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I'm with you MadP. None of what Mole said made much sense to me with what is out there at the mo unless he knows more than he is saying. I.e. replace "I think " with "I know" in his post...
Mole - Assuming that Zaza wanted to abide by the NDA , then when you asked if the 3 trainloads of oil auctioned by the GG was from FRR, he couldn't tell you if it meant that the production could be ascertained. Also, the GOGC website as well as FRR's both changed and the new websites don't show lots of relevant historical data. We know that there was a problem selling the oil in 2018, which could explain the three trainloads in quick succession. The two trainloads per year prior to the Autumn of 2018 match's FRR's two trainloads per year. Why would the GG only sell two trainloads by auction, when they produce and have a share from other companies for a greater amount per annum? FRR's oil is different as the company hasn't got to the point where the GG's share starts, after the sunk costs are recovered. As the GG was in dispute about the sunk costs it is logical they would want to keep an eye on the amount sold until those costs are covered. As they would be selling FRR's oil then it would be auctioned for transparency. Why would they need to auction their own oil or oil received under PSA's? If my assumptions are correct, any further trainloads auctioned in 2018 would probably have been paid in 2019 due to the 45 day settlement and the Xmas/ New Year holiday period. This accounts for 500k barrels of oil produced, but only a profit of $1.2m, plus gives the right flow rates to produce up to 2kbopd stated in the interview.
There's no listing of any arbitration between FRR and the GG, only an article from a year ago, which was released while FRR were fighting for Dolphin. Furthermore, a 99% grab could not be referred to as 'a sledgehammer to crack a nut', whereas a 5% RA deal resulting in a 2.45% increase in the 51% GG share to 53.45% under the PSA could be described in such a way.
If the 5% RA is not a way of giving the GG an extra piece of Block 12, in exchange for helping to get rid of SH/O by transferring the asset, what is it for? A 5% Royalty of current production wouldn't be enough to satisfy the DoS if my theory of enough money left in FEGL isn't believed. Therefore, I don't see any alternative as to why the 5% RA was left in FRCC, a company which was going to be liquidated.
I think that the Mourant case, the liquidation of FRCC and the Texas case will all be resolved by monies left in FEGL from production revenue.
There is an issue that GG with their arbitration are hindering FRR from progressing, if arbitration were to be detering funding or even n deal. I think that could be proven quite easily (whatever GG were arguing on regards to progress or lack thereof). Have a feeling we'll come out of this OK in the end.
JME ,
My understanding is the the PSA was not up for any review until June next year ie, we had until then to get a certain amount of production. If we had not hit certain targets by then the license was up for review and could be taken back.
I'm busy atm but am pretty sure it's in an RNS somewhere, perhaps Mole can answer that one If he is still around or MP can help. I will look later if no one else has.
GL all.... this can still be turned around and yes it might be 2020 however I think the Arbitration is coming up in Sweden very soon and we could hear soon after the result of that
correct me if I'm wrong but we haven't seen any details of arbitration from a court yet?
It'll be a mediation type process anyway wont it behind closed doors. (apart from FRR trying to sue Georgia)
Gipps
Have to say that your posting has become top quality.
Keep it up
Gipps
You say arbitration brought foreward, was that in the last court update?
Thanks
ODR , just musings really. Theres enough information out there to know we are not dead. It's the silence that's killing some!
I never said I thought there would be a relist ! I want it completely taken out of my hands with a special dividend then dividends twice a year going forward.
We wait on the arbitration that seems to have been brought forward ,,, I wonder why !
GLA
Thanks Gipps; good points.
If we do come out the other side then a relist will happen imo. It helps ensure good governance (in theory!) and will undoubtedly provide a wider range of fundraising options.
GLAsnost
ODR.
I would not completely rule it out as I guess there would be ways to get round it. I think its unlikely though but not impossible. I'm not taking about major money with a Super Major . ZAZA said last October that the Super Majors , one of which was ahead of the other one in negotiations were very happy with what they had seen and had found a way of reducing Capex . That does not suggest to me that they would fund any work on the field in 2019 not knowing what might happen with arbitration and the PSA, however what they might have done is done some kind of deal around first refusal. Just so thoughts....
It's unlikely we would get offered a loan without the arbitration being sorted either, that said we seemed to be getting offered money the end of last year by a couple of lenders and the arbitration had already come out by then .
One other thing to add from earlier. Why try to move the asset if there is little or no production ? If we are eventually allowed to move the asset into another company by the GG ( which could be part of the arbitration negotiations ) and the shareholders were locked out of that happening I'm sure we would get together and mount a legal challenge that could drag on years.
My thoughts are we will do a deal with the GG that involves giving back more than the 5% and that the shareholders will not be locked out . They will want this done and dusted and be able to move on with field development at a pace... it's already been 20 plus years...
Gipps: I think we can be confident that there is no deal with any major yet as they (ie the super major) would have had to announce it to their shareholders.
Arbitration is a negotiation. This means the GG are negotiating with us to reach a resolution. My understanding is that we have until june next year to start producing at an agreed level. They might want the whole block back, infact obviously they do if the box is full. If its empty why arbitration ?
Mole says we must still be producing oil to pay the Bill's unless creditors are accepting deferred payments. Why would they do that without an assurance of getting paid. ... pretty big bills with 240 employees, who would not accept deferred payments.
Zaza stated that the profit was $1million from producing 500k barrels in 2018 ... we know the production costs are Ca $12 a barrel, even if early production costs were double that on that amount of barrels the profit should have been way above $1 million . Either theres Bill's we dont know about or that's a schoolboy error from the man.
I do believe they would have opened the choke to get cash in if they were desperate, wouldn't anyone to keep the business alive .
To develop the field in Block 12 it's clear we would need money . Just a guess but that money could have come from a Super Major ( not an outright deal ie a JV or FO ); or a deal with BH maybe even a loan . Hope has been off the board for nearly 6 months now so funding could have been arranged.
In summary it sounds like we are still alive and with the backing of the USA we could still come out of this..
Glass half full for me , intact just over half full.
400million spent and now want 99% back I don't think so!
BUT THEN
In September 2018 Frontera made counterclaim, claiming USD 3.5 billion as lost profits for the period 2012 through 2027 for certain alleged breaches of the PSA by the Company and SAOG. This counterclaim was not supported with any expert report calculation. The Company and SAOG consider the counterclaim to be without merit and intend to contest the counterclaim vigorously. In addition to the claim for the lost profits, Frontera asserted a claim for taxes (VAT and excise tax) in the amount of USD 3.5 million and claimed for legal costs allegedly incurred in obtaining land access to block XII in the amount of USD 74 thousand.
Management believe that the Company and SAOG have factual and legal bases to win the case, and that possibility for Frontera to win these claims is remote. The proceedings are in progress, next hearings are expected to take place in October 2019.
Not much of October to wait out and see. Although there doesn't seem to be a trace of the case or another mention since the original info was posted and that article that surfaced recently. Obviously not having the foggiest what is going on behind the scenes perhaps the license move attempt has prompted other things into motion with the GG. Maybe the dispute was even resolved there and then as part of the approval, if it indeed was.
Frontera Case:
In July 2018, the Company and SAOG (State Agency of Oil and Gas) submitted their statement of claim against Frontera Resources Georgia Corporation. SAOG and the Company inter alia are claiming that Frontera has materially breached certain provisions of the PSA (profit sharing agreement) including but not limited to the relinquishment of approximately 99% of the Contract Area. Apart from this the Company and SAOG are seeking reimbursement of damages including a monetary compensation for the breach of oil sharing and relinquishment obligations and reimbursement of the natural resource enjoyment fee which was paid by the Company and never reimbursed by Frontera.
Georgian Oil and Gas Corporation JSC Notes to the Consolidated Financial Statements for 2018
36
The Company and SAOG believe that there is a high likelihood that the arbitration tribunal will hold that Frontera breached its contractual obligations.
Purely hear say - Can't just make up carp like that then go off into one.
ridiculous
Please remind me, I've not seen any credible evidence that the GG want 99% of block12 or that there would be even the remotest chance of them achieving that in any arbitration.
Thanks Mole for your observations. Question to you or anyone who knows the geographical makeup. Are you suggesting that the Taribani, Mtsare and Mirzani represent 1% of Block 12????
You say
Allegedly GG want 99% of the block back. But its a big block. That would leave the producing Taribani, Mtsare and Mirzani in the 1%.
Is it that big and are you saying that the 99% is made up of the basin edge and all other Frontera untouched/unexplored areas? Also are you suggesting there is a possibility Shlumberger are waiting in the wings to take over the Basin Edge?
realistic and sensible post Mole
Thanks Mole.
Feeling subdued again...
A few observations from watching the posting of the last few weeks.
1. Revenue and Oil production: Logic suggests we are still producing at least enough revenue to pay existing trade creditors and staff as they are falling due either that of trade creditors are willing to accept deferred payments. I would guess they are able to juggle funds as they arrive at the moment. The 2018 campaign will have increased revenue. The debate is around how much. I very much doubt we are producing the numbers from the Ukraine article. The giveaway to that is that profit was $1m irrespective of what he said on production volume. Again the second remark Zaza made on sustainable long term production gives you a clue - you can produce on very high volume on open choke but that isn't a sustainable strategy. Could FRR have opened it up a bit for short periods to get cash? Possibly but they would not run it like that for any length of time in Taribani. The profile of taribani wells to date is steady production over time not gushers. Equally if they were producing in volume they would have had to have dealt with the associated gas.
However, it seems to me highly unlikely they have funds for further Georgia exploration without an external funding source or a partner. Hence the Ukraine bid is interesting in that regard. They may well have had prospective funding source for that - but away from the Georgia turmoil of OMF and arbitration.
2. Arbitration
For me the key at the moment is the arbitration. Do some sums on the claim. Allegedly GG want 99% of the block back. But its a big block. That would leave the producing Taribani, Mtsare and Mirzani in the 1%. Apart from Basin edge - most of that I would suspect is prospective for the Gas. The wildcard on gas at the moment is Schlumberger operations in adjacent Block. We don't know what they are up to either its also very quiet. FRR pushing out and delaying OMF does have the effect of pushing the end game for that the other side of the arbitration. The biggest risk in that at the moment is the damage the attempt to transfer the license out of FRCC has done - as it possible we are still in a limbo state with the company in liquidation with title to the license potentially unwound by the Cayman case and approval of said transfer to evade the liquidation threat moot with GG. Both pose existential threats to the business and could result in GG being the winner. I've seen these ideas about 5% royalty reverting to GG - they don't make sense to me. I think an all or nothing game is being played here.
3. Ukraine : anyone who watches the news about US, Gas companies and Ukraine at the moment would keep a low profile. I'm amazed we have so far not got a mention.
4. Texas case: The common thread of the 3 "defaults" is OMF cases. 500m shares if they have to - they will issue from the 1bn unissued. If paid by SN/ZM its a debt on the company to the board.
Not a good place as shareholders - but not finished eith