Frontera Energy Corporation (TSX: FEC) announced a net loss from continuing operations of $663 million USD for the fourth quarter of 2025. This figure includes a non-cash impairment of $603 million USD related to the divestment of the company’s Colombian exploration and production (E&P) portfolio and a $17 million USD impairment regarding its Guyana interest. The company has scheduled a special meeting of shareholders for April 30, 2026, to vote on the divestiture of these assets to Parex Resources Inc. (TSX: PXT).

The definitive agreement for the divestiture establishes a firm value of approximately $750 million USD. The transaction includes up to $525 million USD in equity consideration. Following the completion of the sale, Frontera Energy Corporation intends to distribute approximately $470 million USD to shareholders, which equates to approximately CAD $9.18 per share. This distribution includes a $25 million USD contingent payment.

The divestment marks a strategic shift for the Calgary-based company as it transitions into an infrastructure-focused business model. The new structure is anchored by interests in the Oleoducto de los Llanos Orientales S.A. (ODL) pipeline and the Sociedad Portuaria Regional Puerto Bahía S.A. maritime terminal. For the full year of 2025, the infrastructure segment reported an adjusted EBITDA of $116.6 million USD and a distributable cash flow of $76.7 million USD.

“Frontera now enters its next phase as a more focused, cash-generative infrastructure company, well positioned to deliver durable returns.” — Gabriel de Alba, Chairman of the Board of Directors, Frontera Energy Corporation

A central component of this new strategy is the development of a potential liquefied natural gas (LNG) regasification project in partnership with Ecopetrol S.A. (NYSE: EC, BVC: ECOPETROL). Puerto Bahía has secured a take-or-pay agreement with Ecopetrol S.A., subject to certain conditions, for the project. The initiative is planned in two phases, starting with an initial capacity of approximately 126 million cubic feet per day (MMcfd), with projections to reach at least 300 MMcfd by 2029.

In terms of operational metrics for 2025, Frontera reported an average production of 39,011 barrels of oil equivalent per day (boed). The company recorded an operating EBITDA of $308 million USD for the year. Production costs averaged $9.23/boe, while energy costs were $5.49/boe and transportation costs reached $12.00/boe.

The year-end independent reserves assessment, conducted by DeGolyer and MacNaughton Corp, placed the company’s gross reserves at 94.4 million Boe for the 1P category and 133.8 million Boe for the 2P category. All of the company’s booked reserves as of December 31, 2025, are located within Colombia.

On the environmental and social front, the company reported that 70,162 tons of CO2 equivalent were absorbed through environmental compensation areas in 2025. Additionally, 35% of operational water was reused during the same period. The company also noted a total of $95.1 million USD in purchases from local goods and services suppliers.

Upon the anticipated closing of the arrangement in the second quarter of 2026, Frontera Energy will retain its midstream assets in Colombia and certain non-Colombian interests, including those in Guyana. The company expects to allocate $25 million USD from the sale proceeds to further fund its infrastructure business and strategic growth projects.

The report, prepared based on the preliminary planning and budgets of oil companies surveyed by ACP, shows the growing interest in natural gas by companies. For 2021, 45% of the total exploration budget will be focused on the search for gas, with a projected $400 million USD to develop gas production, representing 15% of the total investment in production.

“A rebound in investment in the sector is good news for the country, since not only the oil and gas industry guarantees the generation of fiscal resources that allow the nation and the regions to leverage public investment in strategic projects for economic and social reactivation, but also guarantees the self-sufficiency of the country, which will require energy for its industrial reactivation,” said the president of the ACP, Francisco José Lloreda Mera.

Exploratory investment will be concentrated in Colombia’s Caribbean region; while investment in production will go mainly to the Meta, Santander & Norte de Santander departments.

At the regional level, exploratory investment will be concentrated in the Caribbean region, primarily in Córdoba, and mostly on the mainland, where a significant part of the resources will focus on the search for natural gas. On the other hand, investment in production will be directed mainly to the department of Meta, which will continue to be the primary recipient of investment, followed by the Santander, Norte de Santander, Casanare, Antioquia, Putumayo and Huila departments.

“Natural gas is gaining strength in the energy matrix, so it is not surprising that its share has been growing in recent years. Colombia has geological potential, but for it to develop it is necessary to promote the growth of its demand, which implies measures that facilitate timely marketing, competitive transportation to consumption centers and promote competition under equal conditions. This will be key to promoting the growth of this energy in the country, the supply and the reliability that is required in an energy transition process,” explained Lloreda.

President of the ACP, Francisco José Lloreda Mera

Finally, the report highlights that 95% of the investments in 2021 will be carried out on land, while in offshore and unconventional fields (YNC) the investments will be aimed at developing studies and other activities prior to exploratory drilling, which is forecast for 2022.

Investment climate

The report also presented the results of the survey on the country’s investment climate, which assesses several fundamental aspects for the sector: prospectivity, competitiveness of goods and services, fiscal aspects, availability of infrastructure, contractual, environmental and social aspects, political stability, regulatory security, prior consultation and security in operations.

This year, the overall rating averaged 5, placing it in the acceptable range, registering a decrease compared to that granted in 2019 (6 / good). Of the 11 elements evaluated, only one totally favorable perception of the country remains, which continued to be Political Stability, which improved from 63% and 65% in 2018 and 2019, respectively, to 75% in 2020.

The perception of Prospectivity (The quality of being or having a likely location in which to prospect for minerals), which had always been a strength of the country, is now seen mostly as neutral or indifferent. In the remainder of the aspects evaluated, a perception classified between neutral and weak continues to prevail.
“The responses of the surveyed companies invite us to continue working, in conjunction with the Government, on the structural issues that need to be improved to regain interest in investing in Colombia. It is necessary to promote the growth of the natural gas market, reduce oil pipeline rates, have greater regulatory security, review contractual issues, optimize environmental licensing processes, among other aspects that are fundamental for the country to attract investment, develop its potential in oil and gas and generate the necessary resources to mark the economic and social reactivation,” concluded Lloreda.

“Full cycle costs are above price expectations for 2020, leading to negative cash flow generation,” said Lucas Aristizabal, Senior Director. “Companies will need to support their liquidity with CapEx and OpEx cuts, as well as access debt.”

With half-cycle costs below price expectations, almost all Latin American exploration & production (E&P) companies could generate enough cash flow to cover operating and administrative costs, and interest expenses, assuming production remains relatively flat. Fitch estimates that a 10% decrease in production could increase average half-cycle costs by up to $4/boe.

All vertically integrated Latin American oil and gas companies, most of which are national oil companies, benefited from vertical integration during 2019. Although materially lower demand for oil products in 2020 will hinder downstream cash flow generation, crack spreads are expected to remain positive, complementing cash flow generation from downstream businesses – notably for Ecopetrol, Petrobras and YPF. Pemex’s downstream business is not typically a material cash flow contributor.

Fitch expects Latin American oil and gas production to continue the declining trend observed in recent years.

Above photo: Ecopetrol’s refinery in Barrancabermeja, Colombia on the banks of the Magdalena RIver (courtesy Ecopetrol)

According to ACP, the investment in E&P is expected to reach $4.97 billion USD, 23% higher than in 2019. The investment in exploration is expected to be between $920 million and $1 billion USD, 18% higher than in 2019. 70% of investment attention will be directed towards terrestrial projects and 30% destined for offshore activities.

• The investment in exploration for 2020 will be 18% higher than in 2019, representing an increase of 25% compared to the previous year.
• Potential gas fields lead the increase in projected exploration.
• The investment climate was rated between acceptable and good. Political stability, geological prospects and contractual aspects leaning favorable.

“To be able to materialize these investment projections, it is important that Colombia maintain political stability, continue advancing in contractual and fiscal aspects, work on improving environmental conditions and reducing processing times and transportation costs. This will allow us to catch up with other countries that are now taking the lead, because while in Colombia the investment in E&P fell in 2019, international projections estimate that in the rest of the world it grew approximately 4%, ”said Francisco José Lloreda Mera, president of the ACP (pictured above).

Production activity during 2020 should be valued, according to the report at $4.05 billion; 25% higher than in 2019. 53% of those resources will be towards drilling, and 15% to improved recovery, making up 19% of Colombia’s current production. The remaining amount will go to production facilities and other needs.

Gas exploration should be at approximately $300 million USD, or 1/3 of the projected total spend. $340 million USD will go into natural gas production, or 8% of the total production budget.

• To view the report (in Spanish) click here.
• To view the associated presentation (in Spanish) click here.

Though exploration and production expenditures decreased 7% in 2019 compared to the previous year, greater efficiencies in production meant that actual production held stable.

The ACP estimates that 2020 oil production will be approximately 890,000 barrels per day, up 1% over 2019, and commercial gas production will be roughly 1.09 billion cubic feet per day, or 190,000 BoE (Barrels of Oil Equivalent). 90% of the production will be in Colombia’s Eastern plains, the Middle Magdalena region (near the Barrancabermeja Refinery), and Caguán-Putumayo.

“Companies are focusing their investment efforts on sustaining production at the levels we had in 2019, avoiding the natural decline of the fields. If these investments were not made, the report indicates that the production of crude oil would fall to values ​​close to 730,000 barrels this year, hence the importance of continuing to boost the dynamism of the sector, overcome internal obstacles and be more competitive against the behavior and conditions of the industry in the rest of the world,” said Lloreda Mera.

According to the ACP, Colombia’s political stability compared to other jurisdictions is the country’s primary advantage, though stoppages and protests that took place last year do create a climate of uncertainty. Environmental, social and security issues are the primary challenges to investment attraction. The country’s geology remains very promising, with a prospect of significant additional finds.

In the report, the ACP calls for a continuation of collaboration between the industry, communities and the government to make operations in the regions of Colombia feasible, advance contractual reforms, and encourage new investments.

Photos courtesy ACP

Monday, May 4^th, 2015, 8:00 am – 12:00 pm

OTC – NRG Arena – Houston, TX 77054

While Colombia is globally recognized as a source of heavy oil, deepwater exploration and the discovery of shale formations have opened phenomenal development opportunities for Colombian conventional oil producers, international offshore and unconventional producers and investors around the world. High volumes of recoverable reserves such as the Middle Magdalena and Cordillera blocks have been compounded with the government’s policy towards the development of unconventional resources and favorable royalty schemes that indicate it will not be long before Colombia becomes a firm fixture on the international offshore and unconventional resources’ map.

You are invited to join the Colombia Texas Chamber of Commerce and the US Commercial Service in a Forum where international oil and gas experts and government officials will discuss why you should be looking at Colombia for both deepwater and unconventional business opportunities

 Topics include:

•  Colombia energy outlook
• Colombia’s hydrocarbon regulation development
• Colombia Offshore a Free Trade Zone
• Why Colombia? Study by Wood Mackenzie
• Challenges and opportunities for offshore and unconventional E&P
• Gas Opportunities and Developments

Speakers and Panelists include:

Ministry of Mines and Energy, ACP (Colombian Petroleum Association) , Holland & Knight, Wood Mackenzie, Coremar Group, Campetrol (Oil products and services chamber of commerce), City of Barranquilla (TBD), Anadarko, Weatherford, Technip USA, Ecopetrol(TBC), Wood Group, Mustang, Repsol (TBC), Shell (TBC), Intermarine (TBC), Sofec (TBC).