Member Info for Moleinahole

Zib - yes Basin edge. Its pretty clear from the meeting that there is no risk to mtsare or taribani which are the two fields in play for jv/JO model.

Bigdouble I might have to listen to Pyro tape but I'm not sure it is correct they have completed a CPR. What is happening is that they are re-evaluating the data in our data room. For FRR to do a CPR with NSA would take 6 months. We knew already that the old CPR was out of date - take T39 the payload is double the size and has better properties in zone 19 let alone the data we now have for zone 13. I think what a partner with resources brings is the ability to remodel that data quicker than we could and draw their own conclusions rather than produce a "CPR".

The more interesting comment was I think that you could reduce the number of wells to get at the oil reducing capex and at the same time be targetting higher volumes. If you then get eldari b flowing conventional and unfracked in the lower zones like zone 25 then the existing CPR understates OIP by a large amount. That is also not new news really Steve N has been saying that for years.

Well morning folk - long trip back for me only got in at 3:30am. A very interesting meeting indeed. You either believe we have visitors to block 12 with deep pockets or not. Lots of little pieces of information to indicate likely future direction and a first indication of how long they think an initial proposition on taribani will take. I'm inclined to believe we have active visitors with alot of experience of evaluating information.

Might post a bit more later but to answer two specific questions people asked for confirmation:

JS - on Basin edge I didn't ask as the question was addressed indirectly by Zaza. Basin Edge is one of the blobs of the block 12 multi play/partner strategy. But Block 12 is almost certainly one of the fields GOGC would like us to relinquish. Equally I think FRR believe they have a strong position with the PSA and the arbitration is as likely to not go very far especially if FRR start bringing in partners and executing the strategy. So the partners are looking at taribani and mtsare at the moment - Basin edge remains a future prospect.

As requested and onto the mythical production license. I spoke yet again to Levan and he reconfirmed to me that we are not waiting on any licenses and that the Georgian gas law is not the same as that of other countries. We are NOT waiting for a production license.

Lets see. Anything new would need a run by the Nomad (and possibly Yellow Jersey) who are both in London so face to face for that would also make sense before the meeting even without an RNS to go through what can and can't be said. I would be surprised if we exit today knowing less than we started at 7am as I think its inconceivable there will not be a power point at the very least unless the meeting has a very short agenda before retiring to the Angel.....

JS you are correct. Will try and ask.

There are a few reasons Basin Edge has probably been left. Cost will be one - it will be a more expensive drill out there compared to taribani. Second is risk. Taribani is "safer" to drill in terms of chance of success. Third location being out on the far edge of the block it is well away from the rail terminal for monetisation.

The Basin Edge drills were very so close to success but in the end failed due to the hard rock and the drill being slightly off line missing the reservoir. Interestingly Canargo drilled the Basin edge prospect just North of us and that will now be in Schlumberger Block I would think. Last update on this was Steve in Nov 2016 when he said that Basin edge was effectively a future prospect and one up for negotiation in a JV.

So Schlumberger are an interesting "neighbour" given they border both the Mirzani and Basin Edge Oil and Mtsare gas prospect.

Timster its a necessary meeting for many of us given the sustained period of quiet combined with both the arbitration and YA matters so I don't know why you have spent the last few days persistently sniping at it - I'll be charitable and attribute it to you trying to manage expectations.

Whether there is any news before 6:30pm will go along way to set the tone for the evening and the likely line of questions. People will draw conclusions from a lot of what is not said and the body language as what is said. That is the advantage of a face to face meeting as opposed to a bland RNS. You can have a conversation.

The increasing numbers who attend each meeting shows that shareholders value that face to face time. It has also in my opinion created a stronger and more resilient PI shareholder base to withstand the pernicious campaigns directed at the company. I'm approaching the meeting with an open mind but with a few key questions that I would like answering or get a better idea why they can't be answered.

I need a better idea of where we are in terms of the stability of the company finances as a result of the 2018 campaign. I want to know where we are going next and on what time lines and the preferred funding mix. I think we should be told what is happening with Niko and the current performance of the 2018 oil wells (but may not be in detail but an indication of revenue to cover costs would be a minimum after the poor half year results) but I expect to hear a retrospective on UD2. I would like it if Dustin was attending again to hear from him how Taribani has gone.

Lets see how the day unfolds.

Lash absolutely support that view. Having campaigned for years for meetings and information the quarterly presentations started by Steve in 2016 and which have now carried on are very welcome.

The detailed information in the presentations (such as the views of the drill sections or financial models) are really interesting if you can be bothered to read them. Of course we need some concrete numbers and they need to come soon. But I doubt I would be sat here now if the communications had not markedly improved since 2016.

I get as much talking with other shareholders, the nomad, yellow jersey at the meetings as Levan and Zaza. It will be an interesting meeting to gauge body language with or without an RNS!

I'm travelling down from Manchester now and may be able to get down a little earlier so looking forward to meeting a few for a beer before and/or a tea at America Square can't stay late as on the 11pm train back North.

I'll repeat from my knowledge of the PSA and all the meetings I have attended and talked to the company face to face I have never heard that we are waiting on a license of any sort. I will make a point to speak directly to Levan the company secretary on Thursday if he is there and get an answer.

Consolidation has been discussed many times. It will not happen while YA are in play with the preference shares. The only reason to do it would be as part of a further recapitalisation - I would hope we don't need one of those at this juncture.

Madpunter you are repeating one of Seymore's lines on the production license. To my knowledge we are not waiting on any "production license". I will specially ask on Thursday but to my knowledge everything is covered in the existing PSA and the declaration of commerciality has simply activated terms in the PSA around costs. We inherited 6 producing fields in the block.

I'm not enjoying watching the large trades going through at the moment - like most I would like some firm fixed points established as to where we are and where we are going next and when. Hence certainty that the 2018 campaign has resulted in positive cash flow and covering of the yearly deficit needs to be announced sooner rather than later in whatever way the company feel they can. That is absolutely essential and the company can expect some questioning on Thursday on those lines from me.

As of today we don't know the outcome from the 2018 campaign and don't know what is happening next on operations. Equally the two largest areas of uncertainty (the spat with YA and the Arbitration) remains an uncertain. To compensate at the moment we have the possibility of a jv or the possibility that a hedge fund will invest in Niko (which should have been paid for by now and ready to go in 4 weeks).

We are most definitely at a critical point at a corporate as well as a technical dimension. The dice have been caste on the 2018 campaign. UD2 same up short this time but needs $3m+ now spending on it to sidetrack. Taribani has good initial flows but after 5 months we do not yet have the result as the dice have been covered to our eyes.

Saw that comment from Kickmuck. Some interesting thoughts/observations in that post.

I had a very careful look at the accounts over the weekend reconciling and examining all the numbers. Vendor debt is one I had a good look at given the increase in short term liabilities which is still the most interesting number in the accounts. We knew the outstanding part of the balance sheet work in 2017 was the last part of vendor debt.

I have come to the conclusion that they could not have sold much new oil in H1. The inventory historically has always been close to the number in h1 2018 and was historically made up of very little stock oil and mostly drilling materials. Revenue likewise the accounting is that it is recognised when little passes - so that is after shipment to Batumi I think. They will have used more stocked materials in H1 so there is a reasonable chance the stock oil is a larger % of the inventory this time - the year end accounts separate the two whereas the half year does not.

Equally, current liabilities in the past has been made up of Interest, vendor balances and liabilities to staff split. So the sudden jump in this line is unexplained as the H1 does not break the number out. One interesting thing I noted was that the long term debt balance had not changed. I therefore wonder if the increase in liabilities is a mix of vendor debt and I wonder if the 2018 long term debt is to be paid in cash not shares.

That got me thinking if they paid in cash it would enable someone (be it Outrider and the board) to take some cash out (bit like a dividend to them). You could then use that cash to buy shares (maybe even buy out YA - the sums are big enough). Taking cash out while the company is in a tight financial position by the board would have issues. But not if it was used to get rid of preference share debt.

So whilst I would share some concerns that normal ratios you apply when looking at the balance sheet have deteriated the reason why can't be determined from the way the H1 accounts are presented. The change in liabilities dwarfs the $2.6m YA are looking for.

If there is still very little revenue in H2 then the company is running on fumes as continued $7m a year losses can't continue. If the revenue has stabilised at the 1000 bopd mentioned in the podcast then we are in a better place to deal with the increase in short term liabilities.

So once again so much turns on the flow rates and its going to be interesting on Thursday without a bit of news. My gut feeling tells me there are a few bits of wheeler dealing going on here at the moment as the company continues to keep the debt and cash plates spinning.

Well today is the day the T20 expire from the 3rd Sept "excitement".

So after today I would expect the book to have been balanced and the game moves on to the next phase of cat and mouse between YA and the shorters v FRR v the MM.

I know that. I suggest you go and do a bit of research into oil industry full cost accounting......the impairment title does not cover all the contents of the section. A fuller explanation is in year end accounts from memory....

Both of you read note 3 to the accounts in particular the impairment bit.

RB40 the oil and gas properties will be block 12. Because we have not got any proven reserves I think you'll find they appear in the balance sheet on a cost basis. We have spent $8m on the fields this year and at the same time the accountants have used the change in oil price as part of the valuation. But because there are no notes to explain the move it could either be some of the cost has been added or a revaluation or both. Either way as most of the value has been depreciated it's not a line I spend much time looking at in the accounts until such time as the cost recovery pool and reserves can be booked back.

There are two problems when you look at Frontera accounts. First they continue to spend more than revenue even on general expenses let alone exploration. Second the balance sheet remains large in debt and devoid of assets. We all hope the current campaign will result in progression quickly to a CPR that solves both these problems in H2.

These results were always likely to be sub optimal. The next set have to show a transformation.

Rb40 the inventory number will be the oil stored but not yet sold. Any shipped but not paid should be in accounts receivable the $1.1m.

The way the assets for the oil is accounted for is a little unusual due most likely to the fact we have no reserves booked. There is a note in the accounts which explains a bit. The amount carried as an asset has increased by approx $10m which makes a change from the writedowns we have had to take in the past on falling oil price which don't seem to get written back. It most likely some of the cost has been added to that lot to depreciate.

The current liabilities are not broken down apart from 2 numbers which don't really help. One from next Thursday from me.

Interesting no commentary at all in particular on jv or the non arbitration!

Guys I'm still trying to reconcile a few things particularly the increase in accrued liabilities which is the one line that sticks out to me.

Cash they have burned up the Turkish money and I suspect have used the Feb contingency money and and of the money raised for the drilling on some general expenses. That might explain why liabilities have changed to some extent but the notes are not helping.

Apart from that it shows that revenue from current campaign is in H2. So cash for YA payments would have been right in July unless the cash from the oil sales started to arrive.

Bit like your domestic accounts if cash is tight you accrue some of the bills on credit pending payment.

It's going to need a bit of time and a spreadsheet to work out exactly what is going on here. But first impression is that revenue is H2 and as a result they continued to rack up an overall deficit that they have had to finance at the same time as fund the exploration and deal with YA.

Shpunken if you have ever read the accounts FRR produce you would not worry about people being able to back calculate production. You get a revenue line and that's it! I would be very surprised if the results were delayed as at end of June there will be very little to show. This year will be particularly difficult with the rising oil price. Without an actual BOPDE number the H1 revenue will have increased whether they produced more production or not!

The interesting numbers are in H2 and they will be June 2019.

The important part of the results will I think be the commentary, how the YA event is being handled in the notes and for me the current vendor debt and cash position at half year.

TSBS you know this week is results week so RNS is due on Friday 28th Sept with the results. Anything else posted by RNS is a bonus. Last weeks RNS were not of the company choosing but a somewhat unusual circumstance even by FRR standards. I would be surprised if either in the results or just after and before the meeting that an operational and corporate update was not issued.

If the current T39, T45 and Dino is flowing well (and by that I mean cumulatively say 450 to 500 bopd that plus existing 140 bopd) then they have a bit of time as the books will be balanced. Any more than that and they can sit it out with some ease to plan for 2019 campaign. Less than that and they would have had more urgency to get Niko underway.

But I wouldn't write Niko off just yet for 2018 - they could have done the procurement and service booking regardless if they were debating whether to go A or B and even if they have not proceeded with the Hedge fund and update us later with the outcome.

2019 has plenty of time but that campaign is currently about funding model:organic vs JV vs equity vs debt funding. Equity would need extra headroom at AGM.

For me I'm looking forward to the meeting will be interesting to listen and observe.