CGX Energy Inc V.OYL

Frontera Metrics (worth a look I think)

[westcanpride]

Looking at the Frontera's consolidated financial statements below.

2017 to 2020 are full year, while 2021 is to Sept 30. Share price is at the end of each year, while 2021 share price is as of Nov 30. 

Year          Net Income (US)   Shares Outstanding       BOE/Day          Share Price (CAD)
2017          -18.9 MM               100 MM                         64,000                  $20 
2018          -25.8 MM                98.4 MM                       71,900                  $12.5
2019          +30.5 MM               96.4 MM                       70,900                  $9.6
2020          -48.1 MM                97.4 MM                       41,900                  $3.2
2021          +6.95 MM               95.6 MM                       36,400                  $6.88


On a net income basis (which is what matters most, especially in today's world), Frontera has lost $53.35MM USD dollars since the beginning of 2017. Additionally, daily production (oil and gas combined) has fallen more than 40% since 2017. Definitely no suprise why their share price has been in a continual fall since 2017 and has not really rebounded too strongly over 2021 (all considered). Frontera is just not a very good company when it comes to delivering true value (profits) and bringing oil/gas online in a consistent fashion. Market has punished them accordingly! To me, it sucks that CGX partnered with Frontera of all companies.... they are not a good company, plain and simple. 

Guess this is probably why Frontera has not inked a new JV deal for Guyana. Two-scenarios in my mind:
(A) They are gambling and hoping they hit the big thick 300MM bbl recoverable (1 Billion in-place) reservoir with Kawa-1. I think they know their current operations/profits are not very good and the market has punished them accordingly over the past 5 years. They are hoping for that big shot in the arm to turn things around. Definitely a old fashioned big gamble all considered. 
(B) Potential JV partners know Frontera does not have the endless money needed to keep drilling exploration wells in Guyana (let alone fund a >$5B dollar development) and are playing extreme hardball in any JV negotiations. Definitely a show-me scenario. 

My guess is its probably 30% scenario A and 70% scenario B. 

All considered, I do not see the magical touch of De Alba in anything I have described above. He might be a great businessman in other industries (like Suresh and kiosks haha), but for oil and gas he is nothing special. The real "dealmakers' in the oil industry work at companies like Apache and Exxon. He is out of his league I think at Frontera. 

As always though, guess we will see soon enough. Hopefully FOMO will help push CGX share price at least back up closer to $2 in early December.... $1.28CAD right now is a joke (even with the challenges Frontera brings to the table/lack of cash on hand for CGX). 

Happy Tuesday.

[Phantomblogger]

WCP, regarding Scenario A and B. The mind-boggling psychological profile: Why would you want to negotiate from the perception that you're a penny company? He had the opportunity to RO at 2.50, instead he chose 1.63 He then did an options with Durkee for 1.26 In both situations he could have calculated number of shares/options to value. “To be successful, you must act big, think big and talk

[SheDrills]

Durkee's 1,800,000 options are at $1.36 CDN ~ $1.06 USD The drag down in Frontera is just fear of dry hole. Sell hear and be sorry next month. Nothing about the geological potential has changed. If you are loosing your confidence...just look at the discovery map. We have 3 targets...science and statistics say 1 or more will work.

[Phantomblogger]

You're right; Durgee's is 1.36 No cold feet here; contingency plans for the binary results (read music chairs). Read what WCP is saying!

[SheDrills]

De Alba's touch might be useful trying to get other funds to soak up some of their shares in a broad sweeping ownership allocation event. ...but when it comes to farming down Guyana it's the exploration managers who lead the charge. Business persons like De Alba approve deals and sign checks...but it's the technical people who build the cashflow models and the development

[ljmorin]

As the peices of the puzzle come together you really are starting to see the whole picture. It's been completly strategic and calculated. All these are all high end people. You have to ask yourself one question as you go through these peoples resumes. They can basically be doing whatever they wnat whrerever they want with options. So why are they here with this rag tag Junior and small

[SheDrills]

They are here for the money...they have already had real titles at reputable companies.  Being a VP at a small cap no one has heard of doesn't mean anything to them...just the dollars...and they want the share price much higher before they start cashing out those options.

[ljmorin]

Yes exactly, they must have seen the enormous potential utilizing their experience and knowledge in the recriutment process for a major winfall.

[Ermosp]

I think they're here for the same reason many of us are. It's a gamble with clear odds that can take them to the next tier of wealth relative to tying themselves to safer, more notable companies.

[waitingstill]

Thanks for that info SheDrills. I did not know that is who makes the deal. Good to know considering the lack of experience and success in the C-suite in O&G ventures. I feel much better with the resumes of those they brought in! :)

[SheDrills]

If you've seen my LinkedIn then you know I'm speaking from experience.  I've been part of teams pitching development scenarios and justifying economics to my own c-suite at the time as well as to partners and potential partners. Business development is done in teams consisting of technical experts quantifing risk and value.  It's up to the C-suite to approve or deny