Saturday, December 10, 2022

CGX and Frontera Announce U.S. $35 Million Loan Agreement

Frontera Energy Corporation, joint venture partners (the “Joint Venture”) in the Petroleum Prospecting License for the Corentyne block offshore Guyana, announced that they have entered into a financing agreement for a U.S. $35 million loan (the “Loan”) that will enable CGX to continue to finance part of its share of costs related to the Corentyne Block, the Berbice Deepwater Port, and other budgeted costs as agreed to with Frontera.

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“We are pleased to complete this financing agreement in support of our joint venture as we build momentum towards spudding the Wei-1 exploration well in the second half of this year,” said Orlando Cabrales, Chief Executive Officer of Frontera. “These are exciting times for our joint venture and we look forward to working with our partner, CGX, as we build on our recent exploration success at the Kawa-1 exploration well and generating value for our shareholders and the people of Guyana in one of the most exciting basins in the world.”

“The Kawa- 1 exploration well represents a transformative discovery for CGX, in partnership with Frontera. With positive results and data supporting the 200 feet of net pay indicated, we have de-risked our exploration program and can continue to move forward with our overall plans, beginning with Wei-1,” said Professor Suresh Narine, Executive Co-Chairman of CGX. “We look forward to adding to our positive momentum 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 July 31, 2022 or the date on which CGX has drawn down the maximum amount of the Loan. The Loan, together with all interest accrued, shall be due and payable July 31, 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 July 31, 2022, in its sole discretion, the new interest rate will be 15% per annum. The Loan will be secured by all of the assets of CGX. A standby fee of 2% per annum multiplied by the daily average amount of unused commitment under the Loan in excess of U.S. $19 million shall be payable quarterly in arrears by CGX, on the last business day of each fiscal quarter, during the drawdown period.

Subject to the approval of the TSX Venture Exchange (“TSXV”), Frontera in its sole discretion, on or after July 31, 2022, may elect to convert all or a portion of the principal amount of the Loan outstanding, including accrued interest that has not been repaid, into common shares of CGX at a conversion price equal to U.S. $2.42 per common share (being the U.S. dollar equivalent of Cdn. $ 3.10 per common share), provided Frontera provides CGX with 15 business days notice of such conversion.

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