CGX Completes $8.4 Million Financing
CGX Energy Inc. (OYL.U - TSX-V) has completed a previously announced non-brokered private placement. The original announcement was for a $5 million private placement, however the issue was significantly oversubscribed and was closed at $8,412,000. CGX has issued a total of 10,515,000 units at a price of US$0.80 per unit to raise gross proceeds of US$8,412,000. Each unit consists of one common share and one-half common share purchase warrant. Each full warrant entitles the holder to purchase an additional common share at a price of US$1.10 for a period of 18 months until September 21, 2006.The shares issued under the private placement are subject to a four-month hold period. After this financing, CGX Energy's issued capital consists of 93,005,595 common shares and 109,434,913 common shares on a fully-diluted basis.
Of the 10,515,000 units issued, 6,250,000 units were purchased by Sprott Asset Management on behalf of various funds that it manages. When combined with prior purchases, Sprott Asset Management will hold 12.4% of the outstanding shares of CGX. With respect to the private placement, Fort House Inc. was paid a cash commission and broker warrants exchangeable into 322,500 common shares at US$0.80 for a portion of the financing. In addition, GMP Securities Ltd. was paid a cash fee for financial advisory services with respect to the offering.
Kerry Sully, President & CEO of CGX stated, "This financing will allow us to advance our exploration offshore Guyana, where exploration to the east and west of our concessions has intensified over the last 6 months. To the northwest, exploration by ChevronTexaco and ConocoPhillips on the Deltana Platform offshore Venezuela is reported in the press to have discovered more than 5 trillion cubic feet of gas. Also on the Deltana Platform Statoil and TOTAL are conducting a multi-well exploration program. To the southeast, offshore Suriname, three seismic programs totalling 13,000 kilometers have just been completed by Repsol-YPF, Maersk and Staatsolie respectively."
"Within our Corentyne Concession, where we had previously identified our Eagle and Wishbone targets, we have undertaken extensive re-interpretation of the solid-state 2D seismic data we had shot in 1999. Depth-to-time reprocessing has significantly enhanced our understanding of the basin. This has led to state-of-the-art tomography reprocessing, which although expensive, reinforces and adds to all prior interpretations."
"Within our Pomeroon Concession, in December we acquired seismic data that had been shot in 1991-93. Although of older vintage than our Corentyne data, we are applying recent processing technology to this data to define the potential of Pomeroon, which is in the East Venezuela Basin."
Activity offshore Guyana has slowed while maritime borders are being resolved. In this regard, Guyana has opted to proceed through peaceful diplomacy. On February 22, 2005 the Government of Guyana filed its Memorial to present its case under the binding dispute settlement procedures under the United Nations Convention on the Law of the Sea (UNCLOS) in relation to the maritime dispute between Guyana and Suriname. CGX has funded a significant portion of Guyana's legal expense to prepare its case. The full process is scheduled to take approximately another two years. With respect to the Venezuela border the Good Officer process of the United Nations Secretary General is continuing.
"With respect to the our onshore drilling program, four of our locations are prepared and received only modest erosion in the recent flood of the century in Guyana," stated Warren Workman, Vice President of CGX and President of ON Energy Inc., CGX's 62% owned subsidiary in Guyana. "Our onshore concessions in Guyana are held by ON, where our minimum work commitment of aeromag, geochemical surveys and 2D seismic was completed 2 years ahead of schedule. We are prepared to commence drilling as soon as our contracted rig is released from its location in Trinidad,. CGX will announce when the rig is released for delivery to Guyana."
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