Member Info for psxtalks2u

....."Well, nice to see things are gearing up operationally for BP in Georgia. Makes you wonder why when they don’t have any blocks assigned to them (as far as I am aware) - can’t be all infra related as the pipelines are finished. But then why would BP bother going through all the hassle of expense and time of virgin exploration when FRR has done all the leg work? Plus we know they have been talking to FRR for best part of 18 months, finally culminating in the NDA. We can only assume that BP has decided to sign on the dotted line and farmed in to FRR’s mega Gas field with an upfront payment to repay Hope (but will continue with the Fiduciary court case). Who knows. May be wishful thinking of a desperate FRR shareholder but with BP signing a deal with Kosmos in Africa on the gas, clearly shows their primary focus has shifted on gas and Georgia could be strategic for BP on a few levels, so farmin would be strong a strong fit. Also, many super majors have stepped in to Georgia (Exxon, TOTAL, Repsol, Schulumberger, Chinese etc), which may have been a catalyst to get the BP NDA signed last Sept. if this the case, then the $30m court case with Outrider becomes a side show.

All just food for thought. Immediate eyes on Thursday/Friday.

Can we say (#bp): come out, come out wherever you are?"

"Personally I see little point in repeatedly posting on a share we can’t trade and a situation we cannot influence. And thankfully I have plenty of many other rewarding and enjoyable things in my life to get on with.

However this does seem to be a repeat of the Caymans process - the key exception being that at the end of the day a trial for damages is planned in a Californian Court in front of Californian jurors. The management of the process to that end point is of course fraught, expensive, full of venom and of course unpredicatable. But here’s one thought that keeps recurring in my mind.

The accrued liabilities at the end of HY1 2018 were just shy of $20 million. At the mid point in 2017 they were around $10 million - and part of the share headroom (which was never used) was ear marked to cover the main part of what are clearly vendor debts. I think it is a slam dunk bet that much of this debt is to Baker Hughes.

Throughout this process we have not seen any evidence whatsoever of the vendors engaging in the process, but of course if Hope wins they are unlikely to see any return at all. If I was a vendor faced with a) the write off of some historic lending and b) the loss of a potential share in a major development opportunity I would probably do everything I could to privately help the existing owner to retain the business and the rights that go with it.

I am pretty sure that behind the scenes there is a lot more going on than we will ever know"

We are where we are Champion, but when it comes to a jury trial in the highly educated and uber liberal state of California I think FRR have an ace up their sleeve in the form of their new lawyer. He certainly has a way with words and I can imagine him having a jury eating out of his hands if that written style is reproduced in court. It should be very easy for him to portray Outrider as the vultures that they are, especially when he brings up what they did to Madagascar Oil, and he has already prepared the ground for the sympathy vote for the wellbeing of the company’s employees, service companies and so on in Georgia, not to mention us long suffering shareholders.

Assuming we get the TRO and a date for a jury trial I am advised that we might well have a representative attending court in California to report back on the daily goings on. It will of course depend on his availability once the dates are announced so no names as yet, and in any event I would not wish to steal his thunder.

Posted by ToT on ii ........ " I suspect that one of the reasons this has come about is that FRR have stopped paying Computershare to act as Registrar. If the litigation is successfully resolved the company will want to have liquidity in its stock when it comes back to market, so I would have thought that one of the first things they will do in advance of that is to reappoint Computershare or another outfit that provides custodian services.

I will ensure that the issue is raised once we re-establish a line of communication with the company."

Yes quite agree Burton!....If you have anything RH keep it under your hat for now don't want another leak that may scupper something brewing. Good idea to pass it by the BOD namely Neill before anythings said or discussed!

reg.....cheers, you've gven me HOPE (on a plate!!!!)

Hi Fozza,

I’m not entirely sure I agree with the damages claim being purely Cali court.

yes, FRR certainly wanted immediate injunctive relief in the Caymans, but they also launched a civil damages claim against Hope there as well - hence the $56m.

I’ll be honest, the additional litigation and new case in the California court is, personally, a worry for me. I know some on LSE have a theory that we’ve paid either the $2m interest payment, or the full Loan Notes, and will now be pursuing Hope, in front of his home crowd, in a court sitting where information is far more public, and therefore everyone’s dirty washing will be aired for all to see.

It certainly sounds a plausible theory, I’m just certainly feeling in a glass half empty mood at present. For me, it’s the radio silence that is severely dampening my spirits. There are operational updates that can surely now be released. I understand anything to do with the court case is incredibly sensitive, however, there’s not even an acknowledgement of the new case in Cali, or that they continue to “vigorously assert their rights”.

One of my main crumbs of comfort at present, is how FRR are paying for this incredibly expensive litigation. The new lawyers will either have wanted to see proof that they could be paid, or been paid a large retainer. Where has that money come from? How has the company continued to function, when it was basically insolvent?

To me, that’s simple, it’s one or both of:

Producing Oil - I personally believe we’re running at between 1-2k BOPD from last years wells.
Durham Finance and/or JV.
It’ll most likely be the oil money at present, my thinking on this, is:

We struggled to even get a $5m cash injection last Summer, and Zaza had to resort to offering a revolving credit function from his own pocket. All of a sudden at the end of 2018, we sign a term sheet for a $60m loan. That can only have come about, because of the results of the wells drilled last year. It’s a serious amount of money, and will need proof that it can be paid back.
So, why is this even important, especially as we’ve covered this numerous times…?

Well, quite simply, because, one of Hope’s legal teams main arguments in Court, was that the company has tried and failed numerous times, and after multiple restructurings to deliver value and turn it into a profit-making entity. As such, their argument was that FRR are / were insolvent, and that their priorities should be to their creditors and not Shareholders, and so Hope felt the only way to extract value out of the company, was to sell off it’s assets to repay creditors.

Now, if Frontera have finally proven that they can produce Oil at commercial quantities, this would torpedo one of Hope’s main arguments in his quest to asset strip the company to service Creditors. Considering he also used that argument to justify blocking additional funding, it would begin to put him in a really awkward place RE the Durham finance.

I am not parti

A further post from Symore just now......"Fozz - my theory is also based on the fact we are still not listed for the next Appeal of Court Hearing in the Caymans, which is due towards the end of this month. You have to wonder, why not if there was no prospect of an OoCS, especially after the scolding the Judge gave to Hope’s legal team last time. So, a deal may have been agreed, which FRR were not particularly happy about but rather than fight on, they will use the Durham money to repay OMF and advance their work in the field but simultaneously continue the legal action back in California where regulations are very tight. It could also be an indication that a deal has been done with BP and they just want to get on with it in the field,. Who knows.

Perhaps now would be a good time to use Malcy as a conduit to tell us something…??

Anyway just thoughts from my side…"

Posted by Symore B on ii

"Well, now that the Judge has returned from his 2-week (ill-timed) vacation, first thing he is doing is getting down to business with FRR-Hope. Also noticed that for the rest of the week, he is writing judgments, so hopefully we can read what has been going on in the next 7-10days. Plus it’s a short working week as Friday is a public holiday.

Anyway, what to make of this latest court entry? I am no lawyer, but to me it seems it is linked to the amended summons hearing back on the 27th March. Whatever was amended, added or deleted, it was simultaneously adjourned at that time, presumably to allow the other party time to consider and respond. Monday’s hearing will perhaps decide if this summons remain adjourned as a OoCS is being worked upon or to lift the adjournment and bring in to effect the new claims/allegations. Ball is definitely in Hope’s court as to what happens next. The only caveat is whether FRR are in the mood to make a deal with him. But I think SN is a fair man and his international reputation/family name is important to him, so he will try to cut a ‘just’ deal with Hope, and that may be give him his initial investment in CLNs (@$4.5M) plus 6 years of interest, equals $10M? I speculate of course.

You have to also admit that while the Judge was on his (well earned?) holidays, it gave him time to reflect on how Hope and his Legal Team rushed him and ‘hoodwinked’ him in to making a hasty judgment back in December. What mood is he going to be in on Monday afternoon? Will he extend them any benefit of doubt or will he see them for the snakes that they are?"

This from symore B on ii

"Chirs572 has been a fantastic source of information on LSE over a long period, so for me, this is a very interesting and substantial development. In fact I would say it adds to the theory that perhaps we are very close to agreeing a farm-out deal with BP for the mega-onshore-Gas field [South Kakheti field]. Sending the HSE guy for his green light is probably one of the CPs before they sign off on the dotted lines for a big deal?

Furthermore, having SOCAR in the mix is absolutely right and in my view strengthens the proposition [both financially, operationally and politically]. Consider the strong commercial partnership SOCAR has developed with BP in Azerbaizan over decades [re Shah Deniz offshore gas field], but also that it the main supplier of natural gas to Georgia. We also know that it has invested huge amounts with BP on the O&G infra in Georgia and it would be silly for them to hand this piece of the pie to the likes of Exxon, TOTAL, Repsol or the Chinese.

Finally, noting the size of the gas field at 202TCF [and considered to be in the top six of the world’s larges gas fields], it probably needs a large consortium to fully develop this gas field.

Just my thoughts [but it does make you feel a little warm inside while we wait a conclusion to the court case]."

This from Symore B on ii......."I believe this is the quarterly SEC submission that every Fund Manager has to submit, for disclosure and transparency purposes. We have discussed this before that regulation on these type of financial outfits is very tight in the US after the Madoff debacle; Hope is indeed treading a very fine line if he does not settle out of court [that is if FRR is co-operating with them given they have slapped in a damages claim of US$54M). We also know from the Judge’s subsequent summary that he was mislead when he hastily granted the exparte injunction for OMF under "quia timet” (because it fears), which he has subsequently dismissed in a ‘scolding’ manner. Shame Hope did not care to mention this in the latest SEC submission.

Whatever the case, we don’t know what is happening in the background and that is causing some uncertainty. So, it would be nice if the the company [or YJ] could drop us another hint that things are progressing well [perhaps in the field?]…Just my gut feeling but I reckon FRR has got Hope by the “short & curlies”. What you reckon YJ, am I close to the mark?"

"Well, will tomorrow be a big important day? I think so. An out of court settlement of some type appears to be on the cards. Remember, Hope has c.$20MM on the line and FRR potentially has billions and billions dollars [well, at least US$400MM plus 20 years of ‘equity sweat’]. The second statement from the Judge was pretty damning for Hope.

Anyway, I would have dismissed tomorrow’s event as administrative if FRR’s name appeared on the list of cases to be heard at the Appeals Court in late April. But that omission is pretty telling. Anyway, as mushrooms, we have been patiently waiting for over 3 months now and could really do with some news. Plus, some delay can be attributed to the way the Judge handled this case. First, he rushed in to making a cruel judgment against FRR without having all the facts. Then a few months later, he does a complete U-turn and says FRR has a strong chance at the Appeal.

Whatever the case, hopefully the super-sleuthers can get us some update by Thursday or Friday."

= fingers crossed (xed)!

"Fozz, my conclusion is slightly different. Infact I think it points to an OoC settlement. Why? Well, the hearing is an amendment to the summons FRR served originally on Hope/OMF. We know from previous judgments from the Cayman’s that even after an out of court settlement have been reached between the parties, the Court has still slapped in a judgment/penalties on parties, particularly relating to Breach of Fiduciary cases. I think this hearing will probably see the summons amended and maybe the Fiduciary breach claim will be dropped by FRR. Also consider that according to the respectful poster ‘oopsi’ on LSE, the Listings for the Appeals Court for April have been published and interestingly FRR appeal is not on that list…as of now.

Surely all this points to a closure of some kind? We will learn more soon, only a matter of days to wait me thinks."

Continued:

It is pretty clear from all of this that FRR brought this case specifically to proceed with the NY loan, which the variation injunction was preventing it to. This was not a plea for an OOCS with Hope, as some had thought. This would suggest that due diligence has been done and is successful? Hopefully!
If Hope now blocks this despite not being a threat or senior to his OMF security, then clearly he is in breach of his fiduciary duty and he cannot allow this to happen. Therefore I suspect he will accept, the case will not go to Appeal, and FRR can continue its operations and possible JV arrangements. As ToT rightly points out, re-listing soon will prove very difficult, but at least our investment will be intact, although inaccessible for now.

FRR certainly has the upper hand now, but this is all dependent on definitively securing this NY loan. Perhaps super-sleuths Mole et al on LSE could find out about this ‘Durham Proposal’? My basic search has only uncovered a fund called ‘Durham Capital Corporation’, which on its website states: “Providing non-traditional sources of capital for public and private companies worldwide.” Unfortunately links such as ‘closing deals’ are all password-protected!!

Good luck, Champion

I’ve also only just managed to read the court docs as I’ve been in London for a few days with work. Devex, dmat, SB, ToT have all got it right, and no need to add to the excellent reading and summary of the docs.

This judgement is certainly a fillip for FRR, and Hope will undoubtedly be feeling the heat. I believe the first judgment was rather hasty, and the judge is trying his best not to appear self-contradictory (blaming Hope’s counsel for making important omissions and ‘sailing close to the wind (of misrepresentation)’ which led him to make his initial tenuous judgement), but he clearly now feels FRR’s case is much stronger, and in fact now invites them to appeal, rather than his previously dismissive stance.

As SB states, it is clear that Hope wanted this ‘urgent’ injunction on 5 Dec to stop FRR from signing the term sheet with the NY lender (we now know as the ‘Durham Proposal’), which was RNSed to us a week later. The judge now appreciates, given the full facts, that Hope made erroneous and misleading statements in his affidavit, and was rather scathing of his assessment of Hope and his counsel:
“There was and could be no coherent answer to these clear-cut material non-disclosure complaints, only mitigation. Mr Hughes insisted that he had not said anything to the Court which was inconsistent with any documents which were not disclosed. I accept that he did not seek to deliberately mislead the Court. But he and his clients sailed very close to the wind.”. The judge also uses terms such as ‘legal lack of substance’ referring to Hope’s case for an injunction.

Broadly speaking, this judgement appears to completely over-rule his previous judgement, wherein he implicitly acknowledges that he was unjustly rushed into making a judgement then without all of the full facts (Hope’s counsel only gave FRR’s counsel 6 hours notice of the impending hearing!), as well as Hope’s second affidavit not having been properly circulated in advance by Hope’s counsel. The fact that the judge now encourages FRR to go to appeal, as well as the fact that he now states, “on the other hand accepting that the Plaintiffs’ (FRR) core appellate complaint that it was not properly open to me to reach that conclusion at the interlocutory stage (first judgement), had realistic prospects of success before the Court of Appeal.” The judge also orders Hope to pay the full costs of the court hearing.

Lastly, the judge recommends again that commercial compromise should occur and admits “I was told that without prejudice discussions (regarding an OOCS) have been taking place”. He also apologises for the fact that the ‘stay of the variation injunction’ (brought by Hope) has continued up until the hearing (11 Feb), whereupon he has discharged it, so that FRR can now proceed with considering the NY loan.

They then went on to say!!!

"Not yet - sorry
Best"

....love it regdik. A voice of sanity!

ToT
"I think Hope can only get back more than he is owed in a full corporate restructuring - which would include other note holders, and assuming that the Georgian Government agencies would then allow the PSA to be transferred to that new corporate entity, which I think is highly unlikely. He’ll settle imho, but seems to be in a stronger negotiating position now than he was before this ruling."

Devex
"Well having read the thing - and taken some time to reflect - I am not at all convinced this is end-game.

This legal statement is 3 weeks old and refers to the original claim. The judge is basically saying that FRR have to accept Hope but that the risk of a FRR going down the tubes is not going to help anyone. I suspect today’s hearing was about how the parties move forward.

Zaza s not going to make a statement until this has worked its way through - so yet another period of rectal muscle control is in play."

Further follow from ToT just now:

"Thanks for joining up the dots Devex. Now the more I think about this Hope might have made a fatal error in not resigning as a Director prior to opening any short positions that might now exist. I strongly suspect that once FRR started a forensic investigation into YA’s short positions they either discovered a lot more or YA grassed on Hope when FRR put the squeeze on them. Hence the early settlement with YA, with the big cannon then brought out for Hope.

Hope is clearly drinking in the last chance saloon now. He either settles with a deal which is very favourable to FRR or this goes to full trial with a date for that probably given at the recent hearing. We know from the other evidence that I have dug up that Cayman judges often issue a judgement even where an OOC settlement has been agreed between the parties post a full trial. He’d therefore be barking mad not to settle in advance of that imo if the short selling has been proved in the discovery process. The failure to declare that is not just a breach of fudiciary duty but clearly illegal in accordance with AIM rules and that illegality will have significant implications for him as a fund manager in the USA as well as any penalty he might face in the Caymans.

When the book of this story is written this is surely going to be the most gripping chapter. I wonder if Daniel Yergin is following the story?"