CGX Energy : MD&A and Financials for the three and six months period ended June 30, 2023

CGX Energy Inc.

Interim MD&A- Quarterly Highlights

For the three and six months period ended June 30, 2023 and 2022

August 10, 2023

1. INTRODUCTION

This Management's Discussion and Analysis - Quarterly Highlights ("Quarterly Highlights") of CGX Energy Inc. (the "Company" or "CGX") has been prepared to provide material updates to the business operations, liquidity and capital resources of the Corporation since its last management discussion & analysis, being the Management Discussion & Analysis ("Annual MD&A") for the fiscal year ended December 31, 2022. This Quarterly Highlights does not provide a general update to the Annual MD&A, or reflect any non-material events since date of the Annual MD&A.

This Quarterly Highlights has been prepared in compliance with the requirements of section 2.2.1 of Form 51-102F1, in accordance with National Instrument 51-102 - Continuous Disclosure Obligations. This discussion should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three and six month periods ended June 30, 2023 and 2022 ("Interim Financial Statements"), together with the notes thereto, the Annual MD&A, and the audited consolidated financial statements of the Company for the years ended December 31, 2022 and 2021 ("Annual Financial Statements").

Results are reported in United States dollars, unless otherwise noted. In the opinion of management, all adjustments (which consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results for the three and six month periods ended June 30, 2023 are not necessarily indicative of the results that may be expected for any future period. Information contained herein is presented as at August 10, 2023, unless otherwise indicated.

The Interim Financial Statements, have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee. The Interim Financial Statements have been prepared in accordance with the International Accounting Standard 34, Interim Financial Reporting.

For the purposes of preparing this Quarterly Highlights, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of CGX's common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors.

Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Additional information relevant to the Company's activities is available on SEDAR at www.sedarplus.caor on the Company's website at www.cgxenergy.com.

2. FORWARD LOOKING STATEMENTS

This Quarterly Highlights includes "forward-looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and other similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the offshore and onshore oil and gas industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resources estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of the Company to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the risk of CGX not being able to fund the capital and operating expenses necessary to achieve its business plan, the uncertainty

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Three and six months ended June 30, 2023

associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by the Company. The ability of the Company to carry out its business plan is primarily dependent upon the continued support of its shareholders, the discovery of economically recoverable reserves, the ability of the Company to secure customers for the use of its deepwater harbor upon completion of the project and the ability of the Company to obtain financing to develop such reserves. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of the Company should not place undue reliance on these forward looking statements.

Although the forward-looking statements contained in this Quarterly Highlights are based on assumptions that management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements.

Readers are cautioned that the foregoing lists of risks, uncertainties and other factors are not exhaustive. The forward-looking statements contained in this Quarterly Highlights are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward- looking statements or in any other documents filed with Canadian securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. The forward looking statements are expressly qualified by this cautionary statement.

3. OVERVIEW Company Profile

CGX Energy Inc. (the "Company" or "CGX") is a Canadian oil and gas exploration company incorporated under the laws of Ontario, Canada in 1998. The Company's common shares ("Common Shares") are listed and publicly traded on the TSX Venture Exchange ("TSXV") under the trading symbol "OYL".

The Company's head office is located in Toronto, Canada and its principal business involves the exploration for hydrocarbons in Guyana, South America and construction of a deepwater port ("BDWP"), located on the eastern bank of the Berbice River, Guyana. As at June 30, 2023, CGX through one of its subsidiaries holds an interest in a Petroleum Prospecting Licence ("PPL") and related Petroleum Agreement ("PA") on the Corentyne block in the Guyana Basin, offshore Guyana, and is involved through one of its subsidiaries in the construction and development of the BDWP.

The following table summarizes the Company's subsidiaries, the location of their registered offices, and the Company's percentage interest.

		Percentage of
Company	Registered Office	Interest (%)
CGX Resources Inc. ("CRI")	Bahamas	100%
GCIE Holdings Limited ("GCIE Holding")	Barbados	100%
Grand Canal Industrial Estates Inc. ("GCIE") 1	Guyana	100%
CGX Energy Management Corp. ("CGMC")	United States, Delaware	100%
ON Energy Inc. ("ON Energy") 2	Guyana	62%

1. Owned 100% by GCIE Holding
2. ON Energy is in the process of being dissolved. The Company holds no assets, and this process is expected to be completed during the second semester of 2023 with no impact on the Financial Statements.

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Highlights

Highlights of the recent activities to date of the Company and its subsidiaries include the following:

Wei-1 Well Operational Update

On June 11, 2023, the Wei-1 well, reached a total depth of 20,450 feet (total depth planned 20,500 feet) and wireline logging operations were completed on June 23, 2023. The Wei-1 well operations were completed on July 5, 2023, and the rig was released. The Wei-1 well was drilled by the Company and Frontera Energy Corporation ("Frontera"), joint venture partners (the "Joint Venture"), the Company holds 32.00% participating interest with Frontera holding the remaining 68.00% participating interest in the Corentyne block. Wei-1 is located 14 kilometers west of the Kawa-1 discovery well announced by the Joint Venture last year.

The Wei-1 well encountered 210 feet of hydrocarbon bearing sands in the Santonian horizon. The Joint Venture acquired wireline logs and extensive core samples from the Santonian, however, due to a tool failure downhole and a back-up tool not being available, oil samples were not obtained. The rock and fluid properties of the Santonian will now be analyzed by an independent third-party laboratory over the next two months to define net pay and a basis for the evaluation of this interval. The Joint Venture updated its previously announced discovery in the Maastrichtian and the Campanian intervals to 77 feet of net pay.

The Wei-1 well encountered multiple oil-bearing intervals in the western channel fan complex of the northern portion of the Corentyne block in formations of Maastrichtian, Campanian and Santonian ages. A comprehensive logging campaign in the Maastrichtian interval indicated the presence of medium sweet crude oil of 24.9 API. Downhole fluid analysis confirmed light crude oil in the Campanian interval. Wireline logging data and cuttings indicated the presence of hydrocarbons in the Santonian; fluid samples have not yet been obtained. Core samples have been recovered in the Santonian interval and are currently in the lab being analyzed. It is not yet certain that the hydrocarbons encountered to date in the Wei-1 well are yet sufficient to underpin commercial development on the Northern portion of the Corentyne block.

On June 13, 2023, the Joint Venture updated its Wei-1 well total cost to approximately $190-$195 million to reach the total depth, complete the logging runs and finish the well as planned. The Company continues with the financial closing of the Wei-1 well and expects final costs to be in line with the $190-$195 million range. The additional cost includes the delays associated with the late release of the rig by a third-party, and costs associated with fishing, lost sampling tool, and the drilling of the bypass well. CGX is required to fund its 32% interest, after partner carry, of approximately $16 to $17 million.

2023 Joint Operating Agreement Amendment (the "2023 JOA Amendment")

On August 9, 2023, the Joint Venture has entered into an agreement to amend the joint operation agreement originally signed on January 30, 2019 and subsequently amended on July 21, 2022 (the "2023 JOA Amendment"), whereby Frontera will effectively be farming into the Corentyne block to cover unexpected additional costs of the Wei-1 well.

As part of the 2023 JOA Amendment, the Company will transfer up to 4.7% of its participating interest in the Corentyne block to Frontera in exchange for Frontera funding CGX's additional expected outstanding share of the Joint Venture's costs associated with the Wei-1 well for up to approximately $16.5 million. As a result of this agreement, if the maximum amount is transferred by CGX, the Company will have a 27.3% participating interest and Frontera will have a 72.7% participating interest in the Corentyne block. The Agreement remains subject to regulatory approvals, including approval of the TSX Venture Exchange.

Berbice Deep Water Port

Work on in-river construction of the 50 x 12 m access trestle being built from the quayside yard westward into the Berbice river is progressing on budget and no HSE related incidents, with completion of the trestle expected in August 2023. The Berbice Deep Water Port ("BDWP") facility

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intends to serve as an offshore supply base for the oil and gas industry and as a multipurpose terminal to service agricultural import and export, containerized and specialized cargo including aggregates for construction purposes. The BDWP aims to enable provisioning of operators and vendors in territorial waters of both Guyana and Suriname.

Change in Directors

CGX announced on March 1, 2023 that Veronique Giry, a Frontera nominee to the CGX Board, has stepped down as a director of the Company, effective February 28, 2022, and that Mr. Orlando Cabrales Segovia, CEO and Board Member of Frontera, has been appointed to the CGX Board.

4. CARRYING ON BUSINESS IN GUYANA

The exploration and evaluation activities of the Company are currently being conducted in Guyana through its subsidiaries. Guyana is situated on the northern coast of the South American continent. It is bound on the north by the Atlantic Ocean, on the east by Suriname, on the south-west by Brazil and on the north-west by Venezuela. Guyana's total area is approximately 215,000 km2. Its coastline is approximately 4.5 feet below sea level at high tide, while its hinterland contains mountains, forests, and savannahs. This topography has endowed Guyana with its extensive network of rivers and creeks as well as a large number of waterfalls. Guyana is endowed with natural resources including fertile agricultural land and rich mineral deposits (including gold, diamonds and semiprecious stones, bauxite and manganese).

Guyana is divided into three counties (Demerara, Essequibo and Berbice) and 10 administrative regions. Georgetown is the capital city of Guyana, the seat of government, the main commercial center, and the principal port in Guyana. In addition to Georgetown, Guyana has six towns of administrative and commercial importance which are recognized municipal districts; each has its own mayor, council and civic responsibilities. Guyana is an independent republic headed by the Executive President and National Assembly. Guyana is a member of the British Commonwealth of Nations, with a legal system based for the most part on British Common Law.

5. THE PETROLEUM REGIME IN GUYANA

Under the Guyana Petroleum Act, PAs, and associated PPLs, for petroleum exploration in Guyana are executed by, and subject to the approval of, the Minister Responsible for Petroleum. Within Guyana, subsurface rights for minerals and petroleum are vested in the state. PAs may address the following matters: (i) granting of requisite licences; (ii) conditions to be included in the granting or renewal of such licences; (iii) the procedure and manner with respect to the exercise of Ministerial discretion; and (iv) any matter incidental to or connected with the foregoing.

The Guyana Geology and Mines Commission ("GGMC") is the statutory body responsible for administering PAs and PPLs for petroleum exploration in Guyana. The GGMC has been charged with the responsibility for managing the nation's mineral resources.

In order to obtain a PPL, the licencee must:

• submit a PPL application to the Minister Responsible for Petroleum, including a detailed annual work program and budget; and
• agree to comply with licence conditions stipulated by the Minister Responsible for Petroleum, including conditions stipulated in the applicable governing PA.

A PA and an associated PPL enable the holder to conduct prospecting and exploration activities for petroleum on the subject property in accordance with the terms and conditions of such PA and PPL. A PPL is issued for an initial period not exceeding four years, and is renewable for up to two additional three-year periods. In the event of a discovery, the holder may apply for a 20-year PPL, renewable for a further 10 years.

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