This is a fantastic breakdown—sharp work balancing the red flags with the underpriced fundamentals.
What stands out to me is how well you framed the optionality layers in this thesis. You're essentially buying proven reserves at a fire-sale price, getting a high-yield while you wait, and still have potential upside from litigation (Guyana), infrastructure monetization, or even a strategic M&A play.
One thing I’d love to hear your take on: how do you think the market would respond to a successful infra asset sale? Does it trigger a rerate, or do you think the Catalyst baggage still weighs down multiples regardless?
I think it will rerate quickly. The problem is I'm not sure if the infra deal is done with the crazy market conditions or not. Midstream plays have not sold off like this stock has. It would be better to break up the company at this point to have an MLP for the midstream and port assets and keep the company equity for the oil wells. The MLP assets are worth half a billion or more still combined. You can't just build a massive port and oil pipeline that feeds it.
This one brings memories, bought it at the covid lows, and the infrastructure assets were already a hidden asset then... and the only thing that came out of it since was further investment in Puerto Bahia (which is only profitable due to Frontera's own use of it, IIRC) and ceding one of their pipeline ownerships to settle a conflict with one of the statal companies.
Cheap enough to be worth it at this point though, will have another look!
Yes its been a value trap. I feel like something is about to happen, based on the evidence, but tbh i wouldn't be the first person to be wrong on this one 😅
Has panned out on occasion when bought cheaply enough, I did a 3x back then (didn't hold all the way, too much resting on CGX), and this seems a good setup too. Just have to be aware of the mess XD
This is a fantastic breakdown—sharp work balancing the red flags with the underpriced fundamentals.
What stands out to me is how well you framed the optionality layers in this thesis. You're essentially buying proven reserves at a fire-sale price, getting a high-yield while you wait, and still have potential upside from litigation (Guyana), infrastructure monetization, or even a strategic M&A play.
One thing I’d love to hear your take on: how do you think the market would respond to a successful infra asset sale? Does it trigger a rerate, or do you think the Catalyst baggage still weighs down multiples regardless?
I think it will rerate quickly. The problem is I'm not sure if the infra deal is done with the crazy market conditions or not. Midstream plays have not sold off like this stock has. It would be better to break up the company at this point to have an MLP for the midstream and port assets and keep the company equity for the oil wells. The MLP assets are worth half a billion or more still combined. You can't just build a massive port and oil pipeline that feeds it.
This one brings memories, bought it at the covid lows, and the infrastructure assets were already a hidden asset then... and the only thing that came out of it since was further investment in Puerto Bahia (which is only profitable due to Frontera's own use of it, IIRC) and ceding one of their pipeline ownerships to settle a conflict with one of the statal companies.
Cheap enough to be worth it at this point though, will have another look!
Yes its been a value trap. I feel like something is about to happen, based on the evidence, but tbh i wouldn't be the first person to be wrong on this one 😅
Has panned out on occasion when bought cheaply enough, I did a 3x back then (didn't hold all the way, too much resting on CGX), and this seems a good setup too. Just have to be aware of the mess XD
This was written pre trump liberation day. Basically all deals now have a lower chance of happening.
Given where crude is trading and all the geopolitical tensions since the earnings call do you think it’s likely a sale has been cancelled?
If there is no meaningful update in the May call I’m probably selling my position given the increasing likelihood that crude drops below $60 by 2026