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Frontera Resources - The No 1 Oil analyst not impressed

By Tom Winnifrith | Tuesday 13 February 2018

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.

Whilst fat bastard Malcolm Graham Wood is paid to ramp shares in Frontera Resources (FRR) by making claims that cannot be verified, the City's No 1 oil analyst Zac "the Knife" Phillips is impartial and, to say the least, not impressed. In his email to clients today the SP Angel guru opines:

Frontera Resources (0.48p) – The Questions Don’t Go Away.

Sometimes you just have to take your hat off to a management that have no technical experience in oil and gas being able to present themselves as a credible oil and gas company.

What we can’t understand is how management repeatedly get away with not linking the claims they’ve made in the past with the data that they have gleaned in the interim period, questions like: (i) what do the well results tell us about the prospectivity; (ii) is it better or worse (quantitively, not qualitatively); (iii) have the economics of the play changed, such as needing more or less wells.

These questions are important, as many a prospect has been ruined by drilling, and we urge investors to remember what happened with Chinguetti, where a 125mm bbl world scale project, upon drilling and the start of production, was reduced to a tiddler. We have said it before and we will say it again, engineering is important, the data drives the project, not the public relations machine.

This management team are not connecting the dots, and we don’t know if its because they don’t want to, or they don’t know how to. The results may be positive, in which case, give us the data and independent analysis, but we are disinclined to give the management team the benefit of the doubt given the way they have treated investors in the past (witness the attempt to cancel the bond), and their lack of technical training.

Today’s announcement merely reminds us that the nagging doubts remain and the key questions are not being asked. We have no faith that the right work is being done, or the right decisions made.

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