If London's Alternative Investment Market (AIM) were a motion picture, it likely would carry an R rating: for mature audiences only. Not for over-the-top violence or extra skin, mind you, but because the market features high-risk and high-reward investments, and its rules are enforced by the members themselves. One company enjoying the show recently is Houston-based Frontera Resources Corp. Like many small E&P companies, Frontera relied on private capital and project financing to fuel its early growth. Formed in 1996, the company has a 25-year production-sharing agreement with the Republic of Georgia to explore, develop and produce crude oil across a 5,500-square-kilometer area in the eastern part of the country, known as Block 12. By last year, Frontera had outgrown its start-up capital sources. Public-equity markets seemed to offer better opportunities for future growth. And, the company had a good story to tell, a total of 118 million barrels of high-quality reserves, an estimated 1.4 billion barrels of additional prospective resources, processing and transportation infrastructure already in place, and significant potential economic upside. Given all that, conventional wisdom might have figured that a young, growth-oriented company like Frontera would target U.S. equity markets for its initial public offering. Conventional wisdom would have been wrong. For more on this, see the November issue of Oil and Gas Investor. For a subscription, call 713-993-9320, ext. 126.
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