Member Info for Moleinahole

As I keep posting we do not have all the information to make definitive judgements. That is what the court is for.

The use of the word security is part of the problem. After the 2016 settlement the old notes became "secured". Whether they were secured or unsecured was a key part of the 2016 court battle. The outcome was the new notes became secured but lost the right to convert to equity. Its not clear what the security that underpins the notes actually is. You would think its by parent company guarantee as the notes are issued through a subsidiary. We don't have any assets in the note issuing subsidiary. They could have a charge over a specific asset but unlikely. There must be terms we do not know for breach of a covenant the loan notes and how they are remedied (for instance by replacing the loan with an equity raise or refinancing and time lines).

So one way this could play out is that FRR as they bring a partner in use that action to fund the removal of Outrider. Hence my comment last night that there are many ways this could play out.

However, what the company do not want is the ability to close deals obstructed by Hope (and Outrider). hence the other reason for injunction on the security.

The sensible path here for all concerned is to settle very much like the YA arrangement. But that usually depends on both parties wanting to do that. Either FRR or Outrider might feel their case is very strong and hence stand their ground for a day in court. That is unusual - its much more common for them to settle outside court.

We simply do not know all the detailed terms of the notes and what could constitute a breach of the terms of the notes. even a technical breach of the terms could have occurred in the aborted YA action in August or it could be something else such as late or non payment of another debt (Don't forget the Steve N also has some of the notes as does another Hedge fund). Its not unusual for loans to have covenants attached and people are assuming the YA event in August has triggered such an event. That may or may not be the case.

If it is the basis for the attempt to call in the notes then my best guess is that Outrider have tried to use that as a lever to get some or all the notes converted to equity by trying to take FRR to the edge. As a secured creditor they now have first call on any assets ahead of equity and that includes YA as a preference share holder. That is what they did at Madagascar oil if you do some research. The major difference to Madagascar Oil is that they are currently on the board at Frontera hence the counter action for damages.

Secondly Steve and Zaza have no intention of being carpet bagged by a hedge fund. The real difference here is I hope that the Frontera Board for all their past faults are aligned to shareholders in a common cause here - especially since they converted their own debt to equity at a discount to help the company

Pyro nice idea but I very much doubt YA would do that.

As to why you would want to suppress the share price that is easy to answer if you were hoping to convert some debt to equity the lower the share price the bigger the problem and the more dulluted existing share holders would be if you were able to enforce a swap.

Ya are a preference share holder and rank lower than outrider in debt preference. I doubt they would risk forcing the issue. I would see YA and outrider as competitors not collaborators.

As I say I wouldn't try and double guess what has been going on. But I will be researching Cayman company law as part of my expensive fontrera education! US bankruptcy law was interesting but this will be much more interesting.

Read it carefully and then read it again. Then go and do some research on Cayman law and if you can tell me which jurisdiction would handle the loan then I'd be pleased to hear it. I will be researching.

The reality is that without knowing the terms of the loans and the details of the cases you can't form a strong view either way.

I'm backing Frontera as a shareholder but I'm not so daft as to not recognise all the potential outcomes here. The sparring with Outrider has been going on for too long and it looks like it's coming to a head.

Zib - I would as always tend to be very cautious.

There are two inter-related actions here the injunction and the damages. The injunction we learn today Outrider were trying to have lifted and a date in December is to be set. The injunction keeps them away from any claim they may or may not have on the security (which we don't know what that is). I'm not sure we know how valid that claim could be as we don't know what triggered it. We also don't know what jurisdiction any security claim could be being handled and whether the Cayman court has any standing on the substance of the loan.

Equally we don't know how robust a case Frontera have in their damages claim but that obviously is the headline today - but for me I'm more interested in the other action which gets only a passing comment.

So from where I'm sat we have a proper battle for the company that is being fought out in the Cayman Grand Court. Even when the company is morally in the right - commercial law can produce perverse outcomes. I thought I had seen it all but the FRR journey veers off on another detour.

Last time the settlement allowed them to get their loan notes secured and a place on the board. There are many possible outcomes I can foresee here across the full spectrum - some good, some bad, some neutral. Ultimately we have insufficient information to understand the respective cases and do not know the detailed commercial terms, security and covenants of the loans or the details of the actions subject to damages.

A home win like YA and the Turks in 2018 is possible equally we could get another score draw like Outrider in 2016. But don't forget even a win like the arbitration against Azer in the past was a pyric victory - we pretty much won the argument and some compensation but still lost the asset as a result.

So whilst I back the board and I'm sure this is a battle that they would only fight if they absolutely had to I would treat it with the seriousness it deserves and trust that Steve, Zaza and Levan would not have embarked on this detour without some solid evidence this time.

As a shareholder I want to see YA and Outrider gone and replaced by alternative funding sooner rather than later. I hope this will result in that being expedited so we can finally move forward.

TSBS its to catch out those that can't be bothered to break up a trade! If you ever buy above the normal dealing volumes its always worth checking the prices at even small changes in size. I was buying another share a few weeks ago and there was a huge premium on volume - so I just broke the buy down. Its probably as much a sign of the low volumes at the moment as anything which is what is really enabling it to be taken down on really nothing.

Sometimes you have to accept the situation at the time. In 2017 we were effectively bankrupt and unable to fund the next campaign and once the liquidation of the subsidiary was contested further faced lengthy court action or cut a deal. That was round 3 of the ongoing battle. Hope in some way has initiated round 4 and Frontera have had to come out and fight. Had Outrider been content to make money on the loan notes it would not be an issue. But they have persistently tried to make more money through engineering takeovers to the detriment of shareholders.

I'm 100% behind our board taking them on if they are again acting in their own and not the company interest. in 2018 we look to be in a stronger position. But I would still be cautious as we do not know the detail behind both outrider and Frontera respective cases.

I think that is what is happening now. But I think the first event will be a minimal commitment on an initial program in taribani. That will not require a high level signature if it's already been pre-approved as I suspect this game has been going on a bit longer than some might think and they will have been at the relationship now since August.

If you are waiting on Exonn or an other then yes I would calibrate your expectations to be surprised if and when it occurs as I don't think we have a clear view of that especially if it is the gas they are interested in.

But the Baker Hughes part I think could move as soon as the due diligence is done. When I worked in US my observation was Christmas was not really a big shutdown either. People tended to holiday when the weather was nicer!

Emblaze think about it. Would your corporation sign a definitatve deal with another company when one in exec member of the board was being pursued by the exec on the board and had at some point in the process tried to enforce a provision on the notes to steal the company?

You have simply got to let the exec on the board who are aligned to shareholders take care of the disruptive note holder and then I'm sure if the 2018 campaign has been a success then the first of the definitative deals will get signed.

The first deal will be the 2019 campaign in tarbani which if it's due in Q1 would mean drilling permits and mobilisation plans need to be in place soon.

Once FRR have a more lasting injunction in place then I think things will move. Hopefully the original claim by Outrider has already been dismissed without merit.

Aubree the share price in itself is currently less important to the company as we are not using it to raise capital. It is obviously important to individual shareholders be as a measure of sentiment. As a measure of current value it is arguably too high but as a measure of long term potential value it is clearly well detached from potential. So you just have to accept it for what it is. If you take a long term view the underlying assets are what is important and how you intend to create and fund the development plan. The current plan relies on the majors joining us to accelerate and we fund by profit share or cede % of assets. So I think the assets are thee and there is a plan.

Just a waiting game at the moment while some house keeping is done.

Gaf - FRR is about a lot more than just a share price. The political environment, the difficult geology, carrying on through economic and commodity down turns and corporate intrigue that goes with it is what makes this share so compelling and is partly what draws even those who have left and its critics back time and time again. And we all hope at some point that the intrigue will stop and then the company can get back to the assets. But make no mistake this company has had to deal with more than its fair share of problems. Once you appreciate that you find a degree of respect for the board's efforts. We are as close as we have ever been to unlocking the value in the assets and at this time its no surprise we have had YA, Outrider and elements of the Georgian Govt erecting barriers.

YA have been sorted, Outrider is in hand and the changes at the Georgian Energy Ministry are a promising sign.

As I posted yesterday I think this case in Cayman is probably the impediment to the next newsflow. It needs to be resolved and the company did not waste any time getting back to court following the first ruling!

Yes looks like they don't won't to participate. Usually a good sign you have something to hide. Shame main case is not in a US court as the papers would be a good read. But good sign none the less that the board are doing what they said and defending the company and its shareholders. Not knowing what they have been up to makes it hard to calibrate but it looks like Frontera are on offense in this one.

Pyro without the detailed statements of their case it's a hard one to guage. As it's chambers I'm guessing we can't get at the info like when it was in the US courts.

I thought we were going to take them on last time but for whatever reason at the time they both agreed to arbitrate.

50/50 this time whether if they have a strong case they go all the way. I'm guessing for now extending the injunction to let the BH deal get moving is important so would not rule out an arrangement. So far Hope has not walked so it's going to be interesting but I've never trusted Outrider so not surprised it's back in the courts.

Rainbow - in normal circumstances that would be true.

However, you simply have to accept that the company due to historic failure to generate revenue but run up costs has a large historic debt burden. Even after the restructure in 2017 - the run up in unexplained current liabilities in H1 2018 has put us not far off where we were then! Also do not underestimate the baggage the company tows along with past non delivery.

You then need to balance the as yet not signed on the dotted line deals against 2 legal battles the company are fighting of which 1 is back in court tomorrow and the arbitration we don't know what stage it is at and barely what it might be about or the case being made!

When you then consider that the company has been the subject of a prolonged and determined shorting and social media attack combined with a persistent and unidentified background seller recently into lower volume. Finally, the global outlook is poor and the price of oil dropping.

When you consider all those factors we are doing well to be at this level pending the right news.

The right news now as ever is further progress on the litigation which in my mind simply must have some bearing on the due diligence of Baker Hughes and a n other major.

Baker Hughes due diligence for phase 1 simply must impact the thinking around Niko which is now looking increasingly like it will be part of a 2019 campaign.

So I think we are waiting for some of the legals to be resolved to unlock the next news round. The good news must be that we are selling oil - if they are not then somebody must be bankrolling the company as with $500k in the bank at H1 2018 and a monthly deficit of $350k they would have run out of cash by August. So we are either broadly self funding for general expenses or running up some further large current liabilities.

On the arbitration the best eventually is you never hear about it again. It won't be resolved in public in anyone's favour I hope. It's in everyone's interest to put a consortium together to get block 12 moving. Then it will simply fizzle out.

Timster - see why I was worried about SOU last week!

Hope so Timster! Couple of years ago FRR needed a lot of research, trips and effort to be confident not just to hold into the abyss and back but actually to build the holding. I had always hoped SOU would act as a bit of quite stability at the base of the portfolio but it didn't work out like that. Have a bit of time for JP as he does take time to respond to shareholders and I always remember a reply I got back from him explaining one of the placements that left me with a large dent in my portfolio a few years ago!

What is striking however when you do compare SOU with FRR board is how much Steve and Zaza have put in personally to the company in equity as opposed to being gifted options. Their alignment with shareholders here at the moment is why they fight tooth and nail with YA, Outrider, SAOG and will be looking for the best outcome for shareholders.

I never thought 2 years later SOU would be being taken down a trip into the abyss when on the cusp of news! Been there with IOG as well over last 2 years and a few others in the past. But you do learn to hold your nerve and it always pays to keep checking your research and questioning the investment decision because on AIM you can absolutely never be sure.

Aubree - its a stressful time but equally nothing has changed since confirmation of the talks still in progress with 2 majors. I'm actually really worried about my SOU holdings at the moment if that makes you feel any better and each point move on FRR is costing me thousands of pounds either way! All the info from Georgia is positive and we are over 9 months since the last fund raise of any sort. So we must be paying our way with only $500k in the bank at June 2018 and a normal deficit of $350k a month. With YA reduced to $65k a month we have a bit of breathing space to sort out Outrider, the possible arbitration and the deals which I would say are interlinked now. The question is which domino needs to come down first to unlock the deals. I'm sure the company are working hard at the moment as they are well incentivised to see this succeed.

Yesterday was quite outrageous to clip 10% off on absolutely no volume and virtually neutral buys/sells ratio!

Coggy now is the time to back the company not try and pick holes or pull at loose threads.

I think TOT post on the changes in Georgia government was very interesting yesterday. If they are planning on a program in Q1 they will need to mobilise and get permits shortly. They have Niko but probably needs revisiting if they are going deeper to Zone 25 as expected.

As always plenty of intrigue and risk here but you either trust the board can navigate through it or not! The wider macro climate just makes it that little bit more difficult and the journey a bit more uncomfirtable at the moment.

Aubree I wish people would stop constantly dragging up that quote and then running it totally without any intelligent application of thought.

At the time the company were actively trying to work on the well to get it to flow. They started with small stimulations and gradually worked up the well doing larger. At the time the comment was made we were about to try for the next stage with more pumping and propant. That was done and the results announced mid January.

I really fail to understand what point there is of constantly bringing it up. You were waiting at that time like an adult for a Christmas present like a child. They tried to deliver but the well and the formation was not up to the pressure needed as ultimately proved when egged on by everyone at the meeting in January to revisit with higher pumping capacity which ultimately proved the well cementing was poor as it could not take the pressure.

Had the well flowed more consistently he would have been hailed a genius. But no one can say they did not try and the information gained may yet bag a major. So the jury is still out on the ultimate success or failure of ud2.

I get that people are frustrated with the share price but that is nothing to do with what the company are currently trying to do.

Brexit is the excuse but does not justify a 10% markdown on .381% of shares sold!

That is pure greed by the MM.

Yes should be London and could be Dec. But they have pushed out before when they need too.

Zeps you should know I don't do share price predictions - ever.

But seriously the last week has been total opportunism by MM and some of your fellow holders and posters on here who like to trade. There was no justification today for a 10% drop in this share. There was no selling volume. We do not trade in the UK and our earnings are in dollars. Yes the oil price has dropped but we are not a big producer but an explorer with an asset.

If it can drop 10% on 60 m sells then the MM didn't get many shares for their effort - so the majority remain very tightly held. Don't think they will leave it at this level with any volume. It will have helped short CFD and spread traders.