Member Info for Madpunter

Posted this on ii :-
So, Zaza has claimed that FRR can exit 2018 at 1,000 barrels per day but leaning on a cautious side, I said even 500bpd from the 3wells (excluding any thing from Eldari B and Niko), this should make FRR self sufficient. Was this an accurate statement? Well, yes I believe so. Firstly, we should not discount current production of around c.120bpd from Mirzaani and MK. So, 500 new barrels from T45, Dino and T39 plus say 100barrels from existing wells, let’s say total 600 barrels @ an average price of $70 = $15.30m in annual revenues. Total operating loss in 2017 was c.$11.5m. But adding the monthly repayment to YA at $3m makes annual expenses of $14.5m so to me, we are self sufficient.

I call this conservative because daily production could be higher with Z19 added to the production. But against this Z9 from all three wells is currently suspended so you could arguably shave off around 120bpd for this Zone over the three wells. Also oil price fall below $70, but there is a buffer.

Few other observations: interest payable would have reduced by half as $26m RPNs were converted in to equity, plus the Outrider debt accrues interest that is rolled up so is not a cash item.

Finally, the field costs for the three wells were funded through equity and not revenues, so should free a bit more cash.

Unfortunately the interims are not going to show the full contributions from these wells as it happened towards the end of of the first half.

Self sufficient to me means no need for death spiral funding.

JMO

Just been removed.

Just in case some of you missed my post on the weekend, and for the benefit of newbies.
202TCF gas and 18MMbbls oil. Using the same recoverable rates for the figures that are already in the CPR, then 140TCF and 2.9MMbbls of oil = 26.7MMbbls of oil equivalent (1TCF = 170m bbls of oil). With an oil price of $75/bbl (they have been selling their grade of oil at that price) = $2002.5bn.
A very conservative 1% of this figure for a takeover of Block 12 = $20bn. For a JV/farmout 10% of the takeover figure = $2bn. These figures equate to 98p and 9.8p per share. IMHO any deal will be somewhere in between those parameters, and there are two majors involved because of the huge amounts.
Add to this the politics, with USA, NATO, Atlantic Council, UK and EU wanting less reliance upon Russian gas.
Also factor in the same Maykop, same Kura basin as in Azerbaijan, but onshore and with very low costs of under $12/bbl (will drop lower as zone 19 wasn't used to determine costs). Remember, BP bought 4.36MMbbls for $10.5bn with costs well under $50/bbl. No wonder they want our shares!

Timster - The price opened over 7% down, which would trigger 5% stop-losses. Then, after just a few of those it is down over 10% and triggers a few more. However, the real reason for drop, IMHO is shorters selling a big chunk, 15m, which enables them to get out of spread bets of 100k multiples. These can be worth much more per point. Many small trades of 100 shares went through on KOD over a year ago. 'Yachtmaster' explained that these were his spread bets on IG and were worth either £100 or £1000 per point (I can't remember which).

I forgot to add that those figures are the parameters and I would expect any deal somewhere in between. It is so huge that is why two majors are involved IMHO. There's also the politics to consider with the Atlantic Council, NATO and USA wanting the EU less reliant upon Russian gas.

Fundamentals are huge!
202TCF gas and 18MMbbls oil. Using the same recoverable rates for the figures that are already in the CPR, then 140TCF and 2.9MMbbls of oil = 26.7MMbbls of oil equivalent (1TCF = 170m bbls of oil). With an oil price of $75/bbl (they have been selling their grade of oil at that price) = $2002.5bn.
A very conservative 1% of this figure for a takeover of Block 12 = $20bn. For a JV/farmout 10% of the takeover figure = $2bn. These figures equate to 98p and 9.8p per share. Current price 0.345p. Can anyone show me a share with such upside potential, especially with not one, but two majors signing NDA's?

Lots of trades in the multiples of 100k shares which look like spread bet shorts closing. While these are for what appear to be small amounts, they can be for much larger amounts. I remember when 'Yachtmaster' bought a lot of KOD. He explained that each of the small trades were worth £100 or £1000 per point (I can't remember which). One sell of 15m shares to drop the price and they get out of their shorts still in profit. This is why shares often drop just before very good news.

Now 14.1% down on nothing. IMHO the good news from the majors can't be far away.Possibly already agreed, but waiting for the new Georgian Minister's ratification when he takes up his post. He was due to start this week I think, after working his notice in his last job.

Looks like it was done to try to trigger stop-losses. It opened 0.03p down, then dropped another 0.01p after 4 minutes which equates to 10.26%.

Share Price: 0.39 Bid: 0.35 Ask: 0.37 Change: 0.01 (+2.63%)
Spread: 0.02 Spread as %: 5.71% Open: 0.38 High: 0.39 Low: 0.345 Yesterday’s Close: 0.38
Care to offer an explanation of how the Share price can finish 0.01p up with above bid and ask? It's 0.02p above the ask and 0.03p above the mid-point. There were two buys after the close listed below, but they are hardly the sort of trades to cause such a movement in the share price of FRR.
17:18:25 0.39 2,000,000 7,800
16:35:11 0.39 14,000 54.60

Anyone have the II figures for this month? The last one showed no change for 3 months, but the only II had increased the holding from the PB, with 4.4% of FRR.

Don't forget it's the same geology as Azerbaijan, the same Kura basin, same Maykop, but onshore in Block 12 instead of under the Caspian Sea.

What value would $20bn put on the share price?
At the current exchange rate of 1 USD = 0.773781 GBP, $20bn = £15.4756bn, which when divided by 15.77084bn shares = 98p (rounded down).
Therefore, 9.8p for a JV/farmout up to 98p for a buyout of Block 12. IMHO, because the figures are so huge, this is why two majors are involved and we will see any deal somewhere in the middle of the two parameters.

I'm surprised nobody has asked how I got a top figure of $20bn.
The recoverable TCF rate in the CPR for FRR is around 70%, therefore, 70% of 202TCF = 140TCF (rounded down).
1TCF = to 170 million barrels of oil.
140TCF converted to the oil equivalent = 140 x 170 = 23.8MMbbls.
Add the 2.9MMbls of recoverable oil = 26.7MMbbls of oil equivalent.
At $75/bbl = $2002.5bn.
Using a very conservative 1% of the $2002.5bn recoverable value = $20bn value for the takeover of Block 12.

Tsbs - The majors would be willing to split Block 12 because of the size. If you look at the value for 15% of Shah Deniz, $2.25bn posted by riptonk 2 minutes before your post. Shah Deniz has 42TCF and Block 12 has 202TCF, which if valued at the same rate = $72bn for Block 12. Block 12 also has 18MMbbls of oil, whereas Shah Deniz has 3MMbbls. If the same rate for the recoverable is applied to the 18bn as to the 10.225bn in the CPR, this equates to 2.9bn barrels recoverable, which at $75/bbl is worth $217.5bn. As the $2.25bn sale was at a more advanced stage than FRR , I estimated a top figure of $20bn for the ale of Block 12 and a bottom figure of $2bn for a JV/farmout. IMHO it will be somewhere towards the middle. Also, BP paid $10.5bn for 4.36MMbbls with costs of well under $50/bbl (not well under $49/bbl) and FRR's costs are under $12/bbl, but that will now be lower as it doesn't include zone 19 or below.

Posted by Tot on ii earlier :-
No need to apologize SB, that was a great post (and by the way you can now edit your own posts on here) and should to be read in conjunction with Regdik’s great post on lse board which has been posted in another thread on here.

I don’t subscribe to that odious medium known as Shareprophets, but from what you say their team is now starting to feel the heat and rapidly running out of any decent ammunition with which to scare nervous PI’s. I’m thinking that any further upward momentum next week will gain momentum quickly as their followers see the light and take profits or cut losses.

Good to see you mention Moldova. Seems like FRR have secured an absolute bargain there by entering into a very long term PSA before others start to take note of the massive gas resources that are there. On that score take a look at this article about Ukraine selling off some if its producing blocks with a minimum starting price of over $106m for each of 44 blocks:http://georgiatoday.ge/news/12171/Ukraine's-Transit-Ambitions%3A-Energy-Review 3

Also worth noting the reference to Moldova in that article “An unexpected blow to Ukraine’s transit ambitions came from Moldovan President Igor Dodon, who said he feared the unpredictability of the Ukrainian route and would prefer to buy gas bypassing Ukraine.” The ducks are lining up very nicely here for an early start in Moldova with the majors FRR are talking to in Georgia possibly coming on board.

Zaza is a really smart guy and young enough to be looking to the future if FRR are going to step aside as operator of some or all of the Georgian blocks. That’s probably why he’s been bringing his son along to some of the London meetings and letting him have a role in revamping the company website and developing a presence on Twitter. If the son is as smart as his father he’ll have been learning quickly about all aspects of the business and will no doubt have a growing role in the years to come with the launching of activities in Moldova. I therefore have a feeling that I’ll be sticking around for a piece of that action post Georgia farmout, JV or asset sale, once I’ve banked enough profit to pay for a few treats.

ATB,

Tot

P

mcadder - I only have a fraction of your holding, but it's about 80% of my portfolio and if DRG (not a recommendation as it's only a punt and if the reverse takeover comes off it will rise then have a placement. After, it's all down to the luck of the drill) comes out of suspension, as soon as I'm in profit it all gets invested here. My gut feeling DRG will be too late for me to top up here, as IMHO when the new Georgian Minister starts, the deal will be signed off. Good luck.

mcadder - I posted this last night at 19:53 and a reference to my post from 25th May, that is also relevant. This might help to explain my posts with you regarding trades, especially when coupled with my posts earlier in the summer about FRR and Exxon.

jme1976 - We might get better than that, with the new minister signing off a deal between FRR and two majors. The RNS announcing the NDA's with the two majors might be sanctioned by them as the deal is done, but just awaiting the signature of the new minister. See Tot's post below from ii and the enclosed link.
One possible reason for the delay in releasing well results might be associated with obtaining approval from the Georgian Government and its agencies, given the request for arbitration and the likelihood that FRR might be seeking to assign part of its interests in Block XII to a strategic partner. Well if you want to learn a bit more about the internal machinations of the Government take a listen to this podcast from Vox Markets:https://www.voxmarkets.co.uk/articles/versarien-vrs-and-georgian-mining-corporation-geo--7bb8c72 17 The first part is about one of my better investments VRS, but if you skip to the second part there’s an interview with the CEO of Georgian Mining Corporation which is quite enlightening.

They have experienced delays in getting permits from the Government and report to the same Ministry as FRR. From what he says the new Minister for Economy and Sustainable Development has yet to formally take office as he is still working his notice at a bank in Moscow. Sounds like the bureaucrats are afraid to sign anything off until he is behind his new desk.

You couldn’t make it up!

Have a good weekend all,

Tot