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Frontera – shares rampaging higher over a website update?

By Nigel Somerville, the Deputy Sheriff of AIM | Thursday 14 September 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Shares in AIM-listed Frontera Resources (FRR) have been zooming ahead. Having raised the princely sum of £750,000 (including £250,000 from directors) one might wonder how much of that cash is left over already. That helped pick the stock up from a low point of less than 0.1p per share, but the news that apparently got things really going was the announcement that it has updated its website. Really?

What has been updated is that:

following queries from a number of shareholders, it has today updated its website (www.fronteraresources.com) to make information relating to its CPRs more accessible.

These CPRs have been prepared in 2005, 2010 and 2015, by US independent petroleum consulting company Netherland, Sewell and Associates, Inc. ("NSA"), in four reports.  All four of the CPRs have previously been announced and there is no change to the content of the CPRs.

Now call me old fashioned, but CPRs (competent persons reports) are not quite the same as actual drilling. And reading one of them one is almost like wading through so many ifs and buts that you might not notice comments such as the lack of economic analysis over the 51% going to the state-owned oil company once cost recovery is complete.

Or perhaps Totals of unrisked prospective resources beyond the prospect level are not reflective of volumes that can be expected to be recovered and are shown for convenience only.

In any case, these reports are not new. So what do you think the company achieves by releasing them to mug punters? And why are the tit-bits in those reports not directly referred to in a (Nomad-agreed) RNS?

Well of course the plus point is that some people seem to think they understand it all. I’m not clever enough for that. But with the shares having climbed a further 22% today to 0.2p (last seen) it seems a bit of a stretch. The company finances also seem stretched. Will £750,000 be enough to do all that workover stuff announced on 6 September and get the pipes connected over the course of the 6 weeks following well testing, or are things being nicely set up for a discounted placing via bucket shops?

I guess only time will tell, but you really have to wonder: is it really different this time? With historic losses of $479 million (against the current market capitalisation of just £26.5 million) and a round of musical chairs in the boardroom to make it look different, I say not.

SELL.


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