CGX Energy, the Canadian oil exploration company, has moved one step nearer to finding out whether its optimism that it would find oil in commercial quantities on its 800 000-acre Berbice onshore concession will pay off.
Earlier this week they announced that their Guyana subsidiary ON Energy (ONE) has completed the 2-D seismic survey it conducted over 182 kilometres of its holding and drilling is planned for sometime around September.
The survey was carried out over a ten-week period. The data was collected by Seis Pros Inc of Houston, Texas, to evaluate 22 leads covering 250 square kilometres that were identified in the recent geomicrobial survey that ON conducted.
A release from CGX's Toronto office, announced the completion of the 2-D survey and that the seismic survey would be analysed over the next two months to delineate high priority drilling targets which is planned for this fall.
The release says too Seis Pros also completed a 75-sample geochemical programme to supplement prior analysis.
CGX conducted the seismic survey based on the positive results it obtained from the 4000 of the 8000 samples it has analysed for microbes that flourish in the presence of hydrocarbon micro-seepage.
The survey provided employment for in excess of 150 people, with about 80 of them being hired directly by its sub-contractors and the rest through support services.
A release said, "A number of significant sized areas with seepage readings well above background have been identified." It also quoted its vice president for explorations, Warren Workman as saying, "We are pleased by the initial results" and that "as a result of the favourable sampling, additional infill samples on the large seepage areas will be analysed. Sorbed gas analysis will also be performed. The sorbed gas analysis will assist in fingerprinting the hydrocarbons in the areas with elevated microbial concentrations."
CGX's president Kerry Sully was also quoted as saying, "Our preliminary exploration is proceeding well and we look forward to an accelerated exploration programme early in the New Year."
He said too that the analogies in the basin are similar to the Tambaredjo and Calcutta onshore oil-fields in Suriname. Tambaredjo has reserves estimated at 167 million barrels and Calcutta 15 million.
The 8000 samples were collected in October from the company's 800 000 - acre on land concession in the Berbice area by the Oklahoma-based company GeoMicrobial Technologies and carried out the analysis of the samples at its US laboratories.
Prior to the announcement of the results of the samples CGX announced that it has successfully raised US$2.3 million to advance its exploration programme on its extensive onshore and offshore concessions here. The release announcing the completion of the financing said the funds raised would finance follow-up work resulting from any positive results with 2-D seismic or drilling."
ON Energy has filed a prospectus with the local stock exchange to raise up to US$750 000 in Guyana, which, if the full amount is subscribed would decrease CGX's share to 80 per cent. The release said that subject to regulatory approval, the closing will be extended to December 19, and is subject to raising a minimum of US$500 000.
The company subsequently announced it had raised locally through a public offering US$542 000 when around 20 investors took a 14 per cent stake in ON Energy. Current Affairs understands that local investors now own nearer 16 per cent of GCX's Guyana subsidiary ON Energy. Other financing CGX has realised is a US$2.9 million non-brokered private placement following an agreement with Sprott Asset Management. The money is to be realised from the sale of 4.1 million units at a price of US$0.73.
A release from the CGX Toronto office said that Sprott Asset Management had purchased the units on behalf of various funds that it manages and that closing will take place on receipt of regulatory approval. Once approval is received, CGX Energy's issued capital will consist of 62,715,595 common shares and 74,293,663 common shares on a fully-diluted basis.
The release explained that each unit will consist of one common share and one-half common share purchase warrant. Also it said, "each common purchase share warrant will be exercisable into one common share at a price of US$1.10 for a period of eighteen months from the date of the closing of the financing."
CGX shifted to its onshore concessions earlier last year which is adjacent to its offshore concessions in Guyana's territorial waters from which Surinamese gunboats in June 2000 ejected its oil-rig from its drilling position. Since then the two governments have been engaged in discussions aimed at facilitating joint exploration and management of the marine and other resources in the disputed area pending the settlement of the maritime border between them. In February, Guyana referred the maritime dispute to the United Nations for a binding legal settlement under the UN Convention on the Law of the Sea. A five-man panel, chaired by Judge Dolliver Nelson who is President of the International Tribunal on the Law of the Sea has been constituted to hear the case. The other members are Prof Thomas Franks and Hans Smit, nominated respectively by Guyana and Suriname, Dr Kamala Hussein of Bangladesh and Dr Allan Smith of Denmark.
CGX's move onshore was also prompted by reports over the years of sightings that suggested the presence of oil on its concession that stretches from Mara, West Bank Berbice to Skeldon on the Corentyne coast.
To do this CGX formed ON Energy (ONE) Inc in which Guyanese investors are expected to own initially 20 per cent and to directly share in any onshore discoveries. It then contracted the Geo-Microbial Technologies (GMT) to conduct the geo-chemical sampling using the specialised methodologies it has developed for evaluating the presence of microbes in the soil that feed on trace hydrocarbons escaping along micro-seepages from sub-surface deposits.
John Cullen a director of CGX said at the time, "Local knowledge can be incredibly valuable." He said that it has pointed to "at least 5 different oil and gas shows on our onshore concession."
Sully also said that the company discovered that there's a lot of local knowledge about oil and gas seepage on its onshore Berbice Block.
He said too that after meeting with Staatsolie representatives in February 2003 and learning about their company's onshore programme that he knew it was time to take a closer look at his company's onshore block.
Based on their conversations with people in the area last year, the CGX officials said, "there are many analogies between what's happening onshore in Guyana and Suriname," and that they believed that there is also a lot of local evidence to support its thesis.
In Suriname, Staatsolie, the state oil company, is producing 12,000 barrels of oil per day from their Tambaredjo oil-field. Proven reserves are estimated to be 167 million barrels. Since that discovery, Staatsolie have been exploring their 200 kilometre coastline between Tambaredjo and New Nikerie, close to the Guyana border. Using geo-chemical sampling and geophysics, they have identified a number of anomalous prospects.
Dr Kamal Dookie, a founder and director of CGX Resources who grew up in Guyana introduced Cullen and Sully to J P Singh, an incredibly agile and alert man of 90 who runs a cement-block business and is a family friend of the Dookies.
Singh told the group about a drainage canal dug in the '30s. "It looked like "diesel" coming out of the ground this high," said Mr. Singh, raising his arm to knee level. "We had to lay concrete in the bottom of the canal to hold the oil back," he explained. This could be the location of Trinidad Leasehold United's activity at Goed Banana Land.
In Canada, Warren Workman carried out research and he spent several days in the Berbice area in July.
In July, Singh showed Workman and Dookie the canal and he recalled that "the oil show occurred in 1932 when the channel was built and he was 19 and working on the project." "Remarkable man," according to Workman.
At low tide, Dr Dookie returned to the area and saw gas bubbles on both sides of the canal, collaborating the local reports of hydrocarbon seepage in the Skeldon drainage ditch.
"Also at Skeldon, Mr. Singh led us to the location of a stratigraphic test well drilled by Shell in 1967 and the local water well" Dookie recalled. "While Shell's well was dry, the local water well drilled only 100 feet (30 metres) away had oil and gas shows at 1,450 feet (480 metres)!"
In July, Workman also met with Ronald Sangster, agricultural manager for Rose Hall Estate, described by Workman as "a very capable take-charge guy who offered us every courtesy." Sangster showed Workman the drilling pad at Rose Hall where heavy oil shows were found in the well around 6,000 feet (2000 metres) in 1942.
With all of this first-hand evidence from local people, Workman headed to the C. N. Barron Library, named after the pre-eminent geologist of the 20th century in Guyana. The library has limited information about the Rose Hall well but Workman has requested a geological report with attachments from the British Geological Survey. "However, I discovered C. N. Barron reported an oil-stained sample seep when digging the flag pole foundation in 1966 in the village of Liverpool, 18 miles (11 km) south of New Amsterdam," said Workman. "He recovered another sample approximately 70 feet southwest at a depth of the base of the clay. The location is on the north flank of a gravity anomaly."
"I also reviewed the 1967 map of the composite surface geology of Guyana by G.W. Waldron. A basement outcrop was mapped as a Phanerozoic Greenstone (meta-sediment) east of the Berbice River at the Mara settlement," says Workman. "The fact that the Canje River flows parallel to the coast instead of flowing toward it also supports the theory that there is a significant basement high in the area. If it restricts water flow to the coast, it would also form a barrier to hydrocarbon flow further inland, and may also provide the framework for trapping in the sedimentary deposits."
Further news about oil seepages at Mara caught the attention of Workman and Sully based on a copy of a hand-written letter from Magabar Sawh to Prime Minister Sam Hinds, dated June 20, 2000. Sawh took inventory at Mara Sugar Estate during the war.
The estate was "about 27-30 miles by road from New Amsterdam" and was owned by Manoel Veira." Sawh noted "oil and pitch floating on the riverbank" side of the Mara Estate loading dock. "I saw it and Mr. Manoel Veira said to me he should put aside money to drill for oil as soon as the war is over. I am sure oil is there."
This wasn't the first time Sawh had noticed oil and gas see- pages. His letter indicates another show of gas and water farther east during "the biggest dry weather seen in the 1930s."
"The seep locations described in Mr. Sawh's letter are exactly where I'd hope to find them," says Warren. "It confirms there's migration of hydrocarbon from the Canje Formation source kitchen offshore. It's being deflected to surface by the basement highs. Our challenge now is to find hydrocarbon traps between the basement high and the coastline. Our geomicrobial survey should allow us to quickly zero in on the most prospective areas."