Member Info for Moleinahole

ODR he is lucky I'm not going to cross examine. He is a bit liberal with his estimates!
Its really very sad to watch this having met both the protagonists here.

The name of Lundin is new but we knew of the visit from previous court documents.

Evening folks - stiff drink in hand listening to this lot. An interesting segway round some of the questions from what I know on what I've heard so far. Can't believe they have let Steve onto the stand and without his lucky tie....he is painting some picture.

Dulwich the key activity since 2018 has revolved around the inability or unwillingness to pay Outrider off. This itself was a continuation of the 2016 attempt to simply cancel the loan notes. Round 1 went to Outrider in 2016 because they got the security they were after FRR then needed to actually generate enough success to pay them off in the 2017/18 campaign.

Round 2 started when FRR decided to default and counter claim against Outrider with their fiduciary breach action.

FRR have then been gradually losing round 2. Unable to sustain the injunction to stop the security being enforced they moved the action from Cayman to California against Outrider but FTI have pressed on and effectively taken the asset.

Outrider and other have been pursuing the board for personal judgements in Texas to recover money.

Without an asset (FTI have given it away in the insolvency) so FRR has no value - but directors personal assets are still there. Hence with Steve and Zaza having fallen out - Zaza seems to be trying to get money off Steve personally by accusing him of breach of duty ahead of others. (Zaza has now inititiated action claiming breach against every director he is the only one not to have been served - again scandalous if he succeeds in getting anything personally from the attempt).

Of all the parties GOGC seem to be after the asset being ceded back hence their original block of the transfer and the arbitration. Hope and Outrider seem to just want some of their cash out. But they won't back down on any action without ensuring they pick up costs - they can play a long game as they are insured.

Steve can probably defend himself using the insurance money against Zaza unless the policy has lapsed.
He can't afford not to fight now as to stop will incur costs to stop California with Outrider or a judgement against him with Zaza.

FRR having lost the asset have to fight Zaza and at some point go back to Georgia and reverse FTI transfer to Green. GOGC in Georgian must have been fully aware what they were doing in blocking the FRR US transfer. So that battle will be political but how damaged is FRR now and how much support could they now muster?

I think the parties having started the default on the notes and all the litigation - can't stop it. Its got totally out of control and FRR in reality no longer exists as any recognisable functioning business. Its the FRR shareholders and Steve who stand to lose most if they stop - but Outrider and Zaza/Green could yet find the ulitimate winner is Georgia taking the asset and wiping out the cost recovery pool of hundreds of millions. And of course there are winners in the fees for legal and professional services.

Oopsi - Bryce is less likely to put his foot in it - though he may not be up to speed on all the intricacies of FRR - so even he would need to be careful. Steve would be a liability in the box and don't forget this is a counter claim of an action against him personally - he's best sat quietly working his contacts on the side.

FTI puzzle me greatly now. They have made a move on the PSC with some of the documents sealed to enable it the go through without everything in the open. They have opened themselves up to action now they have acted. They knew about Green in 2019 as we first heard about them from their documents to court. And were well aware of the possible family connections. But still they have allowed the Green claim to prevail.

Its really unbelievable what is happening here.

Oopsi hence why I suspect this action will fail but I think GOGC will still have to strip Green of the PSC. To deny FRR the incumbent but allow a party with zero experience and unknown finance is scandalous. If that party then turns out to have Zaza connected then I want that original transaction that created the liability explained in full. FTI seem to have looked at it and allowed it to stand and still given Green the PSC in the carve up of assets. That is a major concern to me. They should not have done that if they thought Zaza was in some way connected or it was dubious. FTI also left Zaza in position on the operating company. So FTI seem to have worked to a degree with Green and by default Zaza if connected.
Having engineered both the Green oil sale and the default that caused the delist if Zaza can acquire the asset by subterfuge or sharp business practise then it looks bad for US and Georgia business environment. Invest in Georgia and be ripped off.
I suspect strongly this will end with the asset back with the Georgians. A total shambles.

Linandy the moment the default was triggered I think effective options here have been limited around the asset. Suing different people is different. The Green security was created without us even knowing in April 2018 in the middle of a financial crisis for the company. You do not default on secured debt ever. With Steve asleep in the back seat he left driving matters in the field and with Outrider and the arbitration to Zaza. With no revenue and debts and a hard deadline on block 12 exploration that is why we are where we are.

This case will prove beyond that TSBS that the entire board has failed in their duties to all their key stakeholders employees, shareholders and governments.
Having said that this case looks like it's going to turn on how close Zaza is to Green and how any evidence stands up. The Green security from April 2018 and whatever money was received still deeply bothers me. It was clearly executed in a less than transparent way by Zaza. It's not reflected in the accounts as far as I can tell and the auditors were unaware as a post year end development along with the Outrider interest. Zaza mislead Hope in the emails from May 2018 describing it as oil sales.
This Green transaction is at the centre of a mechanism to either fund the company that has gone wrong either accidentally or intentionally.
If they can't definitively link Zaza to Green then don't see this case going anywhere.
But if they do then there is still a mountain to climb to unwind the actions FTI have taken and continue to take due to the foolish decision to default on a secured debt.
The continued denial that the asset was transferred legally within FRR but that Georgia would not and still have not registered it is the elephant in the room.
It's disgraceful that the two sides are in court. If as has been reported one of the parties seemed to be enjoying proceedings then I'm lost for words.
I think GOGC should strip Green of the PSC transfer. Uniserve picking it up to run off to end of term or outright cancellation is most likely outcome. But you never know they could yet sign the transfer to FRR US if Steve has lined funding or a partner but that seems a very remote possibility.

Well the transfer to Green was done by FtI as part of the liquidation and forced through in Georgian Court after which it was registered. That is the problem. The original transfer was and still has not been confirmed by the Georgians and was clearly added to the arbitration and the block sustained. It's what happened after the arbitration where it gets problematic. FRR having lobbied hard to retain 1% still have not been able to get the fRR us transfer registered. That meant FTI carried on with the liquidation and effectively gave it to Green to settle the oil sale debt claim Green made into the liquidation. It is that dubious oil sale deal that remains a puzzle. We will see what happens here but there remains a huge gap in my mind to how FRR US gets the registration reversed and then counter FTI likely reaction.

Whamboy the asset grab has not been blocked by FRR. Gogc are leading on blocking Green in Georgia. FRr attempt at same didn't get very far.
Even if Zaza is linked to Green which is yet to be tested in court that does not get the asset back to FRR. To do that they have to unwind the liquidation. I'm very sceptical about that process coming out in FRR favour unless there is something else here we have just not seen. FTI have acted slowly and cautiously to avoid liability. They would not do anything reckless.
At the moment FRR is a shell company with no assets with the board fighting each other seeking to try and pin personal liability and extract personal funds.
We will see what happens but I'm inclined towards ODR view here. The team no matter how good they are and that is not proven are coming on with the team 2 nil down and in injury time.

Max its always easy to be wiser after the event. I suspect alot of people have fond memories of the dot com bubble and crypto could have and could still end up in the same position - boom and bust. I fondly remember my safe dividend bearing bank and financial stocks being demolished in 2008.

Even here you will find people who have done well out of FRR - momentum traders and shorters and top slicers. The ones who have not are those who have invested in the company and supported it or mis timed investment rather than traded or taken some profit out.

The reason many stayed is because they believed the information they were provided. And anyone who thinks they are safe in a crypto currency really do need to make sure that they are diversified. As that is your best defence against risk of any kind. You can never be sure what could happen and some classes of investment are riskier than others.

If there is any lesson I'd start with that. I still feel desperately sorry for people who have been dealt a severe blow here. Not all have the time or wherewithall to recover the losses or chase them in other higher risk "investments".

Dulwich - I agree to a point. I have invested alongside fossil fuels a selection of alt energy for over a decade. Originally I wanted to support them to grow, then the technology interested me but I have in past 2 years significantly increased as I do think the momentum is shifting and I would not underestimate how the pace of change could quicken. That can effect the ability to raise capital and I think that could be a decisive factor in capital intensive projects in fossil fuel. Africa has abundant opportunities with solar and geothermal technology to exploit.

Seingred you are correct in drawing the distinction.

The reason Zaza probably doesn't want to negotiate is because he is after a judgement against Steve to get at money probably before others like Outrider and Mourant. To arbitrate in this case you need willingness on both sides to come to an agreed position of compromise. I doubt Steve has much to offer that Zaza wants if he is after cash.

The key background is that FRR has at this point in time lost the asset. How close Zaza is to Green in that process will no doubt come out if it ever gets to court to be tested.

I do worry about Steve case here - there is a logic to Zaza responses that is remniscent of Steve's case he tried to present to Cayman on the fiduciary case. We are in the odd position of being as shareholders in this case on Zaza side - however he is clearly after money for his back pay. So in terms of the block 12 license we are on Steve side.

The jump thats needed is GOGC stripping it off Green in Georgia and somehow re-assigning PSA to FRR US on nthe registry over the already completed insolvency where it envisaged Uniserve would have next bite if GOGC blocked.

Thats the bit I struggle to understand how its unwound especially while FTI continue to look at the directors roles and the question of solvency and the original attempt to move to FRR US.

Irrespective of what happens here its the actions in Georgia that will be decisive I think.

Dulwich who knows - I'm sure they are good at covering their backs in such things on AIM non regulation. We know little of the investigation referenced beyond whats in the emails and board presentation. But its an angle.

The PWC auditors however I would love to know how the 2016 YE (June 2017) or 2017 YE (june 2018) audits did not review the terms of the notes and missed the material interest changes (they either did not see, were not shown or did not understand the mortgage security and the terms).......as it included a security being established it should have been a major focus of an audit above everything else. Had they ever got to do the 2018 accounts I'm sure they would have. The problem with 2018 so far is that they are interim and had no audit and just look odd in regards the revenue and loans and interest items given what we know. PWC had already shown an interest in FTI activity in the New York case that relates to the directors.

Since then FRR seem not to have bothered maintaining a set or demonstrated they have any books of account which is one of the lines of attack by FTI in Cayman. It is a complete mystery how the paper shell of a company is currently operating. But having said the company was solvent in 2019 Steve and Zaza put themselves at risk. That and FTI getting round to petitioning to wind up whats left of the parent company remains a real risk and is where this may all finally come to an end for us.

As I've said before alot of the players here aren't going anywhere....and I think we have a few more revelations to come yet in this sorry saga. 14th is it for the Texas case so not long to wait for that one.

Ziggy - to answer your question. No we have no idea who the prospective Niko well funder was other than an institution investor. Seems different to Green though and you would think was superfluous if they had ever tapped either the New York funds or got Baker Hughes going. But again had if gone ahead it would have created another deal under cutting Outrider. The bigger issue for that would have been the litigation with Outrider and the arbitration. It never made much sense if you really had MOU in place or T39 was flowing good volume. So how Green go to $5.8m remains a mystery even if we can now place its origin in the timeline.

SIB everything I've seen so far points more to being a chancer and I would say economical with the truth rather than out right lying. It's the failures to adequately disclose that is the issue. There is a subtle difference. In terms of criminality the issues FTI will be looking at revolve around potential trading while insolvent and attempts to move the assets beyond creditors. I suspect attempting to run it all on his own was too much. The sad part is that the board meetings where Hope effectively was looking to wind up and sell they were looking to strengthen the board and bring in some new people. That was probably too late. Zaza is a gambler in my view and the weak corporate structure and governance has failed to ensure excessive risk and cliff edge plans were not adequately mitigated or addressed. They needed something to go right but whether it was low oil prices or low volumes for drilling it did not. The sad part is that shareholders had continued to provide support and time and even at q4 2018 there was 1bn shares in headroom that could have been used. Had either Ud2 or either of the eldari a or b drills produced better volume or oil price rise they could have got through 2018 and started to turn it around in 2019. Defaulting the loan was crazy.
If they had already forward sold all or some of the production to Green and then the volumes were not produced or not extracted due to FTI interference, GOGC interference, continued issues with batumi or simply failing to pay your own staff that is how the green interest has become a major problem. In mid 2018 it was probably a sensible option given the constraints. That does not excuse the non disclosures for which the FCA in h12018 had only just closed their investigation.
So I do think FCA could have some explaining to do here as to why they closed the investigation while FRR continued running the business while being economical with the truth.

Tenners I would highly recommend reading Steve submission to Cayman in 2018. It's the most revealing insight into what was going on inside FRR you could hope for with the board minutes, presentation and emails from this critical week for FRR.
The 23rd April board meeting was clearly the moment the wheels fell off.
Faced with funders arranged by WHI backing off due to Outrider and facing inability to pay staff or fully fund the drilling Zaza was looking for options. They had to complete 2018 campaign to have any chance of seeing off the arbitration proceedings which were just starting to expand. The key bit for green is probably the oil sale issues through batumi. I suspect Zaza has tapped his local contacts and friends. At that stage i doubt he was trying to do anything other than keep the dog chasing the car. But he had inadvertently found a way to get round the Outrider security by generating a debt and security in a company between Outrider and the company holding the black 12 shares.
This was the same mechanism I think he tried again in April 2019 once Outrider escalated the confrontation in 2019.
It may not have started as an attempt to take the asset but it has resulted in it. I've not seen anything yet that proves anything beyond that.
The most likely sequence to me is that the deal was originally to get round the inability to ship through batumi and to try and sell local to pay for urgent items.
The bit I don't get is whether any cash went through the books. It certainly was not disclosed. But things carried on in the field to enable Dion and t39 to be completed.
The cash issue is clearly why the t45 and Dino drills never completed their full program when combined with the low oil cut of 14% they were getting from t45 they gambled on the eldari b to go deeper as the a zones seem still not to be flowing.
The emails are very damning and once the nomad saw them he would have been furious at having been misled.
Had just about any of the contents been shared FRR would not have got out of April. But Zaza found a way to scrape through. Unfortunately he still had not found a way to pay the interest in September and that precipitated the collapse. Unfortunately segments of the market knew more as FRR had been scrambling around for money visitors by everyone that must be why YA tried to force a way out. The PI shareholders however were left hanging on the hopes of the drilling completely unaware of the gravity of the situation behind the scenes.
I'm not surprised FTI is still having a good look at the directors conduct. The board was disfunctional and pretty much out of control in 2018 let alone 2019.
The other bit of info gleaned from that board meeting documents was they had been thinking of using a $3m bank overdraft to try to bridge the April/may deficit
And also the outcome of the original FCA investigation into FRR historic non disclosure was announced and also it shows PWC were in to audit the 2017 full year around that time

At 8:04 am on 24th Levan was drawing up paperwork for the Zaza offer. He notes that it would require Nomad approval.

26th March Zaza says oil sale still pending due to reduction in transit crude.

But 9th May. Hope replies I didn't know we had been able to sell oil. I knew we had NOT been able to sell oil, and we were looking at a significant deficit end of April and were hoping to sell some oil in may.
This was in reply to a Zaza note he said "After you opposed the JCAM capital raise in March and $5m Capital raise in April (associated with me), the only way for us to bring capital in was and still is through oil sale which we executed very successfully and will continue doing so in future. We've discussed it with you many times so you have very good knowledge of it".

So Zaza told Steve H it was oil sale - he does not mention the true nature of the agreement and its not minuted in the board meeting from 23rd April either.

Little pieces of the puzzle.........

A bad day in my opinion for FRR shareholders.

As I've posted before I'm puzzled at the FRR position on over turning the liquidation and have to say Zaza response does seem to align to facts that even we knew about the FRR Us transfer. The cranking up of FTI action against the directors from events around the liquidation does not bode well and is contrary to the more encouraging news about Outrider and the California case. Its bad also as if Directors have any assets FTI are going after them and maybe criminal charges.

Now turning to the $5.8m. Now we know the date seems to be april 2018 that is very interesting indeed. If you read the board emails from Steve case in Cayman in 2018 then this is placed around the time of when Zaza offered $5m if it was senior to Outrider (one of the main planks of the Hope is not funding FRR case). At the time FRR were in trouble, in the middle of drilling Dino with bils due, UD2 and T45 had come up short, could not raise any more cash from market and had just told FEGL field staff they would not get paid.
Now Hope did not want Zaza to get seniority so was not supportive.

If the date of the Green forward oil sale is correct its astounding it was not even mentioned in the Board minutes of that week, let alone the half year accounts (unaudited) we got end sept 2018. I can't see where any cash in H1 2018 could have gone - the cash flow statement does not include any receipt. So the question again arises exactly when was the $5.8m received if ever....where is it?

Interestingly there is an email in the pack dated 24th April post the board meeting where the question of Zaza funding is discussed and specifically Hope makes very clear funding has to be at FRC level and not FGC level. Levan replies making it clear needs Nomad approval of the revolving credit facility. Hope offered $2m on his terms same day and was pushing to announce company in financial difficulty and seek to wind it up by sale.
Then on 9th May zaza in a reply to hope mentions Oil sale for first time and after that the funding question is never really resolved. Whats odd is that before that Hope had confirmed FEGL could run up $2m of debt as part of the mortgage agreement. So its really odd to see a trail of emails from this time and nothing about this $5.8m.

So if anyone has pulled the exhibit around that deal with dates please post the key bits I'm trying to construct the sequence here I would be interested in whats in it.

And finally noticed in the email pack that none other than Senator Lindsay Graham (mate of Trump) was involved in the lobbying for Frontera and had lunch at FRR offices around this time in May 2nd 2018.

Not a good association if FTI continuing attacking the directors and make some of their charges stick.

Complete Mess.

Tenners as an investor with a large holding I'm very keen to find out what has happened. And I'm not unsupportive at the right time to take the right action against the right people. However, having been involved in litigation through my work and in civil society its something I've learnt to be extremely wary about. At the moment I'm not sure I even know who the good, the bad and the ugly are here. I'm tending towards the lot of them are culpable to greater and lesser degrees.

From a basic business standpoint it is never a good idea to run your company with no cash contingency and on a month to month basis. It is never a good idea to default. It can never be right to not hold an AGM, not issue any accounts and leave your shares delisted with no apparent registry and issue no official comment for over 2 years. When the chairman happens to be an influential member of the US Chamber of Commerce its even more baffling.

What Zaza may or may not have done to me simply does not yet add up or make any sense. But time may tell. Maybe there has been something uncovered in all the discovery. Maybe they have all had enough like all of us and want some sort of closure.

I personally think there is a viable field in Block 12 but my suspicion is that its the deep wells which FRR simply can't afford to drill that hold the key. I'd love to know whats down there but as of today we simply do not know. I had hoped that Schlumberger would find something next door in what is now BLOE license. Its possible they have been able to see something from their own deep well that reads across to block 12. Again we do not know. A cheapskate operator of block 12 can make $3 to $5m a year or more as oil price rise running off the existing wells and do nothing new. So the size of whats in the box is unknown but I'm 100% certain if there is any chance of getting it out someone has to show how to do it and have access to a large sum of money to invest and that will need security of tenure of the block and a longer PSA than is currently envisaged.

Phil - I fear they have probably sat on the field. With no staff and no money I think they must have effectively put it into close on a full shutdown. Any money they had likely went on the arbitration fees in early 2019 as the last comment I have seen on the accounts for Dec 2018 from court papers was they were down to $50k. There would have been some money from production pre the delist from the 2018 campaign wells but we really have no idea what happened after Dec 2018 at all. I suspect workers were still active till everyone seemed to leave post june 2019. After that it became debateable about who was employing and not paying the staff with the FRR US transfer blocked. Everything seemed to disintegrate from around july 2019.

So no I really don't think there has been a surprise drilling campaign at $3m a well under the nose of the staff and Uniserve our local contractor who also appear to be a creditor.

Pecten in terms of the GOGC and commerciality. The original CPR listed a number of criteria that would mark the ability to go from prospective reserves to bookable. The main one was really sustained flow. The two eldari wells from the higher zones in 2018 seem to have disappointed again. We were waiting on the last deeper well. The associated gas is an issue with that well in so much as FRR had no means to handle it at well head and could not produce and flare for too long. A main criticism of FRR by GOGC was the absence of reserves report. We were all hoping that the alleged long well test in Q4 2018 was "torturing the wells" and helping profile the deep zones for an updated report to be produced. Again we simply don't know what has happened. Did it continue to flow well or drop off? Again its critical information we do not have. This goes to the heart of the question of how you work the eldari - between the recent stack and frac attempt in a redrilled/recompleted vertical well vs the long horizontal frac ideas they have floated before.

On UD2 we know that a strong frac of the old bore didn't work (thought they had learnt that at taribani!) and gas wells need a redrill and recompletion at $5m+ a well.

Do I think GOGC would block commerciality? Well they have allowed the old ex soviet fields to continue in production. The commerciality should really have applied to new discoveries and again per the arbitration inspite of doing work in taribani on eldari a and b they were unable to convince the tribunal that merited 100% being retained as a discovery. So is there a hidden report waiting in the wings that could result in a revised CPR with reserves and GOGC changing its tune?
There could be - but it just doesn't feel to me that there is. As again logic suggests if there was even a bit of good news out there why has it not come out? In general I'm inclined to be cautious about anything the company says until I see evidence that supports it and Steve as recent as last year said more exploration was needed.

Tenners I think you misunderstand what I'm saying. The question of what is in block 12 is not relevant in pure financial terms. If you default on a secured loan it doesn't matter if its worth $1m or $1bn. You have defaulted. The point I make is that if you booked even a bit of reserves for a few wells, even a small % it gives you the ability to use it to borrow and the Outrider debt could have been serviced or paid off or attract a partner.

FRR have had two issues beyond not having any reserves booked - the first was the reserves are in a block with very limited life left in the license and have come into conflict with their 50% partner GOGC. They then had the issues caused by the 2016 loan note terms with Outrider being secured.

Faced with both the above issues FRR turned to litigation - be it the arbitration or Outrider.

Its encouraging that we have some signs of agreeing to a compromise with Outrider at last in Texas and Calif. 2 years too late in my opinion but its a start. I've been consistent with my view I believe that Zaza and FRR thought both the GOGC with the arbitration and Outrider with the loan notes would be sorted in 2019 with a compromise. The fact both were prosecuted and threaten the company is why we spend so much time on court cases.

If 2018 campaign showed the field was a goer ether for gas or oil and the Baker Hughes plan was feasible then I just don't understand why we have gone through the hell of the past two and half years. The idea that we are in the middle of some complex game of bluff with Russia about the resources while I would never rule anything out with FRR seem less likely to me than a miscalculation by FRR board of GOGC and Outrider intentions.

The proof of the pudding with be when GOGC invalidate the transfer to Green what happens next to Block 12. If FRR US get it back preferably with revised terms to attract a partner to develop it and keep GOGC onboard then finally settling with Outrider becomes a priority.

Nothing has changed since Oct 2018 - the way out has to be to refinance the company and in the process deal with Outrider and GOGC. As of today they need to get the asset back quickly. At that point we can again worry about what is in it and what the final cost of all this has been to shareholder financial let alone mental health.

Tenners whether the box is full or empty is not the point. We don't know on that. As of the time we delisted there was no bankable reserves which is what matters. There are CPR but not to a level that would enable reserves that could have been borrowed against or dwarf the debt on the balance sheet and allow the $400m cost recovery pool to also become available. It's a critical difference and one that has many times been excused due to the Russian angle.
Outrider and the arbitration at its heart has been a financial problem for Frontera. The politics just complicates it. Ultimately you cannot drill to explore but not produce and then default on loans and then try to avoid paying them. That rarely ends well.