Drilling costs for the Kawa-1 exploration well, located offshore Guyana, are expected to increase as drilling operations are taking longer than expected. As a result, CGX Energy may seek additional funding options.
Frontera Energy is the majority shareholder of and joint venture partner of CGX in the Petroleum Prospecting Licenses for the Corentyne block , where the Kawa-1 well is located, and Demerara block offshore Guyana.
The Kawa-1 well, dubbed one of the most exciting exploration wells in the world, was spud in August 2021, using the Maersk Discoverer semi-submersible rig, with expectations to reach total depth in the first half of December 2021.
However, the two companies informed on Thursday that these plans have now changed and the drilling operations will last longer than expected, increasing the overall cost of the well.
According to the update, the current cost estimate of the Kawa-1 well is now forecast to be approximately $115-$125 million. The previous estimate was $90 million.
As a result, CGX may be required to seek additional financing in keeping with the ongoing drilling program and is currently assessing several strategic opportunities.
When it comes to the well’s progress, to date, approximately 90 per cent of the planned footage has been drilled and the initial results suggest an active hydrocarbon system is present at the Kawa-1 location. Horizon 19, the first of three geological zones targeted by the JV, has been penetrated. Logging-While-Drilling and cuttings indicate the presence of hydrocarbons in several Campanian and upper Santonian formations.
The joint venture will run the planned 9 5/8″ liner at current depth, then drill ahead to the main Santonian target zone (Horizon 23) and the deeper secondary Santonian target zone (Horizon 25). The initial geological results will be further evaluated by wireline logging at the end of the well as part of the logging program for the deeper zones.
The JV also reported that drilling operations have recorded one lost-time injury since August and Covid-19 protocols have resulted in no disruptions to operations and no positive cases detected after arrival on the drilling unit.