CGX Energy Inc V.OYL

Frontera's End Game?

[westcanpride]

Realistically, what are they doing with CGX long term? I think that's the end answer no one knows and perhaps they do not even know either. Without big pockets (>$10B), not a single drop of oil will ever be produced from CGX lands, so what does Frontera ultimately do at this point? 

Yes, to pay for Kawa-1 and upcoming Wei-1, Frontera could do another rights offering (say another 150 CGX million shares @ $2.50 CAD). This would generate $375MM CAD and ensure all CGX obligations for 2022 are covered and then we play the same guessing game again next spring 2023.

But really, what does any additional CGX shares do for Frontera at this point? If they cannot make a JV deal right now given the discovery at Kawa-1, all they are doing is just doubling down and hoping a JV deal comes aboard after Wei-1 (at which there is no guarantee). If they cannot find a big partner to fund these offshore fields right now, Frontera will just be holding a bunch of useless CGX shares for years to come (since it would be near impossible to offload any meaningful amount without crashing the share price). They would in essence be like most small operators in the Canadian oil sands or North Sea... lots of assets, but no real money to produce them. 

It is kind of funny... Frontera has played hard-ball with CGX all these years regarding funding and rights offerings, given that CGX had little financial leverage. Would not suprise me 1 minute if the same hard ball games are being played right now with Frontera. 

Perhaps that is why the CGX share price has not sky-rocketed well above $5 since the discovery? It does absolutely nothing for Frontera short-term and in fact they need the price to stay relatively low since additional rights offerings are a strong possibility. 

Either way, it will be interesting how everything unfolds in the coming weeks/months.

[Miftee9]

I think you need to have some patience.  The guys running the show are not dumb. They are in it to make money too so we are all aligned.  They just made a huge discovery and there is still some unknowns, like how much product is there and what kind of product they have.  I am sure there is a lot of stuff going on in the background.  If they are negotiating, it takes time

[Dirksidetrack]

Westcanpride, Just a quick question: Given that cgx has no revenues, no free cash flow and no net income and have been raising cash through borrowing and share issuance, if they farm-out part of their interests and raise cash that way would it not finally give them revenues, cash flow and income?I believe that the market thinks that it is likely to happen because if it were a dry hole then the sp

[westcanpride]

Dirk, some replies to your questions: 1) "if they farm-out part of their interests and raise cash that way would it not finally give them revenues, cash flow and income?" - No, if CGX gets any JV deal, the money likely would be a one-time transaction (kind of like selling your house... one-time deal and then you do what you want with the cash). I know many people on this board believe an

[Dirksidetrack]

Great points WCP! Thanks for the clarifications. Ok so they found resources that they call "commercial". Yet nobody can value them accurately unless they drill appraisal wells. So they can't farm the resources out at this point. Their only option is a JV where all parties involved share in the costs, obligations and risks. Does that about summarize what you are saying?

[soulfire]

And all of this because we dropped 10c?

[Toucan1234]

What if they collaborated as a team to win. Think win win-Covey