Frontera Energy Corp T.FEC

What happens to OYL shares if FEC is sold intact after Wei?

[kcac1]

With Catalyst Capital's ownership of FEC shares now approaching 40% with the agressive share buy back program, and CC's Managing Director and Partner Chairing FEC and Co-Chairing CGX which FEC now refers to as a majority owned subsidiary, what do others think will happen if the Wei-1 well is a gusher?  The decision obviously is almost totally up to Gab de Alba who pretty much calls the shots for CC, FEC and CGX.  If a gusher, I see FEC entertaining selling itself to the higher bidder. This would include 2 ports, with Puerta Bahia being one of the largest on most strategic ports in the world due to its close proximy to the Panama and a refinery and the ability to load/unload the largest ships in the world, 2 at a time and also would include the shares owned of their various subsidiaries including their 78% ownership of CGX shares.

Clearly, CC has a fiduciary responsability to the pension funds and other conservative investors that in their Limited Partnership Fund(s) that trusted CC with millions of Pension Fund type money to buy and hold FEC shares (among other investments) to not subject them to undue risk like the political risk that has increased in Colombia, the volitility of the price of oil, and surely not the risk of developing a costly offshore oil field with or without big $$ partners. Thus I think Gab and company have already been testing the waters and conferring with its financial advisors.regarding selling the entire FEC package intact.

My question, if FEC is sold, what happens to the OYL shareholders, which also includes me?  I agree, it makes sense to keep CGX intact for various reasons but what if FEC were to be bought by CNOOC who loves ports and already in embedded in Colombia and invested in Guyana infrastructure and already a player in offshore Guyana?  Let's say FEC is sold in a cash deal. How would OLY shareholders be compensated?

If Wei is a duster is a discussion for another day.

[Frank007]

What value would you put on frontera ?

[SportyJ]

Kcac, an interesting question indeed. Imo, a lock stock and barrel sale will most likely include the sale of both companies. The question I have is what if only corentyne is sold for all cash or cash and a small retained interest?  What would that look like for shareholders?  Let's say the cash portion is 1 billion USD.  Well fec gets 680 million and cgx gets 320 million. Short

[kcac1]

My less than .02 is in this case, unlike many, I think the value of FEC is worth more than the sum the parts. At last count, 2 hedge funds own close to 50% of FEC and de Alba is running the show for Catalyst Capital's Be$t Intere$t. I think big $uccess on the well, with proper testing this time willl end up with serious thought of de Alba and company just ridding themselves of the entire FEC

[SportyJ]

Interesting discussion. First, if Columbia is going socialist, socialist leaning Canada seems a decent fit lol. China being communist quite different. No doubt though cnooc seems like a logical acquirer. Second, the value of CGX is straightforward. They have 32% in Corentyne and 100% in berbice port. FEC on the other hand has so many parts to value. Third, if Wei is dry (not likely imo) or a

[Frank007]

My 2 cents....  wei 1 being as prolific as Liza ....they either bring in a major  to develope the feild .that should not be hard ...once # are in ...finish the port project  as they have people in the know on the business side of running the port ...they just cut back on columbian projects ...invest the capital in Eqidor ..l ready positive results with Geopark ...I estimate the

[kcac1]

Sporty, I agree this is a very convuluted setup, that I have never seen before. Where the hedge fund managing partner, is also chair and very active in a small cap overseas oil company (FEC) who controls about 78% of a much smaller oil company (OYL) where he is also a co chair and active in decison making with them. With the new Colombian President being a Greenie on top of being a socialist, he

[Frank007]

Would they not extract more value by selling of each asset sepately ....the pipelines. Cgx shares ...the Puerto Bahia ..equidor conssession.  Columbia assets ...would that not net more value than a unit sale ?

[ukrop13]

This post has been removed in accordance with Community Policy

[kcac1]

You are talking a huge hassle with so many moving parts to break up and sell. You have multiple companies some public some private in play with multiple owners, many companies have not even been mentioned but most are not owned 100% by FEC including the portbut the own almost all of it. Puerta Bahia is discretely embedded in FEC which I think CNNOC has had its eye on for years. I doubt the US

[Frank007]

Well thought out response ...I will change my line of thinking .....thanks

[SportyJ]

Kcac, not sure if pacific rubiales had cgx shares just the current share count owned by FEC. The clean end game is a total sale of both companies. That will be up to DeAlba. I envision a corentyne farm down with cash and a reduced WI retained. However, I can't envision cgx getting hundreds of millions in cash without fec wanting their share of any cash going to cgx. FEC could take cash and a

[SportyJ]

Kcac, 100% agree. Seems the "get paid" squeeze is full on. CC, supposed guyana gov't cgx shareholders, retail cgx/fec shareholders, employees w stock options, etc etc would all like to get paid. While we thought Kawa was gonna be the answer, here we are today. With Kawa results not clearly quantified (ie no reserve estimate assigned) a good portion of risk is now riding on Wei

[kcac1]

Dang, for an old phart my memory is still holding up.  Odd that over 10 years ago PRE was investing in CGX and now we have this current strange setup in share/concession ownership. Pacific Rubiales ups stake in CGX Energy to enter Guyana | Reuters

[Frank007]

Thanks again for the input ..very helpfull

[SportyJ]

Kcac, nice recall!  FEC has a $3.84us per share in cgx's current mkt cap. If cgx doubles in value FEC's investment goes to $7.68us per FEC share. Add to that FEC's cash balance AFTER paying for Wei could easily be $2.35us per share.  And even add to that FEC is producing 40,000 boe/d.  FEC is undervalued and this is without even considering the value of it's 68% WI

[Sil.D]

Sporty- You are right, this is nuts. The current market cap for CGX is almost half of the current market cap for FEC???? And FEC owns about 78% of CGX market cap??????  See Below: Maybe the play is to sell CGX on any big positive well news and buy FEC as I think it will take time for the general market to sort this out and CGX will likely jump far more (%) on day one on news of having a big

[SportyJ]

Thank you Sil.D.  You've got it figured out!  The slight correction to your post is that FEC has 86.6m shares outstanding (92.8m in your post was before the share buyback last year).  It makes the FEC Valuation you show even more ridiculously low.  I can assure you that if we've figured it out, smart $ has it figured out. I've considered posting my estimate on where

[Frank007]

All of South American countries seem to be leaning left for now....Europe too ....I guess we are in for another French Revolution .....the pessants have no bread ...oh well let them eat cake