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Thanks Mole, appreciate that response! Well considered and knowledgable.
This is a case of waiting it out now.
Good luck to all the good folks here!
ZiggyZag, you said,
"With their history of investigations into them by SEC do you really think that they would expose themselves to scrutiny via the litigation process against FRR if they felt their past actions with the company would cause them further legal issues ."
---------------
What we do know - and it was RNSd clearly by FRR - that YA were dealing with shares that had no right to have at that point. Those shares hadn't as yet been issued by the company.
See RNS from 17 September 2018 :-
https://www.investegate.co.uk/frontera-resources--frr-/rns/update/201809170700079289A/
The see RNS from 19th Oct 2018 :-
https://www.investegate.co.uk/frontera-resources--frr-/rns/update-regarding-ya-ii-pn--ltd-matter/201810190700025391E/
From the latter of these RNSs :-
"As part of the settlement, (i) the Company withdrew its claims against YA as announced on 17 September 2018 and 19 September 2018, (ii) YA cancelled its 30 August 2018 and 3 September 2018 conversion notices and withdrew its 12 September 2018 notice of default, and (iii) the Company and YA mutually released each other from claims relating to this disagreement."
If YA hadn't been in the wrong, how is it FRR come out of this ruckus in more advantaged state? How is it YA were not able to turn the screw? (Which I'm sure YA would have been looking to do if they had been in the right)...
Mole ,many thanks for your sensible reasoned posts . Dont blame you for giving it a rest tbh .
To my mind it looks as if FRR have been hamstrung and unable to develop the field to bring in more revenue. I think there is big potential in the field but because of the litigation, the arbitration, the obstructiveness of the GG, etc I don't reckon Frontera have been able to make any deals, loans, JV, buyouts, etc as a result of it. That means that FRR have potentially been jogging on these past two years theoretically making a loss but not paying hardly anyone only those that are deemed absolutely necessary too. That they have not found the money to scrap together to pay of YA points to this as does the restructuring of the loan repayments to YA, the smaller repayments could be made leaving the large repayment till the end which FRR probably knew they would be unlikely to pay so thereby putting off legal action to later date.
I still think there is wealth in the field though, it's just stuck in the ground. Zaza, SN, etc would have walked long ago if there wasn't. Hope, YA, etc would have done so too if there wasn't. Then there is all the data and legal statements to say that there is.
To me it's looking like Zaza going is just more delaying tactic, I assume, though we will probably find out for sure along the way somewhere. He and SN have a large amount of shares so stand to lose a lot so they won't want to lose. Until a deal gets done and new big finance comes in though we are going nowhere fast with liquidation potentially looming but not knowing where, when or if.
Big question is whether a deal is now possible now that we are post Arb and the GG have backed down. The Election is coming up and that gives the potential to be rid of the GD and those problems. The litigation remains but if investors see it as money being able to put the litigation to bed will they go for it? It seems it all relies on FRR being in a position for someone to touch it with a barge pole. That or Hope, YA etc and FRR come to terms with each other to get the oil field developed so they can all take their respective cut. Either way it seems something needs to be done.
Because that I fear is the one case they can't lose - its the one that stops all the others concluding. They simply can't lose that and survive. If there was evidence in discovery it should have concluded. All the others the company would throw in as part of damages if they won or would resolve themselves. If its mediated the others go away with a new funding partner. That has always been the case as I will keep repeating we are in the same place as oct 2018 and June 2016 in that respect.
The ability to attract a partner or funding relies on ending the litigation and there being an asset big enough to attract a partner in a way that does not wipe us out. If T39 proved that then we really should not have endured the last 2 years.
I'll not debate this further as the company have decided to go it alone - in Steve case on his own now.
I shall watch it unfold but it looks more like an end game in a game of chess where Steve is playing for a draw by moving his king back and forth and his opponents haven't worked out how to end it. It should never have happened - if T39 is as good as you think the back to back funding from the Durham loan should have happened in Jan 2019, a nomad would have been found and we could have still been listed enabling YA to to paid off. I admire the optimism in watching and seeing positives in the litigation. I don't share that optimism I'm afraid. Its a dangerous and unpredictable strategy/tactic that I don't like.
So for now that's me done for a bit. I'll watch but won't post further on FRR.
My money has gone. I have known that for a long time. I invested here as we all did mainly because of Steve and more recently Zazas dream. His alignment with us and his appearances at the London meets. Clearly things have gone wrong. One thing though. Why o why could he not even been man enough to face us one last time. Finalist and end the dream so we could all move on with our lives.
Mole - YA wouldn't sit tight if a deal ensures the California case is heard and they end up incriminating themselves, as explained in my earlier post.
Mole - T39 was a gusher, but due to the associated gas probably had to be capped after the EWT (no flaring of gas). Why have FRR employed 7 lawyers in the California case if they are just stalling in California (posted by Earsbern if my memory is correct)? Surely with the lack of money they wouldn't hire so many.
CF and Mad. I'll stop posting for a bit and watch what happens. I'm observing a protracted and unfolding wreck. The reason its taking so long to unfold is in my opinion that there are alot of creditors and only 1 asset. Outrider are secured - YA less so through the preference shares and at back of queue the GG and all the trade creditors and staff.
The money explanation is actually pretty simple if you factor in a drop in oil prices and discount fantasy production volumes. At the time of the delist the company was running at a loss and unable to pay the loan interest - they needed to add at least 500 bopd to break even. We know the first well dropped back. The second probably did as well and the final deeper well will have as well. I think we ended up at around 200 to 250 bopd max and it could be lower if the third well was locked in due to having no gas gathering. Since then they have gradually discarded the staff and the list of unpaid parties grows each time we look. It simply does not look like a careful plan to me.
For what its worth I think the plan was:
1. Start the fiduciary case as leverage.
2. Outrider mediate and allow debt interest rollover or FRR attract farm in or back to back replacement loans.
3. GG give in on the arbitration and things carry on as before hedge with Political lobbying.
4. With 1 to 3 in place go back and carry on in block 12 either with a new partner or new funds with Baker Hughes in the field.
The problem is thats not what happened. Outrider would not back down and using insurance funds could defend the fiduciary case and then use their own funds to engage FIT. The GG far from backing down also dug in and when FRR tried to execute the transfer the two streams collided and converged neither having been resolved.
Meanwhile by not resolving in april 2019 the company had to cut its costs to virtually nil and clearly have either chosen to or can't pay anyone - including YA. Having lost the listing they could not seek help from shareholders to issue equity and YA obviously didn't want the 1bn illiquid shares. With the asset under risk from Outrider and GG the company found getting a loan and a partner nigh on impossible and that issue has been aggravated by the covid induced oil price drop.
Issues and problems have then just fed into each other and gradually the management team has left. The first director left in 2018, then Levan and finally Zaza.
The geo politics plays a part here but at the end of the day I suspect I have lost my money here because the drills in taribani did not flow enough in 2018 to pay the interest on debts we had been told would rollover and being delisted they had nowhere else to go.
YA as preference share holders had rights to share in any takeover farmin gains. If they thought there was a prospect of that they would sit tight . Whilst we owe them $2.8m on paper - they had already recovered their funds by preselling and the extra $1m added at the start.
CF73...you say
4. YA were caught naked shorting, which is illegal. In order to naked short, they had to get the shares out early and then, of course, apply the screw, just as others were simultaneously were doing (GD with their arbitration; TW and his lot etc). But they got caught. ....
With their history of investigations into them by SEC do you really think that they would expose themselves to scrutiny via the litigation process against FRR if they felt their past actions with the company would cause them further legal issues .
Mole, I see you the issues you raise earlier. I do not think that they necessarily put to bed the matter, indeed, they have very plausible answers/ responses, which to some degree or other have been answered by MadP. Having gone through both responses, I had feelings about how I would have responded in some of the places
1. As Madp says, there had been lobbying going on for some time. However, the case (i.e. GD heavy interference and corruption) was emergent and only becoming demonstrable enough for US intervention much later. Earlier, FRR were just a puddly company. Later, we were potentially onto something, added to which, very importantly, GD corruption had become clearer and pretty much self-evident. This would have made it far easier for the US to intervene in Georgia, a former Russian/ USSR region/ state/ province, right on the doorstep of present-day Russia.
As much as it may seem easy for the US to wade in everywhere, is never that simple. Is easier to do with Venezuela, Bolivia, or Iraq, than with Georgia.
The path to significant US political pressure needed to paved/ made easier. However, corrupt/ duplicitous the US itself is, it still does require the idea of ‘justice’, ‘due process’ and playing by the rules to generally apply pressure (not always the case but they still have a pretence towards such things).
In short, is only recently that a number of things happened and converged, enabling their wading in to support a piddly AIM company.
2. Not sure this is a petty dispute with Outrider. Outrider wanted to sink FRR and have done this to others. As Madp says, they tried to restrict avenues to finance. Indeed, Hope went around the back of the other directors, trying to pressure our NOMAD. This was not a petty dispute. Indeed, if he was not acting in concert with others, I will be surprised i.e. strange how so many parties simultaneously decided to apply heavy pressure on FRR
3. See Madp’s answer
4. YA were caught naked shorting, which is illegal. In order to naked short, they had to get the shares out early and then, of course, apply the screw, just as others were simultaneously were doing (GD with their arbitration; TW and his lot etc). But they got caught.
5. MadP says, “If bank accounts are frozen and FRR is prevented from selling oil, then staff have to go. If the court cases needed stalling, then it was essential for the need to be incommunicado.” – I say, “Indeed!”
6. Again, see MadP’s response.
7. See MadP
8. See Madp
Folks may wonder I have gone through the trouble of going over this, repeating, addings or referring to Madp’s responses. Is because while the issues that are raised by Mole are fair enough, the answers are – as best as we can have answers – are available to us already, and should be to a well-informed Mole (we make sound like ‘our man on the inside’). In other words, there are very plausible, credible – indeed, known - reasons for each
Apologies if for some this is repitition
Your google searching is truely unrivalled DomFok.
I have no idea what is going on over there but I think it is becoming less relevant everyday.
MadPunter,
I still think you won't be far off the mark.
A little more patience.........
GLA
Bezzy
Ivy - FRR already had the tender in the Ukraine before suggesting the Ukraine government conduct the process in a formal manner. I suggested at the time that I thought we didn't want the offshore asset, but wanted it to look like we weren't dumping the asset. The move to renewables and the drop in the PoO has already resulted in SM's writing down inventories and offshore is often the first to go. Plus, with the Crimea situation makes Dolphin less attractive to any SM's.
My post @ 18:57 on the 26th July 2019 :-
The big picture
As the world moves towards a lower carbon model, then off-shore drilling with the extra risk (think about the BP spill in the Gulf of Mexico) will decline. Some projects will never come into production. The world will still need oil and gas, but the emphasis will be on gas for fuel in the transitional period. As for the oil which will still be required for non-energy uses, the emphasis will be for on-shore. With this in mind and BP waiting in the wings to sign on the dotted line, why would FRR want the Dolphin License? Furthermore, the Russian annexe of the Crimea would add to the risk of the venture becoming profitable. IMHO FRR initiated the tender process to get rid of the license, as BP were not interested in another off-shore venture. IMHO FRR is close to signing a deal with the super majors and the court cases are just as Kickmuck referred to as 'just noise'.
Posted by BezzyBushFire @ 19:11 :-
Evening MadPunter,
I'd recommend sticking your 18:57 post into the Frontera archive. We're going to look back in the not-too-distant future over these retained posts and I don't think you'll be far off the mark.....
Ukraine is just as corrupt as Georgia if not more so, getting involved there would likely mean similar sheeit. Then again it's probably a game Zaza knows well now and perhaps enjoys the thrill of navigating it all.
Ivy, I don't see that FRR are the same, in the earlier days of their history it looks that way but since fracking technology has come forward it looks like this is for real. I don't think it would be easy to forcify all that data, RNS, and then have the GG and Hope find it worth having a fight over an empty box, or a nearly empty one. I think FRR tendering for the Ukraine block was probably to entice new investment into the company as well as raise the profile of the company with that in mind. I reckon they don't really care too much about whether they develop them or not at least in the short term, if it gets new investment in to help them deal with Hope etc then they probably saw it as worth a shot. In theory if a company has a few contracts for areas that look viable oil opportunities then that in itself can raise more interest from the Major's.
Doplhin in Ukraine went quiet.. last note i see on teh matter was in Feb saying they were splitting the block. Would have thought they would have done another round by now.
Agree Guys.I know we all want this to come good but consider just one of the points raised by Mole and not effected one bit by Georgia issues.That of tendering for the Dolphin field in Ukraine.
They initiated tender but did not win but then took the whole process to court when I think we all know they did not have the resources to carry out the work.
Maybe they were fronting for a major but also fits in with idea of enjoying life in the public eye as why would you genuinely seek to promote yourself in Moldova and Ukraine when you can’t even afford to complete work in Georgia.
I remember Mole when we were both in a share called AFPO with a guy called Chris Cleverley who regularly met up with African PMs and did deals with them.
I actually did very well out if them but others lost a lot as the guy turned out to be a charlatan abd I can see the similarity here.
We simply don’t know but the history here is not one of FRR being fully open with its SH and it may be that they simply like operating in the limelight and have delusions of grandeur strutting about the global stage like Mr Cleverly.
ATB
1) Ditto why Uncle Sam didn't wade in concerning the ADC, even though the port development is of strategic importance. Uncle Sam cannot be seen to be meddling in other countries decisions and has to use tact and diplomacy. Hence, a deal with the GD prior to the elections without Zaza or a deal with the united opposition after the elections with Zaza would both be welcomed by uncle Sam.
1) IMHO Uncle Sam and FRR were waiting for the election. The lobbying has been going on for years, it just increased in the run up to this time. Due to the Texas case and the timing of events both SN and ZM needed to be incommunicado.
2) SH/O were trying to takeover FRR by restricting avenues for finance. IMHO I wouldn't call that petty.
3) It would be impossible to farm out with the arbitration ongoing. They were being hampered from selling oil by the GG, so IMHO FRR could have been expecting to pay off the interest.
4) YA sell the shares in every company they lend to and possibly before they get them (this time they were presumably caught by FRR, hence the court case and quick resolution). There was no increase, it was constant for months when they were allowed to convert the preference shares.
5) If bank accounts are frozen and FRR is prevented from selling oil, then staff have to go. If the court cases needed stalling, then it was essential for the need to be incommunicado.
6) By the final round of the arbitration, FRR would have had a fair idea of the result of the arbitration and the incommunicado was possibly more important. It would also be difficult to pay their share of the costs if bank accounts are frozen and possibly lawyer's fees.
7) Eldari B was a gusher flowing at 250bbls/d from only a 3mm aperture. As it was flowing unaided and with associated gas it is unlikely to decline and possibly even increase, as when the gas gets carried along, bubbles that block the fissures are removed. Ditto answer 3). No the arbitration is now over and the main obstacle is the length of the PSA.
8) If FRR haven't informed SH's of events since early 2019, then why should the Dolphin bid be different?
The 1% has most, not all of the value. Plus as the resource is so huge, the sweet spots would be extracted from first and possibly for many decades, and these will recharge from further afield (even from outside the 1%). The other areas will probably never be developed, as the move towards renewables increases over the coming decades. It is always a juggling act as whether to spend on proving up a larger resource, or spending on getting those reserves proved booked.
The oil and gas is hard to get out in volume as it needs a shed load of money spent on infrastructure. The gas requires processing facilities and pipelines and as the Eldari B has associated gas it is the same. While the Eldari A oil doesn't require as much infrastructure, it only flows at low volumes.
IMHO the silence by both sides in Georgia suggests a deal is being negotiated.
Great mole if you are discussing a normal company that is not being hit from all sides geopolitically.
All hands have not been played yet imv and when they do we won't ever know what was played or whom played them.
This is not a normal company!
I part agree with Moles post actually, as do most.
He certainly doesn't hit the hand of people with a positive just to be rude.
oh dear,errazel wont be happy mole
such a distinguished poster sounding a sceptical and realistic note
lol
Hit the nail on the head there Mole, excellent post.
Phil and back in the real world..........there are problems with fantasy reserves and hence valuation arguments nice though it is to live in hope!
1. If it was so good uncle sam would have waded in much earlier and much more decisively on the matter. They really have not - FRR resorted to lobbying directly just at the time they dropped out of the type of forums (Atlantic Council) they should be on with such a resource.
2. Why on earth would you risk such a resource over a petty dispute with Outrider? Maybe its an enormous CIA type bluff but I doubt it.
3. If it was so good it could have been farmed out of funded in 2018 with no issues at all. Why did they launch the fiduciary case as the loan interest fell due over $2 to $4m?
4. Why did YA attempt to exit at speed 1 month before that date?
5. Why have we no staff and why was Steve hiding to avoid a summons in 2019, Levan exited same time and now Zaza?
6. Why did FRR go into the final round of arbitration with no legal teams and only 1 witness and not even pay their share of arbitration?
7. We know the Eldari A stack and frack under performed at 1 of the 3 wells. Eldari B was less than hoped and again we do not know what it settled at - it was concealed right up to delist in Dec 2018. If it was good it should have enabled a back to back refinance in April 2019 unless the litigation in arbitration and fiduciary by then made loans/deal impossible hence a smaller oil and gas player maybe is behind the secret mystery farm in/investment.
8. Bid for Ukraine Dolfin - never informed shareholders.
The 1% has all the value argument does not seem correct to me. The presentations from 2017/18 made the key point Eldari B covers a large part of the block and into the 99% - that was the company pitch on the study area. So losing the 99% has to have included alot of the Shah Deniz analogous plays. That being the case if there was a high probability of that - why has it been allowed to be ceded so easily? The 1% definitely contains value - it has producing wells but beyond that the CPR don't help us as they don't enable booking of reserves onto a balance sheet which fully records a mountain and short term liabilities and no assets.
The common sense explanation to me is that there is oil and gas but it is still hard to get out in volume (Steve said as much to Houston Chronicle a few weeks ago) without more drilling and by 2018 FRR have simply run out of cash and the company has arrived at the next capital restructure to resolve the issues the 2010 one left behind in the loan notes. The deeper oil and gas is unknown but Schlumberger exit from block 10 raises further doubts on the size of a likely partner. Again I'm not saying there can't be a deal here but as time goes by my scepticism grows and I tend to gravitate to simpler explanations as to how they have spent 20 years, lost 99% of the block and put no reserves on the balance sheet.
Whoa! That's a huge fortune MP. If FRR could tap into the oil & gas enough to get enough following through to bring in a string revenue stream they could pay off Hope in next to no time. Even a revenue stream that is reasonably string could probably aid in getting better availability to short term long to pay off Hope I would imagine. I can see why the GG tried to stifle FRR as once the oil and gas really start to flow they would no longer have a crippled company on their hands but instead a company with a lot of economic clout and in Georgia money means power.
Part of the problem we have of course is that we still don't really know if the field has been developed much more in the last couple of years. I believe we've heard rumour on here that it has a bit but also other rumours that say little has been done because of the legal wranglings holding the company up. Baker Hughes was supposedly supposed to be helping to develop the field for a cut but we don't know if they are still a part of it.
Then this latest situation where we are not sure what is happening with ZM going, potentially more time buying it is perhaps starting to look like.
I'm not too fussed about the website being down, if there is really all that wealth at stake I don't reckon anyone is going to be just walking away from it. It's kind of a shame all the respective parties can't be reasonable and just accept their cut and be happy with that. The GG at least seem to have backed down (hopefully permanently) so I'm hoping that this will be the start of FRR unwinding from all its difficulties as I think it's in everyone's interest to get it all straightened out and away from a stagnated situation.