What is unexplored land worth these days?Virtually nothing unfortunatey. Please, can anyone actually point me to a deal since March where any company actually paid any sort of meaningful cash for land that has: (i) no production, (ii) no actual wells drilled, and (iii) no infrastruture? There is no one I can find. Hell, companies are literally selling current oil production at valuations that are 50-70% less than they were back in January.
Yes, I understand CGX (and Guyana) is a different beast all together. Once in a lifetime opportunity, unique basin, unique land area, etc.
But even so, look at Apache... and they are an actual success story in Suriname/Guyana basin. With that, they have gone from a market cap of $9.62B USD on Dec 31/2019 to a current market cap of $3.03B USD. As everyone knows, Apache has hit on multiple massive discoveries in Suriname and yet the market now could not care less during Covid... why? Because its future production at least 5 years away (Exxon poured billions into Guyana to progress their initial first oil... I doubt Apache will be as quick on the draw for many reasons that I won't get into).
With that, Apache's current oil/gas production means precious little on the current market and I would guess the Suriname discoveries mean even less (just because of the massive future CAPEX required to progress this oil from discovery to production).
With that, again CGX is different. Tiny little company that almost no one knows about. But a plus is that if we ever did hit oil, we probably would see a wicked share price jump. As everyone knows, however, we need money to actually drill for oil. The land itself is worthless in the meantime.
My conclusion: CGX/Frontera needs to JV with a partner who will drill. To get this JV partner, we probably will need to give away the land for the price of $0 to entice them to join along. I just don't see anyone paying cash for unexplored land in today's market. Maybe a NOC might... but even then, they have more than enough oil. Anyone joining up with CGX is definitely doing so with a 10-20yr time frame in mind. But I cannot see anyone paying good money for it... not when compananies like Husky or Concho or Painted Pony are literally giving there current produciton away for nothing in recent deals. That or Frontera will have to go for broke and shift money away to other operations to fund Guyana drilling (which would be incredibly risky as well. One bad hole- dry or drilling issues- and Frontera really loses).
See what next week brings. If we do see any sort of spike, I might go and sell 50% of my shares. My break even after all these years is around .50 cents (too many shares I own now sadly). Unfortunately, we need a mircale at this point for me to make any real cash and many of us have been waiting 10-20yrs for this to happen.