CGX Energy Inc V.OYL

I do not think a JV will happen

[westcanpride]

Based on all the recent hires from CGX (as pointed out by OilRun and looking at LinkedIn), a company with a future minority interest in any offshore well would not be making these moves. CGX now has multiple drilling engineers, exploration managers, pore pressure specialists, etc (in addition to the genius help of guys like Suresh!). Plus, they can always outsource a wellsite geologist to work alongside the drilling crew offshore (95% of which is always associated with the drilling rig and not sourced via company staff). 

Those moves imply to me they are going to probably remain "operator" of the upcoming two wells. Frontera will also provide expertise no doubt, but I think this well is CGX's to drill now. I just do not see any large IOC/NOC taking majority interest in these land bases and not wanting to drill the well themself (imagine Exxon or Chevron acting as a 50% majority partner and allowing CGX to drill as operator... would NEVER happen. Even in a 15% minority I doubt that would happen).  

Its already April 1... close to 8 months since Frontera first released their exciting news about the offshore land. We know the resource report was completed in October (even though not released till February). If any external company wanted into this play, it would have happened already. I think the recent hires and staffing upgrades suggest CGX/Frontera will go at this Kawa-1 well alone. Could I be wrong... sure. But it does not take that long for external companies to do their own internal analysis and compare their OOIP/GIIP to CGX and come to a deal. Unless of course CGX/Frontera do not like the terms of agreement being proposed.

Anyway, if this path continues... how will Frontera feel about paying for like 90% of the well costs? Suppose we will have to hear soon enough. 

Happy Easter!

[Miftee9]

Very optomistic of you.  Hope you're wrong.

[soulfire]

There is only one thing I certain about in life.... That is, if we are down a couple of pennies I will see a post from WCP I prefer to think we will get a JV. No JV means everyone has given up the best prospect. WCP a JV is not certain, but given the time constraints don't you think CGX has to do the smart thing and hire the right people regardless if we will get a JV? I think so.  GLTA

[Devanand1]

WCP, I had a look at the resumes of the three new hires last night on Linkedin and I am more inclined to agree with you now than ever before. I cannot see a company getting into a JV for Kawa  on one hand and on the other hand going out and doing all this new staffing. It is possible but I am looking at the time frame of 8 months  that they have to pull all this together  for Kawa.

[Rapsani]

All valid points.   My view is we need to acquire the skill so we don't get rolled over again - right type of dril, location, etc, even for a JV. IF there is no JV, I'd speculate either a) Frontera never really wanted one b) asking a high amount (or c) no one is interested, and that scares me).    With a) or b) there is such high risk and such high possible

[waitingstill]

WCP - all negative conjecture as per usual. Yes, a JV is still up in the air. We will not know until one is signed IF it iis signed. Just because one is not signed now, does not mean one will not be signed.  I assumed you were in O&G or at least had some knowledge but to suggest that major oil companies make decisions within weeks is ludicrus. Six to nine months are the usual "

[westcanpride]

Looks like my post has generated a mix of replies.  As usual, some folks think I am being fully negative (shocker).  a) The data room no doubt has been open way longer than the past couple months. CGX and Frontera would be asbolutely moronic to have waited until Jan 2021 to open it up, especially if the government is going to force them to drill. ** Hell, Frontera made a deal a couple

[YancyDerringer]

WCP I had predicted on October 5, 2020 there is no JV, only a buyout!:)YD

[Devanand1]

Yancy, why do you think that there will not be a JV. I am interested in your reasoning to supporting your assertion.

[YancyDerringer]

Devanand1 As Soulfire stated I have predicted a buyout long ago, NO JV. My reason is simple and basic. Frontera would have entered into a JV long ago, however, it appears to me they want to go it alone. They will either take more % in the site for paying for CGX share of drilling or sell the concession, with Frontera retaining some level of ownership. Time is running out for anything other then

[Miftee9]

So, what would a reaonable valuation range be per share in your opinon if they were to sell?  Are we talking a 20% premium or something significantly higher?  Interested to know informed opinions as I am not an O&G guy.

[soulfire]

Yancy I believe you had predicted a buyout in the $18US range. I will take that.

[ljmorin]

Well Said WCP, Makes allot of sense to me as also with 30 years in this buisness watching things eb and flow. Logic sometimes seems to elude some people. I totally agree with you. Just need a spud date soon. very soon on Kawa.