Member Info for Looed

From a post by Domfok posted yesterday 19:02 (feels like a lifetime ago!)

From an interview with Zaza -

"Most importantly, none of the financial claims were met by the state court, a claim that has been challenged since 2013, as if we were misleading the distribution of oil and gas products to the state, as if we were not paying the state the money it deserved. The amount demanded by them exceeded 100 million dollars - they refused. In addition, they demanded the cancellation of the contract, which was not satisfied. Instead, the court granted the state a very trivial matter, which we did not even dispute. We pay the state the advance tax on the entrails every year, and this advance, which was not a large sum and is about $ 200,000, had to be paid to us. It's just that the state has our debt and we were telling it to reduce that debt in that amount. The arbitral tribunal granted this request to the State."

Seingred - sorry did I imply that - I can't see where I did so. Definitely not my intention!

Seingrad - I can't really find fault with anything you have said. As always with FRR (Forget Rational Reasoning Ltd.) things remain vague so consensus if hard to maintain. JRjnr and others have a different take. Hopefully we can soon fulfill tsbs1's wish and see the elusive decision.

Another show of support - Kelly visits Occupation Line

Source - http://georgiatoday.ge/news/20938/US-Ambassador-to-Georgia-Visits-Occupation-Line

from 22nd Jan -
“The lawsuit of the Oil and Gas Corporation and the State Oil and Gas Agency related to several violations by Frontera. In particular, the breach concerns the non-refund of most of the contract area - 99%. Frontera had this obligation in November 2017, and there are a number of other violations, including the distribution of products, which we have referred to arbitration. When it comes to content, after the arbitration decision, we will provide you with additional information. The disputed amount is not small. I will avoid naming him at this point. There are several alternative requirements, so I will refrain from specific numbers."

So, GOGC didn't get a 99/1% verdict - they got 100% of what they wanted = 99% return of the total area.

So the 1% has never been in contention / part of the Arbitration?

A lot of articles have been churned out in the last 24 hrs in all the usual languages. If anything, the volume tips more towards reporting Zaza's latest comments rather than scathing attacks on the company, which was the case last time we had some back and forth between GOGC and Zaza.

And they mostly call for the release of the arbitration decision. An inadvertent bit of shareholder support!

JRjnr - Your name is perfect as this really is like an episode of Dallas!

As far as I can recall all mention by GOGC, Hogans etc has referred to material breach. Could you expand a bit on repudiatory?

Is the termination of the PSA really that big of a surprise. FRR have relinquished 99-ish % and Zaza wanted an extension beyond 2027. Doesn't that make the original PSA no longer fit for purpose?

Two FRR companies where involved in the arbitration but the termination has only been sent to the Georgia company. I have it my head that part of the asset was moved to another USA company (FRRUS or something like that). So Zaza agreed with the arbitration as the parts he wanted was already secure. he willingly hands back the land GOGC want.

A likely dumb theory but I am trying to see this from as many angles as I can. Sorry but that's the best I got!

I think this is a recent change - Tim's name and contact info has gone. Just has the name Flagstaff and address only.

https://fronteraresources.com/contact/

The GOGC termination letter has been sent to “Frontera Resources Georgia Corporation” (the original parties involved in the Arbitration included FRR USA as well).

Did we ever determine where the asset ended up?

I cannot find any other info that what's already been posted - maybe more will be revealed later today. In all the froth of yesterday the one consistent thing has been the GOGC claim of 'material breach'.

Pt.4 should read "we know this has NOT happened...."

I went back over the rules and a few things popped out - these either give us a better understanding of where we are. (Note I am making a lot of assumptions here)

1- We know from Hogan Lovells and GOGC that the result was unanimous - FRR also agreed with the final award. If they didn't accept they could dissent.

2- The Board has the right to demand one or both parties pay-in costs in advance. We don't know if that happened here but it is possible FRR had to show signs of solvency. The Board states each side must show "the Claimant’s or Counterclaimant’s ability to comply with an adverse costs award and the availability of assets for enforcement of an adverse costs award;" Inability to support this means an immediate end to the arbitration. It also states "the Board may order parties to pay
additional advances during the course of the arbitration"

3- One side can call for a "procedural decision" without the need for full arbitration. This must have meant FRR had sufficient evidence one one or more of the issues to support a full arbitration hearing.

4- Both parties need t agree in advance to the reasons and manner for the award being published. We know this has happened as far as we can tell, other than the general GOGC statement.

5- Settlement is possible up and until the Final Award. It would seem this didn't happen

6- "An award shall be final and binding on the parties when rendered. By agreeing to arbitration under these Rules, the parties undertake to carry out any award without delay." Hopefully we will see some developments soon that might help us understand the details of the rulings and its implications.

7- For a period of up to 30 days after the Award, either side can ask for correction, clarification etc - but cannot challenge the decision.

8- During that same 30 day period, either side can "request that the Arbitral Tribunal make an additional award on claims presented in the arbitration but not determined in the award. After giving the other party an opportunity to comment on the request, and if the Arbitral Tribunal considers the request justified, it shall make the additional award within 60 days of receiving the request" Its been stated that all FRR claims where thrown out, so perhaps this clause can only apply to GOGC.

9- Final costs are determined before the Final Award is given, so this shouldn't have been a surprise to FRR. The Board can split the costs between parties but it seems FRR have to pay 100% of these costs, and FRR would seem to have agreed to this. This also applies to costs incurred by the other parties.

I re-read again -
In a unanimous award, the arbitrators ordered Frontera to immediately relinquish the oil & gas fields in dispute -an area of more than 5,000 square kilometers in Eastern Georgia that Frontera had exploited for more than 20 years, declared that Frontera had materially breached the contract, and ordered Frontera to pay certain damages, interest and attorney's fees. The tribunal also accepted the withdrawal of and dismissed Frontera's counterclaims.

"The oil and gas fields in dispute" must only mean the undeveloped area's as GOGC didn't go after 100% ? The "more than 5,000 sq km" can still exclude Taribani which is 80 sq km according to FRR website.

https://www.hoganlovells.com/en/news/hogan-lovells-secures-historic-win-for-georgia-before-international-arbitration-tribunal

PJohn - Sorry my intention wasn't to signal (more!) doom and gloom. I was just reflecting on how almost all the crumbs of info that Zaza shared turned to be nothing but hot air. I agree with the other posters that something seems to be going on. Good / bad / big / small is sadly still anyones guess.

There seems to be something easy to miss but potentially very important that is missing in the translation provided by Oopsi

The cation under the photo reads - "Frontera hopes to continue cooperation with Georgia"

Not sure if that is a historical reference or refers to our current situation.

Source - https://translate.google.com/translate?hl=en&sl=ru&u=https://sputnik-georgia.ru/economy/20200428/248349052/Kurs-lari-dollar.html&prev=search

I have cherrypicked the main points in light if the "we mostly won and yet continue to be slightly vague" nature of the GOGC statement. Anything in CAPS is mine.

1- One of the main causes of the dispute is the licensing area - the state says Frontera should give up 99 percent of its contract, and the US company insists the government is depriving it of resource-rich territory. SEEMS A WIN FOR GOGC

2- According to Frontera, the amount of investment made in Georgia since 1997 has reached $ 580 million, with the state claiming to be several hundred million less." TRIBUNAL SEEMS TO HAVE REJECTED FRR CLAIMS

3- We very much hope that the arbitration will make a fair decision....and have never violated any of our contract terms. AS ABOVE, SEEMS TRIBUNAL REJECTED FRR CLAIMS

4- We have always wanted to come to an agreement, as this would prevent all parties from spending a great deal of money during the arbitration process. FRR TO REPAY FUNDS TO GOGC AND REIMBURSE COSTS

5- Unfortunately, the process that we thought was going to reach an agreement did not end in a meaningful way. There is no negotiation on the agreement at this stage. Extensive negotiations with the government have been going on for about six months, and we have agreed on the issues to be discussed. The state expressed a desire to have a greater economic interest in this agreement, and we were ready to do so.
Finally, whatever issues arose in the light of the existing agreement, I am sure It seems that their actions were not sincere. There were issues that were not on the agenda. They sought to amend the various clauses in the contract so that it radically changed the economic interest of the company in the contract. When you invest more than half a billion and then fundamentally want the state to change the economic terms of this contract, it is very difficult and virtually impossible to work in such a situation. FRR CLAIMS REJECTED, TRIBUNAL "MOSTLY" SIDED WITH GOGC, TO WHAT EXTENT REMAINS TO BE SEEN.

And from an interview 14th Feb 2020

6-The court hearings were held in London, awaiting a ruling. We do not know when. We expect to be positive in that we do not have, and we know that we have never had nearly $ 70- $ 80 million in debt - IS THIS THE MINERAL USE TAX THAT FRR NEED TO REPAY? WHY DO FRR NEED TO PAY THIS TAX?

Pt.2
And
"The Operating Company shall have no tax liability whatsoever in respect of profit tax payable pursuant to
Georgian tax laws (‘‘Profit Tax’’) or mineral use tax payable pursuant to Georgian tax laws (‘‘Mineral Use Tax’’).
Save in respect of Profit Tax and Mineral Use Tax, both the Operating Company and Frontera Georgia shall be
entitled to full exemption from all taxes payable under Georgian tax laws.
Both Saknavtobi and Frontera Georgia shall be subject to Profit Tax at the rate of 10 per cent. However,
Saknavtobi agrees to pay Frontera’s share of Profit Tax and Mineral Use Tax from its Profit Oil and, with the
support and guarantee from the State, indemnifies Frontera Georgia from all taxes payable under Georgian tax
laws. If the amount of Profit Tax which would have been owed by Frontera Georgia but for the provisions of the
Block 12 PSA exceeds Saknavtobi’s share of Profit Oil (the ‘‘Excess Crude’’), Frontera Georgia shall advance to
Saknavtobi a sum equivalent to the Excess Crude. Such sum shall be recoverable by Frontera Georgia in
accordance with the Cost Recovery provisions

Source - its a PDF so I can't copy a link but seems to be for a placing in April 2005

We know from the ruling that the company must repay mineral usage tax - is this because profit tax exceeds agreed amounts? Not sure if I am reading this right, but its the only reference to mineral use tax I can find.

Pt.1 from placing document

"Block 12 PSA and Mineral Licence may be subject to legal uncertainties
The Company’s principal business and assets are derived from the Block 12 PSA and the Mineral Licence.
The legislative and procedural regimes governing PSAs and mineral use licences in Georgia have undergone a
series of changes in recent years, including the introduction in 1999 of a new Oil and Gas Law governing such
agreements. As the Block 12 PSA and Mineral Licence pre-dates the new Oil and Gas Law, they were granted to
Frontera Georgia pursuant to a presidential decree in accordance with the practice of that time. Despite references
in the current legislation grandfathering the terms and conditions of the Block 12 PSA, confirmation from the
State Agency that the Block 12 PSA has been grandfathered into the Oil and Gas Law and the stabilisation
provisions in the Block 12 PSA, conflicts between the interpretation of the Block 12 PSA and Mineral Licence
and then existing, current or future legislation, including, but not limited to, any new Oil and Gas Law and the
new tax code effective 1 January 2005, may exist or could arise. Such conflicts, if and to the extent that the
Group, the State and/or the State Agency were to dispute them, could adversely affect the Group’s rights under
the Block 12 PSA."
And -
".....pursuant to the terms of the Block 12 PSA, the Contractor is not required, with certain
limited exceptions, to pay taxes in Georgia. However, there is a risk that the tax law is not consistent with the
provisions of the Block 12 PSA and that the relevant government bodies may interpret and apply those provisions
in the Block 12 PSA differently and apply a new tax regime. The resulting effect on the tax liability of the Group
could have a material adverse effect on the financial position of the Group."

no truer = not sure!

Thompson - Thanks a bunch but not the right filing. The one I am referring to was approx towards the end of last year. We made some assumptions as to the reason why they where set up and I recall general consensus was it was a local servicing company, though I am no truer that was fully confirmed. I was just wondering if there had been any recent changes to the entity now that arbitration has passed the results stage. If you saw Oopsi's reply he said he checked last week and no changes.