Member Info for Moleinahole

I agree. BH could play this a number of ways but for the big gas play you would think that is where a super major comes in. Interesting at the meeting when talking about the two potentials:

1. Taribani oil was ahead of the Mtsare Gas.
2. One wanted a JV model - the other a more formal farm-in.

So if BH is the taribani (at least for phase 1 and 2) and is a JV then there is scope for the major to make a move on a farm-in or buyout of the Mtsare gas - possibly with a drill of the sidetrack on UD2 with first refusal . A lot now depends on the terms of the detailed agreement they thrash out. BH are big enough to take on both the Oil and gas if they wanted it and I'd be happy to see FRR sit back a bit in Georgia and let them get cracking and evn start to deploy a bit more resource into Moldova.

CF that is one possible interpretation. But if they intend to carry on drilling zone 14,15 and 19, 25 then they will have to deploy a solution to associated gas. I believe that is the initial gas monetisation and possibly improving Mtsare as the shallow gas is pitiful and can be improved with a bit of work to sort out the water (Coggy offered to help them!).

The gas is not ready to monetise unless there is something we don't know in Mtsare/Udabano without further drilling. That does of course leave the door open to a further deal in Udabno area for the gas which I must say was my impression from the meeting.

I'll leave it at that Madpunter as it ties in with conversations I've had with the company and ties in with the PSA - I've never seen anything that suggest the auctions are anything other than profit oil - but if you want email GOGC and ask them!.

That's Ok just knew I'd seen the details before just didn't have time to look! The important bit in that is that with volume the discount reduces and hence profit goes up.......

Lets see how today goes I think this well intervention thing is worth a further investigation and if you read that document is has an excellent summary of the old exploration of the zones pre 2005.

The Company operates a rail terminal and storage facility at Dedopliskaro, approximately 10 kilometres northwest of the Mirzaani Field, which has a storage capacity of approximately 27,000 barrels and can discharge
approximately 10,000 bpd. The Mirzaani Field is connected by a pipeline to Frontera’s storage facility at
Dedopliskaro. Oil from the Mirzaani Field is processed at the field facility then pumped through the pipeline to
Dedopliskaro for storage. This pipeline has the capacity to transport up to 1,500 bpd. Oil produced at the Taribani
Field can be taken by truck to the facility at Dedopliskaro or to the Mirzaani Field should processing be required.
Once a sufficient amount of crude oil, usually in the range of 10,000 to 20,000 barrels, has been accumulated
at Dedopliskaro and within field storage facilities, Frontera arranges for the oil to be transported by rail to
Batumi, a port on the Black Sea, where it is loaded into crude oil tankers destined for the international markets.
The Company has entered into an agency agreement with Trafigura Beheer N.V. pursuant to which Trafigura
agrees to market the crude oil from Batumi. Oil sales to date have been transacted F.O.B. Batumi at an average
discount to Dated Brent of $3 to $4 per barrel. This discount is attributable to the small volumes and, to a limited
extent, a quality differential to Dated Brent. The Company receives payment for its oil in US dollars into its
offshore account. Frontera’s costs of transporting and marketing its crude oil from Dedopliskaro, storing at Batumi and loading onto tanker ships has averaged approximately $3.50 per barrel over the past few years. It is anticipated that this cost would decrease as production volume from Block 12 increases. Furthermore, the volume discount to Dated Brent at which the oil is sold would also decrease, and could be eliminated, as production increases.

Source page 21 Morgan Stanley Frontera Placing document dated March 2005
http://preqveca.ru/placements/memorandum/download/72/

Yes the RNS talks of taribani, mirzani and mtsare. But in terms of detailed work is clearly talking about taribani in phase 1 and 2. As I posted this afternoon my original thought was that the gas was Mtsare but I now think monetisation of the associated gas in taribani would probably be a priority. That means basin edge is available and mtsare and the shale play could also be potentially available for a second or third deal in the future. But today's RNS is a good start with plenty to be getting on with if phase 1 leads into a full field development in phase 2.

The transportation bit is to address madpunter as the oil is shipped by Frontera and sold by trafigura on the international markets not by GOGC in auctions.

Well in mirzani there is a mix of a large number of low producing Soviet wells and the work done by Schlumberger around 2010. Can't see much money bring spent on the old Soviet wells but the 5 Schlumberger wells always under performed.

In terms of taribani apart from Niko you have t21 and t23 and t9. Pecten you read the docs you linked earlier t9 used to flow at 875bopd from. Zone 14! T31, t32 and t34 were also flowed well from zone 15.

Going back to original varang plan in 2014 the target was T31 and T16 but a sidetrack was envisaged. Phase 3 of the old varang envisaged revisiting i#13 B#16 and K#7a to prove up Jodi, Haida and like kupra fields.

Maybe the gas wells could do with a revisit as Mtsare is producing alot less than orginally envisaged.

So there are a few possible targets but the bigger wells are more like what has been done at T39.

Also while looking at the document madpunter it covers your question on tanker shipments on page 21. Once 10 to 20000 barrels accumulated Frontera arrange transport by rail to Batumi where it is loaded to oil tankers for international markets. The company had an agency agreement with trafigura beheer to market the crude.

EDI drilling is the other Baker Hughes link. Edi did our sidetracking. Four of the five directors are ex Baker Hughes.

I'll post drive later when I get back from work!

You can find the document if you google frontera strand hanson or frontera project bluewater

Canny have a read of the details around taribani - think they were in the AIM admission document or the placing document. You can see all the wells by location and the pay/depths estimated for the whole taribani area.

T39 showed that the size used for zone 19 in the CPR underestimated it. Given how few wells have been drilled deep in taribani the first good well down to zone 19 was always likely to give data to correlate back to the seismics they have. personally I wouldn't have said T39 was that far "downstream" in taribani you can walk between it and Niko pretty quickly but there is delineation in the geology with some wells productive and others not that are close together! there is a lot of commentary about the extent of the field in that document - maybe the comment is more about the extent. This is what I was rereading the other night when looking at zone 19 and Niko flow tests.

One of the other interesting things in todays RNS was the explicit inclusion of Mirzani which shares the same geology at taribani in the pot even if not explicitely included in the phase 1 and 2 comments so presumably a phase 3 target!

Yes about what I have come to expect (we often rise and fall on no news!).

1. Because its clear from the posting over the past month and at times today some people were thinking takeover 9specifically by a major) when a JV was always the most likely short term staging post and Baker Hughes obviously aren't big enough for some!). That has caused a lot of momentum traders and speculators to adjust their position.
2. We are still the target of a determined campaign to attack the company as seen this morning.
3. The company comes with a lot of historic baggage.
4. Its a MOU not the final signed and costed deal that is to come.
5. Wider markets remain volatile.

But for a long term holder it presents many interesting possibilities and can't be spun as anything other than positive.

Pecten a lot now depends on how you proceed long term funding. A CPR will be essential for any RBL type funding and probably any institution. However, I agree a CPR equivalent could be done by BH as a third party independent of FRR that a future oil field major would accept. Either way I think revised modelling combines with what schlumberger and Exonn are up to in the rest of Georgia is on the cards and that fits in with GOGC objectives for the basin as well.

Now had time to have a careful read. So lets take each para at a time and pick out the key bits.

Para 1: The date is interesting. Signed on 26th Oct. I think the NDA was signed 26th August but later the MOU expires 26th September 2019. You would have thought a 1 year time! The term mutual cooperation is used. Mutual implies a bit more than just buying some services. The MOU is one result of the discussions with industry majors but need not be the only outcome of such discussions.

Para 2: Aim and scope is laid out. Collaborate to improve efficiency of operations, enhance service capacity and capabilities, and COMMENCE in-field drilling and intervention campaign Note this last comment COMMENCE. Also looking at the list of services that could be deployed which is a full range mix of project management, technical and analysis.

Para 3: Initial phasing is Phase 1 field program of reworked wells in taribani with objective to increase oil production. Phase 2 Wider Taribani full field development. Phase 3 Future projects - including interestingly "gas monetisation". When I originally read that I thought Mtsare but maybe its the associated gas?

Para 4: we are now working towards a Definitive agreement to frame the work outlined in para 2 and 3. The commercial models sound very like the info you would use in a CPR. The cooperation will deliver the BEST of BHGE's expertise, knowledge, know-how and services. Funding from FRR side mentioned for first time as by "sharing of its oil and gas production" (like what was already announced for NIKO!).

Para 5: Reaffirms the term mutual cooperation and that the company looking to cede profit share of production in return for Baker Hughes deploying expertise and potentially kit.

So all in all my view not changed from this morning. In the near term the 2018 campaign carries on phase 1 and develops into the full field development of taribani phase 2 probably once they know what zone 25 is like at Niko. Further out there are other potential projects. The proved up assets in a JV structure do not preclude deals being done at any time. Very much the sort of deal I was expecting.

As a note notice the MOU is with FEGL the subsidiary that holds the block 12 license. That would have been the subsidiary Outrider might have been eyeing up. Notice the dove tailing of the YA settlement into the timeline as well.

This should leave the company with a plan to increase revenue over the next 12 months (funded by profit share) to continue the company restructure and stabilisation of balance sheet and 100% of block retained.

Crudetrader I will reply a single time to you as your motives are malicious in posting.

There is a huge difference between a master services agreement MSA and a MOU involving both services and a potential profit share arrangement deal. The transaction commercially is totally different.

In my line of business we sign MSA all the time with general suppliers. This MOU is of a different nature. But having an MSA already in place will certainly speed up any contractual discussions especially as this in phase 1will most likely be a profit share on the well as was already planned for Niko.

The two are not the same and this is early days in the new phase of the relationship.

It's a miserable existence coming on boards and trying to undermine companies. Please go away.

I suggest some people do a bit of research on Baker Hughes.

This MOU leaves every option and eventuality on the table. One final thought from me is that signing the MOU shows intent to GOGC around any possible arbitration that FRR intent to develop Block 12.

Well I've said a few times that if we do a deal with a service provider Baker Hughes would get first refusal over schlumberger due to their involvement since 2016 campaign. Also BH are part of the Houston oil world. Maybe they are the service provider vendor who did not mind carrying their unpaid bills since 2016/17!

First it's talking about the three main producing fields taribani, Mtsare and mirzani. So it still leaves open other parts of the block. It looks like the start of a JV where we retain operatorship and so don't need GOGC approval. The terms of the deal are obviously still being discussed but BH have obviously seen enough to go to a MOU. Looks like a profit share type arrangement per well likely which would explain the change of tack with NIKO.

The JV type road will not be what some would like as it is a slightly longer road to a buyout! But when you have not got the CPR in place the could well be the best road for larger longer term value.

The access to expertise and equipment is important. Phase 1 you would think starts with Niko and then they take it from there with more wells and into phase 2 on the full commercialisation. Phase 3 with the gas is interesting so it's oil first and with both taribani and mtsare the prime gas has been staked from them.

Needs more detail but it's not a bad RNS however it's spun! Needs follow up with the details but looks like a good start in retaining a high % of future production with options to sell a more proved up asset in future or invite a counter bid on some of the assets especially as gas is phase 3 objective.

Very much depends on what the major want to do I would say! Can't see them being passive partners!. Maybe we concentrate on the others prospects. If we believe the potential arbitration is most likely about the aress we have not recently been active in. Basin edge is the most prospective of those. Zaza view on this is that Basin edge has the eldari under it hence the study is valid and a continuity of the work in taribani. But you would think a commitment of an agreed work program for that area would be a minimum requirement. Basin edge was named by Steve in his 2016 strategy as one to work with a partner. That makes sense as it needs the right drill rig and plenty of cash to drill let alone produce as it's miles away from the rail terminal to truck.

Tarbani feels like it's heading for a farm in with a free carry element. But you would think any partner would be keen to drill down into the gas under taribani so the terms of any deal here will be interesting delineating between the oil and gas elements. Remember the taribani gas has not been drilled.

Mtsare also needs more research. So could see that being a loser arrangement maybe with limited initial commitment with a right to have first refusal.

Quite a few possible ways this could play out.

Prod would agree with that. For the MK gas they need 3d seismic to delineate it better but I suppose they could go for the sidetrack. Can't see us spending $3m+ on that when they could get a partner to do it. If we had $3m to spend I think it would go on Niko as of today. I think whatever schlumberger are up to in the adjacent block will be a key factor in the gas. If they get good flows from the well they are working on which should be done by now then maybe we don't need to do anymore at the moment.

Mike i would personally tone down the milk country of its resources type comments. Likewise I agree with Aubree there is alot of chicken counting and the start of the what I'll do with my millions type posts.

The company continues to progress and the right outcome here is for both the Georgians and Frontera shareholders to benefit from the persistence and determination to get a result in block 12. The idea that we are carpet bagging the country rather than investing is the thinking that drives the arbitration seekers.

Be quietly confident but not over confident here as they work through the final of the many challenges we have had to see out.

Well it's Georgia presidential election this weekend. Looks like a former French diplomat independent but supported by Georgia Dream will win. Main issue in the election is economy and jobs. That is most likely why the pace is increasing to get the work in the energy sector going.