CGX Energy Files Independent Resource Assessment
January 03 2008 - 4:22PM
Marketwired Canada
CGX Energy Inc. (TSX VENTURE:OYL.U) ("CGX") is pleased to announce that an
independent resource assessment (the "Report) has been completed by Gustavson
Associates LLC of Boulder, Colorado, U.S.A. (Gustavson) for four prospects on
the Company's Corentyne Petroleum Prospecting Licence (PPL) located offshore
Guyana, South America. Using probabilistic analysis, Gustavson calculated a
total best estimate (P50) Prospective Resource in the four prospects to be 2.7
billion barrels of oil (see description of Prospective Resource below). The
Resource Assessment has been filed on SEDAR (www.sedar.com) and on the Company's
website (www.cgxenergy.com).
Gustavson was retained by CGX to prepare the Report to estimate the potential
undiscovered oil and gas resources underlying the 9,170 square kilometre
offshore portion of the Corentyne PPL in which CGX has a 100% working interest.
The Report did not review CGX's 25% interest in the 9,742 square kilometre
Georgetown PPL, its 100% interest in the 3,968 square kilometre Corentyne Annex
nor its 100% interest in the 11,400 square kilometre Pomeroon PPL. The Gustavson
resource estimates were prepared in accordance with the requirements of Canadian
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities
("NI 51-101"). Capitalized terms related to resource classifications used in
this press release are based on the definitions and guidelines in the Canadian
Oil and Gas Evaluation Handbook ("COGEH").
No commercial discoveries have been made in the offshore Guyana basin and hence
there have been no reserves found. Historic well data, regional geology and 2D
seismic were reviewed by Gustavson to prepare a probabilistic Resource Estimate
of that portion of the prospects lying entirely within the Corentyne PPL as
shown below.
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Prospective Oil Resource Millions of Barrels
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Prospect Low Estimate Best Estimate High Estimate
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Eagle Shallow Fan 153 545 1,956
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Wishbone Shallow Fan 186 439 1,043
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Eagle Deep West 379 859 1,590
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Eagle Deep East 415 904 1,636
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Sum of Prospects 1,133 2,747 6,226
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Prospective Resources are those quantities of oil and gas estimated to be
potentially recoverable from undiscovered accumulations. If discovered, they
would be technically and economically viable to recover. However, there is no
certainty that the Prospective Resources will be discovered. In addition, the
following mutually exclusive Classification of Resources were used:
Low Estimate - This is considered to be a conservative estimate of the quantity
that will actually be recovered from the accumulation. This term reflects a P90
confidence level where there is a 90% chance that a successful discovery will be
more than this resource estimate.
Best Estimate - This is considered to be the best estimate of the quantity that
will actually be recovered from the accumulation. This term is a measure of
central tendency of the uncertainty distribution and in this case reflects a 50%
confidence level where the successful discovery will have a 50% chance of being
more than this resource estimate.
High Estimate - This is considered to be an optimistic estimate of the quantity
that will actually be recovered from the accumulation. This term reflects a P10
confidence level where there is a 10% chance that the successful discovery will
be more than this resource estimate
Note that these distributions do not include consideration of the probability of
success of discovering and producing commercial quantities of oil, but rather
represent the likely distribution of the oil deposits, if discovered.
As specified in the COGEH, the Sums of Prospects are arithmetic sums, and as
such do not represent the same probability levels as the estimates for the
individual prospects.
Gustavson (http://www.gustavson.com/) is a global consulting firm consisting of
geologists, geophysicists, engineers, land and contracts managers as well as
economists and financial experts who solve problems on all aspects of natural
resource evaluations. This work ranges from the first steps of prospecting to
design and assessment of production facilities. Gustavson has a 30-year track
record of quality consulting to industry and governments worldwide. Specific
studies in South America have included reports on "The Petroleum Resource
Potential of Brazil", "An Overview of the Geology and Petroleum Resource
Potential of Bolivia" and "The Petroleum and Exploration Potential of
Argentina". Gustavson have also completed reserve estimates for clients such as
the International Finance Corporation, Conoco, Inc., and the Ghana National
Petroleum Company, and conducted economic modelling for private clients as part
of license rounds in offshore Venezuela. Gustavson have also done extensive work
offshore West Africa, including reserves and resource estimates and economic
evaluations in Cote d'Ivoire.
Gustavson has acted independently in the preparation of the Report. Gustavson
and its employees have no direct or indirect ownership in the property appraised
or the area of study described. Ms. Letha Lencioni, P.E., signed off on the
Report, which has been prepared by her as a Qualified Reserves Evaluator, with
the assistance of others on Gustavson's staff.
With respect to Assumptions and Limiting Conditions within the Report,
"Gustavson Associates reserves the right to revise its opinions of reserves and
resources, if new information is deemed sufficiently credible to do so. The
accuracy of any estimate is a function of available time, data and of
geological, engineering and commercial interpretation and judgment. While the
resource estimates presented herein are believed to be reasonable, they should
be viewed with the understanding that additional analysis or new data may
justify their revision and we reserve the right to make such revision."
Although a scoping exploration and development economic scenario was presented,
the Report did not attempt to place a value thereon. Scenarios for field
development of the Best Estimate Prospective Resource Cases were prepared for
only two of the four prospects wholly contained within the Corentyne PPL. These
prospects are Eagle Deep West (deep zone) and Tertiary Turbidite Fans (shallow
zone Eagle) and did not include Eagle Deep East or Wishbone shallow. Four
potential outcomes of exploration are the foundation for determining four
possible scenarios for field development.
1. Scenario 1 assumes that oil is discovered in both the Eagle Deep West
and Eagle Shallow Fan.
2. Scenario 2 represents a discovery only in the Eagle Shallow Fan, with
the Eagle Deep West dry.
3. Scenario 3 represents a discovery only in the Eagle Deep West, with
the Eagle Shallow dry.
4. Scenario 4 is the possible case in which no oil is discovered.
The probability of success for each of the possible scenarios is
shown below.
Probability
Scenario Exploration Outcome of Success
Scenario 1 Eagle Deep West and Tertiary Turbidite Fans 5%
Scenario 2 Tertiary Turbidite Fans 19%
Scenario 3 Eagle Deep West 15%
Scenario 4 No oil Discovery 61%
The scenarios included the assumptions that "A planned exploration program will
include the acquisition and interpretation of 500 square kilometres of seismic
data during 2008 and the drilling of an exploratory well in late 2009 or early
2010. If successful, the field will be delineated with appraisal wells. Field
development would start in October 2011 when a production platform becomes
operational. The first oil would be delivered in October 2012. A floating
storage offloading facility would be leased for the duration of oil production.
The capital requirements and the total number of wells drilled under each
scenario of the exploration and development program for the Corentyne PPL are
summarized in the table below."
Scenario Total # of Wells Capital Costs ($MM)
Scenario 1 71 3,336
Scenario 2 51 2,167
Scenario 3 16 1,116
Scenario 4 1 121
The conclusions from the scenario analysis were the statistical or risked
Expected Value for the development of just two of the prospects on the Corentyne
PPL is $4.8 billion at a 10% discount rate and $2.4 billion at a 20% discount
rate. The range of unrisked net present values at a 10% discount rate for the
four scenarios is from ($104) million to $23.6 billion. The Expected Value is
the combination of the unrisked best estimate resource net present value and the
associated probability of success. It should be noted that estimated values
disclosed do not represent fair market value.
Expected(i) Value of Two of the Prospects on the Corentyne PPL
Net Present Value, $MM
0% 10% 15% 20%
Scenario 1 - unrisked $53,701 $23,641 $16,455 $11,744
Scenario 2 - unrisked $18,673 $8,522 $5,999 $4,314
Scenario 3 - unrisked $30,869 $14,248 $10,084 $7,296
Scenario 4 - unrisked ($121) ($104) ($97) ($91)
Expected Value - risked $10,660 $4,818 $3,377 $2,418
(i) Expected net present value is the probability-weighted value of the
four possible outcomes. It represents the risk-adjusted value of the
exploration and development of two prospects on the Corentyne PPL.
"We're very happy to have this independent concurrence of our work by Gustavson
Associates" stated Kerry Sully, President and CEO of CGX. "While waiting for the
resolution of the maritime border between Guyana and Suriname, Warren Workman,
our Vice President of Exploration, worked extensively with Geoseis Inc. to
re-interpret the Guyana Suriname basin offshore Guyana. The most significant
lead has been a series of structural traps in the Upper Cretaceous that we've
called our Eagle Deep targets within our Corentyne PPL. These are basin opener
plays and we look forward to further refinement of our interpretation with 3D
seismic, and testing of our concepts by drilling as soon as possible
thereafter."
CGX is a Canadian-based oil and gas exploration company focused on exploration
for oil in Guyana, South America. CGX is managed by a team of experienced oil
and gas and finance professionals from Canada, U.S.A. and the UK. CGX is
financed internationally and has thousands of shareholders worldwide.
This press release includes "forward looking statements", within the meaning of
applicable securities legislation, which are based on the opinions and estimates
of Management and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward looking statements. Forward-looking statements
are often, but not always, identified by the use of words such as "seek",
"anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast",
"may", "will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "should", "believe" and similar words suggesting future
outcomes or statements regarding an outlook. Such risks and uncertainties
include, but are not limited to, risks associated with the oil and gas industry
(including operational risks in exploration development and production; delays
or changes in plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserve estimates; the uncertainty of
estimates and projections in relation to production, costs and expenses; the
uncertainty surrounding the ability of CGX Energy Inc. to obtain all permits,
consents or authorizations required for its operations and activities; and
health safety and environmental risks), the risk of commodity price and foreign
exchange rate fluctuations, the ability of CGX Energy Inc. to fund the capital
and operating expenses necessary to achieve the business objectives of CGX
Energy Inc., the uncertainty associated with commercial negotiations and
negotiating with foreign governments and risks associated with international
business activities, as well as those risks described in public disclosure
documents filed by CGX Energy Inc. Due to the risks, uncertainties and
assumptions inherent in forward-looking statements, prospective investors in
securities of CGX Energy Inc. should not place undue reliance on these
forward-looking statements. Statements in relation to "resources" are deemed to
be forward-looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the resources described will e
discovered and can be profitably produced in the future.
Readers are cautioned that the foregoing lists of risks, uncertainties and other
factors are not exhaustive. The forward-looking statements contained in this
press release are made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward-looking statements contained
in this press release or in any other documents filed with Canadian securities
regulatory authorities, whether as a result of new information, future events or
otherwise, except in accordance with applicable securities laws. The
forward-looking statements contained in this press release are expressly
qualified by this cautionary statement.
Shares Outstanding: 124,523,913
Fully-Diluted: 132,574,913
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