Canada’s Pacific Rubiales Energy Corp has agreed to purchase 85,714,285 units of CGX Energy Inc. (“CGX”) at a price of C$0.35 per unit for an aggregate investment of C$30 million.
At the same time, the Company has entered into a technical services agreement with CGX whereby Pacific Rubiales will provide technical assistance to CGX in respect of its operations. In addition the Company will have an option to participate in each of the next wholly owned commitment wells to be drilled on the Corentyne and Annex offshore Petroleum Production Licences (“PPL”), in Guyana, by funding 50% of the exploration well costs and certain seismic costs, in exchange for a 33% interest in the respective PPL’s.
Ronald Pantin, Chief Executive Officer of the Company, commented: “This is a great opportunity for the Company to expand its investment in the highly prospective offshore Guyana oil play. Through our ownership in CGX, the technical services agreement and a direct earning option, the Company will be participating in an exploration campaign in an offshore basin with analogous geology to West Africa and Brazil. We are looking forward to working with the management of CGX on realizing the potential of offshore Guyana. This investment is strategic to the Company’s objective of being the leading Latin American independent explorer and producer of hydrocarbons.”
The purchase of the units is being accomplished by way of a private placement offering by CGX. CGX will use the proceeds from the private placement to fund expenditures related to the Company’s oil and gas exploration activities in the Guyana-Suriname Basin and for general corporate purposes.
Pacific Rubiales currently owns 58.7 million shares of CGX, which were acquired by the Company through a bought deal financing that closed in October 2011. Upon issuance of the units, the Company will hold approximately 35% of the issued and outstanding common shares of CGX on a non-fully diluted basis. The Company will also be entitled to nominate up to three directors to serve on CGX’s board of directors.
Offshore Energy Today Staff, May 31, 2012