- Recorded $16.6 million in Net Income and $26.8 million in Income from Operations
- Declared Quarterly Dividend of C$0.0625 Per Share, or $3.9 Million in Aggregate, Payable on or around January 17, 2025
- Generated $103.2 Million in Operating EBITDA and $124.1 Million in Cash Provided by Operating Activities
- Delivered Average Daily Production of 40,616 Boe/d, Up 2% From the Prior Quarter, Averaged Approximately 42,300 Boe/d of Production in October
- Targeting Q4 2024 Average Daily Production above 42,500 Boe/d
- Reficar Connection Continues Advancing, Start-Up Expected December 2024
- Starting September 1st, 2024, ODL Transportation Tariffs to increase by 7.8%
- Generated $26.1 Million Quarterly Adjusted Infrastructure EBITDA $13.1 Million and Segment Income
- Completed $30 Million Substantial Issuer Bid, Over 90% of Shareholders Participated
- Announces Intention to Commence an Additional Substantial Issuer Bid For Up to $30 million
- Intends to Renew NCIB For Another Year
Frontera Energy has reported financial and operational results for the third quarter ended September 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:
'Frontera remains focused on the execution of its strategic goals and priorities across its three business units: Upstream, Infrastructure and Guyana.
The Company's Upstream unit continues to perform according to plan, overcoming unexpected social issues during the year. The Company is gaining momentum with crude production ramping up to an average daily production for October of approximately 42,300 boe/d, and targeting fourth quarter production average daily above 42,500 boe/d.
Together with its financial advisor, Goldman Sachs, the Company continues to advance its strategic alternatives review for its standalone and growing Colombian Infrastructure business. This process is actively ongoing with a virtual data room open and discussions with interested third parties underway. The Company remains particularly excited about the long-term prospects of its port business, Puerto Bahia, and its strong pipeline of catalysts including the Reficar connection as well as the recently announced LPG import project with its JV partner, Gasco.
With respect to its Guyana assets, the Company and its joint venture partner remain committed to the potential development of the Corentyne block as supported by our recent discoveries. While we continue to remain confident about the potential of the Corentyne block, the Company is reviewing all available alternatives to safeguard its interest in the block and Guyana.
Subsequent to the quarter, S&P reaffirmed the Company's credit rating at B with a Stable Outlook, reflecting Frontera's strong credit quality and financial position, underpinned by the Company's low leverage. The Company ended this quarter with total debt of $531.2 million and a healthy cash position (including restricted cash) of $240.3 million.
So far in 2024, Frontera has delivered on its commitment to enhance shareholder returns. Subsequent to the quarter and with significant shareholder take-up, the Company successfully completed on its $30.0 million substantial issuer bid which saw over 90% of the Company's shareholders participate. More importantly, and together with the successful substantial issuer bid, the Company will have returned in excess of $53 million to its shareholders, including $11.7 million of declared and paid quarterly dividends, $3.9 million in declared quarterly dividends and repurchased $7.8 million of its common shares through its normal course issuer bid, for an estimated aggregate yield of 11%.
Consistent with the Company's shareholder value focus and following the strong third quarter results, the Company is pleased to announce its intention to commence a new substantial issuer bid (the "New SIB") to purchase up to $30 million of the Company's outstanding shares. The Company shall continue to consider future investors initiatives, including potential additional dividends, distributions, or bond buybacks, based on the overall results of the businesses, cash flow generation and the Company's strategic goals.'
Orlando Cabrales, Chief Executive Officer (CEO), Frontera, commented:
'Frontera recorded another strong quarter generating net income of $16.6 million and delivering Operating EBITDA of $103.2 million in line with our plan, despite lower average Brent prices and certain unexpected events during the quarter. We remain on track to meet our 2024 Production and EBITDA Guidance.
During the quarter, we increased our quarter-over-quarter average daily production by 2% to 40,616 boe/d led by strong performance from the Company's heavy oil assets. Our heavy oil assets performance was supported by successful drilling campaigns in both the CPE-6 and Sabanero blocks, and increased water disposal capacity in the CPE-6 block - where the Company achieved another daily production record reaching 8,810 boe/d. These gains were offset mainly by the effects of the 6-day national truckers strike and blockades.
Light and medium crude oil production increased, driven by increased production in Ecuador and well intervention activity performed during the first half of the year, which helped maintain light and medium crude production levels. Natural gas liquids production during the quarter increased following the completion and start-up of the compression facilities expansion and gas reinjection project at our VIM-1 block. Following the completion of the VIM-1 gas reinjection project, natural gas volumes produced at VIM-1 were reinjected, reducing natural gas production and sales volumes. Exploration activities for the VIM-1 block are expected to resume in early 2025 with the drilling of the Hidra-1 well following delays during 2024 associated to social issues. We continue to see additional activity on our VIM-1 block and remain excited about its prospects.
October 2024's actual average daily production totaled 42,300 boe/d.
We invested approximately $82 million in capital expenditures during the quarter primarily to drill 15 development wells at Quifa, CPE-6 and Sabanero, as well as to improve facilities and flowlines.
Additionally, as part of our continuing drive to simplify our business, Frontera and the ANH mutually agreed to terminate Caguan 5 and Caguan 6 blocks exploration contracts, due to long-standing social and security restriction in the contracted areas, reducing the Company's exploration commitments by $53 million.
In our Infrastructure business, ODL continues to deliver positive operational and financial results, generating $68 million of EBITDA for the quarter, resulting in $12 million in net distributions to Frontera during the quarter (totaling $43 million year-to-date). In Puerto Bahia, construction of the connection to the Reficar refinery is over 60% complete, and we are confident that the connection shall become operational by the end of the year. With respect to our LPG import project, working groups have been assembled and detailed engineering work is underway.
At our SAARA project, we are currently processing approximately 50,000 barrels of water per day, and expect to grow water handling capacity to 250,000 barrels by year-end, boosting heavy crude oil production at the Quifa block.
Subsequent to the quarter, Frontera was recognized by the Great Place to Work Institute for its workplace environment. This recognition is a positive reflection of the entire Frontera team and our ongoing efforts to make Frontera a great place to work.'
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Source: Frontera Energy
