Arbitration Concluded On the PSA, worth remembering that FRR’s ‘exploration phase’ expired in 2012, but had a provision to automatically extend 5 years to 2017. And i think the development phase is up to 2022. In order to obtain a long term production license, Frontera had to declare the Block as commercial or return the acreage that was deemed barren/unproductive. We know that FRR tried to get the whole block declared as commercial based on a feasibility report submitted to SAOG in April 2017. In this report, FRR justified commerciality based this on the Miocene formations in Eldari A and Eldari B. But clearly the Georgians didn’t accept this report and as a result, are demanding 99% of the Block back. So, for the arbitration, a lot may hinge on this Feasibility Report that was probably shared with the Tribunal, supported by additional data [collected from 60 wells?], independent CPRs and increased production. Personally, I am keeping everything crossed as Georgians are pretty ‘bookish’ when it comes to contracts, law and regulations. And their lawyers seemed confident too. Lets hope an olive branch is extended.
brand new updated broker note [link] .
Arbitration Concluded Interesting comments from the Chief Honcho at GOGC, specifically this… “the head of the Georgian Oil and Gas Corporation, George Tatishvili, noted that the Frontera Resources statement was based on factual inaccuracies. “Despite everything, compliance with contractual provisions is a key point. Therefore, we often cannot disclose details due to Frontera Resources privacy requirements. This statement is full of factual inaccuracies. It should also be noted that precisely because of these controversial issues, the Gas and Oil Corporation appealed to the international arbitration court. We await the decisions of the arbitration court in April, ”Tatishvili said on the air of Channel One. According to him, the Frontera Resources statement did not say anything about the 11-month debt to its employees, which the company has accumulated over the years. “They had income, but the debt to the workers, apparently, was not a priority issue … Frontera now has two licenses. One was issued in 1997 to grant oil and gas production rights. The second license was obtained several years ago. This is an oil transportation license. The company has both licenses and operates under these licenses. I don’t understand what restrictions of licenses or permissions are mentioned in the message, ”the head of the Corporation emphasized.” Its pretty clear that the employees unpaid issue has become a propaganda tool to make a case in the arbitration. I don’t know if the PSA required local employment but generally speaking unpaid wages is not a termination condition. Also, the other main gripe from the Georgian side is that they feel they been deprived revenues from O&G sales over many years (probably going back to 2012 when the Dream party came to power). Anyway, the important thing to note is that the GOGC had to approve certain costs submitted by FRR in order to qualify for the cost recovery pool; this is them approving them not FRR making it up! Last count in 2016, it had reached over $300m, so I don’t know what they are moaning about. If that is the main gripe, how does it entitle them to reclaim 99% of the block back? As far as impediment/restrictions are concerned, it is blatantly clear that since the DReam Party came to power, FDI has reduced significant and democracy reforms stalled. The sooner they get rid of Dracula Ivanishvili the better.
Arbitration Concluded This will be decided on the exact wording within the PSA regardless of how much Frontera invested in Georgia or what shareholders think is fair. I’m thinking its win win for the Georgian gov, lose and they keep the US sweet and win and they get to keep the B12 asset which is potentially worth billions. Bringing uncle Sam into the FRR mix could suggest Frontera are not that confident. Good luck holders, looks like just a couple of months longer to wait.
Arbitration Concluded And Zeninvestors thoughts of which I entirely agree: So the dispute has made its way onto Georgian TV. From what we can glean, the GOGC are haggling over the specifics of the PSA contract and focussing on that alone Tatishvili is dismissing Frontera’s huge investment in Georgia on the basis that the Georgians didn’t ask them to invest so much: “The state did not set off the company an investment of several hundred million, because this investment was not made in accordance with the requirements of the contract.” Arbitration may see that differently. Frontera have invested hugely to make the fields viable. Tatishvili acknowledges that FRR have (until recently perhaps) revenue but have diverted it elsewhere and not paid the work force. Of course, he conveniently forgets the $6million VAT rebate.
Arbitration Concluded Thanks to Looed on LSE: According to Georgy Tatishvili, the volume of investments is one of the issues discussed today in the arbitration court. “The state and Frontera have different views on this. The state did not set off the company an investment of several hundred million, because this investment was not made in accordance with the requirements of the contract. Frontera has its own numbers, and we have our own. We will wait for the arbitration decision, ”Tatishvili repeated. As for the protests of the company’s employees, the last of them took place a few days ago. Employees of the company demanded to cover their salary debts for 11 months. In addition, many of them lost their jobs after the protest in December 2019, and their families were left without money for the New Year. The protesters had two basic requirements - to return the salary and restore to work on old conditions. According to the protesters, they will hold campaigns until their conditions are met." Source - [link]
Arbitration Concluded More pressure from the US, this time from Congressman Randy Webber. I can’t help but think that this is to coincide with the timing of the final submissions for the arbitration. Again, as FRR is specifically mentioned, they are indirectly telling the Georgians not to proceed with arbitration but instead come to an amicable solution for an American Company based in Houston. Let’s see what this may bring. But again, sincere thanks to the super sleuther ‘Looed’ from LSE BB: twitter.com Randy Weber (TXRandy14) I am alarmed by reports of delayed reforms and a declining climate for U.S. investment in #Georgia, especially for energy companies from the #USA. I wrote this letter to Georgia's Prime Minister @GakhariaGiorgi to express my serious concern. 11:57 AM - 11 Feb 2020 Texas Congressman Randy Webber addressed a letter to Georgian Prime Minister George Gaharii. The American legislator publishes a message for the head of the government of Georgia in his microblog on Twitter. “I add my voice to the growing bipartisan concern that US Congressmen express about the ongoing rollback from democratic values ??and the associated economic prosperity in Georgia. The USA is a strategic partner of Georgia. We must also consider the significant foreign aid that the United States is sending to Georgia. I feel I have to join the colleagues who wrote to you in recent days. I join their concerns expressed in connection with the government’s refusal of democratic reforms, as well as violence against peaceful demonstrators because of existing information, and most importantly, because of the inappropriate focus and oppression of political opponents, the media, international and American corporations and members of civil society, ”the letter said. According to the congressman, last year he supported the act in support of Georgia adopted by the House of Representatives, aimed at supporting the sovereignty and territorial integrity of Georgia against the background of future challenges from Russia. “It is important to note that the act in support of Georgia does not provide for US support for a government of Georgia that is contrary to democratic values, including free and fair elections, transparency and accountability of the public sector, the rule of law and anti-corruption efforts,” Weber wrote . According to him, according to statistics, since 2017, the amount of foreign direct investment in Georgia has decreased by 50%. “At the same time, according to the Transparency International Index of Corruption Perceptions of 2019, Georgia’s ratings continue to decline, and we have seen stagnation since 2015. According to this report, “the undesirable impact on leading institutions is one of the main challenges for Georgia. The report says that “seizing state institutions” and “concentration of power with private individuals” is also an ongoing challenge in Georgia. The report also notes that in recent years, Georgia’s lack of progress in points indicates how stagnating anti-corruption reforms are, ”Weber said. According to him, the reduction of foreign investment in such conditions "should not be a surprise. American and European businesses see significant challenges in such an environment, and there are cases of harassment, termination of contracts and expropriation attacks. A prime example of this is the oil and gas company from my hometown of Houston, Frontera Resources. Another example of a deteriorating situation is related to the American company Facebook, which recently announced that it had discovered and closed a network of accounts related to the ruling Georgian Dream party, which “accused of improper, inauthentic behavior aimed at destroying the Georgian opposition and promoting anti-Western sentiments, especially this is about the United States, ”Weber writes. Congressman notes that it is precisely in line with the trends that the United States passed two laws on the allocation of funds from the US Congress for 2019 and 2020, and these laws specifically relate to the departure of the Georgian government from democratic values, free market principles and the interests of American business. “Due to noticeable negative trends, amid significant annual foreign aid, calls for sanctions and other fines have increased in the United States. I joined the growing number of members of Congress in a call for reform under the sponsorship of the Georgia’s Fair Business Practices Sanctions Act, which is represented in the US House of Representatives. Georgia remains an important friend and strategic partner of the United States. I hope that sincere conversations between friends will strengthen relations in the coming years. In this context, I also hope that your government will find ways to stop acting against American companies, encourage growing direct investment from America and unequivocally find ways to respond to alarming signs that pose a threat to the freedom of the Georgian people and economic prosperity. ” - writes Randy Weber. The congressman also sends copies of the letter to the U.S. Secretary of State, Secretary of Commerce, and White House National Security Advisor."
Arbitration Concluded The key allegation made in the above letter is this imv:………….“Various material breaches of the PSA have been asserted over time, and those issues are required by the PSA to be resolved by arbitration before an impartial international arbitration tribunal following international rules.” Well, it will be up to the tribunal to decide whether “various material breaches” were just breaches or were in fact ‘material’. And what is difference between material and just normal breaches? One for the lawyers in think. Anyway, in the absence of what these breaches could be, difficult to say which side of the argument the tribunal is going to land in. From what we know, number of wells were drilled by FRR, supported independent CPRs and formal submission of the ‘Feasibility Report’ to declare B12 as commercial based on Eldari A and Eldari B formations in the Miocene zones.
Arbitration Concluded One way I’ve read this is that Dunn is saying arbitration is complete so no need to pester and create noise as it’s pointless. I’d say this is why FRR really are turning up the noise.
Arbitration Concluded The below letter was issued by Hogan Lovells [legal reps for GOGC] dated 31st January 2020 and has been posted before on another thread, but deserves further careful reading. In the letter, it says that the hearings were conducted in London in December and “are concluded”. The next step was for any ‘final submissions’ due by the mid-February before the 3 arbitrators deliver their decision. Clearly, release of this letter was directed towards the Congressmen after a flurry of ‘finger-pointing’ Letters from the US. We know some high-level Georgian Officials met US officials last week and we can only hope that some friendly pressure resulted in a resolution. But my gut feeling is that they will not budge because of Ivanishvili’s interference and so it will be over to the Arbitration… Anyway, here is the contents of that letter… "Hogan Lovells claims Frontera’s accusations against the Georgian side to be baseless 31 January, 2020 Hogan Lovells represents Georgian Oil and Gas Corporation (“GOGC”) and the State Agency for Oil and Gas in arbitration proceedings arising from and relating to breaches by Frontera Resources Georgia Corporation of its obligations under its 1997 Production Sharing Agreement (“PSA”) with those entities. Various material breaches of the PSA have been asserted over time, and those issues are required by the PSA to be resolved by arbitration before an impartial international arbitration tribunal following international rules. GOGC and the State Agency followed the contractually bargained-for dispute resolution procedure in the PSA, by initiating arbitration proceedings before an international tribunal appointed under and in accordance with the PSA and international law (the “Tribunal”). The hearings on that matter were conducted in London in December and are concluded; the parties await the Tribunal’s decision. GOGC and the State Agency have committed to respect, honor and abide by whatever award is issued by the Tribunal. Consistent with this clear respect for the rule of law, GOGC and the State Agency have refrained from initiating action to interfere with Frontera’s continued exercise of rights in the disputed territory, even though GOGC and the State Agency believe Frontera is without rights in that regard. The issues in dispute form a standard, customary commercial dispute, and the Georgian entities involved have acted properly in invoking contractual remedies and disputes procedures. There is simply no basis to claim otherwise. Nonetheless, Frontera has, without justification or factual basis, asserted otherwise and attempted without factual basis to place blame upon the Georgian parties with which it has dealt. Frontera has sought repeatedly to delay and impede arbitration proceedings in various ways, with the result that they have been protracted. However, GOGC and the State Agency have adhered to their respect for the contractual requirements and the rule of law. We would be happy to provide additional information as appropriate. Very truly yours, David Dunn"
Frontera Public Statement the glaringly obvious omission is reference to star wars & the star wars universe
Frontera Public Statement Why not tell shareholders about the interest payment and why not tell us the Georgian gov started the arbitration in 2017. Anyway, today’s news was very welcome and I personally think there’s a fighting chance we may still get something out of this.
Frontera Public Statement So why not update the web site. Why do the holders of shares on the LSE have to go hunting on a Georgian website.
Frontera Public Statement Have to say that is a pretty bold and strong statement - and very welcome. Almost certainly will have been made on the back of legal advice (and I doubt if TT is involved in this bit of the process) Final submissions to Stockholm due this week we believe - is it timed to coincide with that? But arbitrators will not be influenced by public statements of this sort in my view - purely the technical/legal submissions. It is certainly not aimed at us, nor in my view the Georgian public. Aimed rock solid at the Georgian authorities - perhaps to coincide with some behind the scenes court discussions. Most importantly it is positive - and not significantly acrimonious. The saga continues
Oil Market Civil.ge – 10 Feb 20 Georgian Parliament Speaker Concludes U.S. Visit Georgian Parliament Speaker Archil Talakvadze, who was on a working visit to the United States on February 5-10, met with U.S. lawmakers, including co-chair of the U.S. Congressional Georgia Caucus…