Member Info for Moleinahole

Olly - no one will be happy with the price at .32/.33. Not Zaza and certainly not any of us. I have thought this through a few times and its my considered opinion remains that any RNS now that is not 100% rock solid information about extended flow rates on either and probably both the oil and gas will have limited impact on the share price. In fact it could have the opposite effect. Sometimes its better to say nothing at all as the song goes!

The deal with YA for the remnant of the preference shares was a good RNS. People just pick holes in it. The Jan RNS for UD2 people just pick holes. Each drilling result with detailed information - people pick holes in it. So the evidence to date has been that increased information in 2018 has not translated into the share price. All it does is provide a platform for negativeers to sow doubts. And no one here can be under any doubt that this company has been singled out for attack by the purveyors of doom and gloom.

There has been a marked change in comms since April and even more marked since May with only 2 RNS in June. Could be something is going on with SAOG (as evidenced by the arbitration - and I agree with Star Rage post) or a farmin or jv. SAOG via GOGC will know full well what is going as they have a 50% stake in the operating company so they know what is going on operationally but do have to approve any arrangements. But relations are not so bad that licenses and approvals in taribani and presumably Udabno are impacted. The arrangement around Niko would not have needed their approval as it was a share of our profit we gave away for the funding. That was an unusual arrangement designed to avoid dilution as is the YA arrangement it potentially avoids dillution. The Outrider arrangement also has no equity option built into the arrangement.

The rounded large cancelled trades - back again yesterday I see. I would not necessarily read that as something big however as in total they are still small amounts but seem to have a magnified effect in low volume trading and on sentiment.

The problem is that shareholders have supported the company thus far but are at the limits of risk and hence are not buying. Meanwhile the pressure on the share price has meant momentum traders have left to chase other rainbows and it is not until volume returns (with the momentum traders and herd) that the share price will take off again. News may precipitate that - equally the company may be more interested in other forms of funding (including institutions) hence lack of communications could be seen as a good thing as if they were looking at a placing involving PI's I'm sure it would increase in volume.

The two risks at the moment are future contract certainty around the license post 2022 and the long term flows of the wells on test (short term they have all flowed). By its nature that takes time unfortunately. But with stable flows a fundamental value for the company can be computed.

Pecten - the results of the frac are in a very small picture on page 15 of the may presentation. I have been meaning to make that bigger and study it a bit deeper as it explains the rationale for the perforation or only small parts of the stage. If you can find it you can compare to the original thoughts in the march 2005 Niko proposal when they concluded horizontal was the way to go to avoid sediement problems!

Pecten have a very close look at the Jan presentation I think that had some details of the perforation they had in mind for T45 and Dino.

Fir example Dino:

Stage 1 Perforation Interval
2616 – 2618m; 2 spf
(12 perfs)
2627 – 2632m; 2 spf
(32 perfs)

2-1/8” guns at 60 deg phasing with 0.32” EHD

The next RNS could well be the director appointment. I'm surprised that did not come with the results as they need to get someone onto the board to make the numbers back up on the committees.

We know that the fracing crew must be about to work on T39. Assuming they spend a bit over a week there leaving T39 the final well under test then they are then pretty much on the original announced plan to revisit T45 after the 60 day test. Assuming they then remain available they would go to Dino original plan was to revisit 60 to 90 days which would fit. So that may be nearer the 60 days than 90 days by the time they release from T45.

T39 may be a totally different set-up as I'm not sure how you go about the 5 zones across pressure regimes given they have no indicated separating zones 9 and 13 like they have at T45 and Dino but have said they could be produced together once equalised. Clearly a different operation and timeline to Dino and T45. Now a short Dustin video on how T39 will be worked would be interesting.

UD2 testing must now be heading towards 2 months.

So I don't think they are far off plan the wait is just painful until the results are known. RB40 is correct we have seen before good initial flows dwindle off.

Pecten - to answer your question I don't believe we have used ceramic proppant before - we used to use sand/gravel based packs but I don't know whether we tried out ceramic during the 2016 campaign. Possible but not seen that level of detail on the 2016 campaign for which they claimed an unspecified technical breakthrough. Multi zone however they did try in 2010 at Mirzani with Schlumberger doing the work but at a shallower depth. Given Schlumberger have now taken the adjacent block one wonders what they garnered from working for Frontera in block 12! Obviously not put off about Georgia.

early flow rates are picked apart for not being representative of longer flow. Longer flow rates are criticised for taling too long. Cuadrilla in Lancashire are intending to flow test for 6 months on the shale gas. So I don't think its late by any means.

Those referring back to production by end of year forget that for that to have happened the well first needs to be flowing. they trued several times at stage 1 and 2 to get the adults their Christmas presents as near to year end as possible. The revisit is complete but the flow test is ongoing. They knew with the stage 1 and 2 operations within 3 weeks that they needed to do something different to get the type of flow they were anticipating. Silence at UD2 does not automatically mean there is a problem.

Quite easily. They can set whatever price they like in the market particularly on relatively iliquid stock and few active market participants. In the round they are only really interested in their margin on the book as a whole. Hence they are not going to buy shares they can't sell at too high a price or sell shares they could get a higher price for but most of the time in shares like this they are not holding much of a float if any and will be moving the price as they match trades. So if someone (like this morning) sells 10 to 20m worth 0.13% of the company it has caused a near 9% drop not because of any other reason than the MM need to sell them at a profit. Over the past year the MM know they have had access to reliable tranches of shares from YA (and the vendors). It is not certain at the moment if more YA or vendor shares could come into the market. Given Niko was funded from an institution (and it looks like the contingency funds raised from the other Institution have gone into T39 deepening to me) its not certain more equity will come to market.

They would not drop a main market stock or any stock where such a heavy discount would just be seen as a bargain! The problem here at the moment is sentiment has clearly been damaged (in part by a determined campaign against the company supported by active trading and probably CFD or spread bets) and the market makers in a light market are testing the resolve of longer term holders to sit tight. I think most are however at their risk or financial limits so we end up with lighter volumes and a stand-off. The change in communications style since april has not helped and just causes speculation.

Now what will be important here when sentiment changes is who holds the shares. The reason FRR can shoot up is because the a large number of shares are not really in free float into the market at all they are tightly held so as sentiment and demand picks up the shares become scarce. At the moment fear is the predominant emotion but there will come a price where greed will take over, the shorts will close, the traders reverse, the herd will arrive again and the MM will then be happy to oblige and drive the market higher. Depending on your investing style trying to build a large holding when that happens is impossible but it would suit momentum traders who do well on AIM these days - just look at UKOG today if you want a prime example. What is however frustrating is that Frontera has benefited so far momentum and short traders. That however could change in an instant and that is when the patient long term holders could have the last laugh. Whether the risk and stress endured was worth it will depend on what happens with the results.

UKOG or FRR? The resource here is significant and I'd rather drill holes in Georgia than around Gatwick. Downside is the local politics assuming we have mastered the Geology.

Don't forget the Frontera share price has fallen sharply against a backdrop of rising oil

Looking at the actual trades and low volume the MM are just marking down to create a market. If I had to guess we have a few chasing UKOG and GGP here - you only need a couple of people doing that to see the type of trades I see.

On such days the share price can bare no resemblance to what is going on inside the company. I can assure you no one will be happy about the share price even those who you might think don't care. But one observation I would offer is that the company have issued alot of RNS in 2018 and they have tended to be attacked by shorters and taken advantage of by traders and have not resulted in any real support for the share price. So obviously it needs to be the right kind of RNS - any old RNS will not make any difference and would very likely be counter productive.

For the time being the company is solvent and even if we did nothing else in 2018 we have a funded drill at Niko! They were confident enough of cash (or perhaps desperate if you are a shorter!) to take some risks with T39 (but T39 is actually physically close to Niko so maybe not such a great risk). After the reaction to the gas in January I'm not surprised they have elected to say little on Gas. And with the possible arbitration that will also tend to result in saying less in public in my opinion anyway.

Difficult period at the moment but I would direct your frustration at the drop today at who ever fancies admitting to selling to buy elsewhere rather than the company on this occasion.

We seem doomed to re-run the same debate every day until the results - which is why I stopped posting 3 weeks ago (not because of what someone says or does not say on this board that I agree or disagree with - I filter people) . Share price drops, people sell and negative posting starts. Share price drops negative posting and conspiracy theories and olive branch takeover posts sprout up.

Zaza will be mindful of the share price but the main objective has to be executing the current program safely and in budget. The results will be what they will be and I would judge that some additional news on them is due sooner rather than latter. Frustrating it most definitely is.

Right off to work and watch the Winter Hill fire from my office window progressing across the landscape.

Whether they jump or not is neither here nor there.

What I do find I retesting us that their vertical well has failed and they believe they need to do multi stage horizontal. That is of course the opposite of what we hopefully have achieved at taribani with vertical multi stage wells. However, it must remain a possibility of what you need to do for the gas if the ethical well at UD2 does not get the results.

Sou is also interesting raising $15m for their 3 well drill as contingency. Frontera are not perfect but have done well to raise cash this year.

Interesting to compare companies and how sentiment plays out.

The gas is clearly identified as associated gas. The gareji is not associated gas it is a pure gas play under the eldari b and a fair way still to get to zone 29 before you get close to it in taribani. The udabno gas is closer to the surface as the geology has been lifted to the west. Indeed so violent is the lift we visited zone 15 on the site visit on part of the block between taribani and mtsare.

No this is looking at the oil. I don't know how long pressure equalisation would take but it's a strange thing to be doing if you were tight on revenue to take a risk like that. Implies it is being done for a very specific purpose. They have always said when looking at deals it could be for any asset not just gas.

Yes the original plans were single zone horizontal for tarbani zone 9. If you search the web I think you can still find the schematic for the well page 17 of the march 2005 placing document and plenty of RNS from 2005. Given trouble we have had with sediment I guess the vertical frac and stack with high power to open the rock around each section is the way to go filled with modern materials to pack the fractures and keep them open.

The CPR when revisited now would have alot more to include in the numbers.

Magic that might make some sense. I suspect they were interested in the license expiry terms from November which has been one of their persistent lines of attack. But for me whoever in the SAOG breached confidence was not close to the case I feel for reasons I have explained before.

As I say I think it is a major reason for the change in communications. Certainly what I would do if I had a possibke legal process about my business I would cut down on anything public. Indeed we saw that in the past while the litigation with Outrider layer out to the extent that the only way to find what was going on was on the US Court system! In addition issuing even good RNS has not really helped the share price! Obviously needs to be the right RNS.

I do think if there was a serious problem here that there would be more in the public domain from SAOG. And they continue to grant licenses for the current work program including Niko for Q4!

So it will be interesting to see how long before we get the next update. They can't leave it too long as we still have a vacant position on the board that needs to be filled. Hard to call could be anyday as they have learnt particularly on the gas not to set a date that people use to beat up the company.

Would be very comforting if they could get even 400 bopd from T45 and Dino. There was a clear plan running from. August 2017 for 1 year to manage the debt and get taribani commercial production underway. That still looks on track to have 3 reworked wells in production during q3 with plans for the next campaign in taribani take the shape but starting wth Niko. The plans for the gas clearly depend on the flow test from a small but representative section at UD2 and one suspects a bit of politics.

Nice day here in Lancashire so the garden beckons.

Thanks Bugs it's odd isn't it. There is absolutely nothing not even on Russian friendly news feeds. That alone makes you wonder how it ended up in the public domain. There is obviously something going on but there is nothing out there to track from SAOG or anywhere else. Would make sense for all parties to resolve amicably.

The Georgians also have history of losing at arbitration from my research. I'll have a read on the other case though for some background.

I think folk too quickly forget how we got ripped off in Azerbaijan. The arbitration award in no way compensated for what we lost there and I think Frontera have no intention of it happening again.

The problem with the arbitration is that apart from the prophets of gloom article (which I believe is factually incorrect in saying the arbitration would be Geneva when the PSA says it would be Stockholm) and the company RNS which acknowledged something was going on but at best at an earlier stage than the prophets of gloom believed. Since then I am aware Frontera engaged their legal team in preparation and have also been using akin gum and cornerstone for lobbying at a political level.

So the company are almost certainly operating a three strand strategy to fend them off. Political, legal and finally operations creating facts on the ground. The battle line will be over the validity of the study as a devise to protect the integrity of the block. The leverage SAOG may have is over approval of a JV or farm in.

Hence I very much see connections in the key activities. The gas is most attractive to a JV. But is also most political. The problem Frontera have I feel is that due to us having to manage the debt since 2008 as the operations have failed to generate sufficient revenue the company has moved too slowly from the size of the block which is really too big for a company which has limited capital to invest in operations. Zaza has done well since 2017 to manage the debt and get a war chest together to do the 4 wells. I think SAOG were hoping we would fail to make the declaration of commercially. But it was done and as long as we continue with even minimum work I think we are in a good position and SAOG will have to make their case. They have stripped companies in Georgia of blocks when they fail to meet minimum work.

As I've posted before I can't see that mtsare, mirzani or taribani as producing fields can be under any threat.

I think ultimately a bit of horse trading will happen here as long as we stay solvent. Hence if we get good results on final flow from the 3 well campaign then we can dig in and see them off. I think the gas is where the horse trading might be we want a JV partner approved and may be the price is either a reworked PSA and or we let some of the block go. So ultimately I think a deal will be done as I think nicking the block under a trump administration no matter what one thinks of Ivanashvlli would be provacative as Frontera are my without friends.

When you consider all this going on in the background and active operations Zaza needs to focus on those more important stakeholders and our angst on here doesn't help I suspect. Personally, I'm ok to leave the company alone at the moment to work this through but like everyone am still keen to know the outcome of the current campaigns.

Well I would have been surprised if Zib had any new information at this time.

After yesterday's results and the non arbitration I was intrigued that the prophets of gloom did not raise it again in their attack on the company and why it was not in the accounts in the list period events.

So I spent a while searching again last night. It would be good if bugsy or some other sleaths could check. But I can't find any record of it other than the company press release. What I did dig into again was the lobbying the company engaged in 2018 with both Akin Gump and cornerstone government affairs. The last company was new to me but we engaged 9 lobbyists covering a wide spread of Washington institutions and Congress up to April the latest available information.

The latest moves in Congress and EU around Georgia remain very interesting as the engagement is clearly to do with exploration and production matters in Eastern Europe rather than general NATO type stuff. But Frontera sparring with the Georgia SAOG has now been going on for several years.

So I'm inclined to think the arbitration which was leaked in April just as Frontera were doing well with this campaign has had a chilling effect on publicity and communications. It would to me also obviously impact access to this some funding sources.

The block energy and shlumberger activity on the adjacent license blocks have also come to my own close attention now in the context of the arbitration. Firstly, the involvement of GOGC in block license shows a different model to develop licenses. Frontera have the shale plays and land to the north and west of mtsare as well as basin edge. If the gas is continuous from block 12 westwards and we have a massive block which we are working part of it slowly then I think they would like us to as they put it in their press releases fulfill our PSA obligations and drill or drop. Frontera will not want to do that and the devise of the study is being used.

At the same time the company has increased pace and level of investment in 2018 compared to 2017.

I asked Zaza about the study in may and my concern about the different geology especially basin edge. His response was telling. The eldari a and b covers the entire block.

Then we suddenly drill to eldari b unplanned in June. I think we have no choice but to be patient and let what is going on in the background play out.

Funding and jv is clearly dependent on ensuring title to the block in the longer term and as the lobbying shows the company are going to great lengths to secure that.

PG thanks for posting the Prophets of Gloom and Gloom latest take on all things Frontera. The comments are on this occasion on the soft end of their persistent attacks on the company. It is noticeable that even their comments seem to show some signs of doubt that they are sure of their position. The fact remains while the results from T45, Dino and UD2 are moot no one is able to draw firm conclusions of the current position of the company - neither a short or long investor or a prophet of gloom.

The accounts do however show that the company is managing its debt as it falls due even if the mainly Outrider longer term debt (not management debt) is growing with just over 2 years to resolve. The statements in the SP note are misleading comparing 2017 exploration spend (1m mostly on just UD2) with the full general admin expenses. If you did same for 2018 you would have the investment in 3 oil wells and UD2 plus Niko in Q4 already which is $12 to 14m a much more favourable ratio to compare. Likewise revenue $2.6m in 2017 but 2018 will be much higher.

2017 was a year when the company restructured its balance sheet to survive. Whilst we have a way to go that achievement of dealing with the short term debt and funding the 2018 campaign should not be underestimated.

So as usual lies and statistics.

At the end of the day this share has always been an asset play as most resource stocks ultimately are. Short term only releasing the flow rates will resolve the debate about longer term going concern and viability and I look forward to them when they are released.

As for the personal attacks on Malcy - the big man is used to it but that does not make it any less reprehensible.

Veritas odit moras

This campaign has built on past mistakes a decade ago (at Dino and Niko) and the the 2016 campaign. Once these 3 wells are done they will have a robust and repeatable pattern of how to drill in taribani (and Mirzani as its the same geology) with a recorded stable flow. They will have patterns on how to deepen and sidetrack existing wells and the deepening can be applied to any new wells.

So its the combination of the flow information and technical solution that you can take into a CPR or a bank or a partner to finance the wider campaign. I think this is the final bit of the exploration/experimentation on Taribani and in future the operations will be of a more pure commercial focus.

Be interesting to see any WHI note today as their valuations do not go anywhere near this zone.

Well that RNS will generate all kinds of speculation as they have chosen to not comment further on 3 key areas today:
1. Longer period flow results from T45 and Dino.
2. No update on UD2 and potential pipeline or 3d seismic.
3. No update on Q3 into Q4 operations or its funding.

All 3 of those of potentially interconnected.

But turning to T39 then which they have reported. T39 is not a total surprise someone asked me about the depth in May and we debated it at the time. Well they went even further and down another 250m+ into the marine sandstones. They have only reported zone 19 but 16, 17, 18 have carbons in them as well so they will have plenty to look at.

I think that is a good move. We now have another 250m of logged section to feed into analysis and in particular a CPR when they are ready to do it. They are also now clearly thinking of comingling across the pressure regimes. That is a major step forward in how you would approach the full field development and its economics. The original CPR's envisaged single zone probably using some horizontal drilling. We are now looking at deeper multii zone vertical drilling. If they really have solved the silting problems then this makes the economics much more attractive.

What this also means is that the drill and fraccing team stayed on site and did not leave. I always thought the drill was contracted till end of June so maybe this was just opportunistic due to the speed we got the job done. Maybe they will now move back over to T45 and Dino now the 60 day flow test are almost complete before releasing the frac team.

Timster I think yesterday questioned a 200 well campaign to exploit taribani. I don't - there are 50+ wells all in close proximity to T39 so a scaled out campaign could well exceed that - I believe they could go out to the thousands of wells due to the tight formation characteristics you get modest flows over long periods and need close well spacing. The commerciality now depends on the final delivered flow rates and then availability of finance.

The results are as expected and just extend the half year we already had to year end. Revenue rubbish in spite of rising oil price and debt moved about but long term debt still rising and now at $35m (and cost $4m in interest in 2017 in new notes!). You can see they have used $2m of the Uniserve credit in the prepayments.A couple of odd entries on the cashflow statement around remuneration otherwise all as expected.

One bit of good news the 25m of warrants the loan shark lenders took look like they were with a 1 year term so will have expired unredeemed.

No remuneration paid to directors in 2016 or 2017.

I would read the lock in period end for Steve and Zaza as 30th June from the accounts.

No further update on YA payments as a post year end event.

There is a complicated section on the impact of the Trump tax cuts on our deferred tax assets which needs a detailed read in the notes but nothing to worry about.

But my usual caveat when reading FRR results they always look bad because revenue historically is low on the P & L and the Balance sheet has no assets recognised and reported as we have no reserves or cost recovery pool as assets.

Ok - as per last time. I'll cease posting till results. Bye.

Spot on Reg. You can add to that the existing FRR processing facilities that it is proposed to link too and the Georgian domestic pipe that that links too is clearly not what you would use in anything other than a small scale operation. The big infrastructure is south south west of Udabno and west to the power station. Add to that the further out a deal on the gas is the higher the likely value of said deal. Zaza was clear last year that the oil was the priority but that the gas was worth rolling the dice. That was in spite of opposition from the ministry even though the Energy community was starting to take effect. People forget too quickly that UD2 has probably only had $1m to $1.5m max spent on it whereas the oil has had $9m+ ($3m per well). The obsession with the gas flare video shows more about us on this bulletin board than Frontera I suspect! We know the well flares you had picture in January. Personally, I very much doubt that it is UD2 and even if it was it adds nothing to what we already knew so it is interesting but a distraction. The other find on the oil service company was much more revealing on taribani drilling. The oil campaign has progressed pretty much to plan and has achieved its primary purpose and even suppliers are saying that! They have proved the sidetrack and comingled frac and stac. The operation has been done safely, has added another zone 13 and with better volumes of oil than anticipated. The final part of both these campaigns is the more extended flow tests. I've been watching 88e flow test result RNS - I could imagine what would happen here if FRR posted anything like that and I'm glad they have not. News is due in the next 2 weeks with the results a certainty and maybe beforehand if they choose.

The meetings are broadly quarterly with one being the AGM in place of the conference call which everyone slated as well!. So on that basis August would be next in line. Before then we have results to look forward to by 30th June. I see frustrated comments again about it just being another meeting. Well from my viewpoint I'd rather that with the opportunity to ask questions than reversion to quarterly cut and paste RNS wth sparse detail. But I'm sure if that is what people would prefer it could be arranged to save cost and enable management time to focus on the operations. At which point everyone would be complaining that they knew even less what was going on and were unable to ask questions! People are clearly frustrated by in the main the share price which has not responded to the operational news so far and the belief that releasing flow rates would make all the difference. A good set of results is no guarantee of that as it will depend in large part what you think good is! I'm definitely in favour of not setting dates as it just helps traders and is just used as a stick to beat rather than measure.