CGX, a Canadian-based oil and gas exploration company focused on oil exploration in the Guyana-Suriname Basin, has entered into a loan agreement with a subsidiary of Frontera Energy Corporation, its joint venture partner in a petroleum prospecting license for a block offshore Guyana.
Thanks to a senior secured loan facility secured with its partner in Guyana’s Corentyne block , CGX will continue to finance its share of costs related to the corporate working capital costs and other budgeted ones.
The $2.5 million loan will be available for drawdown in tranches on a non-revolving basis for a period of six months, beginning upon the completion of the conditions precedent to the first tranche drawdown.
During the drawdown period, CGX may request drawdowns provided that the maximum amount of any tranche drawdown does not exceed $1.9 million and that the aggregate amount of all does not surpass $2.5 million.
The loan, together with all interest accrued, is set to be due and payable a year after the date it was arranged, with interest payable on the principal amount outstanding accruing at a rate of 19.32% per annum, compounding on a monthly basis.
The arrangement remains subject to customary conditions, including the Canadian player obtaining regulatory approvals. This loan comes months after Frontera and CGX urged the Guyanese government to work out the issues surrounding the Corentyne block license.
The two players were adamant in their intention to seek legal avenues to assert and defend their interests if such an attempt failed after they received another communication from the country’s government regarding the termination of their license.
On July 23, 2025, the government of Guyana, through its legal counsel, reaffirmed its view that the joint venture’s interest expired on June 28, 2024, but noted that it may consider a final meeting in October 2025, with the JV getting informed as to whether such a meeting would occur in September 2025.
While drilling an appraisal well for the Kawa-1 appraisal program, the JV made the Wei-1 discovery in 2023 as its second one on the Corentyne block, claiming that it fulfilled the obligation under Phase 2 of the second renewal period of the original ten-year license.
The joint venture holds 100% working interest in the Corentyne block, located offshore Guyana. Frontera Guyana and CGX Resources have agreed that their respective participating interests are 72.52% and 27.48%, which includes a 4.52% interest that the latter agreed to assign to the former in 2023.
The assignment of this 4.52% participating interest remains subject to the approval of the Government of Guyana, but is believed to be enforceable between Frontera Guyana and CGX Resources.