CGX Energy Inc V.OYL

Formal Evaluation

[westcanpride]

I encourage everyone to go to sedar.com and read the latest Material Change Report uploaded on Aug 1. It outlines the formal evaluation prepared by H&P Advisory Limited with regards to the Formal evaluation of Corentyne and proposed Farm-In by Frontera. 

All is can say is this... if CGX was going to get H&P to do an evaluation and accept it at face value (i.e., demand absolutely no additional premium from Frontera for WI in exchange to help drill Wei-1), then what in the hell do they need all those BoD and Senior Management for? Tons of examples exist in the business world where companies pay premiums for opportunities. 

Irony though... everyone and their dog now knows what an external party thinks about Corentyne. If Wei-1 backfires and does not come back as a massive find, Frontera in essence will be holding a pretty worthless asset in Corentyne. Next couple months will be interesting.

[Miftee9]

The difference between Mangagement/BofD and H&P is independance which is required in this instance.  I have been involved in issuing these in the past and they carry a significant amount of risk given the opinion they are giving.  They would have done everything necessary to support their conclusion.  Lets look forward not backwards.  GLTA.

[Schreibzey]

Miftee, in saying that, would you agree the formal valuation given is highly conservative as a function of that risk of opinion?

[Miftee9]

I cannot conclude one way or the other as I do not have all the facts.  Given who the users are of the report, it cannot be too conservative or to aggressive.  It has to represent what the fair market value of the company is based on the facts.  If to conservative or to aggressive then it would favor one side over the other which is not the objective of the exercise.  In

[westcanpride]

Your experience in these matters Miftee are definitely appreciated.  I mean, however one slices it now, based on the report, current CGX market cap is WAY over bloated given their remaining 32% interest in Corentyne. Is the port actually worth the remaining amount baked into the share price? Is Wei-1 opportunity currently baked in? Wish I knew the answers but I do not. Either way, given the

[jada13]

Nickles and dimes being traded. This will explode to the up side soon .

[soulfire]

WCP i believe the evaluation would have had to be done before the deal. So the deal incorporates the 335M shares and on a median basis that works out to be roughly $1.00 US per share. So we should be at minimum C $1.25 SP The 32% that CGX currently owns will be factored in when they hit MASSIVLY on WEI1. Correct me if i'm wrong anyone.

[Miftee9]

Correct Soulfire.  Valuation is at a point in time.  As new information is obtained, it will have an impact on overall valuation.  Had the valuation been done before Kawa results, it would have been much lower.  If WEI is a huge success a similar valuation would show a significant increase all else being equal.  Look forward not backwards.  I am still bullish on this

[westcanpride]

How do you figure Miftee that the valuation would have been lower pre-Kawa 1?  As per Feb 2021 resource report, the upside potential for CGX looked pretty damm good.  https://www.newsfilecorp.com/release/74529/CGX-Energy-Inc.-Announces-Guyana-Resource-Evaluation-Report Additionally, CGX was trading at a far higher market cap for much of the past year relative to where we are today

[Miftee9]

Not sure how much value you can place on the trading of this stock.  Very thinly traded with wild fluctuations.  Even though pre drill Kawa seemed promising, there was still no proof they would hit.  It would have been heaviliy discounted in a valuation given the uncertainty of hitting and it being commercial.  I am only speculating as I have no inside knowledge of what they

[Rapsani]

Does the valuation factor in the cost recovery credit CGX has?  Can't recall the last figure but that's got to be in the $250M+ plus range.

[Miftee9]

Likely, if they were doing their jobs right.  However, the cost recovery is not guaranteed so may have had a limited impact.  Unless I am misunderstanding how the credit works.