RE:MARCH-04-2021: FRONTERA EARNINGS CALLThank you Oil_Run:
Here are some other key quotes from the investor call I found interesting (along with my thoughts):
1) "The acquisition of CGX and joint venture interestest"- Richard Herbert
- Definitely from the tone of the call and use of language, one would think Frontera runs the show and CGX is now just a by-stander. Very interesting use of language, particularily since CGX is still 'operator' and has been hiring people to progress these wells. The government must really be pushing to keep CGX alive depsite what I am sure Frontera would rather have otherwise.
2) Investor question: "Outlined a range of $40 to $90 million... wondering why that's such a wide range...".
De Alba Reply: "CGX is a subsudiary of Frontera". "Frontera has allocated the amount required for a JV portion, but it has also reserved what could be a larger amount for the full exploraiton of that well".
- Again very interesting. Even though CGX is operator, De Alba holds nothing back in stating that Frotnera has overwhelming majority interest in the well (~80%) and are the ones calling the shots. Addtionally, the last sentence implies that Frontera is keeping their options open for a another JV....
De Alba further reply to investor question: "There are comments related to reviewing strategic alternatives. So while we have reserved for the full amount, there are other strategic alternatives being persured at this time. That is why the range is there".
- Wow. 'Strategic Alternatives'... in other words, very much looking for a JV partner to help reduce the up front costs needed to drill these wells. I think Frontera would spend the money if they had too, but would very much rather farm down their interest (or in a perfect world eliminate CGX completely and give their working interest to someone else who has money... thank god that probably won't happen).
Investor reply to De Alba answers: "Okay. Terrific. Thank you, guys'.
- I think he knows 100% they are actively looking for the JV. Least De Alba confirmed this for him without outright saying so.
3) "Yes. Gabriel, I think that is clear and nothing to add. As you said, I mean, we will be persuing strategic alternatives a-- and that is why the range is wide".- Richard Herbert
- Another very clear answer... they want a JV badly and are looking for one right now (if not in active discussions).
As an aside... the game continues based on the share price today. I won't lie... I really thought we would see a more meaningful jump in share price. Instead we finished .02 cents lower than yesterday. Such a joke. Looks like until that JV is announced, no one could care less about Frontera's best intentions to want to drill this well in 2021 and hence we stagnant our share price. Remarkable how other tech and health care stocks are literally booming on speculation, yet something like CGX now needs everything perfectly aligned before making any real price jump upwards. Sad really. Hopefully sonner than later we get closer to that $1B market cap (which for a company about to drill for a potential 1 billion barrel in-place oil field volume is not un-realistic at all at this point).