A couple of days ago Frontera Resources released a statement notifying a discovery of 5 trillion cubic meters of natural gas in Georgia.
The company director general Steve Nickerson noted that Georgia would start natural gas exports to Europe in the near future.
Part of Georgian experts asserts that this statement is ungrounded and unrealistic, because Frontera has spread similar statements several times for many years without real results.
Frontera statements aim at raising prices of its shares at stock exchanges, Andria Gvidiani, an analyst of the Association of Young Financiers and Businessmen (AYFB), noted.
“The strategy of the US company of Frontera is to explore the potential of the developing markets of the Black Sea basin’s eastern European countries and to get established in these markets. For many years this company has spread many statements on having discovered huge natural gas reserves. We know that trading in shares at stock exchanges is a very sensitive process and any statement and event related to the company activities make huge influence on the price of shares.
In this specific situation, the interconnection between the company statements and change in prices at exchanges is evident. Similar statements often bring quite positive results. For example, after the last statement by Frontera, the company shares increased by 28% in price at the London Stock Exchange. Frontera applied the same method in December 2015, when the company shares increased by 18% in prices, after the company released a statement on achieved progress in mining works in the Kakheti field.
There are many similar cases and we can say that this company follows this strategic vision and line to increase the prices of its shares on the exchange markets. All other dishonest companies apply the same mechanism for growing their share prices.
It should be also noted that the Georgian Oil and Gas Corporation (GOGC) has even used this against Frontera. Namely, the government requested the company to submit a report on natural gas reserves, while Frontera rejected to submit these documents.
As a result, the state imposed a fine on the company. Therefore, doubts that Frontera employs unacceptable rules of game, is grounded,” AYFB analyst Andria Gvidiani said.