CGX Energy Inc V.OYL

High Stakes Poker

[westcanpride]

In essence, Frontera management is playing an olf fashioned game of high stakes poker in Guyana. In their case, the buy in was over $500MM USD (i.e., seismic, land, Kawa-1 well, etc) and each additional round going forward costs ~100MM USD (i.e., Wei-1, etc). 

The market, at the moment, is calling their bluff and is understandably pessimistic that they can keep playing long term (i.e., multiple exploration and appraisal wells). Yes, Frontera has indicated they can play around round for 2022 and is willing to drill Wei-1 on their own... but then what... does Wei-1 generate a Royal Flush for Frontera or do they come up with another Two-Pair/Kawa-1 type result? 

Frontera's market cap is ~$1B USD... the market/poker participants (e.g. Exxon, Total, Chevron, etc) know that it's going to likely take ~$1B to properly explore/appraise Corentyne before any final game is decided (in this case, FID). 

Management clearly did not get the initial poker hand they wanted in Kawa-1... yes, 200ft of pay is great, but less than 50% of it was oil. Even worse, their crown jewel Horizon 23/Santonian was not as great as expected. In reality, they came up with a two-pair type result. Not great, but not devestating.

Guess we will see how long Frontera keeps playing this poker game and who bluffs first (i.e., Frontera by farming down for less than desired OR some company getting antsy and overpaying). Exxon, Total, etc can clearly keep playing (i.e., drilling) for many years to come and can survive a less than desired hand or two... can Frontera?

[tkloebs]

They didnt install this kawa well in a location that maximizes pay column of H23 they targeted a location that they could accumulate information from multiple stacked zones. On the presentation they note that H23 likely has a thicker pay column away from exploration borehole. Some say 2 pair id say straight or flush.  glass half empty always for you WCP

[westcanpride]

Gee tkloebs, I was trying to instill some light hearted nature on one of my posts.  But wow... less than 100ft light oil is a straight or flush for you... guess the entire oil community must be entirely blind to what CGX/Frontera discovered if that is your standard of a fantastic result.  Of course I know Horizon 23 wasn't targetted for the thickest pay. They emphasized that a

[tkloebs]

A straight or a flush is not a fantastic  hand in a game of poker. Its a middle of the road hand that only gets better with Wei results. Acting like a JV agreement comes overnight.. these kind of deals take a long time to draw up and execute. Patience grasshopper things are in the works

[IceDog13]

You must not play much poker! 

[tkloebs]

i cant tell you how many times ive lost with a straight ...... 

[Ermosp]

Predrill estimates for this well were hoping for oil in all targets with enough pay to indicate 500M barrels of oil from this drill alone (ie not drilling in the thickest part of each pay zone). Oil run posted an estimate positing that we might have a 1B barrel well here.  Why is it so hard for some people to admit that the results for this well didn't match that potential? Yes, there

[ljmorin]

Condy is worth money too. Hello. It sometimes out paces oil.

[Harel1976]

No smoke without fire.. All the releases suggested they are hiding the true results because they are in too deep. My guesstimate was the quality of oil but as it appears they encountered active petroleum system with light oil and gas condensate but not a commercial discovery. Now they must go all in on wei-1 all alone and the risk couldnt be higher, another kawa like success and its game over for

[Dirksidetrack]

Excerpt from Oilnow news story: "Repsol will employ the Noble Regina Allen to spud the Beebei-Potaro-1 wildcat in the Kanuku block, immediately to the south-west of the prolific Stabroek block, where ExxonMobil has already encountered more than 10 billion barrels of oil equivalent in recoverable volumes."Repsol Beebei-Potaro-1 should be spudding this month, if it hasn't already