CALGARY, AB, Feb. 15, 2024 /PRNewswire/ – Frontera Energy Corporation (TSX:FEC) (“Frontera” or the “Company”) today announced its full year 2024 capital and production guidance, provides an update on its estimated fourth quarter 2023 and full year average daily production and provides and update on shareholder value initiatives, including the initiation of a quarterly dividend of CAD $0.0625 per share payable quarterly, following the release of year-end 2023 results. All values in this news release and the Company’s financial disclosures are in United States dollars, unless otherwise noted.
Anticipated $400–$450 million in consolidated Operating EBITDA at $80/bbl average Brent while investing $272-335 million in total consolidated capital expenditures, a 32% decrease at the midpoint compared to 2023.
Deploying $230–$280 million, including $35–$45 million exploration investments, in the Company’s core Colombia and Ecuador Upstream business, a 10% decrease at the midpoint compared to 2023, to deliver 40,000-42,000 boe/d full year production for 2024.
Investing $35–$45 million to drill three exploration wells including the high-impact Hydra-1 well in the VIM-1 block in Colombia and two wells in the Espejo Block in Ecuador and additional seismic and pre-drilling activities in Colombia.
Investing $40–$50 million in the Company’s standalone and growing Colombia Infrastructure business mainly to build the 6.8-kilometre, 18-inch pipeline connection between the Reficar Refinery and the Company’s Puerto Bahia’s Liquids Terminal and to commission the SAARA Reverse Osmosis Water Treatment Facility at Quifa.
Estimating total production costs, including both production and energy costs for 2024 to average $14.25 – $15.75, primarily driven by El Niño-related higher energy costs. Transportation costs for 2024 are forecasted to average $11.00 – $12.00 per boe.
Hedging approximately 40% of the Company’s estimated production after royalties at an average Brent price of $73.34 through June 2024, providing revenue visibility and reducing exposure to price volatility.
Initiating a quarterly dividend of CAD $0.0625 per share payable quarterly, following the release of year-end 2023 results, subject to regulatory approval, and repurchasing up to 3.95 million Common Shares for cancellation through the Company’s recently announced Normal Course Issuer Bid (NCIB).
Considering future additional shareholder value enhancing initiatives, including additional dividends, distributions, or bond buybacks, based upon overall results of our businesses and the Company’s strategic goals.
“In 2023, we delivered estimated average daily production of approximately 40,919 boe/d, in line with our guidance range, while deploying significant capital to successfully advance our exciting offshore Guyana exploration program.
Guided by our strategy of value over volumes and our track record of improving capital efficiency, in 2024 we will invest $272 to $335 million in total capital, a 32% reduction compared to the midpoint of our 2023 guidance to generate $400 to $450 million in consolidated Operating EBITDA at $80/bbl average Brent prices while sustaining an estimated 40,000 to 42,000 boe/d full year production.
Our 2024 capital and production plan is fully funded, protected by a prudent hedging program, and leans into the most productive and profitable assets within our portfolio, capitalizing on outstanding near field opportunities at our Quifa, CPE-6 and VIM-1 producing blocks, while delivering our quickest payback barrels with sustained future growth potential. We expect that our development program, together with our exploration investments led by our potentially high-impact Hydra-1 well in the VIM-1 block in Colombia, will deliver sustainable production and strong cash flows in 2024 and beyond.
Frontera has generated approximately $1.5 billion in Operating EBITDA over the last three years with strong cash flow expected in 2024. Since 2018, we have also returned more than $305 million to shareholders via dividends and share buybacks. For 2024, the Company, subject to regulatory approval, seeks to pay a CAD $0.0625 per share quarterly dividend following the release of year-end 2023 results in addition to its ongoing NCIB program announced last year. Additionally, the Company’s strategic review process for our exciting Guyana exploration business is advancing, where a data room has been opened and management presentations are underway. At Frontera, we remain committed to unlocking the sum of our parts and driving shareholder returns.”
Guidance Metrics
Unit
2023 Guidance
2024 Full Year Guidance Frontera Consolidated
Average Daily Production (1)
boe/d
40,000 – 43,000
40,000 – 42,000
Production Costs (excl. energy costs) (2)(4)
$/boe
$12.50 – $13.50
$8.50 – $9.50
Energy Costs (2)(4)
$/boe
$5.75 – $6.25
Transportation Costs (3)(4)
$/boe
$10.50 – $11.50
$11.00 – $12.00
Operating EBITDA(5) at $80/bbl (6)
$MM
$425 – $475
$400 – $450
Upstream Operating EBITDA
$MM
$400 – $430
Infrastructure Operating EBITDA(7)
$MM
$15 – $25
Adjusted Infrastructure EBITDA(8)
$MM
$95 – $115
Development Drilling
$MM
$110 – $130
$85 – $95
Development Facilities
$MM
$75 – $85
$95 – $115
Colombia and Ecuador Development
$MM
$185 – $215
$180 – 210
Colombia and Ecuador Exploration
$MM
$50 – $60
$35 – $45
Other(9)
$MM
$25 – $30
$15 – $25
Total Colombia & Ecuador Upstream Capex
$MM
$260 – $305
$230 – $280
Colombia Infrastructure(10)
$MM
$5 – $10
$40 – $50
Guyana Exploration
$MM
$155 – $160
$2 – $5
Total Capital Expenditures (11)
$MM
$420 – $475
$272 – $335
Notes:
1
The Company’s 2024 average production guidance range does not include in-kind royalties, operational consumption, quality volumetric compensation or potential production from successful exploration activities planned in 2024.
2
Per-bbl/boe metric on a share before royalties’ basis.
3
Calculated using net production after royalties.
4
Supplementary financial measure (as defined in National Instrument 52-112 – Non-GAAP and Other Financial Measures (“NI 52-112”)). See “Advisories – Non-IFRS Financial and Other Measures”.
5
Non-IFRS financial measure (equivalent to a “non-GAAP financial measure”, as defined in NI 52-112). “Operating EBITDA” represents the operating results of the Company’s [Colombia and Ecuador upstream] business, excluding the following items: restructuring, severance and other costs, certain non-cash items and gains or losses arising from the disposal of capital assets. See “Advisories – Non-IFRS Financial and Other Measures”.
6
Current Guidance Operating EBITDA calculated at Brent $80/bbl and COP/USD exchange rate of 4,100:1.
7
Includes Puerto Bahia (including FEC-related revenues), SAARA and Proagrollanos.
8
Reported Adjusted Infrastructure EBITDA (previously referred to as Adjusted Midstream EBITDA) is a non-IFRS financial measure used to assist in measuring the operating results of the Infrastructure business, including the proportional consolidation of the 35% equity investment in the ODL pipeline.
9
Other includes Sabanero Insurance, HSEQ activities and New Technologies
10
Colombia Infrastructure includes investments related to the Reficar connection, SAARA Reverse Osmosis Water Treatment Facility and safety, maintenance activities and operational optimizations in the Port.
11
Non-IFRS financial measure (equivalent to a “non-GAAP financial measure”, as defined in NI 52-112). See “Advisories – Non-IFRS Financial and Other Measures”. Capital expenditures excludes decommissioning.
NCIB: Under the Company’s current NCIB which commenced on November 21, 2023, Frontera has repurchased 508,000 common shares for cancelation for approximately $3.0 million as of February 14, 2024. The Company is authorized to repurchase up to 3,949,454 of its common shares for cancellation, representing up to 10% of its outstanding float.
Quarterly Dividend: The Board of Directors has adopted a dividend policy to pay a dividend of CAD $0.0625 per share quarterly, following the release of year-end 2023 results. Dividend payments will be subject to quarterly review and approval by Frontera’s Board of Directors and the determination to pay such dividends will be based on, among other things, the Company’s view of prevailing and prospective macroeconomic conditions and business performance. In addition, the payment of dividends is subject to the approval of the Toronto Stock Exchange, applicable law and the provisions of the indenture governing the Company’s unsecured notes. Each dividend, if declared by the Board of Directors, is intended to be payable to shareholders of record at the close of business on the second trading day of the first calendar quarter following the date of declaration.
Frontera remains committed to unlocking value and enhancing shareholder returns and will continue to consider future shareholder value enhancement initiatives in 2024, including potential additional dividends, distributions, or bond buybacks, based on the overall results of our businesses and the Company’s strategic goals.
Frontera’s 2024 capital and production guidance is based on an average 2024 Brent price of …
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