Member Info for Moleinahole

Coggy the original plan for Niko from a few years ago was a short horizontal single zone exploitation starting at zone 9. That was the thinking of how you get the tighter eldari a to flow. The 2016 and 2018 campaigns have proved you could get good results from horiziontal stack and frac (with high power to open up the rock) as long as you a good clean bore and a good cement job across multiple zones. You would think given the US enthusiasm for horizontal fracking that horizontal will always be an option. The Eldari b is I think where the excitement is as a conventional gas driven play hence the vertical approach.

But I'm sure the majors will have plenty of ideas of the best way to take on this dual conventional/unconventional oil and gas play. Would really appreciate another visit or video from Dustin in due course on the 2018 campaign and the options going forward - something like the Sound Energy Deep Dive.

Keep focus on the asset and the share price will take care of itself.

Following that thought process along a bit further T39 and Niko are actually quite close. So I think they will learn a even more with both wells sunk through zone 19 and one into zone 25 (not forgetting Niko was drilled deep in the past so they do have existing data from Niko) which will inform the plan for the wider field development. If WHI think a hugely risked price on just the eldari a in taribani is over double the current share price and you can commercialise at even lower capex and significantly higher resources the commercials of taribani point towards a favourable commercial decision once the technical verdict is in whether its done by a major or even FRR on their own.

Timster if you listen very carefully to the meeting I think the way you reduce the capex is probably by covering the same area with fewer wells - that was my impression. We always knew there were more resources deeper down so I do wonder if when exploiting the deeper horizons you can get away with a wider spacing. Not having to frac the deeper zones due to them being conventional is also a huge bonus.

The decision to go deep into T39 was a bold one given the cash and revenue position but must have been done in the large part for the benefit of the interested parties. Without that additional proven deeper eldari b information the field would be much less attractive exploiting the tighter eldari a.

I think that move into Eldari B will probably prove to have been the decisive moment here as we know the major interested in Taribani went to NDA in August as soon as those results were in.

In a similar vein the work at UD2 in jan may already have been enough to get the other major having a very close look. Given what is at UD2 is what is under Taribani it will have interested the major looking at taribani as well.

Its ultimately all about the asset here.

I think there is a good chance the even higher pressure and deeper zones could be very prospective. Eldari B is gas and oil in every zone. You would think the deeper oil will have more gas to separate so unless they invest in more equipment to handle it at the surface it becomes an exploration well initially rather than for pure commercial production. Going down to Z25 will not cost a great deal more on the side track and must pay for itself pretty quickly.

Have a look at the Jan presentation off the website it has the section of Eldari into Gareji.

The temptation for a major must be to drill down a little more into the Gareji to start the gas but zone 25 looks like quite a thick section. The advantage of UD2 is that the gas is much nearer the surface - UD2 we were working at a bit over 2300m in zone f - in taribani that would not scratch the top of zone a.

Its the thickness of the sediments that produces the large TCF estimates on the gas. The deposit is end to end across the block. The Gareji at Taribani goes down to 5040m - double the depth we are working at zone 19. Mind boggling the time periods covered by the geology.

Shatner I have not read the analysis but while the majors walking away might not be good for the short term share price a lot depends on why (the price could be too high!) and what the current flow rates are. FRR do have a viable go it alone path in Block 12 if they are running at break even or better. It would be much harder path and take longer but it is a viable option. The reality is we have achieved the 2018 campaign on our own and now the majors have come for a look at Taribani and Mtsare.

The wider context with Exon looking for a block (proven in the Georgian Govt ministry report) and Schlumberger busy in the adjacent block would indicate the odds of some sort of deal are reasonable.

Timster indeed the Georgian Christmas present was a map showing where the treasure was. People were hoping for the actual treasure (in the form of fares, flows and pipelines). In the long run Frontera will never be producing the gas in Georgia it will be someone else who can execute a project that requires both capital and expertise. To them the treasure is the data - they are well capable of getting the treasure out.

In the same vein people need to reflect on what high flow rates from the Eldari B might mean. Zone 19 is quite high up it keeps going down to the Gareji where the gas is lrking. A conventional gas driven oil field which will have totally different characteristics to the Eldari A zones 9 - 15 which requires a lot more effort to force the oil out.

Blue have to be quick as I'm between meetings...

There are a few things going on with vendors.

If we go back to 2016 the two local providers (biggest Uniserve) got paid in shares to see us over the period when the loan notes battle was fought out. Those were sold by Jan 2017.

In 2017 the smaller vendors were paid in shares lucky for them they were able to get them very cheap. They appeared on the register under what looked like a custodian nominee who sold them down pretty quickly into the rise in Q3/4 2017.

From the restructure there remained about $5m of vendor debt which it was said would not be converted mid 2017 but no date was given or explanation as to why they would carry the debt.

In 2018 vendor and short term liabilities has increased further. In fact its gone up a lot and that is inspite of the 2018 campaign being fully funded. From that I have concluded that the company have been juggling the payments for the operations and covering the general deficit of $7m+ with the available funds (in 2018 this has been helped by the $2m+ arbitration recovery from Turkey and the extra institutional raise in feb of $1.5m). But by half year we only had $500k cash left but still had a large deficit of current liabilities of which $4m was almost definitely vendor debt.

So in 2018 they have run up debt beyond what was needed for the 2018 drilling program. That was partly explained by the delays and extra cost that are being caused by the EWT for the major (I think it is one major not two as the cost will be Taribani). The attempt to revisit UD2 I suspect was for the other major.

So while I still think there is probably $5m of vendor debt that was expected to convert around 0.0045p and we still have the headroom to deal with it - I don't think that would be presold and its not been issued either.

Remember the lockin on the II investment in Feb is ended. I'd be inclined to believe we are still being played with by YA and the cabal of shorters - who having closed last week could easily have gone long CFD to cover the short and are now closing those. If that is the case then we should stabilise.

The more shares end up in sticky hands and the less equity the company issue the bigger the next move will be on news. My mind drifts to some of the psalms where David reflects on his enemies at times like these.

No Pecten I think not. The study area provision is clearly in the excerpt of the PSA Levan posted on Twitter in April. The context is slightly lost however in that single image but you can work out how it probably fits. From everything I'm aware of and have listened too and researched I would be pretty sure its about relinquishment of undeveloped (and non producing parts) main bits would be Basin edge and the shallow unconventional shale play at the top of the Block. Those are of course adjacent to the area where the GOGC and Schlumberger are busy and doing a detailed study.

What FRR did was just before the end of the exploration phase they announced both 1. the declaration of commerciality and 2. the study area. Important bits from RNS is as below:

the Company, filed a Notice of Feasibility of Commercial Production ("The Notice") related to its operations in the country of Georgia. The Notice relates to the Company's ongoing work within its Block 12 license area and has been filed with the Georgian state-owned oil and gas company in accordance with the terms and provisions of the Company's production sharing agreement. This is an important milestone for Frontera, as the Notice is primarily associated with operations targeting the substantial oil bearing Eldari Formation and other related geologic targets. Based on the Company's recent filing of the Notice, technical work will now continue in order to establish feasibility of commercial production across all of Block 12 related to the Eldari Formation and its related geologic targets.

Then from Nov 2017:
the Company has commenced implementation of a program to study commerciality of Block 12 (the "Study Program"), in order to reach conclusion regarding sustainability of commercial production. Commencement of the Study Program represents another important milestone in Company's ongoing work and its goal to reach commerciality of production, as it is primarily associated with operations targeting the substantial oil bearing Eldari Formation and other related geologic targets where independent assessment by Netherland, Sewell & Associates ("NSA") estimated to contain significant resources.

Pursuant to the terms and provisions of Frontera Resources' production sharing agreement, the Study Program has a 5-year term and it delineates the entire Block 12 as the area where the Study Program will be implemented. Pending completion of the Study Program and notification of respective results, no relinquishment of any part of Block 12 is due for the duration of the Study Program.

So from that Block 12 is declared commercial. The debate is whether its right/fair that they can delineate an area equal to the size of block 12 to study. FRR will argue Eldari A and B is under Basin Edge. Arrival of partners will sort it as I think main issue was lack of progress in 2016/17 due to funds.

I'd be almost 100% sure its Basin Edge the beady eyes were on! Hence it has no effect on where the main action is currently going on around JV/JO but its a very valuable bit of the box to fight over. But equally I'm sure FRR have a strong claim to carry on studying as Basin Edge is also part of the Eldari A/B that we are only now starting to unlock.

Of the PSA parts in the public domain I would not like to say what happens after the contract term has run with 100% certainty but Levan and Zaza never seem worried about it. If the fields remain commercial logic suggests it should indeed be rolled over for a further 5 year terms at a time or until it is not commercial. The 15 + 5 year exploration phase and 25 year PSA never really made much sense to me without the ability to roll it over else you would never encourage long term investment!

Aussie the question asked was is he in a closed period. That is specific to Year end and half year accounts.
He may be restricted due to confidentiality which is why he bought before the full year and half year in june/sept and since then has been inside discussions.

Prod - the arbitration it would appear does not involve Taribani or Mtsare which are the subject of the jV/JO discussions at the moment and hence is not likely to be about cost. Hence the thinking is its highly likely to be Basin Edge. That was one of the biggest takeout for me from Thursday. It was always inconceivable that we would have to relinquish fields that are actually in production such as Tarbani, Mtsare and Mirzani.

I think the fields are safe until 2027 when the PSA expires and the arbitration can only be about whether FRR declaring a study area after the PSA exploration phase expires was valid or not. FRR believe the PSA allows them to do that and to protect the block they have declared the whole of block 12 as part of the study as they believe commercial production is still likely. I'm hoping that a grand arrangement is possible here where with a bit of horse trading all parties get a satisfactory outcome here - Majors, FRR and GOGC/SAOG.

At some point the whole PSA comes up for renewal and that is one of the things I'm not 100% sure what happens but with any lick by then it will not be a discussion for FRR. Sorting out the longer term parts of the PSA has to form part of the commercials here.

An interesting question as to who owns the cost recovery pool and how you might go about this - just jotted down a few quick random thoughts.

There are additional factors here that need to be considered around whether the arrangement needs approval and how long that takes from SAOG. The Georgian Gas law is pretty clear on PSA and takeovers. If one of the majors step in they will fulfil most of the obligations and caveats in the law with no problems at all.

The way the PSA and license is constructed I believe it is held by the Operating company. The operating company is owned in pretty much equal shares by FRR and GOGC. Under the PSA FRR are responsible for the funding and recover the costs from their share of the output. FRR are represented in that arrangement as FEGL a wholly owned subsidiary.

So the $300 to $400m would normally come out of production and must be inside the FEGL company.

So if FEGL were sold the accrued sum to my mind is clearly an asset of FEGL Once the fields are in commercial production with to my mind a CPR its easy to value - else maybe they pay a %. Without the CPR they are off balance sheet at the moment and hence not visible in the consolidated accounts (like the missing reserves). This is the iceberg of value here - all some people see when looking at the balance sheet is the tip of the assets (and which is hidden further by debt at the moment). Obviously if GOGC could force FRR off the block then they effectively write-off the sunk $400m.

A joint operation with profit share maybe you sell part of FEGL and yes that could be for cash recognising the accrued costs. But that might be complicated if you have two majors as you need to assign away parts of the PSA of the whole block!

Alternately, they could do what has been suggested for NIKO and share costs and profits on a per well basis where FRR remain operator. That way FRR get a free carry and perhaps only consider the incremental costs and revenue per well or agree to share some of the accrued cost as part of the transaction (i.e. profit share post offset of accrued costs).

As FEGL holds all the block and not just individual fields maybe a small special purpose vehicle gets set-up for a JV/JO and FRR agree to assign a portion of the cost recovery pool from FEGL onto the entity.

Straight farmout of a fieid in the block where FRR retain they cost pool inside FEGL might enable GOGC/SAIG to insist the company farming in might do so and only be able to offset their own costs against profit oil.

So I think there are a few possible permutations here but I don't think any of them are bad for FRR.

Either way its worth a serious debate.

An observation: Too many on here have now decided to start following the minute by minute share price and I even see the charting gurus have now started arriving from the broken III site. That and the board being infested by momentum traders and would be short traders. And then as if to prove a point "long term "holders" describing how l they have traded the share. The number of posts talking about the actual business has dropped to virtually nil. That is exactly what Zaza was on about in the shareholder meeting.

If the opportunity is sound and the JV/JO discussions are sound then that is what you need to focus on. Filter out the rest of the noise and watch the dog catching up with the car.That is what needs to be talked about so don't lose sight.

Free it's easily split. The block is large enough. The Mtsare and Taribani are different enough. Taribani you get an oil play with the gas underneath. Mtsare you get a mainly gas play that is 3000m thick.

Taribani and mirzani go together quite well but it takes 30mins to drive between even those two fields. Basin edge is even further out. The block is easily big enough for two or more areas to be developed independently.

Of the two tarbani has the oil derisked with the lower eldari b a conventional oil play with the eldari a a bit tighter. The gas under taribani has not been drilled but NSA seem confident n the CPR that it's there.

The gas at Mtsare has not just UD2 but several other deep V# wells to show what might be down there. That is going to suite someone who doesn't mind having to a bit more 3d to delineate it a bit.

Listening on Thursday and reflecting on the decision to go deep at T39 and in future Niko it looks like the Taribani blog is much further down the process of evaluation than Mtsare.

Underlying the technical position if the share has been shorted (which it has been) by a combination of traders, outright shorters from the cabal of doom and YA that has worked when the share price is falling in lower volumes.

Once the dynamic changes YA selling volume has little effect, the shorters close and traders try and get back in and momentum traders rejoin. All the time as long as the company do not issue more equity the existing stock accumulates in longer term holds. That is one reason why FRR moves quick in both directions underpinned by the possibility of missing out on a large deal on the asset. Fear and greed are powerful forces.

There is always a pivot point between the two forces and the charts will reflect that. However, for the more fundamental longer term investors our time will come from the work done in the field not from a price on a computer screen.

Timster you have changed your tune. Last week the shareholder meeting was a waste of time as there wouldn't be new news. Now you wish it had been recorded. The purpose of last week was a sit down and reassure existingi shareholders. I'm sure there won't be a shortage of publicity when the right RNS is ready for the market.

Strange how Devex has just posted some similar thoughts to mine in his post!

Further to his note on timing I was talking with Dulwich about this in London. For me an outright takeover unless it was a derisory offer for the field would take time and should cost alot of money. Even for a major approving a move on a field requires an approval process and the bigger the price the higher the approval and hence due dilligence goes. Politically a smaller move in followed by a larger future expansion makes more sense as well.

The speed of movement here does point towards a modest initial size to start in taribani with the option of scaling up in future. That might not need to go so high in the organisation for approval as the financial commitment would be less but it would get their "towel on the beach" as it were. The speed of that will also have been greased by the interest of a second major.

If as we believe the 2nd major is looking at Mtsare that is a less proved up gas play and has a very different profile of further exploration before it can be produced so that could take a bit longer but not too long if they have no exclusivity in place.

Whether its ultimately JV or JO model seems to depend in part on the GOGC/SAOG not holding things up and the preferences of the interested parties.

Either way its going to be interesting watching this unfold.

Blue - nice idea but given the likely structure of a deal I doubt it for a couple of reasons. First we have a lot of work to do on the balance sheet still and that will have to take priority before you could think about a dividend. You can't pay dividends until the short term debt is resolved, followed by YA preference and with half an eye on Q3 2020 longer term debt. Indeed I think YA being taken off the pitch is probably now a priority - I wouldn't want them to get one cent of any dividend if one was to be paid.

After that we will need to plough everything we can back in to ensure we maximise future returns. We may get a free carry on some wells but depending on how the deal is arranged we may need to fund a share of costs in future. If there is then free cash we need to invest that in accelerating the work outside Mtsare and Taribani particularly Basin Edge to protect that asset as quickly as possible from relinquishment due to inactivity.

Dividend would only occur in the event of an outright take-out which is not impossible but down the list after JV and JO. A one off dividend might appear nice but from the underlying business at this point in time it would make little sense.

The value here will come from a fundamental rerate when you put the cost recovery pool and booked reserves onto the balance sheet and the value gap between current share price and underlying potential value is demonstrated.

At the moment the share price is somewhat disconnected ironically probably too high given the current booked assets/liabilities and cashflow but too low given the potential assets. There lies the problem at the moment that it is probably going to take confirmation that one or more of the large assets are in the bag (remember arbitration appears not involve the taribani and mtsare plays which are the focus of major interest) to cause analysts to get the abacus out.

At the moment new and existing investors have the possibility of buying in before that transformational moment. Its irritating to think people can jump in now and do that. So I get that someway of rewarding longer term supporters would have been nice. My preference would have been to raise in the past with warrants which I prefer compared to Primary Bid but I do recognise such arrangements cost more.

TSBS the $25m number has been repeated several times over the past 2 years. Its the same amount they mooted raising from EBRD. We will need $20m+ to pay current liabilities alone that would leave us with a bit of change while we wait for the first wells in the revised 250 well campaign over the next 10 years to get going.

Careful guys on that comment. Knowing Zaza quite well I would read that as a challenge to the questioner to value a field yourself not that B12 was the same value. He will not want to put a value out there and then be beaten up with it that's for you to do yourself.

The important work is going on at a technical level 24/7 in the field and the data room. As long as Zaza has brought in the right experts to face off against the majors team then that work will reach a point where a recommendation can feed into the commercial work stream. The tariibani analysis was always going to be at the front of the pack as there is so much information available.

The important bit is that I don't think anyone who went or listens to the meeting could conclude that the Majors RNS on 3rd Sept was a ruse and a massive bluff to keep the plates spinning.

The date for the AGM was set around this time last year for November. So with a bit of fair wind there has to be a chance of some further movement before then. Would be pretty brave short at this point in time when discussions could easily conclude suddenly when a critical point is reached. Having 2 looking at the block with one having seemingly a head start on the other in taribani should keep them moving along nicely.

The non-arbitration and YA are sideshows to the main event at the moment and I'm sure will get resolved. The main event has always been how big is the asset. For taribani (and all the analogous oil plays in block 12) the answer to that looks to be a credible yes. The gas is at an earlier stage in its journey. But surely that is the real prize that the bigger players will be looking at.

Do I think we are generating and selling oil at the moment? Yes. Are we selling as much as I'd like? No. Are we producing enough to "keep food on the table" through this important period? I'm inclined to say just Yes.

The meeting should stiffen the resolve of long term holders to see this one out. AGM could be only a few weeks away now - we had the notice last year around now. That date has some flexibility but should occur inside the timelines where a deal could be put on the table. There is a deal to be made here that will resolve many of the open threads.

Pyro you are indeed reading too much into that call which was to Houston! They did exactly same after last meeting. It was a shame that they had to leave early but everyone had a pretty good chance to ask most of what they wanted.