Re: Thoughts on Zaza Good post SB - and Zaza certainly has put a lot of energy and charisma into the last 12 monthsRe SN I understand from informal conversations that he really is doing the Non Exec Chair role - helping in the background but leaving the CEO to act with full authority. I am equally certain that there was always a plan here - but it could only be executed once the political backdrop had moved forward. I also think it would be wrong to assume that they are overly close - SN was as you say always the dominant force simply by way of his overwhelming share holding.Worth highlighting that ZM was only appointed a director 3 years ago - and there was clearly a battle going on behind the scenes regarding the politics. Whilst PSA issues obviously remain the April/May/June period last year marked a turning point that led to ZM being appointed CEO. Behind the scenes certain forces were trying to prevent development of the gas in particular, and what we now see is an explosion of energy that could only be released once that block had been at least reduced, if not removed altogether. Zaza in my view is the right man at the right timeThe clues abound - Atlantic Council, US Senators/Congressman/resolutions, meetings with presidents and PMs, European Energy Compliance, the SOCAR influence, key RNS and MOE statements etc etcRe the gas - update must be close. On Tuesday Zaza was asked to give just three reasons why investors should follow FRR. He said:1 - because of the great resource potential2 - because of FRR knowledge/expertise/infrastructure3 - because of the "the very good gas potential"?Good weekend to one and all
Re: Niko 1 ENI/CHARTP
Thoughts on Zaza I was pretty pleased how the week ended and started to reflect on Zaza leadership since he took full control and how FRR has developed/evolved under him. Now, a lot of people have said that he was part of SN's team from the start so he should share some of the blame for FRR historical shortcomings. I don't think that is entirely fair. Why? Well, I think SN was the dominant decision maker but since Zaza took control, his management approach to operations, finances and shareholders has been a complete contrast to SN's way of doing things. To me this says he has been given full control. So let us look at his approach very closely: 1) led from the front in participating in 3 fund raising since last September, 2) has represented FRR in a number of high profile O&G conferences and has done at least a dozen TV interviews, podcasts and investor gatherings. 4) he has said no more death spiral financing and wants to see the back of YA, so true to his word, he arranged Niko funding creatively thus avoiding dilution and Georgian Govt intervention. Operationally, he replaced a desk guy (Gerry Bono) with a field guy (Dustin Aro) and methodically started the drilling campaign on oil and gas wells. Over the next few weeks, he will finally bring all four wells in to production, oilx3 plus 1x Gas. On the gas, I think we are due an update and maybe this is what Malcy was hinting in his blog yesterday. But Zaza's job is far from done and he needs to arrange financing for Phase 2 of Taribani campaign. With YA debt falling away, i think more financing options will become available. If he can secure say $15m for another 5 wells, I think we will be self financing to roll out the other 250-wells ourselves. Thusfar, he has done a good job raising new money so worth reiterating what he has achieved since September 2017: raised £3m in October from PB, again £2.5m from PB in Feb, plus £1.5m from an Institutional Investor at the same time and now £3m for Niko. In between, they've collected over $2m from the Turkish contractor. So, if you include the contractors money, over the past 6 months, FRR has invested around £8-9m in Georgia and completed 4 wells. Not bad for a lil old company plus he has managed to reduce the YA debt to just £2.8m although this was excruciating painful with monthly dilutions, which probably impacted operations, distracted management time and hurt investor sentiment. Hopefully this sad phase in FRR's history is nearly over.The wild card remains UD, but they seem to be very cagey about it. In my view it is still 'alive and kicking' as Zaza mentioned it in his last podcast as 'in testing' and Malcy also mentioned it in his blog. So what's holding this up? Politics? Farmout? Or more rudimentary like EWT?JMO
$450m recuperation costs Surly there will be no $450m pay back, but we will be allowed to keep all the revenue from oil & gas sales up to that amount, and then split it 49%/51%And yes this is a $3m farm in. It would be good to find other such funding, for future wells, until we have enough revenue flow to fund the next 230 odd wells ourselves. At least until we get a T/O offer or farm out for the whole field.
Re: Malcy.. It was such a poorly written note that we have to speculate to even begin to understand it. Block? Azerbaijan? I am still in profit and have taken some more hereIt simply has to be a proven resource. No mention of tapped gas, none needed, yet!We are close to boomVery, very closeGLAH
Re: Niko 1 One well funding of this sort is not common place.
Re: Niko 1 Exactly...farm in. Why are people reacting as though some revolutionary kind of funding has been discovered??This type of deal is common place. TP
Re: Malcy.. Just read Malcy's blog. Note last sentence: "These drilling successes will before long feed through to a strong revenue stream and the company are promising details shortly of the drilling campaign for 2019. FRR looks to be in increasingly good nick and with what I hear is promising news from Block the Azerbaijan is going to be increasingly in the news for all the right reasons.""With what I hear is promising news from Block the (sic)" - I assume he means Block 12, Georgia?Surely he is referring to the Ud-2 gas situation, as he has already covered the Taribani oil situation in his preceding paragraph. Can't really be anything else....... or is he referring to a potential TO/JV?!!May be a slip of the keyboard fingers, but I as I alluded to in my last post, I do think that we are going to hear of very promising UD-2 news very soon! Just when we least expect it...........Champs.
Re: Niko 1 I think the funding is the equivalent to a farm in. Great bit of busines. Wonder if Exxon involved? Onwards and upwards. Gas news next.
Re: First thoughts........... Should have added that if you were sitting in SOAG/GOGC you would probably be thinking that this is the last chance to try and moderate the deal. Also probably explains the reluctance to offer up the VAT rebate as a cash payment.So effectively the State doesn't get any return until 2023/4 as things stand. 12 months ago this all looked like a pretty irrelevant consideration - but a share of nothing has now transformed into a share of something pretty significant. Hence the State is trying to get some form of compromise. Happy to let Zaza deal with that - he has to strike a balance and his interests are pretty much aligned to ours these days.Which perhaps is where the gas comes in
Re: First thoughts........... Just a few points from today's exchanges:- The economic model is on Page 23 of the original WHI report, for those who can access it. show that the real kick up in revenues takes place in 2022 - the compounding effect. As things stand the $400 million plus of offset costs last until around 2023-4 - although the basis is $60 pbo and no account is made for any gas revenues. Whatever - the deal this morning looks like it has about 5 years before the maths change - which makes it hugely attractive imo. And if the gas brings the date forward? Well to be quite honest we will all be at the races if that happens - and it will be the least of our worries. - A number of people have asked why the investor has not been named. Well this is a finance deal pure and simple - and the originator will only be named if they consent to it. That's the way this stuff works. Could be all sorts of reasons, but of course one could be that they are thinking about further investment and simply want to keep a low profile whilst things progress. As for the Nomad - all he will want is evidence that the deal is contractually as announced. - just to remind everyone - Malcy is clearly considering FRR for the bucket list (he openly said so on May 9th). His words this morning will I think give us a clue. And his final sentence is very telling.I have a feeling that what we saw this morning is just a taster for the next 6 weeks or so
Malcy.. Today 13:56Frontera ResourcesMorr good news from Taribani today from Frontera where results have continued to please since I reported back from T-45 in February. News is that the T-39 sidetrack well has reached TD and the combined pay from zones 9, 14 and 15 is 102.5m with 14.2% porosity and some 12.3m of pay in zone 13. One certainly can£t accuse these wells of creating a surprise, all zones are performing at the highest of expectations.The company has also announced that it has received a drilling permit for the Niko-1 well which is scheduled for November of this year, unsurprisingly the zones expected are as per previous successes. The company has been offered a $3m investment by an institutional investor to finance this well which makes life significantly easier. These drilling successes will before long feed through to a £strong revenue stream£ and the company are promising details shortly of the drilling campaign for 2019. FRR looks to be in increasingly good nick and with what I hear is promising news from Block the Georgia is going to be increasingly in the news for all the right reasons.
Niko 1 Why on earth would 'somebody' stump up $3m for ONE well, I've never heard of anything like it anyone else come across this individual funding?JV not sure maybe ?Get the next 6 month data out of the three existing wells for funding of 1 well maybe ?Then if all good you can have the lot for a Billion.............No?
WH Ireland Update Personally speaking, there is scope for them to uplift the target sp of 0.82p given the current price of PoO, revised lower drilling cost per well and recoverable oil of at least 103m barrels just on Taribani field and this is covering just 3 payzone zones (I.e. not including zone 13 which I believe will be exploited and commingled with 9, 14, and 15). Anyway, this is what they say.....Frontera Resources (FRR) £ Corporate £ Taribani Drilling/Logging UpdateMarket Cap £67m Price 0.43pFrontera announced that the T-39 well has been successfully sidetracked to a depth of 2,800m into the Eldari formation with logging indicating a combined gross pay of 102.5 meters in Zones 9, 14 and 15 and an additional 12.4m of pay in Zone 13. As with the prior Taribani wells, shows of oil and gas were experienced during drilling operations.In respect of the Niko-1 sidetrack well the company received the requisite drilling permits and expects drilling operations to commence in early November 2018 with the well completion expected in December 2018. Like the wells of the current testing programme, the sidetrack is expected to test Zones 9, 14 and 15 and possibly Zone 13 which is increasingly prospective based on oil & gas shows and logging results.Funding for Niko-1 has been sourced by an institutional investor who has committed up to $3m of investment. In consideration for funding the well, the investor will receive 60% of the well production from the completion of the work program until recovery of its investment and 30% of the well production thereafter.In our opinion, operational progress is advancing smoothly and successfully. The funding arrangement for Niko-1 is a well specific ring-fenced arrangement effectively providing the company with free carry on the well and meaningful retained working interests.We retain our 0.82p fair value estimate for the company.
Re: First thoughts........... Excellent posts from Devex, SB, ToT.Here's my 2p worth....This is actually an extremely good RNS. The shorters and derampers were warning us of a placing, which was a fair assumption under the circumstances. However, this RNS has shown that not only is there good institutional investor support for the company, but that Zaza is also able to think outside the box when it comes to funding streams. As others have alluded to, management is heavily invested in the company so would also want to minimise dilution. How many other AIM companies have this sort of alignment with PI concerns? I see shorters like WShak have tweeted about this investor probably being some sort of 'death-spiral outfit' - he obviously doesn't have a clue about the meaning of 'death-spiral' in this context. Shorters just clutching at straws when a good RNS is delivered...... sad they have no balance. Makes them all the less credible.....The one thing I would say, however, is that FRR will only get 30% profit stream of Niko-1 after payback, as we are still bound by 51/49 profit-oil share contract with Georgian govt. But remember that is only AFTER we get our $400 million payback from them for costs incurred. So getting this well online and revenue-generating ASAP is good thinking from Zaza as one of our first few producing wells, and further deals like this will only help the company in the early years while we're still owed these back costs. Well done Zaza!Next is the YA issue. We do have $2.8 mill to pay back in about a month. Zaza has known about this for some time and reiterated at the investor meeting that he was not going to allow further dilution with share conversion. I have a strong feeling we are going to get a 'bonanza' Ud-2 gas update within the next 2-3 weeks. I don't believe he wants to 'drip-feed' news about the gas until he gets excellent flow rates and then possibly some sort of JV, which all takes time wrt stimulation and extended testing. That would rocket the SP and then even if he had to do a primary bid to pay off YA, that would not be an issue at an SP of > 1p. However, we should have some funds already available with the $2 million arbitration award received as well as income from the oil wells already online, so hopefully some money already in the 'bank' to help pay most of this off. I am therefore not too concerned about this issue.Lastly, we have to give credit to Zaza and the team for success so far in the Taribani 3-well venture. Many were quick to discredit him when he had delayed Ud-2 news, so I think for balance we have to give credit where it is due (including massive credit for financing the Niko-1 well without further dilution! - this is being very underestimated in terms of today's SP reaction!) Forget about our historical delays and failures (which the derampers keep referring to), over the last year we have seen a new company develop and I'm really looking forward to the next few weeks with Ud-2 news. My only assumption on why the Georgian govt came up with this tenuous PSC arbitration request so recently, is that they are genuinely concerned about the possibility of a takeover by an oil giant, and wanted to ensure they could renegotiate the payback and profit oil terms if necessary as they could argue it was already 'on the table' prior to the takeover/JV. I'm banking on superb Ud-2 news and it should be just around the corner.Interesting and good times ahead............Champion.