Recorded an Income from Operations of $45.2 million and a Net Loss of $2.8 million Generated Operating EBITDA of $110.3 Million and Cash Provided by Operating Activities of $149.8 Million Delivered Average Daily Production of 39,912 Boe/d in Q2, Up 5% From the Prior Quarter, Including Average Daily Production of Approximately 40,600 Boe/d in June and July Generated Quarterly Adjusted Infrastructure EBITDA of $27.8 Million and Segment Income of $14.6 Million Began Construction of Strategic Reficar Connection, Expected to Become Operational in December 2024 Signed a 2-year Water Treatment Collaboration Agreement with Ecopetrol for the Quifa Block Via the SAARA Water Treatment Facility Entered Into Collaboration Agreement Between Puerto Bahia and GASCO to Pursue LPG Project in Cartagena, Colombia Declared Quarterly Dividend of C$0.0625 Per Share, or $3.9 Million in Aggregate, Payable on or around October 16, 2024 Announced Intention to Commence a $30 million Substantial Issuer Bid CALGARY, AB, Aug. 7, 2024 /CNW/ - Frontera Energy Corporation (TSX:FEC) ("Frontera" or the "Company") today reported financial and operational results for the second quarter ended June 30, 2024. All financial amounts in this news release are in United States dollars, unless otherwise stated. Gabriel de Alba, Chairman of the Board of Directors, commented: "The Company continues to execute on its strategic priorities supporting the long-term growth and sustainability of its businesses. During the quarter, the Company finalized a 2-year agreement with Ecopetrol to treat and dispose water from the Quifa Block in its SAARA facility during a stabilization period of the plant, and today announced that we have broken ground on the construction of the connection project between Sociedad Portuaria Puerto Bahia S.A. ("Puerto Bahia") and Refineria de Cartagena S.A.S ("Reficar"), which the Company expects will become operational in December 2024. Following the end of the quarter, the Company also announced it executed an agreement with a leading Latin America energy provider, GASCO, that seeks to develop the lowest cost, liquefied petroleum gas ("LPG") import facilities for Colombia at Puerto Bahia. Frontera also continues to take actions to unlock value for its stakeholders and remains committed to these efforts for the remainder of 2024 and beyond, including the ongoing strategic alternatives review processes. In addition to the quarterly dividend, I am pleased to announce the Company´s intention to commence a Substantial Issuer Bid ("the SIB") to purchase $30 million of the Company's outstanding shares, highlighting the strong financial results of the first half of 2024. So far this year, considering the proposed SIB, the Company is poised to return over $51 million of capital to our stakeholders, including $11.7 million in declared dividends, $6.7 million of common share repurchases and $3.5 million in buybacks of its 2028 unsecured notes." Orlando Cabrales, Chief Executive Officer (CEO), Frontera, commented: "Frontera's second quarter production and financial results build on our momentum from the first quarter and were in-line with our expectations. Operationally, the Company generated $110.3 million in quarterly Operating EBITDA, produced $27.8 million of Adjusted Infrastructure EBITDA, and finished the quarter with a total cash balance of $215.1 million. Production increased by approximately 5% quarter over quarter, mainly driven by increased water disposal capacity in the CPE-6 and Quifa blocks, well interventions in the Sabanero block, expansion of gas compression facilities in the VIM-1 block, and the completion of two wells at the Perico block in Ecuador. On the exploration side, with all pre-drill activities completed, we now expect to spud the high impact Hidra-1 prospect on the VIM-1 block in the third quarter of 2024. Following recent successes in Ecuador in the Perico block, the first (Espejo Sur B3) of two wells in Espejo has been completed showing initial gross production of 500bopd, spud of the second well (Espejo Norte A-1) took place at the end of July and drilling operations are on-going. Despite some inflationary pressure on our costs, we remain on track to achieve our 2024 Capital, Production and EBITDA Guidance. We have increased production during the quarter, and in June and July, averaged production was approximately 40,600 barrels per day. In our infrastructure business, ODL paid a first installment of dividend and return of capital of $31 million in April, approximately 50% of the total of $62.8 million expected for 2024. Operationally, ODL continues to maintain strong operating and financial performance with transported volumes increasing about 1% q-o-q and EBITDA reaching $68 million for the quarter. Puerto Bahia continues to move forward with its strategic agenda, breaking ground in the construction of the Reficar connection and achieving an important milestone with the start of horizontal directional drilling in the Canal del Dique in July, as well as announcing the GASCO LPG transaction. During the quarter, we also started-up and continue stabilizing our SAARA water treatment plant with a goal of reaching 250,000 barrels of water treated per day by the end of the year. During the month of June, the plant realized its first gross revenues associated to the water treatment collaboration agreement with the Quifa Block. In our Guyana exploration business, the Company and its joint venture partner continues to engage in regular, constructive and collaborative conversations with the Government of Guyana. The Joint Venture, with support from investment bank and capital markets experts Houlihan Lokey, continues to actively pursue strategic options to unlock the potential of the Corentyne block." Second Quarter 2024 Operational and Financial Summary: Q2 2024 Q1 2024 Q2 2023 Operational Results Heavy crude oil production (1) (bbl/d) 24,839 23,398 24,051 Light and medium crude oil production (1) (bbl/d) 12,583 12,580 15,188 Total crude oil production (bbl/d) 37,422 35,978 39,239 Conventional natural gas production (1) (mcf/d) 4,019 3,283 5,626 Natural gas liquids production (1) (boe/d) 1,785 1,639 1,823 Total production (2) (boe/d) (3) 39,912 38,193 42,049 Inventory Balance Colombia (bbl) 758,794 683,335 881,758 Peru (bbl) 480,200 480,200 480,200 Ecuador (bbl) 80,195 115,228 72,550 Total Inventory (bbl) 1,319,189 1,278,763 1,434,508 Brent price Reference ($/bbl) 85.03 81.76 77.73 Produced crude oil and gas sales (4) ($/boe) 78.31 76.10 69.96 Purchased crude net margin (4) ($/boe) (2.13) (2.39) (2.05) Premiums paid on oil price risk management contracts (5) ($/boe) (1.32) (1.27) (0.80) Royalties (5) ($/boe) (2.01) (1.64) (3.02) Net sales realized price (4) ($/boe) 72.85 70.80 64.09 Production costs (excluding energy cost), net of realized FX hedge impact (4) ($/boe) (10.79) (10.21) (8.45) Energy costs, net of realized FX hedge impact (4) ($/boe) (4.74) (5.29) (3.94) Transportation costs, net of realized FX hedge impact (4) ($/boe) (10.92) (11.33) (10.89) Operating netback per boe (4) ($/boe) 46.40 43.97 40.81 Financial Results Purchased Crude oil and gas sales ($M) 224,646 209,043 227,923 Purchased crude net margin ($M) (6,118) (6,574) (6,705) Premiums paid on oil price risk management contracts ($M) (3,796) (3,489) (2,600) Royalties ($M) (5,774) (4,506) (9,837) Net sales (6) ($M) 208,958 194,474 208,781 Net (loss) income (7) ($M) (2,846) (8,503) 80,207 Per share – basic ($) (0.03) (0.10) 0.94 Per share – diluted ($) (0.03) (0.10) 0.92 General and administrative ($M) 12,928 13,556 12,422 Outstanding Common Shares Number of shares 84,253,816 84,693,416 85,188,573 Operating EBITDA (6) ($M) 110,321 97,248 116,461 Cash provided by operating activities ($M) 149,787 65,616 183,560 Capital expenditures (6) ($M) 80,198 69,381 154,860 Cash and cash equivalents - unrestricted ($M) 180,659 154,907 180,294 Restricted cash short and long-term (8) ($M) 34,419 27,058 33,485 Total cash (8) ($M) 215,078 181,965 213,779 Total debt and lease liabilities (8) ($M) 523,994 537,151 532,273 Consolidated total indebtedness (Excl. Unrestricted Subsidiaries) (9) ($M) 426,004 429,556 415,395 Net Debt (Excluding Unrestricted Subsidiaries) (9) ($M) 283,651 305,821 286,675 (1) References to heavy crude oil, light and medium crude oil combined, conventional natural gas and natural gas liquids in the above table and elsewhere in the press release refer to the heavy crude oil, light crude oil and medium crude oil combined, conventional natural gas and natural gas liquids, respectively, product types as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. (2) Represents W.I. production before royalties. Refer to the "Further Disclosures" section on page 35 of the Company's management's discussion and analysis the three months ended June 30, 2024 ("MD&A"). (3) Boe has been expressed using the 5.7 to 1 Mcf/bbl conversion standard required by the Colombian Ministry of Mines & Energy. Refer to the "Further Disclosures - Boe Conversion" section on page 35 of the MD&A. (4) Non-IFRS ratio (equivalent to a "non-GAAP ratio", as defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure ("NI 52-112"). Refer to the "Non-IFRS and Other Financial Measures'' section on page 22 of the MD&A. (5) Supplementary financial measure (as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section on page 22 of the MD&A. (6) Non-IFRS financial measure (equivalent to a "non-GAAP financial measure", as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section on page 22 of the MD&A. (7) Net (loss) income attributable to equity holders of the Company. (8) Capital management measure (as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section on page 22 of the MD&A. (9) "Unrestricted Subsidiaries" include CGX Energy Inc, listed on the TSX Venture Exchange under the trading symbol "OYL", Frontera ODL Holding Corp., including its subsidiary Pipeline Investment Ltd. ("PIL"), Frontera BIC Holding Ltd. and Frontera Bahía Holding Ltd. ("Frontera Bahia"), including Puerto Bahia. On April 11, 2023, Frontera Energy Guyana Holding Ltd. and Frontera Energy Guyana Corp. were designated as unrestricted subsidiaries. Refer to the "Liquidity and Capital Resources" section on page 28 of the MD&A. Second Quarter 2024 Operational and Financial Results: The Company recorded a net loss of $2.8 million or $0.03/share in the second quarter of 2024, compared with net loss of $8.5 million or $0.10/share in the prior quarter and net income of $80.2 million or $0.94/share in the second quarter of 2023. The Company's second quarter loss was mainly a result of income tax expense of $32.7 million (including $31.4 million of deferred income tax expenses), finance expenses of $17.4 million, foreign exchange losses of $7.5 million and $3.6 million related to loss on risk management contracts, partially offset by an income from operations of $45.2 million, and $13.4 million from share of income from associates. Production averaged 39,912 boe/d in the second quarter of 2024, up 5% compared to 38,193 boe/d in the prior quarter and 42,049 boe/d in the second quarter of 2023. Q2 2024 Q1 2024 Q2 2023 Heavy crude oil production (bbl/d) 24,839 23,398 24,051 Light and medium crude oil production (bbl/d) 12,583 12,580 15,188 Conventional natural gas production (mcf/d) 4,019 3,283 5,626 Natural gas liquids production(boe/d) 1,785 1,639 1,823 Total production 39,912 38,193 42,049 Heavy crude oil production increased approximately 6% quarter-over-quarter mainly due to increased water disposal capacity from a new injector well in the Quifa block, the start-up of the SAARA plant during the month of May, increased water handling capacity in CPE-6 and additional activities in the Sabanero block. Conventional natural gas and natural gas liquids increased 22% and 9% quarter over quarter respectively due to increased production at the La Belleza field in connection with the compression facilities expansion and gas reinjection project. Light and medium crude oil production was flat compared to the prior quarter benefited by an increase in Ecuador production from the Perico Norte 6 and Perico Centro 2 coming online offset by natural declines in the Colombian light and medium crude oil fields. Operating EBITDA was $110.3 million in the second quarter of 2024 compared with $97.2 million in the prior quarter and $116.5 million in the second quarter of 2023. The increase in Operating EBITDA compared to the prior quarter was mainly due to higher Brent prices and oil differentials, partially offset by higher production cost (excluding energy) net of realized FX hedging impacts. Cash provided by operating activities was $149.8 million in the second quarter 2024, compared with $65.6 million in the prior quarter and $183.6 in the second quarter of 2023. During the quarter, the Company received $31.3 million in dividends and return of capital payments from its investment in the Oleoducto de los Llanos Orientales ("ODL"). The Company also invested $80.2 million in capital expenditures, $2.8 million in share buybacks through its normal course issuer bid program ("NCIB") and repurchased $2 million of its senior unsecured notes due in 2028 (the "2028 Unsecured Notes") for a cash consideration of $1.6 million. The Company reported a total cash position of $215.1 million at June 30, 2024, compared to $182.0 million at March 31, 2024 and $213.8 million at June 30, 2023. The Company's total cash position, as of June 30, 2024, includes the benefit of $41.8 million in prepayments received from costumers, which are expected to be settled during the third quarter of 2024. Following the end of the quarter, the Company received approximately $90 million in tax refund proceeds associated to the 2023 income tax return. As at June 30, 2024, the Company had a total crude oil inventory balance of 1,319,189 bbls compared to 1,278,763 bbls at March 31, 2024. As of June 30, 2024, the Company had a total inventory balance in Colombia of 758,794 barrels, including 405,789 crude oil barrels and 353,004 barrels of diluent and others. This compared to 683,335 as of March 31, 2024, and 881,758 barrels as at June 30, 2023. Capital expenditures were approximately $80.2 million in the second quarter of 2024, compared with 69.4 million in the prior quarter and $154.9 million in the second quarter of 2023. During the second quarter, the Company drilled 30 development wells at its Quifa SW, Cajua, CPE-6 and Perico fields. The Company's net sales realized price was $72.85/boe in the second quarter of 2024, compared to $70.80/boe in the prior quarter and $64.09/boe in the second quarter of 2023. The increase in the Company's net sales realized price quarter over quarter was mainly driven by higher Brent benchmark oil price and better oil price differentials. The Company's operating netback was $46.40/boe in the second quarter of 2024, compared with $43.97/boe in the prior quarter and $40.81/boe in the second quarter of 2023.The increase was a result of higher net sales realized prices, lower transportation cost net of FX realized hedge impact, partially offset by higher production cost (excluding energy cost), net of realized FX hedge impact. Production costs (excluding energy cost), net of realized FX hedge impact, averaged $10.79/boe in the second quarter of 2024, compared with $10.21/boe in the prior quarter and $8.45/boe in the second quarter of 2023. The increase in production costs during the quarter was driven mainly by higher well services activity. Energy costs, net of realized FX hedging impacts, averaged $4.74/boe in the second quarter of 2024, compared to $5.29/boe in the prior quarter and up from $3.94/boe in the second quarter of 2023. The decrease during the quarter was due to better electricity prices in Colombia benefiting from the end of the dry season partially offset by higher energy use during the quarter. Transportation costs, net of realized FX hedging impacts averaged $10.92/boe in the second quarter of 2024, compared with $11.33/boe in the prior quarter and up from $10.89/boe in the second quarter of 2023. The decrease in transportation costs during the quarter was primarily attributed to an increase in local sales volumes and more efficient transportation economics and routing for some of our heavy crude production. ODL volumes transported were 249,196 bbl/d during the second quarter of 2024, compared to 246,042 in the first quarter of 2024, mainly due to the increase in crude oil volumes received and transported from the Caño Sur and Llanos 34 blocks. Total Puerto Bahia liquids volumes were 61,798 bbl/d during the second quarter compared to 53,360 bbl/d the first quarter of 2024. The increase in volumes during the quarter was mainly due improved navigational conditions in the Magdalena River leading to normalized liquid volumes. Puerto Bahia revenues were $11.2 million during the second quarter 2024, compared to $9.7 million to the first quarter of 2024. For the general cargo terminal sales increased to $3.2 million in the second quarter versus $2.6 million in the previous quarter. Adjusted Infrastructure EBITDA in the second quarter of 2024 was $27.8 million, compared to $25.7 million in the first quarter. The increase was mainly due to improved performance at Puerto Bahia driven by higher liquids volumes and cost optimizations, and greater sales volumes and ...