ENABLES CGX TO CONTINUE TO FINANCE ITS SHARE
OF JOINT VENTURE EXPENDITURES
KAWA-1 REMAINS ON-TRACK TO SPUD IN
2H21
TORONTO, April 16, 2021 /PRNewswire/ - Frontera
Energy Corporation (TSX: FEC) ("Frontera") and CGX Energy
Inc. (TSXV: OYL) ("CGX"), joint venture partners (the
"Joint Venture") in Petroleum Prospecting Licenses for the
Corentyne and Demerara blocks offshore Guyana, announced today that they have entered
into a term sheet for a $19 million
loan (the "Loan") that will enable CGX to continue to
finance its share of costs related to the Corentyne, Demerara and
Berbice blocks, the Berbice Deepwater Port, and other budgeted
costs as agreed to by Frontera.
"Our joint venture with CGX represents a significant growth
opportunity for both companies and is rooted in a commitment to the
Guyanese government to develop these world class assets with a
focus on local engagement and the development of infrastructure,"
said Orlando Cabrales, Chief
Executive Officer of Frontera. "Completing the loan
agreement with CGX is an important step forward and the Joint
Venture remains firmly on-track to spud its first offshore
Guyana well as planned in the
second half of this year."
"These are exciting times for CGX, the Joint Venture and our
stakeholders as we get closer to spudding Kawa-1," said Professor
Suresh Narine, Executive Co-Chairman
of CGX. "We have exciting exploration plans for the Kawa-1 and
Makarapan-1 wells on the Corentyne and Demerara Blocks and, as
importantly, we are developing the infrastructure necessary to
support and enhance broader energy and trade industry activity
through the Berbice Deepwater Port Project. We look forward to
executing on our programs and creating value and opportunity for
our stakeholders."
The Loan to CGX will be available for drawdown in tranches on a
non-revolving basis until the earlier of October 31, 2021 or the date on which CGX (or its
subsidiaries) enters into a binding transaction that provides funds
to repay the amounts outstanding under the Loan. The Loan, together
with all interest accrued, shall be due and payable on June 30, 2022, or such later date as determined
by Frontera, at its sole discretion. Interest payable on the
principal amount outstanding shall accrue at a rate of 9.7% per
annum payable monthly in cash, with interest on overdue interest.
If the Loan is extended by Frontera past June 30, 2022, at its sole discretion, the new
interest rate will be 15% per annum. The Loan will be secured by
all the assets of CGX. The Loan agreement also includes a standby
fee of 2% multiplied by the daily average amount of unused
commitment under the Loan payable quarterly in arrears by CGX
during the drawdown period.
Subject to the approval of the TSX Venture Exchange
("TSXV"), Frontera in its sole discretion, may elect to
convert all or a portion of the principal amount of the Loan into
common shares in the capital of CGX at the conversion price per
common share equal to US$0.712 (being
the U.S. dollar equivalent of the C$0.89 closing price of the common shares on the
TSXV prior to the announcement of the Loan), or any amount as
required by the TSXV, at any time (A) after July 15, 2021 and on or before February 15, 2022, in certain circumstances on
the condition that Frontera first notifies CGX in writing of its
decision to exercise its conversion right, and CGX either (i) fails
to notify Frontera, within fifteen calendar days following delivery
of the Frontera notice, that it will repay all amounts outstanding
under the Loan in cash or (ii) fails to so repay all amounts
outstanding under the Loan within fifteen calendar days following
CGX's timely notice of its intent to repay the Loan, or (B) after
February 15, 2022, on the delivery of
a conversion notice by Frontera if CGX Resources has as of
July 15, 2021 entered into a
binding transaction (which closing is subject to government
approval only) that will provide it with funds to repay outstanding
amounts under the Loan. The maximum number of common shares which
may be acquired by Frontera upon the conversion of the Loan is
26,685,393 common shares, which represents approximately 9.28% of
the currently issued and outstanding common shares of CGX.
The Loan contemplated by the term sheet remains subject to
customary conditions, including the negotiation and execution of
definitive agreements between Frontera and CGX and obtaining
regulatory approvals. There is no guarantee that definitive
agreements will be executed on the terms contemplated, or at
all.
The transactions described herein between Frontera and CGX are
related party transactions under Multilateral Instrument 61-101 but
are exempt from the obligations to obtain a formal valuation and
approval from a minority of shareholders. The material change
report to be filed by CGX in connection with this news release will
contain the required disclosure regarding such exemptions.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
About CGX:
CGX is a Canadian-based oil and gas exploration company focused
on the exploration of oil in the Guyana-Suriname Basin.
About Frontera:
Frontera Energy Corporation is a Canadian public company and a
leading explorer and producer of crude oil and natural gas, with
operations focused in South America. Frontera has a
diversified portfolio of assets with interests in more than 40
exploration and production blocks in Colombia, Ecuador and Guyana. Frontera 's strategy
is focused on sustainable growth in production and reserves.
Frontera is committed to conducting business safely, ethically in a
socially and environmentally responsible manner. Frontera's common
shares trade on the Toronto Stock Exchange under the ticker symbol
"FEC".
If you would like to receive News Releases via e-mail as soon as
they are published, please subscribe here:
http://fronteraenergy.mediaroom.com/subscribe.
Advisories:
Cautionary Note Concerning Forward-Looking
Statements.
This news release contains forward-looking statements. All
statements, other than statements of historical fact, that address
activities, events or developments that Frontera and CGX believe,
expect or anticipates will or may occur in the future (including,
without limitation, statements regarding the entering into of
definitive agreements, the timing of the Guyana exploration program, the completion of
a financing, obtaining regulatory approvals, continued exploration
and success thereof, and CGX obtaining sufficient working capital,
estimates and/or assumptions in respect of CGX's and Frontera's
exploration and development plans and objectives, including its
drilling plans and the timing thereof) are forward-looking
statements. These forward-looking statements reflect the current
expectations or beliefs of Frontera and/or CGX, as the case may be,
based on information currently available to them. Forward-looking
statements are subject to a number of risks and uncertainties that
may cause actual results to differ materially from those discussed
in the forward-looking statements, and even if such actual results
are realized or substantially realized, there can be no assurance
that they will have the expected consequences to, or effects on,
the applicable companies. Factors that could cause actual results
or events to differ materially from current expectations include,
among other things: with respect to Frontera, failure to obtain
regulatory approval and reach appropriate definitive agreements
with CGX; with respect to CGX (and as applicable Frontera), failure
to reach appropriate definitive agreements with Frontera, obtain
regulatory approval, successfully explore and develop the offshore
blocks, and unforeseen costs and expenses; changes in equity and
debt markets; perceptions of the applicable company's prospects and
the prospects of the oil and gas industry in the countries where
the companies operate or have investments; and the other risks
disclosed in the applicable continuous disclosure documents under
each of Frontera's and CGX's profile on SEDAR at www.sedar.com. Any
forward-looking statement speaks only as of the date on which it is
made and, except as may be required by applicable securities laws,
each of Frontera and CGX disclaims any intent or obligation to
update any forward-looking statement, whether as a result of new
information, future events or results or otherwise. Although each
of Frontera and CGX believes that the assumptions inherent in the
forward-looking statements applicable to it are reasonable,
forward-looking statements are not guarantees of future performance
and accordingly undue reliance should not be put on such statements
due to the inherent uncertainty therein.
View original
content:http://www.prnewswire.com/news-releases/frontera-and-cgx-announce-19-million-loan-agreement-301270927.html
SOURCE Frontera Energy Corporation