Member Info for Moleinahole

Timster the loan notes are not due to 2020. So if for some reason the notes could be called in early then the company would need to find alternative funding to replace the notes. If they could not do that then the security under the notes which is likely to be the Georgian assets indirectly as the notes are in Frontera international as the parent company has debt and no assets.

Hence the term sheet last week is important. If that could be used for debt then it could be used to swap outrider out.

I very much doubt the asset could just be appropriated without any recourse to alternative funding as we have not defaulted on the clown notes.

The case is in chambers there won't be any documents worth reading at the stage. It may never get to the point cases are published.

The pacer documents were viewable from us side of the action but we discussed this a month ago.

Leave it to the company I'm sure they know what they are doing as they started the action not Outrider.

As for the prophets of gloom. YA dispute is over preference shares not a loan. So it would be odd if that non default had any bearing. Clearly the gloomy ones have descended to the lowest forms of fear trolling yet with project Frontera fear.

But was it YA or the finance deal that triggered things?

I'm inclined to think this is all about Outrider not wanting finance on the underlying asset that had higher precedence.
Meanwhile the lender won't lend without just that. It's possible Outrider have some rights in the event new debt is added about where it would rank. If outrider and inter alia Hope blocked the 2019 development by declining to allow new debt and deprived FRR of the ability to earn revenue to repay the debt that's where the damages come in. The interest of the company is to secure the funding but the funding is probably not in the interests of outrider hence the conflict.

Without the detailed statement of case and knowledge of the outrider notes terms we simply can't ever tell. I just doubt the more wild theories around Outrider and a simpler battle over debt makes more sense to me.

Would not assume that from my own experiences of the law!

I think it could go either way depending on both sides appetite for a scrap. The preheating can just be to scope out what a case might look like evidence witnesses etc to enable court time and procedure to be agreed without addressing the case. However, it is clearly also an opportunity should either side take it to settle without taking it to trial.

It's just a hearing before the judge in chambers but for some reason using the court maybe it has VC facilities. So the best that can be expected on Tuesday is they settle in chambers and the games stop there and then. If not it presumably moves on to set a formal hearing in court for 2019.

My preference is for this to just be resolved on Tuesday much as I don't like outrider I would prefer it resolved to enable the other deals to progress sooner rather than later.

Thank you Star.

ODR on this particular issue it keeps being brought up. I simply have to keep responding on it as it is a main line of attack historically from the prophets of gloom. Levan the company secretary is well versed in the laws and I have discussed this subject several times over the past two years and the reply has been consistent.

If there was any issue around a license then I very much doubt anyone would lend $60m today let or outrider rolling over debt in 2016.

As I have posted previously I am pretty certain the main producing fields Taribani, mirzani and mtsare are not in any risk as part of any arbitration. Where I would agree is that the funding RNS and Baker Hughes Mou greatly assist any case we need to present.

And yes Seymour if your reading can't fault your enthusiasm and support for the company!

If Seymour reads Lse or someone can post to the thread on III.

Seymour keeps referring to converting the license to a production license. There is no such thing in the Georgian oil and gas law. Look up the law you can pull it down off the web.

We have the PSA for the block we are not waiting on the granting of anything. The PSA conitnues until it expires and is hopefully rolled over in 5 year terms as I understand it. There is nothing published that confirms that but is it what I have heard from the board several times.

If you read the PSA extracts we do have reports of the declaration of commercilty activates cost recovery provisions around expenditure. The area most likely at dispute in the arbitration is the end of the exploration phase of the original 25 year license and whether Frontera have to relinquish parts that they believe are not commercial. Frontera believe all of block 12 is commercial due to the eldari covering the block hence the 5 year study. The arbitration is most likely testing the robustness of the study period.

Dave - I do doubt that. Not like their past methods. Outrider dispute is most likely around the debt seniority and conflict of interest between the roles of Director of the company and Director of a lender specifically when Hope was faced with having to choose between the two and see his secured but not convertible loan notes become subordinate to a $60m facility secured directly as first lien against the principal assets! By favouring the fund he would immediately have been unable to show independence. Caught in a trap of his own making probably by demanding a seat on the board in 2017.

If so the fact that FRR paid $150k on the note arrangement fee this week indicates FRR were confident enough in the outcome to commit. Remember the invitation to try and remove the injunction on the security was due "early December". Maybe that date has passed and the injunction was upheld as at 11th December allowing the term sheet to be signed by Frontera.

Lets see if these trades stop next week. Hopefully sense prevails we get closure on that early next week.

AJ - indeed I will post tonight if I get some time more on the relative geology of the two blocks and do a bit of research on micro lateral drilling solutions and see what Baker Hughes have in their tool box!

Puddy whatever you think about these transactions - they do not hold the price down. I think they are having a phsychological effect way greater than actual.

The price if you watch carefully seems to me to move on the volume of the other transactions not these. The MM have a relatively wide spread and have done for a while.

They really don't look like pure sells to me - but while it feels like its a big holding its only 5 to 10 m a day over 20 to 30 trading days. That hundreds million not billions of shares.

FRR may well have let YA get the shares back in an orderly manner over time rather than in one go. Don't forget YA sold shares that did not exist. A broker/MM may have had to execute some sort of trading plan to do this even borrowing shares (like a short) to cover the miss trade.

I've never seen anything quite like it before selling under bid like that - but I have seen YA shifting in 5 and 10m lots many, many times over extended periods.

Zeps - as I've tried to post today there is a significant difference in the size of opportunity and dynamics between Block and FRR. FRR asset is potentially Champions league compared to Block ambition of championship. Always difficult to watch but the Court case really is key here. Imagine you trying to get a mortgage on your house while someone else said they owned it!

Puddy I'm sure that post is just frustration.

I would think the reporting threshold for a TR1 acts as a bit of a limit here.

The service providers from 2016 Uniserve and Kraft were recorded as holders with significant %. They sold throughout 2016 to 2017 and finally went below 3% and at the end of the process in jan 2017 there were some huge final trades reported as the price spiked up to around .50p. What we do not know is where the shares from that period ended up. A lot was in PI hands but there were enough for some to end up in a pot elsewhere. So at best I would say it was 10% of 2bn shares issued which would indeed put it in the range of our 5m a day man but I think not.

The other vendors were all small local suppliers with pooled funds. Again subject to a TR1 and again went below 3%.

So I very much doubt we have anyone lining up 2bn shares.I think we must be looking at someone transferring a much more modest 200 to 400m keeping them outside the 3% declaration. That is easiliy in the range of amounts YA appropriated in Aug/Sept for instance.

Ajames as I say you need to be careful with the geology.

I have read their RNS and looked at the geology a bit. The rock is different and that may be a decisive factor.

The Eldari and Gareji drill mud weight problem is compounded by the looseness of the surrounding sands in the formation and the tightness. I can't see how drilling out on a short bore rather than using perforating guns will help when the problem is that the bore is so bad and cementing has failed. Certainly not drilling out a couple of metres. The difference I suspect is the fracks and proppant we have been doing in Eldari and Gareji will be going out a lot further than that. Unless it was combined with some sort of remediation of the cementing I can't understand how it would help.

Bloe appear to be using that technology in a conventional oil well. Eldari B works fine if you drill with the correct weight and then cement properly - so it might have some use there but not in Eldari a or Gareji but I doubt it as the plan is to drill side tracks to exploit E;dai B and in future Eldari A and there are very few deep Eldari B wells that can be used anyway.

Eldari A needs powerful fracks as it appears does the Gareji (in spite of high pressure). Can't see how a short latereral drill would stop the massive pressure we need to use in Block 12 going up the sides of poorly drilled old soviet wells.

There may well be important differences here between the geology that mean it works in one but not the other. Bit more research needed but I'm sure Baker Hughes know all about various technologies that can be used to achieve similar in tighter formations.

Well out of interest I've had a read of the Block RNS.

First if FRR issued a flow RNS saying they flowed 300 barrels when first tapping the well over 10 hours followed by 300barrels over an undetermined number of days with no choke size we would have a riot on here suspecting the flow was portraying an optimistic view!

Second they are drilling into totally different formation. I don't know much of about the Eocene formation they are drilling. If you look at Block 12 that is the formation under the Eldari and Gareji - so its older rock. On block 12 that formation rises to the west as the Eldari thins out but is also one of the targets at basin edge to the east where the rock has been lifted and folded. Canargo targeted It in adjacent block. So it does beg the question if its prospective for Block could it be prospective in block 12 once we have exhausted Eldar a and b and Gareji of course! It may be that the shale play in the west has this formation under it relatively near the surface.

Third its interesting they are looking to go horizontal in their rock in their next campaign. Maybe they can while the Maikop shales we are in isn't so easy to do that hence the vertical approach at UD2 in Gareji and Eldati in Taribani.

Fourth - we see their price of oil is Brent minus $10. And gas US$2.6/Mcf at current Georgian gas prices of US$5.5/Mcf,

So while its very interesting to see what they are up too - its pretty clear they are operating in a totally different geological formation. But I do take the point that Block are in a hurry - but they are motivated by having to earn their share of the field at the moment!

I would like to add my own vote of support to our nomad who I have also been fortunate to meet and spend time talking with as he does attend the shareholder meetings.

He is in my opinion a normal decent person not some city spiv. The job of the nomad is not an easy one and he does a pretty good job given how difficult it is on just about any AIM company let alone one where he is UK based and the senior management team is in Georgia and Houston with different time zones.

Timster/ODR Frontera has for many years been about how a company in a great deal of financial difficulty and surrounded by risk follows through on its conviction it has in Block 12 title to a valuable asset. I like that underdog comes good under story here.

The compounding risks have been political, macro economic, predatory corporate and geological/technical. All those risks remain. You can spend too long worrying about those but you can never ignore them. For me the financial risks around the debt have been my biggest concern for most of the last 5 years. In the past the geology and whether I could trust the board were key issues for me.

If I didn't think Block 12 was worth my time researching and understanding it and the company that has the license I would have left at any one of the points over the near last decade I have held FRR shares and gone elsewhere.

FRR is at the top end of high risk investing. Anyone who invest in this and doesn't understand that needs to take a serious reality check.

However, I think the 2018 campaign as evidenced by notes from WHI Ireland notes, 2 Mou's and a prospective $60m funding package, and no fund raise for 10 months underpins an argument that the company is moving forward whether the share price reflects it or not. The improved communications particularly quarterly face to face meetings has enabled me to gain a far greater insight into the team I have entrusted my capital.

If people (who I have probably got on filter anyway) want to post an informed and reasoned counter argument they can post away. But what I will say is that the malicious and often ill informed attacks on Frontera by the prophets of gloom and doom have made me simply more determined to support the company and post in a broadly positive slant. That does not mean I do not analyse and post on the problem areas such as the court cases, arbitration and debt. My observation is that negativeers and bashers never recognise any positive or potential and seem afraid that the company might actually succeed.

Cayman Court case and arbitration get them out of the way and then we should have a lot to look forward to in 2019.

I've shared my theory on this previously.

I don't think the NDA is the issue with flow rates - though the partners may prefer us to refrain from releasing while they are negotiating - I think the NDA applies more to the technical information we provide them and the financials of the draft contracts/deals. They have not to my knowledge signed exclusivity but BH are inputting into the planning of the FDP for taribani pre agreement probably via the existing service agreements we already had with them. T39 in particular will stay "on test" until they have a solution in place for the associated gas. Not to do so could result in it getting shut in but I do suspect they are very interested in the flows from the well over the 1 to 3 month and then 3 to 6 month period. For Eldari B we are in new territory on flows as previously the wells have not flowed freely to get information over an extended period which is particularly important for Eldari B due to the different drive mechanism which is expected to result in higher initial flows. A 6 month flow on that really would not surprise me at all. So if I was to guess I'd announce that once they have chosen which wells they intend to take on in Q1 2019 campaign.

Once the funding is released and we get a bit of certainty on the Cayman next week the plans and definitive agreements under pinning them could fall into place very quickly. We are already in the period where rig booking should be happening for a Feb start at Niko.

If you look at the funding yesterday it is made up of $20m for debt and $25m for operations with $15m contingent funds. On a go alone $25m would fund a full program of 5 to 7 wells depending on whether they decide to go after a revisit of Udabano area which could be $3m to $5m on its own. So I'm thinking 5 oil wells plus a deep gas well to flush out the 2nd major and maybe invest in some seismic for the gas.

Plenty to look forward too once the legal foundations are put to rest here and I like Zaza comment yesterday where he is looking forward at the operations not back to legals. 2018 Was always going to be a sowing/foundation year. 2019 should be when operations are harvesting value. Finally its been a long wait.

Thanks for answering that - I asked laat week whether lenders would require the equity element to be in place at the same time as the main funding. I guess a lot depends on how much the lenders trust the company and confidence in the project fundamentals. Based on that the drop in the share price would be well over done hence why I originally asked the question.

It does not look like a distressed seller to me and I doubt its Outrider - my original thoughts were maybe YA are having to gradually buy back the shares they didn't get in Sept/Oct in an orderly way but its gone on too long! But I would not rule out YA having sold some of their conversions to a particular holder. This is very reminiscent of when both YA and the service providers in 2016 disposed of huge numbers of shares which must have gone somewhere at process in many cases lower than current price.

A distressed seller would at least have tried to maximise by shifting in smaller lots or increasing volume. This is much more like a transfer of some sort. The puzzle is why its always a point under the bid no matter what other trades are going on. You then get the smaller 1 and 2m cancelled trades often next day.

Looks too organised and slow to me to be distressed but does look institutional as can't see any PI doing this for so long at under BID.. If FRR don't need to raise equity not in anyone interest to try and set a VWAP.

So puzzling as it is it does look like a slow transfer by someone.

Bigdave you have been posting broadly negative now for a while. You need to take a cold hard look at the company balance sheet and apply a dose of realism. Frontera have millions of $ of debt at the moment both in longer term loan notes and current liabilities. The debt if you tot it all up is not far off the current MCAP. The company have prospective assets in the field and cost recovery pool but no assets actually booked onto the balance sheet and very little cash.

Precisely how do you think a company would be allowed to pay a dividend in those circumstances? We have not even started the full field development yet and that requires significant funding way beyond the pockets of PI investors chipping in a few quid. The next stages of the development here for the oil and gas requires hundreds of millions of capital. How did you think that would be funded? I have no idea why you think a dividend could suddenly materialise here - maybe you have invested to try and carpet bag on a takeover. The company have been pretty clear that they are building the company and see the greater returns from development not a cheap sell out. Its a harder path but its the one we have been on for several years and should be no surprise.

It is the way of the world in corporate business for shareholders to be low down the pecking order at this stage in a company lifecycle. There are few AIM companies where that is not the case. However, with the board holding significant equity now I think we are as aligned as one could expect in looking out for equity interests.

As always I've done my word by word re-read of the RNS. Further thoughts below.

Para 1 – TERM sheet is the outline of the loan agreement to take into the draft of the legal contract before the money is released. Note Para 3 it has cost us $150k already for the fee – so its at a significant milestone! This 100% explains why the old arrangement for Niko was no longer needed.

Para 2 – Confirms its for Georgia and not Moldova or Ukraine and is quite broad so could be used in any of the fields.

Para 3. Note the delayed senior secure basis. Thus means the draws will be contingent on some pre-agreed terms – could be performance on drilling or financial such as cash balance or ratios. This deal would never have been possible without the success of the 2018 campaign and the reduction in debt due to YA preference shares and Steve and Zaza conversion into equity. The $20m initial amount COULD be used for existing debt. That could be some current liabilities (vendor debt) or Outrider. I tend to agree with Devex the company would prefer NOT to spend it on Outrider but if the dispute on the security with Outrider can’t be resolved it is a backstop option to get them out of the way but would leave us with some high current liabilities carried into 2019. Interest is less than current loan notes but the 3% fee at each drawdown is a bit of a hidden cost but not the end of the world. The final line on the lien and charge ties in precisely with the known dispute with Outrider around security. So this finance deal was almost certainly in play in October. FRR need the cash in the interests of all shareholders but this would place the new noteholder at the front of the queue.

Para 4 The lender is going to Georgia for the field trip…..as part of due diligence.

Para 5 Note Zaza does not comment on debt (or Outrider) at all and instead looks forward to the operations in 2019. This deal also goes along way to address GOGC as it talks of ALL of block 12.