Frontera Energy (FEC) Q2 2024 earnings summary

Executive summary

• Q2 2024 production increased 5% quarter-over-quarter to 39,912 boe/d, with heavy crude up 6% due to water handling improvements and new facilities.

• Operating EBITDA reached $110.3M, cash from operations was $150M, and income from operations was $45.2M, but net loss was $2.8M due to tax and finance expenses.

• Entered a 2-year water treatment contract with Ecopetrol, started Reficar connection construction, and announced a joint venture for LPG storage with Gasco.

• Declared a quarterly dividend of CAD 0.0625 per share and announced a $30M substantial issuer bid, with over $51M in capital returns to shareholders YTD.

• Strategic reviews of the Corentyne block in Guyana and Colombian infrastructure business are ongoing.

Financial highlights

• Net sales were $209M, up from $194.5M in Q1 2024; net loss of $2.8M, improved from Q1 but down from Q2 2023.

• Operating EBITDA was $110.3M, up from $97.2M in Q1; cash flow from operations was $150M.

• Total cash position as of June 30, 2024, was $215M, including $181M unrestricted cash.

• Received a $90M tax refund related to 2023, boosting liquidity.

• Capital expenditures for the quarter were $80M, mainly for drilling and infrastructure.

Outlook and guidance

• On track to achieve 2024 capital, production, and EBITDA guidance despite inflationary pressures.

• Production in June and July averaged 40,600 boe/d, supporting full-year targets.

• Reficar connection expected operational by year-end 2024, potentially doubling port liquid handling capacity.

• SAARA water treatment plant targeting 250,000 bwpd by year-end.

• Strategic review of Colombian infrastructure and Guyana JV ongoing, with potential for asset spin-off or sale.