FEC – FiGambler

Back to Blogging 11/6/2021

Posted on November 7, 2021 4:48 pmby figambler

I have been quiet for some time due to personal reasons, but I haven’t stopped buying in the market. Moving around during the pandemic sure is fun, but the pain of moving is excruciating. Currently I’m living beautiful British Columbia.

Investment Update

But just a quick update on where I am – in the past 2 months, I have increased my position in Frontera Energy by 25% and increased my position in Petrotal by 1.8%. Currently, Frontera and Petrotal offers significant upside, due Frontera’s Guyana exploration program, and Petrotal’s social unrest, and production increase.

PTAL Catalysts

9H
ONP reopening

FEC Catalyst

Dividend reinstatement
Puerto Bahia
Kawa-1 results
Colombia exploration and production increase
NCIB

While I’m preparing to get back to more blogging, I’m anxiously waiting for Frontera’s Kawa-1 well results, and Petrotal’s 9H Completion. Exciting times ahead!

My RSUs just unvested, so I have plenty of liquidity to purchase more. We are just in the beginning of O&G Bull Market.

FEC refinances bonds at a lower rate and it’s implications

Posted on June 14, 2021 5:50 amby figambler

FEC will be issuing $400 million in senior unsecured notes due 2028 at a coupon rate of 7.875% and buying back their $350 million worth of 2023 9.70% senior secured notes at 104.95% premium. This indicates a 1.825% difference in interest payments.

I believe there will be associated costs to pay any financings fees and the 4.95% premium on existing bonds; though the impact will be short lived. The long term benefit would be $2.45 million/annum in interest savings since the loan is now $400 million.

Bigger loan, smaller interest payment, why not?

The reduction in financing cost is a sound move, but the interesting part is this shows rating agencies believe Frontera is a lower risk investment than it was a year ago.

The 2028 Notes have been assigned a rating of B+ by S&P Global Ratings with a Stable Outlook and a rating of B with a Stable Outlook by Fitch Ratings.*

With an even stronger balancing sheet, Frontera is poised to take on Guyana, the elephant in the room, and Puerto Bahia, the giraffe in the room – meanwhile taking advantage of its strong production at $70 oil prices.

I do wonder what Frontera is going to do with the extra $50 million dollars; save it for a rainy say? Continue to develop Guyana upon initial drilling success; or take Puerto Bahia to profitability?

source: https://fronteraenergy.mediaroom.com/2021-06-10-Frontera-Prices-Oversubscribed-and-Upsized-US-400-Million-Senior-Unsecured-Notes-Offering-at-7-875

Frontera Energy Q1 2021 thoughts

Posted on May 8, 2021 7:31 amModified on May 8, 2021 7:31 amby figambler

Frontera, despite reporting a loss in Q1 2021, if you read closely in MD&A and Financial statement, you’d notice that they have a lot of income generated from its midstream asset – $19 million USD in Q1. This is not part of OPERATING EBITDA.

source: https://www.fronteraenergy.ca/content/uploads/2021/05/Frontera-FS-Notes-Q1-2021.pdf

source: https://www.fronteraenergy.ca/content/uploads/2021/05/FEC-MDA-Q1-21.pdf

ODL

Share of income – $9.8 million
Dividends Receivable – $28.8 million

For the three months ended March 31, 2021, the Company recognized $9.8 million as its share of income from ODL which was
$2.4 million lower than the same period of 2020 primarily due decrease in the transportation tariff since the second quarter 2020
and impact of foreign exchange fluctuations. During the three months ended March 31, 2021, the Company recognized gross
dividends of $41.6 million and a return of capital of $4.2 million. As at March 31, 2021, the Company has accounts receivables of
$28.5 million of dividends and return of capital contributions.
source: https://www.fronteraenergy.ca/content/uploads/2021/05/FEC-MDA-Q1-21.pdf

During the three months ended March 31, 2021, the Company recognized gross dividends of $41.6 million, (2020: $24.5
million) and received cash dividends of $9.0 million, (2020: $38.7 million). As at March 31, 2021, the carrying value of
dividends receivable after withholding taxes is $26.6 million (2020: $Nil). In addition, during the three months ended March 31, 2021, the Company recognized a return of capital of $4.2 million, (2020:$Nil) and received in cash $2.0 million (2020: $Nil).
source: https://www.fronteraenergy.ca/content/uploads/2021/05/Frontera-FS-Notes-Q1-2021.pdf

Puerto Bahia

Operating income: $10 million

For the three months ended March 31, 2020, prior to the acquisition of a controlling interest in Puerto Bahia on August 6, 2020,
the Company had recognized $25.1 million as its share of losses from IVI mainly due to higher unrealized foreign exchange
losses on the revaluation of Puerto Bahia’s USD-denominated bank debt. For the three months ended March 31, 2021 Puerto
Bahia has generated $10.0 million of segment operating income primarily from take-or-pay contracts in its liquid bulk storage
terminal business.
source: https://www.fronteraenergy.ca/content/uploads/2021/05/FEC-MDA-Q1-21.pdf

Bicentenario

Are they actually going to receive their dividends?

FEC Cont’d

Posted on April 20, 2021 12:33 amby figambler

FEC is getting very close on acquiring CGX Energy now that they’ve established a 19 million dollar loan deal with CGX Energy. FEC will have the option to convert the loan into shares, which represents “9.28% of the currently issued and outstanding common shares of CGX.”

If FEC decides to convert their loan into CGX shares, FEC will control more than 80% of CGX Energy.

Fun times ahead!

source: https://ceo.ca/@newswire/frontera-and-cgx-announce-19-million-loan-agreement

Cautiously optimistic on Frontera, United Oil and Petrotal

Posted on December 20, 2020 7:42 amby figambler

Quick Recap

Frontera – Increased Production, Colombia drilling, Guyana, Midstream domination

United – Egypt success, Jamaica farmout

Petrotal – high netback, production increase, exploration

Why cautious? All these things will keep oil prices down and limit upside.

CV19 might still be a thing
US Oil Rig slowly increasing
OPEC+ disputes

Well, it doesn’t matter for UOG since it’s been pretty much stagnant even though Brent prices rose more than $10. I’m really looking for its Jamaican assets to shine.