RE:RE:RE:Thanks for the recap of conference call Interesting elaboration on the potential value for the two ports Frontera has direct control of. Currently valued to about Zero by the market, but with a potential value for an acquirer that could be valued @ 2X the current FEC MCAP.
I personally also hold both FEC and OYL shares but my FEC holding is almost 10 times larger then the OYL holding since FEC almost got full control of OYL and are worth more than the current valuation if Kawa should be a duster (hope and think not).
kcac1 wrote: Thanks Guys,
It would nice nice to get some discussion going on FEC on the FEC board and not have to read the OYL board for FEC news. I own both stocks, as I think CGX by owning the concessions with a very old contract with very favorable terms and having some good history (paying for the border dispute) even with slow progress might make them invaluable and likely to remain a going concern and not be directly bought out or allowed to go broke and be absorbed by another company.
The way that FEC has bought up ~77% of their shares and is full control of the company, calling CGX their subsidiary would seem to me that FEC would be the company that is bought out. CGX may do a partical JV to finance the 2nd well. A well needs to be drilled on the D block by Feb, to fund it I can only see FEC carrying them, this time for more of the concession or them Jv'ing part of one or all of their concessions to raise money as they are still deep in the red even with this recent $60mmUS infusion of cash to fund Kawa and pay some other bills.
With the surprise mention of a "Wei-1" well in CGX forward looking statements released 11/3, it brings more intrigue. The only reason I see a purely Chinese name for well in Guyana is a Chinese company is already deep in negocations with FEC/CGX, the obvious suspect being CNOOC who currently holds 25% of the Starbroek block.. I have seen it mentioned on the OYL board that others have noted the CCP has been on a tear buying interests in ports over the globe. I think the number now is somewhere near 100 and they are now heavily investing in South America in many ways.
If CNOOC, were to buy FEC, they gain an oil company that is now in the 8 percentile (out of 100) by Schwab to strongly outpeform as of 11/5 based on 3Q numbers but most importantly, they would gain control of 94% of Puerta Bahia, the only port in Columbia that can on/off load a Super Tanker and a Super Container ship at the same time. It was not finished until 2018 at a cost of $400MM+ and very near a refinary and as of last week had had almost 1.5mm barrels of FEC's own crude blend stored in bulk storage at their own port pre sold awaiting pickup.
Plus, by buying FEC, a Chinese company like CNOOC which is owned by the CCP would also gain controling ownership of the Berbice Port under construction and likely would want to keep CGX as a subsidiary to somewhat mask their ownership, just like their ownership of Puerta Bahia would be hidden in the purchase of a Columbian Oil Company by a Chinese oil company. Something likely to slip under the radar of the competely dysfunctional US government who I would think would highly oppose if they knew the CCP were buying 2 ports very close to each side of the Panama canal.
My 2 cents is FEC is surely on the CCP's radar (with those 2 ports) and the ultimate target but CNOOC could easily ease in by Jv'ing soon with CGX so that CGX can pay for the 2nd well and maybe even a Wei third well????
Or if Kawa is a big hit and FEC and CGX rocket up in price, I do not think it is farfetched to see CNOOP make a genrous buy out offer for FECand potentially even start a bidding war. Obviously, every rides on Kawa results.
CNOOC recently raised somewhere around $5Bil US to fund future operations and they mentioned mainly in Guyana.
I would like to hear others thoughts on this, if you are long FEC or are considering buying shares.
Thanks