RE:RE:CGX /FRONTERA: POTENTIAL JV & EXPECTATIONSDevananda1 -
Would agree the volatility in CGX share price this year (along with the prior 5 years) has been frustrating. Perhaps further exasperated by the recent 'heavy oil' news fiasco along with ambiguous Maka-1 new release. It's not just CGX shareholders who have been negatively impacted - but, also Eco-Atlantic and Tullow shareholders as well.
Taking a step-back - I think its important to highlight several key milestones that have been achieved by CGX over the past 12 months.
1. Resolved historical outstanding payments with Frontera, JDC and Inpex.
2. Resequence of Corentyne work committments as to optmize 2020 well locations (i.e. Northern Corentyne Area).
3. Updated Corentyne CPR report taking into adjancent / nearby discoveries and 3D Northern Corentyne Seismic. Along with the first public CPR report on Demarara license. Both due in early 2020.
4. Finalize 2020 drill locations on Demarara and Corentyne.
If one had purchased CGX in 2014, 2015, 2016, 2017 or 2018 (assuming annual average share prices) - returns would anywhere between 100% to 400%. On average.
Moreover, if one had entered into the rights offering (CAD $0.25) - returns on those rights would have been over 100%. Point being, the importance of being able to average down over time.
I can attest (as with everyone else on this board) - during 2014-2018 its was very hard to pull the trigger and buy CGX shares when the possibility of bankruptcy was very real.
I am now just starting to make a good return (after more than a decade of holding CGX shares). I am with you - its been extremely frustrating.
However, the future outlook for CGX - in my opinion - has never looked better. The future outlook for CGX far surpasses any histrocial concern I have had with the company. All those past issues are now behind us and the basin is now just starting to reveal itself and show its colors.
I have been in the oil industry for just short of two decades. Have worked all around the world and have never seen an offshore basin as prolific as Guyana. Just take a look at who we are surrounded by (the E&Ps) - we are surrounded by the big players / big money.
Sure - risks are still there. I would imagine some of big institutional / hedge fund money managers will continue to remain on the sidelines until there is a clear path on how CGX/Frontera intend to fund their upcoming exploration, appraisal and development campaigns.
Then again, those money managers that are looking for an entry point are pehaps struggling to find one. We have seen this month that a little volume in CGX can move the share price quite significantly.
On Nov 13, CGX share price was CAD $0.32 (post heavy oil sell off). It only took 1M shares to be traded (which is less than half a percent of outstanding shares) to drive the share price back to CAD $0.60. On several occasions - we were seeing bid/ask spreads on its way upward of more than $0.10 CAD.
Devananda-1 - understand where you are coming from. But, would encourage you to hold your CGX position through 2020. Let's see what CGX/Frontera have to say / offer...