Frontera Energy Corp T.FEC

Weekend Update of Old News since we have No New News

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I think it is a given that this article at the bottom of this post, from 5 months ago is correct. However, this is obvious a very complex and time consuming sale. FEC could be sold at least 4 ways. FEC in total or FEC in at least 3 parts. 

Catalyst is obviously calling all of the shots and even that is likely complex with de Alba apparently breaking ties with the head guy at Catalyst, Newton Glassman. Gab de Alba has formed his own destressed asset fund, GDA Luna, housed in Miami, where de Alba has a residence and he has the $ backing of 2 billionaires. I do not see how de Alba can continue to run so many of Catalyst companies and also have time to found his own similar fund operating in the States.

Obvious signs that FEC is for sale.

1. Nothing is being done to promote the stock, the only presentation on their site and very hard to find is the very dated but detailed 83 page Nov 2022 investors day presentation which is a Power Point that looks more like a presentation to entice new owners than entice shareholders. If you have not seen it, it is filled with information. For example, go to page 6 where they give the metrics and value themselves at C$26+sh. There is far more data here including a great map showing Kawa and Wei in relation to the other successful wells in the area.  It is worth a weekend look if you are wondering why you are still holding this stock. I note that CGX appears to have completely removed its last presentation, which was dated March 2023. Up until the news came out of a FEC sale, both companies had consistantly updated their websites to include detailed presentations, particularly after very favable news, such as both companies claiming a discovery with the Wei-1.

 Presentacin de PowerPoint (fronteraenergy.ca)

In addition to FEC breaking it self up into 3 saleable parts almost 6 months ago and having no current presentation and releasing only the bare nesssary news. They also stopped the share buy back program which they claimed was enhanceing shareholder value. They stopped paying a nice dividend start the share byback program which allowed Catalyst to substantially increase their % of share ownership to close to 42%, at last report, Garmercy Funds owned 12% of FEC shares and the 2 funds (with over 50% ownership) have partnered on other deals as recently as this past spring. Here is a history of the dividents that were paid before they converted to buying back shares. Without large outlays for their Guyana Capex or share buybacks, they surely have the cash flow to start paying a dividend again if they wanted to enhance shareholder value. But not a word to enhance anything.

Frontera Dividend Details

 

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Declaration Date	Record Date	Payment Date	As Declared cents per share ($C)
December 6, 2018	January 3, 2019	January 17, 2019	0.33
March 13, 2019	April 2, 2019	April 16, 2019	0.165
May 30, 2019	July 3, 2019	July 17, 2019	0.205
August 1, 2019	August 9, 2019	August 23, 2019	0.535
August 1, 2019	October 2, 2019	October 16, 2019	0.205
November 6, 2019	January 3, 2020	January 17, 2020	0.205
March 4, 2020	April 2, 2020	April 16, 2020	0.205

They have done nothing to enhance shareholder value since the Nov 2022 presentaion.

Besides what is metioned above, there are multiple subsidiaries involved, and the subsidiaries including CGX have subsidiaries. Many countries are involved, not only where they are operating but where the various companies and sub companies are registered. I assume many approvals need to be approves by various sources to sell some or all of FEC. FEC has projects in 4 countries counting Peru and some litigation to clean up some of their abandoned projects in a rain forest. And hopefully this time consuming process is delayed by multiple offers for the parts or the whole. For me, I think there is little doubt they are well into the sales process and a sale or sales will be forthcoming. With a current market cap of less than C$1Bil.,

I am just being patient and holding tight as I think any sale will surely be for more than C$1Bil.  The way things are going, the next news may not be until Oct when they have to release 3Q numbers. Good Luck to all that have continued to hold what has become almost a ghost stock.

Breaking News 11 April 2023

Frontera Energy taps Citi to explore potential sale

By Carlos Martinez

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Frontera Energy, a Toronto-based oil and gas company with operations in Latin America, has hired Citi to explore a potential sale, according to two sources familiar with the situation.

The Catalyst Capital Group-backed energy business has already received offers for the whole company and at least one for some of its blocks, a third and a fourth source said. Catalyst Capital is one of Canada's largest private equity companies with a diversified portfolio of investments, according to its website.

Frontera has interests in 31 exploration and production blocks in Colombia, Ecuador and Guyana. It also owns 96.55% of Puerto Baha, a Colombian maritime liquid bulk and dry cargo terminal, and controls a 35% stake in the 146-mile Oleoducto de los Llanos Orientales pipeline.

Infralogic reported in November that Frontera was working with CIBC to study a potential divestment from Puerto Bahia. However, the CIBC-led mandate is not for a direct sale of the port facility but rather a capital raise seeking a co-investor to participate in the expansion of the facility to incorporate additional services such as container handling, according to the first and a fifth source familiar.

Last month, Frontera announced that its wholly-owned subsidiary Pipeline Investment Limited — which controls its stake in Puerto Baha — secured a USD 120m loan from Macquarie Group's Commodities and Global Markets business to refinance the terminal’s debt.

Toronto-based Catalyst Capital owns about 40.84% of Frontera, according to financial filings. The private equity firm, which has raised more than USD 4.3bn through five funds, took over Frontera’s predecessor Pacific Rubiales in 2016 when Catalyst Capital provided it with a USD 500m debtor-in-possession loan.

Pacific Rubiales, co-founded by former executives of Venezuela’s Petroleos de Venezuela (PDVSA), entered bankruptcy proceedings in Canada in April 2016 in what was then the largest bankruptcy of an oil and gas producer in terms of debt.

Catalyst Capital has been trying to exit Frontera since at least 2022, according to the second and the third sources and a sixth source familiar. The election of Gustavo Petro as the president in Colombia in June 2022 led the PE firm to halt its potential exit, the sixth source said.

The government of Petro, a former guerilla member, announced in January it will not grant new oil and gas exploration contracts as it intends to shift away from fossil fuels. Colombia represented 98% of Frontera’s total oil and gas production last year, according to financial filings.

Companies already operating in Colombia such as GeoPark, Parex Resources, Gran Tierra and state-controlled Ecopetrol would be logical buyers, the third and a seventh source familiar said.

Frontera reported a net income of USD 286.6m in 2022, 54.2% less than in 2021, according to financial filings. The company has a market cap of CAD 1bn (USD 778.1m).

Frontera and Catalyst Capital Group declined to comment. CIBC and Citi did not respond to requests for comment.

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