CGX and its partners today announced that its six-month drilling operation for the Jaguar-1 well here was brought to an end without any commercial oil discovery because it wasn’t safe to go deeper.
It was the second offshore well that CGX has participated in this year that has come up dry and a further setback for the company which first attempted exploration here in 2000. The company said today that there is a prospect that the Jaguar-1 well site could be revisited later. Light oil samples were found during the drilling that started in February.
A release from the company today said that CGX announces “along with its partners on the Jaguar-1 well located on the Company’s 25% owned Georgetown Petroleum Prospecting License (“PPL”), that drilling operations at the Jaguar-1 well on the Georgetown PPL, Guyana have ended and the well will be plugged at a depth of 4,876 metres without reaching the primary objective in the Late Cretaceous geologic zone. The decision to stop drilling at this point was unanimously agreed by all partners based on safety criteria and was taken after reaching a point in the well where the pressure design limits for safe operations prevented further drilling to the main objective. Jaguar-1 was a high pressure, high temperature (HPHT) well which was spudded in February 2012 using the Atwood Beacon jack-up rig. Whilst the primary Late Cretaceous objective was not reached, samples of light oil were successfully recovered from two Late Cretaceous turbidite sands. The partners to the Georgetown PPL are Repsol Exploración S.A (15%), as operator, along with YPF Guyana Limited (30%), Tullow Oil plc (30%) and CGX Resources Inc. (25%).
Kerry Sully, President and CEO stated, “Based on hydrocarbons recovered during the drilling of Jaguar-1, CGX is confident that a new well targeting the same prospect would hold significant promise and is therefore committed to seek a re-drill utilizing a new well design.”
Commenting on the Company’s plans in the Guyana Suriname basin, Suresh Narine, Chairman, reiterated CGX’s near-term goals stating, “In addition to our commitment well on the Corentyne Block, we are planning a 3D seismic program later this fall with our ultimate goal being to commit to a rig for a three to five well program. Added to this would be the re-drill of the Late Cretaceous target addressed by the Jaguar-1 well.”
The UK Guardian today reported that the decision to cease drilling at the site may well be for the best, because the Jaguar well was a “high pressure, high temperature” well similar to the BP Gulf of Mexico operation that led to the catastrophic Deepwater Horizon oil spill which gushed underwater for three months in 2010.
Meanwhile the US stock exchange NASDAQ today reported that as of this morning CGX Energy’s shares had plunged by 46% to a new year low on the news.
The dry wells have been costly for CGX. On May 7 this year, the company announced that it was moving on to other locations in its hunt for oil after drilling at the Eagle-1 location in the Corentyne Basin proved to be futile, with the company now having to raise an additional US$20 million to finance the added drilling days spent at that site.
“CGX Energy Inc announces the results of the drilling of the Eagle 1 well on the Company’s 100% owned and operated Corentyne Petroleum Prospecting License (“PPL”), offshore Guyana. The Eagle-1 well reached total depth of 4,328 metres on April 25 in the upper Cretaceous Maastrictian geologic zone on an 8 ½ inch diameter hole and with synthetic oil based mud drilling fluid,” the release said.
It said that during drilling, the Eagle-1 well encountered oil and gas shows through the objective Eocene and Maastrichtian geologic zones and at the, yet to be confirmed, Oligocene zone indicating an active petroleum system where generated hydrocarbons have migrated through the pre-Miocene section drilled by the well.
The company in its release said that after combinable magnetic resonance and modular formation dynamics were run, it was determined that while there was a presence of good quality sandstone reservoirs, they “unfortunately” proved to be water bearing. “Further analyses will be conducted to verify the geological age of the drilled section as well as the chemical composition of the recovered fluids,” the company said.
CGX said that the Eagle-1 well was initially budgeted for 60 days of drilling but experienced weather delays and mechanical issues which extended operations for approximately an additional 30 days.
“The initial cost estimate for the Eagle-1 well was US$55 million, however with the delays the Eagle-1 well is now estimated to cost US$71 million. As a result, the company will need to raise approximately US$20 million in the near term,” the press release said.
Sully, President and CEO, had stated, “Although the results of the Eagle-1 well are disappointing for all stakeholders, this test has gathered valuable information that will assist CGX with determining the drilling location for its next well to be drilled on the Corentyne PPL and for other future targets.”
Sully said that the company’s geosciences team has been interpreting the recently acquired 3D and additional prospects have been identified. “In addition, the team has established that the up-dip termination of our Eagle Deep Turonian prospect is at a shallower depth than originally anticipated. Now that the Eagle-1 well has finished drilling and in response to expressions of interest, CGX is re-opening the data room to re-start the joint venture process,” he said.
Up to February this year, Repsol had expended US$52 million on its operations for Jaguar-1 and this figure was expected to reach a total of US$180 million.
Interest in the Guyana/Suriname basin amplified after explorer Tullow struck oil last year off of French Guiana raising the prospect of the opening of a major offshore oil producing province in South America and boosting its shares.
CGX’s attempt to drill a well here in June 2000 ended after Surinamese gunboats chased its rig from the drill site. This led to a protracted territorial dispute between the the two countries which ended when Guyana approached the Hamburg, Germany-based International Law of the Sea Tribunal and substantially won its case.
