Canadian oil company Frontera Energy (TSX: FEC) highlighted oil exploration progress in its second quarter report along with “positive” results from its current oil production output.
Specifically, in Colombia, the company noted that it drilled 19 development wells at its Quifa, CPE-6, and Cubiro blocks (including five wells at CPE-6 site) along with 12 production wells (including seven wells at Quifa and five wells at its Cajua location) and general “expansion and improvement” at CPE-6.
“During the quarter,” stated the company, “Frontera invested in the expansion and improvement of the development facilities in the CPE-6 block, which will double water-handling capacity to 240,000 bbls/day by the end of 2023 and support additional growth for the field.”
The Canadian company also provided details about exploratory assessments in Ecuador at the Perico and Espejo block, where it holds a 50% non-operator stake and is currently preparing environmental impact assessments as well as more testing in order to be able to acquire a production environmental license from the government.
“At the Espejo block, preliminary logging information indicated the presence of hydrocarbons in both the Pashuri-1 and Caracara-1 exploration wells and further analysis is underway. In addition, jointly with the operator, new 3D seismic survey data is being interpreted to define the location of the two remaining commitment exploration wells.”
This all comes alongside its the bigger news of the company’s recent discovery of 210 feet of hydrocarbon-bearing sands during its offshore exploration off the coast of Georgetown, Guyana, a discovery that is currently being investigated further to determine its potential as the firm works on its agreement with partner CGX regarding the building of the exploratory well and the discovery.
In Colombia, where much of the company’s current output comes from, Frontera is continuing its expansion in the country with its exploration of the Lower Magdalena Valley and Llanos Basins, as well as further investments in midstream assets and infrastructure within the country.
“In its standalone and growing Colombia midstream business, the company generated quarterly adjusted midstream EBITDA of $30.4 million USD, an increase of 8% over the prior quarter,” said Gabriel de Alba, chairman of the board of directors of Frontera Energy.
Overall, the company reported earnings (EBITDA) of $116.5 million USD this quarter — up 27% from the previous quarter — and net earnings of $80.2 million USD compared to a net loss of $11.3 million USD in the first quarter of 2023.
Crude oil production reached 39,239 barrels per day within the quarter, outpacing both the last quarter’s figures and the output reported in the second quarter last year. The firm’s total oil inventory reached 1,434,508 barrels this quarter due to the strong production of its oil fields.
Frontera’s CEO Orlando Cabrales expressed optimism over the second quarter results and cost control efforts while noting that the Canadian company was able to return much of its oil production back to operation after the road blockades that affected production in the first quarter.
“Our total cash position including restricted cash as of the second quarter increased to $214 million USD while we deployed approximately $155 million USD in capital spending, primarily to drill 19 development wells at Quifa, CPE-6 and Cubiro, improve flowlines, build a storage tank and other facilities to double water handing capacity at CPE-6, drill two exploration wells in Colombia and complete Wei-1 exploration drilling activities,” said Cabrales.
“We continue to proactively manage our inventories in Colombia, selling approximately 20% of total inventories under an improved differentials environment,” he added. “Lastly, the company remains vigilant on costs, with a stronger Colombian peso year-to-date affecting our domestic costs, we have hedged 40% of our Colombian-peso denominated cost-base to help protect our bottom line.”
Photo: Frontera Energy’s oil operations in Quifa, Colombia. (Credit: Frontera Energy)