PATIENCEI feel for every CGX shareholder. Whether it be Covid-19, oil price wars, maritime border disputes (and gun boats), partners stealing interest in our offshore license (Georgetown/Kanuku), new management teams coming and going, delays in government elections, and numerous equity raises and dilution - seems like we have been through it all.
In the near term, expect numerous E&P's along with oilservice companies to go bankrupt. Primarily those companies that have significant debt obligations (poor balance sheets) and / or are over-exposed to assets that can't generate returns sub $40/bbl oil. There are many, many companies that fall within that category and over the years simply got caught up chasing volume over value.
Looking past the immediate term - believe the investment opportunity may be far superior than what the industry experienced back in the mid-1980s. I have been in industry for a very long time and expect we may see another mega oil cycle during the next decade. Due to massive reductions in future investments - it will be challening for industry to replace reserves. Most analyst would agree, the indsutry (as a whole) has experienced significant under-investment since 2016.
Irrespective of immediate and near term head-winds - access to reserves that can generate returns sub-$35/bbl will continue to be in high demand. Likely to be on the radar of every major / large oil company who are using this period as an opportunity to strengthen their upstream portfolio.
I strongly believe CGX assets offshore Guyana fit this unique criteria. Offers exceptional longer term value even in times of low oil prices.
Frontera (along with Catalyst / de Alba) have alot on the line here with CGX. Their present investment in CGX is well over $180M CAD - roughly $0.82/sh breakeven. There is no doubt in my mind they will be able to unlock significant value here and make a signficant return on their investment. Patience...