May 8, 2012 / 2:32 PM / in 6 years

CGX Energy crashes after hitting water in Guyana project

May 8 (Reuters) - Shares of CGX Energy Inc slumped 73 percent to a three-and-a-half-years’ low on Tuesday, after the oil and gas explorer said its Eagle-1 project in Guyana had water, and not oil.

CGX Energy spent C$71 million - C$16 million more than it had budgeted for - and spent 30 extra days to examine the commercial feasibility of the project, it said in a statement.

“Both logs identified the presence of good quality sandstone reservoirs that unfortunately proved to be water bearing,” said CGX Energy, which will need to raise about C$20 million to compensate for the cost overrun.

Shares of the company, which is focused on the exploration of oil in the Guyana-Suriname Basin, were trading down 65 percent at 37 Canadian cents on the Toronto Venture Exchange. (Reporting by Aftab Ahmed in Bangalore; Editing by Joyjeet Das)

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