(TSX-V | OYL)
TORONTO, May 2, 2016 /CNW/ - CGX Energy Inc. (TSX-V - OYL) ("CGX Energy" or the "Company") announced today the release of its audited consolidated financial results for the year ended December 31, 2015, together with its Management Discussion and Analysis. These documents will be posted on the Company's website at www.cgxenergy.com and SEDAR at www.sedar.com.
Dewi Jones, Chief Executive Officer of CGX Energy, commented: "In 2015, the Company's business plan was significantly impacted by the prevalence of low international oil prices and a global downswing in exploration budgets. Despite these difficulties the Company was successful in its ability to dramatically cut costs, deal with its significant payables and move towards monetizing some of its non-core assets. We continue to be very optimistic about exploration and development drilling in Guyana and look forward to a stronger 2016."
2015 Year-End Overview and Highlights
- On November 16, 2015, Company issued a convertible debenture (the "Convertible Debenture") by way of private placement in the amount of $1.5 million (the "Principal Amount") to Pacific Exploration & Production Corp. ("Pacific"). The Convertible Debenture has a term of twelve months and an annual interest payable of 5% and will be convertible at the option of the holder at a conversion price of $0.335. The Principal Amount has been funded in full. In the event that the Company fails to satisfy any of its obligations under the Convertible Debenture, Pacific shall have the right to take a pledge of shares in the Company's subsidiaries.
- As a result of the continuing decline in oil prices in 2015, the Company obtained a deferral of its commitment well in the Corentyne Block. Currently, the spud date for this well is July 1, 2016.
- On March 4, 2016, CGX entered into a bridge loan facility with Pacific in an amount up to U.S.$2 million. This facility shall be used to help CGX fund monthly general and administrative expenses and is a drawdown facility that is approved by Pacific on a monthly basis. Pacific has the right to take a pledge of shares of CGX's subsidiaries in an event of default under the facility. As of April 29, 2016, the Company has drawn U.S.$586,000 on the facility.
- On February 10, 2016, the Company announced the resignation of John Cullen as a director.
- On April 18, 2016, CGX entered into a term sheet with a potential partner (the "Partner") in respect of CGX's wharf and logistics yard located in Berbice, Guyana (the "Term Sheet"). The Term Sheet contemplates an initial payment upon signing of the Term Sheet and subsequent payments based upon agreed milestones. The Term Sheet also provides the Partner with a seventy-five day exclusivity period within which to conduct further due diligence and to allow the parties to negotiate definitive documentation.
- On June 19, 2014, CGX Resources, a wholly-owned subsidiary of the Company, entered in to: (i) a drilling rig agreement (the "Drilling Agreement") with Japan Drilling Co., Ltd. ("JDC"); and (ii) a rig sharing agreement (the "Rig Sharing Agreement") with JDC, Teikoku Oil (Suriname) Co., Ltd ("INPEX") for the use of JDC's HAKURYU-12 drilling rig (the "Rig"). Upon termination of the Drilling Agreement, the total amount payable to JDC by CGX Resources was U.S.$20.35 million (the "JDC Payable"). Pursuant to the terms of a definitive agreement entered into with JDC effective November 30, 2015 (the "JDC Settlement Agreement"), the JDC Payable will be paid as follows: (i) U.S.$5.5 million payable in Common Shares; (ii) U.S.$500,000 on or before December 1, 2015; (iii) approximately U.S.$7.18 million on or before March 25, 2016; and (iv) approximately U.S.$7.18 million on or before June 15, 2016. The total amount of the JDC Payable is subject to adjustment based upon the demobilization fees under the Drilling Agreement. JDC will be issued 16,522,500 Common Shares (the "JDC Settlement Shares") at a price of C$0.44 per share resulting in JDC owning approximately 15% of the Company on a non-diluted basis. The JDC Settlement Agreement also provides for a parent guarantee from CGX Energy to JDC in respect of the JDC Payable. As a result of the much lower prices for rigs currently available, the Company is of the view that notwithstanding the JDC Payable, drilling the next exploration well offshore Guyana on the Corentyne Block will ultimately cost approximately the same as under the Drilling Agreement. The Company is in continuous negotiations with INPEX and JDC with a view to determining how to address these significant payables in light of depressed oil prices.
- CGX continues its initiatives to secure a joint venture partner for all 3 Petroleum Prospecting Licences ("PPL") and is actively pursuing this initiative. In the short term, the Company will require additional financing and seek to widen its shareholder base, but still with a view to negotiating farm-out transactions as the primary way to enhance shareholder value. The Company is pleased about ExxonMobil's announcement of a significant oil discovery of more than 295 feet of high-quality oil-bearing sandstone reservoirs on the Stabroek Block located approximately 120 miles offshore Guyana.
About CGX Energy
CGX Energy is a Canadian-based oil and gas exploration company focused on the exploration of oil in the Guyana-Suriname Basin.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
This news release contains forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur in the future. These forward-looking statements are based on certain key expectations and assumptions made by CGX Energy. CGX Energy believes the expectations and assumptions on which it develops forward-looking statements are reasonable; however, undue reliance should not be placed on forward-looking statements as there can be no assurance they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. In addition, other risks that may affect the forward-looking statements in this news release are outlined further in the Company's Annual Information Form dated April 29, 2015 filed on SEDAR at www.sedar.com.
The forward-looking statements contained in this news release are made as of the date hereof and CGX Energy undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
SOURCE CGX Energy Inc.
For further information: Michael Galego, General Counsel and Secretary at (416) 843-3858 or [email protected]