RE:CGX is the play! Frontera's primary path forward will be to bring in a third party to help fund future exploration, appraisal and development activity across both blocks.
In yesterday's conference call, it was clear Frontera/CGX are in discussions with various third parties. Details were shared that some third parties did not want the deepwater port included in a potential deal. Others parties wanted interest in only certain licenses (not both). In summary - options are be looking at and discussed. But, "nothing concrete" to be shared with investors or the public at this time.
However, an announcement could come at any time...
Frontera is very wise to continue advancing the Kawa exploration program knowing they can get this high reward low risk well drilled without relying on a third party. It sets the stage for a transaction to take place that is on par to what Apache received via the Total farm in.
Having said the above, Frontera also knows it can't entertain proposals from third parties (that are probably very attractive) and turn around and deal with CGX for a better deal. This would be a clear cut violation of numerous securities laws in Canada and would
violate minority shareholder rights. Perhaps some of these minority shareholders could be influential Guyanese citizens.
Probably most important on this topic, Frontera knows it does not have the financial capacity to continue holding a 83.7% economic interest in these two offshore licenses when each exploration well costing $125M a pop. Over the next 30 months, CGX/Frontera will need to drill 4 exploration wells (2 on each license) in order to meet their minimum work obligation.
I would think Frontera will continue moving forward based on what they (de Alba) have said - primary path is to bring in a third party that can advance the program forward. They are probably using the Apache-Total deal as a benchmark in any third party negotiation.
The next 100 days are critical. As de Alba stated, would be transformational for shareholders. We are talking about billions of dollars versus a few hundred million.
Both CGX and Frontera need to bring in a third party to help advance this program to the next stage. For the prospective partner, this is a phenomenal opportunity for them to capture high valued assets (which Exxon has stated nothing can compete with). For the larger operator,
If the deal is similar to what Apache-total agreed to, becomes a financing exercise where they can reclaim costs against future exploration, appraisal and development carry.
GLTA