(Frontera, 7.Mar.2024) — Frontera Energy Corporation (TSX: FEC) reported financial and operational results for the fourth quarter and year ended 31 Dec. 2023, and announced the results of its annual independent reserves assessment conducted by DeGolyer and MacNaughton Corp (D&M). All financial amounts in this news release and the company’s financial disclosures are in United States dollars, unless otherwise stated. All of the company’s booked reserves for the year ended 31 Dec. 2023, are located in Colombia and Ecuador.
Highlights:
— Recorded Full Year Net Income of $193.5mn, Including $92mn in Q4’23
— Delivered Full Year Average Daily Production of 40,919 Boe/d
— Generated Full Year Operating EBITDA of $467.2mn
— Generated Full Year Adjusted Infrastructure EBITDA of $119.8mn and Segment Income of $69.3mn
— Declared Quarterly Dividend of C$0.0625 Per Share, Or $3.9
— Million in Aggregate, Payable on or around 16 Apr. 2024
— Recorded 164.1 Million Boe 2P Gross Reserves and 108.7 Million 1P Gross Reserves
— $3.5 Billion 2P Net Present Value Before Tax Discounted At 10% As At December 31, 2023
— 7.3 Year 1P and 11.0 Year 2P Gross Reserves Life Index
— 514-628 Mmboe PMean Unrisked Gross Prospective Resources
— Estimated in Maastrichtian Horizons in the Northern Portion of the Corentyne Block
— Commissioned First Solar Farm, Offset 50% of Emissions Through Carbon Credits, and Preserved and Restored 1,681 New Hectares in Casanare and Meta, Colombia
Gabriel de Alba, Chairman of the Board of Directors, commented:
“During 2023, Frontera continued to take concrete steps to deliver significant value to shareholders. The company delivered EBITDA of $467mn, at the higher end of guidance for 2023, closing the year with a strong balance sheet including $190mn cash position, and having a fully funded plan for 2024.
Our significant Infrastructure business generated Adjusted Infrastructure EBITDA of approximately $120mn and keeps building momentum following the announcement of the connection agreement between Refineria de Cartagena S.A.S (“Reficar”) and Puerto Bahia’s liquids terminal. On its Guyana exploration business, Frontera, and its JV partner CGX Energy Inc. with support from Houlihan Lokey, is pursuing a review of strategic options, including a farm down of its interest in Offshore Guyana, following the announcement of a second discovery in the Corentyne block. Lastly, the company during the 4th quarter of 2023 renewed its normal course issuer bid (“NCIB”) program and repurchased approximately 741,700 Common Shares for cancellation, returning $5.9 million to shareholders in 2023.
Frontera recently announced the initiation of a new quarterly dividend and remains committed to enhancing shareholder returns. The company will continue to consider future shareholder value enhancement initiatives in 2024 and beyond, including potential additional dividends, distributions, or bond buybacks, based on the overall results of our businesses and strategic goals.”
Orlando Cabrales, Chief Executive Officer (CEO), Frontera, commented:
“Frontera successfully achieved its strategic, capital and production targets across the Company’s three core businesses in 2023:
Through our Colombia and Ecuador Upstream onshore business, we delivered average daily production of 40,919 boe/d, with an increase to our heavy crude oil production of 9% year over year, while maintaining our production costs, transportation costs and capital expenditures within guidance.
Our commitment to sustained production and value over volumes continues to be supported by our upstream Colombia and Ecuador reserves which closed the year with 108.7 million and 164.1 million boe in 1P and 2P gross reserves, respectively. Achieved a three-year average gross Reserves Replacement Ratio of 79% for 2P Reserves and 104% for 1P reserves, while maintaining a Reserve Life index of 7.3 Years for 1P reserves and 11.0 Years for 2P reserves, and a significant 2P net present value of $3.5 billion before tax discounted at 10%.
In our standalone and growing infrastructure business, we generated full year Adjusted Infrastructure EBITDA of approximately $120mn. ODL transported over 243,000 bbl/day, generated $285mn in full year EBITDA and distributed over $135mn to its shareholders. Proportional to its 35% interest, the company received $47mn in capital distributions and Frontera’s Adjusted Infrastructure EBITDA benefited from $100mn associated with ODL’s EBITDA. Puerto Bahia generated approximately $20mn in operating EBITDA, reached a connection agreement, started pre-construction activities with Reficar, and successfully refinanced its existing legacy project finance debt with room to grow.
In our potentially transformational Guyana exploration business, as announced in the 11 Dec. 2023 news release, we successfully completed the second well of our two-well program, where we believe that approximately 514-628 MMboe PMean unrisked gross prospective resources are present in multiple Maastrichtian horizons in the northern portion of the Corentyne block.
Frontera is committed to sustainability and achieved 108% of its 2023 ESG goals. We started the operation of our first solar farm named “Ikotia” in Dec. which we expect will reduce CPE-6 power consumption from the grid and offset 50% of the block’s scope 1 emissions.
As we turn now to 2024, we remain focused on executing our recently announced 2024 plan and continuing to deliver sustainable value-focused production, strong operational and financial results, and driving shareholder returns.”
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