CALGARY, AB (By Frontera, 13.Aug.2025, Words: 2,150) — Frontera Energy Corporation reported financial and operational results for the second quarter ended June 30, 2025.
Gabriel de Alba, Chairman of the Board of Directors, commented:
“Despite a volatile global macro-economic and oil market backdrop, Frontera continued to execute on its strategic goals and priorities across its businesses in the second quarter delivering strong operating results and completing significant value-generating initiatives for its shareholders and bondholders. The Company generated $76.1 million in Operating EBITDA, produced $27.1 million of Adjusted Infrastructure EBITDA, and maintained a strong balance sheet, finishing the quarter with a total cash balance of $197.5 million while reducing its upstream net debt by 30%.
Following the expiry of the 90‑day consultation and negotiation period arising from the Notice of Intent -and in view of the uncertainty introduced by the Government of Guyana—we have recognized an impairment of over $430 million related to our investment in the Corentyne block, in accordance with prudent accounting standards. The Joint Venture remains firmly of the view that its interests in, and the license for, the Corentyne block remain in place and in good standing and that the Petroleum Agreement has not been terminated. We remain committed to working with the Government of Guyana to resolve these issues amicably, while preparing to assert and protect our legal and contractual rights through all available legal remedies, as necessary.
The Company prioritized returning capital to all investors via its successful $80 million tender offer and consent solicitation of its senior unsecured notes due in 2028 and, subsequent to the quarter, the completion of a C$91 million substantial issuer bid, the largest in the Company’s history.
The Company also declared a quarterly dividend of C$0.0625 per share, or approximately $3.5 million in aggregate, and initiated a non-course issuer bid program.
Over the last twelve-months, Frontera has returned over $144 million to shareholders via dividends and share repurchases while also reducing the outstanding aggregate principal amount of its senior unsecured notes by over 20%. These efforts underscore the success of the Company’s return of capital focus to its stakeholders.
The Company will continue to consider similar investor-focused initiatives in 2025 and beyond, including additional dividends, distributions, and share or bond buybacks, based on the overall results of the businesses, oil prices and cash flow generation. Additionally, the Company will consider all options to enhance the value of its common shares, and in so doing may consider other strategic initiatives or transactions.”
Orlando Cabrales, Chief Executive Officer (CEO), Frontera, commented:
“Frontera’s second quarter financial and operating results demonstrate the decisive steps we are taking to deliver stakeholder value, maintain financial and operational flexibility, and reduce leverage over the long-term. We increased our total production quarter over quarter driven by increased processing capacity at SAARA, investments in new flow lines in our heavy oil fields, a successful well intervention program within our light and medium blocks and new commercialized volumes of natural gas production from the VIM-1 block.
During the quarter, we continued to prioritize operational improvements, reducing capital spending and cost and process efficiencies across our business, delivering a 10.3% decrease in production costs quarter-over-quarter driven by fewer well interventions and the implementation of new production technologies. We also reduced our transportation costs by 5.7% quarter-over-quarter driven by higher domestic wellhead sales.
Our standalone and growing Colombia infrastructure business, which includes the Company’s interest in ODL, generated an Adjusted Infrastructure EBITDA of $27.1 million. At Puerto Bahia, the Reficar connection was completed by the end of the quarter and now the efforts shift to the first transported volumes which are expected during the third quarter of 2025. Strategic investments in the port, including the LPG JV with Empresas Gasco, are progressing on schedule. The port is also pursuing additional investment opportunities that leverage its facilities and infrastructure for sustainable long-term growth.
Consistent with our strategy, following the end of the quarter, the Company announced it had reached an agreement to divest its interest in the Company’s non-core Perico and Espejo fields in Ecuador. This transaction is consistent with our strategy of maximizing value over volumes and supports a stronger focus on our higher-impact Colombian upstream operations.
As a result, we are adjusting our 2025 production guidance to account for the impact of Ecuador sale to 39,500 to 41,000 boed. In light of the current oil price environment, we are also adjusting our capital expenditures guidance downwards, by approximately $20 million, reducing development facilities capex to $45 – 65 million and exploration capex to $25 – 35 million, reflecting our disciplined approach to capital spending and ability to identify ongoing operational efficiencies. Additionally, we are providing Operating EBITDA Guidance at a $70/bbl Brent Price with a target of between $320 – $360 million and revising our Adjusted Infrastructure EBITDA Guidance to between $110 – 125 million.”
Colombia & Ecuador Upstream Onshore
Colombia
During the second quarter of 2025, Frontera produced 39,778 boe/d from its Colombian operations (consisting of 27,535 bbl/d of heavy crude oil, 9,850 bbl/d of light and medium crude oil, 3,118 mcf/d of conventional natural gas and 1,846 boe/d of natural gas liquids).
In the second quarter of 2025, the Company drilled 26 development wells mainly at the Quifa and CPE-6 blocks and completed well interventions at 22 others.
Currently, the Company has 1 drilling rig and 2 well intervention rigs active at its Quifa and CPE-6 blocks in Colombia.
Quifa Block: Quifa SW and Cajua
At Quifa, second quarter 2025 production averaged 17,576 bbl/d of heavy crude oil (including both Quifa and Cajua). The Company invested in facility expansion and the installation of new flow lines in the Cajua field, in the Quifa block to support new well production and the SAARA connection.
In the second quarter 2025, the Company handled an average of approximately 1.78 million barrels of water per day in Quifa including SAARA.
CPE-6
At CPE-6, second quarter 2025 production averaged approximately 7,771 bbl/d of heavy crude oil, decreasing from 8,056 bbl/d during the first quarter of 2025.
During the second quarter 2025, the Company invested in the expansion of crude oil storage capacity and the implementation of new field production technologies.
The Company handled an average of approximately 327 thousand barrels of water per day in CPE-6 in the second quarter of 2025. The Company’s current water handling capacity in CPE-6 is approximately 370 thousand barrels of water per day.
Other Colombia Developments
At Guatiquia, production during the second quarter 2025 averaged 5,385 bbl/d of light and medium crude compared with 5,119 bbl/d in the first quarter 2025. During the quarter the Company performed a sidetrack in its Coralillo 3 well.
In the Cubiro block production averaged 1,057 bbl/d of light and medium crude oil in the second quarter of 2025 compared with 1,213 bbl/d in the first quarter 2025.
At VIM-1 (Frontera 50% W.I., non-operator), production averaged 1,960 boe/d of light and medium crude oil in the second quarter of 2025 compared to 1,840 boe/d of light and medium crude oil in the first quarter 2025.
At the Sabanero block, production averaged 2,189 boe/d of heavy oil crude production in the second quarter of 2025 compared to 2,346 boe/d in the first quarter 2025.
Colombia Exploration Assets
At VIM-1, following engagement efforts with authorities and communities, the joint venture operating the VIM-1 block (Frontera 50% W.I., non-operator) has shifted its focus from Hidra-1 to the Guapo-1 exploratory well. By the second quarter 2025, all necessary designs and permits were secured for roadwork and site preparation for Guapo-1, with drilling and completion expected to occur in the second half of 2025.
At Llanos 119, the Company is awaiting the decision of the Agencia Nacional de Hidrocarburos (ANH) on transferring exploration commitments to VIM-46 for a 3D seismic survey. Meanwhile, pre-seismic and pre-drilling social and environmental studies are underway at Llanos-99 and VIM-46.
Ecuador
In Ecuador, second quarter 2025 production averaged approximately 1,277 bbl/d of light and medium crude oil compared to 1,467 bbl/d in the prior quarter.
At the Espejo block (Frontera holds a 50% W.I. and is a non-operator), long-term tests continued at the Espejo Sur-B3 well with production of 330 bbl/d gross and a water cut of 78%.
Subsequent to the quarter, the Company agreed to divest its 50% interest in the Perico and Espejo blocks in Ecuador. The total cash consideration to Frontera for the blocks is $7.8 million, subject to working capital and other customary adjustments as of the effective date of January 1, 2025. The agreement includes an additional contingent consideration of $750,000, payable to Frontera upon the Perico block achieving cumulative gross production of two million barrels as from January 1, 2025.
Closing of the transaction is subject to satisfaction of customary closing conditions, including the receipt of regulatory approvals for closing and operations takeover from the Ministry of Energy of Ecuador, and is expected to occur by the second quarter of 2026.
Infrastructure Colombia
Frontera’s Infrastructure Colombia Segment includes the Company’s 35% equity interest in the ODL pipeline through Frontera’s wholly owned subsidiary, FPI and the Company’s 99.97% interest in Puerto Bahia. Beginning in 2024, the Infrastructure Colombia Segment also includes the Company’s reverse osmosis water treatment facility (SAARA) and its palm oil plantation (ProAgrollanos).
Frontera processed 119,409 barrels of water per day at is SAARA reverse osmosis water-treatment facility during the quarter and remains focused on reaching its goal of processing 250,000 barrels of water per day.
On the Puerto Bahia side, the Reficar connection’s construction was completed by the end of the quarter and, the Company’s efforts shift to the first transported volumes, which are expected during the third quarter of 2025. The Company is progressing with its growth plans, including the LPG joint venture with Empresas Gasco.
Guyana Exploration
On March 26, 2025, the Company and its subsidiaries Frontera Petroleum International Holding B.V. and Frontera Energy Guyana Holding Ltd. (the “Investors“) sent a Notice of Intent to the Government of Guyana (the “GoG“). In this Notice of Intent, the Investors alleged breaches of the United Kingdom – Guyana Bilateral Investment Treaty and the Guyana Investment Act by the GoG. The communication initiated a 90-day period for consultations and negotiations between the parties to resolve the dispute amicably. After the 90-day period, no mutually, acceptable solution has been produced. As informed in previous quarters, Frontera Energy Guyana Corp. (“Frontera Guyana“) and CGX Resources Inc. (“CGX Resources” and together with Frontera Guyana, the “Joint Venture“) and its stakeholders are prepared to assert their legal rights.
On July 23, 2025, the GoG, through its legal counsel, responded to the Investors, rejecting their claims regarding the Corentyne block license. The GoG reaffirmed its view that the Joint Venture’s interest expired on June 28, 2024, but noted that it may consider a final meeting with the Investors, on a without prejudice basis, in October 2025, and the Joint Venture would be informed as to whether such a meeting will occur in September 2025
The Joint Venture remains firmly of the view that its interests in, and the license for, the Corentyne block remain in place and in good standing and that the Petroleum Agreement has not been terminated. Although the 90-day consultation and negotiation period derived from the Notice of Intent has now expired, the Joint Venture and its stakeholders continue to invite the GoG to amicably resolve the issues affecting the Joint Venture’s investments in the Corentyne block. Should the parties not reach a mutually agreeable solution, the Joint Venture and its stakeholders are prepared to assert their legal rights.
The Company evaluated the Corentyne E&E asset’s recoverability given the GoG’s conduct and communications, and its unwillingness to recognize the Joint Venture’s rights during the consultation periods, which have since expired. Although all contractual requirements of the Company have been met and an external legal assessment determined that the Company’s interests in the licenses and agreements for the Corentyne block remain valid, the GoG’s positions mentioned above have restricted the Company’s ability to develop activities under those licenses and agreements. This situation has led to uncertainty regarding the asset’s future development and constituted an impairment indicator. Consequently, the Company recognized an impairment of $432.2 million in its income statement, and the Corentyne E&E asset’s carrying value as of June 30, 2025 is $Nil (December 31, 2024 $431.9 million).
The Joint Venture jointly hold 100% working interest in the Corentyne block, located offshore Guyana. Frontera Guyana and CGX Resources have agreed that their respective participating interests are 72.52% and 27.48%, which includes a 4.52% interest which CGX Resources agreed to assign to Frontera Guyana in 2023. The assignment of this 4.52% participating interest remains subject to the approval of the Government of Guyana, but is believed to be enforceable between Frontera Guyana and CGX Resources.
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