Frontera Energy Output in Colombia up 4%

Petroleum producer Frontera Energy (TSX:FEC)has announced an increase in production to 65,560 barrels of oil per day , equivalent in the first quarter of 2019, up 4% from the same quarter last year. The Canada based company with operations in Colombia attributes the increase to production in their Quifa field, located in Colombia’s Meta department, some hours south of Bogotá.

Frontera indicates that the Guatiquía field, also in Meta, has been stable, and the company drilled 29 development wells and 2 exploratory wells during the quarter. During the 2^nd quarter, Frontera plans to drill 37 development wells and 3 exploration wells. Colombian production during the 1^st quarter of 2019 was the highest since the 4^th quarter of 2017.

“2019 has had a good start for Frontera, with our production and exploration in line with the perspectives for 2019, and our plan to maintain production in Colombia,” says Frontera CEO Richard Herbert.

Other Frontera 1^st quarter highlights (USD):

• Net income of $46 million ($0.47/share) in the first quarter of 2019 compared to a net loss of $117 million ($1.17/share) in the fourth quarter of 2018 and a net loss of $3 million ($0.03/share) in the first quarter of 2018, driven by strong realized prices and lower operating and transportation costs.
• Cash provided by operating activities of $72 million compared to net cash used by operating activities of $3 million in the fourth quarter of 2018 and cash provided by operating activities of $28 million in the first quarter of 2018. Cash provided by operating activities adjusted for changes in non-cash working capital was $140 million in the first quarter of 2019.
• Operating EBITDA of $145 million was 22% higher than the fourth quarter of 2018 and 68% higher than the first quarter of 2018.
• Production averaged 67,974 boe/d, a decrease of 5% compared to the fourth quarter of 2018, reflecting the suspension of production from Block 192 in Peru during the quarter, following a force majeure event on the NorPeruano pipeline. However, Colombia production increased 4% compared to the fourth quarter of 2018 driven by strong production from our heavy oil and light oil business units.
• Current production is over 75,000 boe/d, driven by the resumption of production from Block 192 in Peru in March 2019.
• Operating netback during the first quarter of 2019 was $30.23/boe, 28% higher than in the fourth quarter of 2018 and 21% higher than in the first quarter of 2018 driven by higher realized prices, and lower production and transportation costs.
• Production costs of $70 million were 17% lower than the fourth quarter of 2018 and 6% lower than the first quarter of 2018, due to the suspension of production from Block 192 in Peru. Production costs of $11.40/boe were 11% lower than the fourth quarter of 2018 and 3% higher than the first quarter of 2018.
• Transportation costs of $72 million were 5% lower than both the fourth quarter of 2018 and the first quarter of 2018. Transportation costs of $12.70/boe were 1% lower and unchanged compared to the fourth quarter of 2018 and the first quarter of 2018 respectively.
• Cash and cash equivalents including restricted cash totalled $487 million as at March 31, 2019, a decrease of $101 million compared to December 31, 2018 reflecting a reduction of accounts payable relating to capital expenditures of $47 million, a one-time cash payment of $34 million to settle the Bicentenario put option, and $28 million spent to enhance shareholder returns, including $19 million of dividends paid and $9 million of shares repurchased under the Company’s Normal Course Issuer Bid (“NCIB”).
• Capital expenditures of $69 million during the first quarter of 2019 were 56% lower than the fourth quarter of 2018 and 12% lower than the first quarter of 2018 driven by the drilling of 31 wells during the quarter as compared to 29 wells and capital relating to the Quifa water handling expansion project in the prior quarter and 36 wells in the first quarter of 2018.
• General and administrative expenses (“G&A”) of $16 million in the first quarter of 2019 declined 24% compared to the fourth quarter of 2018 as cost savings initiatives targeted during 2018 successfully materialized. The Company continues to focus on improving operational and efficiency metrics throughout the organization.
• The Company repurchased for cancellation 942,520 shares at a cost of $9 million (C$12.13/share) under its NCIB during the first quarter of 2019. To date, the Company has repurchased for cancellation 2.7 million shares at a cost of $28 million (C$13.70/share), representing 54% of the authorized buyback under the NCIB.
• 44% of expected 2019 production is now hedged using puts ($57/bbl strike) and costless collars ($57/bbl floor and $76/bbl ceiling), as is 14% of expected first quarter 2020 production using costless collars ($58/bbl floor and $76/bbl ceiling).