in the Corentyne block and 5 in the Demerara block). Frontera’s consolidated interest is equivalent to a mean volume of 6,089 MMboe unrisked and 1,090 MMboe risked. The fluid content considered for the prospects is mainly oil (64%), natural gas (28%) and the remainder condensate (8%). These results support management’s view that the blocks are highly prospective.
The independent external Resource Report was completed on 21 October 2020 and certain information contained in the Resource Report is summarized below. The table shows the prospects on the Corentyne North Area, Corentyne Main Area and Demerara block for Frontera’s consolidated working interest (82.6%) on an un-risked and risked basis.
(1) There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
(2) The Unrisked Total is not representative of the portfolio Unrisked Total and is provided to give an indication of the resources range assuming all the prospects are successful.
(3) All of the prospective resources assigned as part of this assessment have been estimated probabilistically as this is the most appropriate method given the high degree of uncertainty in the various input parameters. Distributions of the various reservoir and fluid parameters were determined, based on parameters from existing wells/discoveries in the area or general worldwide data, and probabilistic calculations of the unrisked OOIP/original gas-in-place (OGIP) and recoverable resources were prepared for each prospect.
(4) The risked resources have been risked for chance of discovery and chance of development. The chance of development is defined as the probability that, once discovered, a known accumulation will be commercially developed. Quantifying the chance of development requires consideration of both economic contingencies and other contingencies, such as legal, regulatory, market access, political, social license, internal and external approvals and commitment to project finance and development timing. As many of these factors are extremely difficult to quantify, the chance of development is uncertain and must be used with caution.
(5) McDaniel has determined that the chance of discovery is estimated to be between 18% and 51% and the chance of development between 50% and 70%, based on an evaluation of the risks relevant to the blocks.
(6) Sub-Total and Total are based on the probabilistic aggregation of zones within a prospect and arithmetic aggregation of the individual prospects to the Sub-Total and Total level.
(7) Volumes listed are full life volumes, prior to any cutoffs due to economics.
(8) Based on a Mcf to BOE conversion of 6 to 1. See “Oil and Gas Information Advisories”
(9) The calculations presenting Frontera’s 82.6% working interest were carried out by Frontera and confirmed by McDaniel.
The map below shows the location of the Joint Venture’s Demerara and Corentyne blocks in the Guyana-Suriname Basin, along with peer discoveries. (1)
(1) Block acreage reflects the proposed 25% relinquishment that has been submitted to the Government of Guyana in connection with moving to the second renewal period of the Corentyne and Demerara PPLs. Final relinquishment details remain subject to government approval.
The Joint Venture continues to advance its exploration program in both the Corentyne and Demerara blocks with well locations being selected by the Joint Venture.
In the Corentyne block, plans are proceeding on the Kawa-1 exploration well. Well design is complete, procurement of long lead items is in advanced stages and key technical staff have been recruited. The Joint Venture plans to spud the Kawa-1 exploration well during the second half of this year and expects to drill the well in a water depth of approximately 1,100 feet targeting the Campanian-Santonian-aged stratigraphic trap, interpreted to be analogous to the discoveries immediately to the east on Block 58 in Suriname. Additional prospects and leads on the northern portion of Corentyne have been identified and are being matured by the Joint Venture.
In the Demerara block, the Joint Venture continues to advance its preparatory work for the Makarapan-1 exploration well (previously called Demerara-F), an Aptian stratigraphic prospect on the block. Additional prospects and leads on the block have been identified and are being matured by the Joint Venture.
Demerara Work Commitments
The Joint Venture completed negotiations with the Government of Guyana regarding rescheduling work commitments with respect to its PPL for the Demerara block in offshore Guyana . The Joint Venture has been advised that the existing 12 February 2021 deadline for drilling the next well will be extended to 11 February 2022 subject to documentation.