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Bullboard - Stock Discussion Forum Frontera Energy Corp T.FEC

Alternate Symbol(s):  FECCF

Frontera Energy Corporation is a Canada-based oil and gas company. The Company is involved in the exploration, development, production, transportation, storage, and sale of oil and natural gas in South America, including related investments in both upstream and midstream facilities. The Company has a diversified portfolio of assets with interests in 27 exploration and production blocks in... see more

TSX:FEC - Post Discussion

Frontera Energy Corp > Frontera in Guyana
View:
Post by westcanpride on Aug 16, 2024 5:36pm

Frontera in Guyana

To date, FEC has "invested" over $400 million USD in two wells and additional $40 million USD in port related activities. 

https://oilnow.gy/featured/frontera-says-it-already-sunk-us400m-into-two-guyana-wells-us40m-on-cgx-port-facility/

FEC and its former parent company have also "invested" roughly $218 million CAD into CGX shares over the past decade... majority coming since 2019 when De Alba sunk his teeth into Guyana. 

$400 million usd + $40 million usd = $440 million usd x 1.37 conversion = ~ $602 million cad 

$602 million cad + $218 million cad = $820 million cad

FEC current market cap = $713 million cad

I know many people are enjoying the destruction of CGX via government soapbox meetings. In many ways it's warranted. But end of day, De Alba et al have injected over three quarters of a billion into Guyana since 2019 via FEC. If CGX truly does go bust and forfits Corentyne for $0, that is most likely game over for Frontera as well within Guyana. Thats a hell of a lot of money to evaporate into thin air for no return... especially given the JV team did find over 500 million barrels of prospective oil. 

Of course an alternative is FEC buys out CGX interests in Corentyne and comes up with a tangible appraisal plan to satisfy government demands. I just don't see the government giving the block to FEC and simultaneously killing CGX in the process. Over 20 yrs of CGX history suggests this won't happen. 

End of day, many folks wonder why FEC trades at such a low PE ratio. I think the lack of returns from their Guyana ventures have made a ton of investors scared. If they can blow this much money and get no return, despite actually finding oil, why should investors feel comfortable they will invest new earnings any more wisely? Continually buying share back on the cheap show that their strategy the past 4 yrs has failed as well.

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