Frontera Energy Corp T.FEC

FEC + CGX + Catalyst Capital

[kcac1]

As I am sure some of you know.  $4.3Bil U$ Catalyst Capital is a Canadian Venture Capitalist firm with Gaberiel de Alba as Managing Director. They speicalize in rebuildind distressed companies and own about 36% of the Stock of FEC and the same  Gab de Alba is Chairman of FEC with other Cat. Capital members on the board.

FEC in turn, owns about 74% of CGX Energy, in addition to owning 33% of of their (CGX) Oil and Gas concessions.  de Alba is also Co-Chairman of CGX and now seesm to be running the show.  FEC also has some other members on the CGX board. 

This statement is currently on the CGX website and this potential very high impact first well must be drilled by Nov.  Many think that the two companies are trying to bring in a 3rd partner but it appears they are ready to drill these wells alone if necessary due to the Nov time line which has been missed several times and likely is a must..

" CGX is a publicly traded (TSX-V|OYL) Canadian oil and gas exploration company that holds interests in three licenses in the Guyana Basin; a proven petroleum basin with over 8 Billion Barrels of recoverable oil equivalent discovered to date. Since 1997, CGX has been an active explorer both onshore and offshore Guyana. The company has drilled two operated exploration wells on its offshore Corentyne Block and drilled three more exploration wells on its onshore Berbice Block. In addition, CGX has acquired and processed over 7,000 km² of 3D seismic data on its offshore licenses. Using these data, CGX has developed a low risk, high reward prospect inventory and is now poised to drill two exploration wells, with Joint Venture Partner Frontera Energy Corporation, in the near term on its offshore Corentyne and Demerara Blocks.

The next exploration well on the Corentyne Block is located in the northern region of the Block, adjacent and on-trend with major commercial discoveries (Haimara and Pluma on the Stabroek Block and Maka Central, Sapakara West and Kwaskwasi on Block 58 in Suriname) located mere miles from the Northern Corentyne region. An independent resource estimate report is currently in process.

The next exploration well on the Demerara Block is located in the Western Region of the Block, adjacent with the Joe and Jethro discoveries on the Orinduik Block. The well is expected to have high quality, light oil similar to the Liza Field on the Stabroek Block as it will receive its hydrocarbon charge from the same source kitchen on the adjacent Stabroek Block. An independent resource estimate report is currently in process.

CGX, through its wholly owned subsidiary, Grand Canal Industrial Estates Inc. is involved in the development of the Berbice Deep Water Port in Region 6, Guyana."

In my opinion this first well is the most important factor facing FEC this year.  It has that much potential, it is also a high cost offshore well and a duster would be very costly, partiucarly to CGX who has no $$$.  XOM has successfully hit of 18 of 22 similar wells in close proximity  in the past 5 years and some were very big wells causing offshore Guyana to be their number one project with projections to ramp up to 750k boe/d in 5 years.

I own both stocks and it is nice to have seen both climb close to 60% since the end of last year.  I do not think I have ever seen a situation like this, where you have an investment bank (Cat. Cap.) controlling a large % of the stock of an O and G company (FEC) and their managing director running (as Chairman) that  company (FEC) who has now bought a much larger % controlling interest in a much smaller O and G company (CGX) and the same person is running all 3 companies. To drill the well(s), even more control will have to given up by CGX to fund the expensive well(s).

What I am wanting some thoughts on, is IF the Nov well off Guyana hits big, I am assuming even if CGX is furhter diluted, it likely will move up the most, but if the well is a dud GCX surely will move down bigtime.  I think FEC would move up or down less and be a safer yet less far less risky bet.  Is the risk/reward on CGX worth the gamble over owning a larger % of it than FEC? 

And any other thoughts would be appreciated.

 

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