Frontera Energy Corporation (TSX: FEC) (OTCQX: FECCF) reported first-quarter 2026 net income from continuing operations of $13.1 million USD and adjusted EBITDA of $28.5 million USD, as the Calgary-based company moves to close the sale of its Colombian exploration and production portfolio to Parex Resources Inc. (TSX: PXT) and reposition itself as a standalone Colombian infrastructure company anchored by its pipeline and port assets.

Total revenues from continuing operations were $26.8 million USD in the first quarter, compared with $26.9 million USD in the fourth quarter of 2025 and $25.1 million USD in the first quarter of 2025. Net loss for the period, including discontinued operations, was $15.4 million USD, reflecting a $28.5 million USD net loss from the Colombian E&P assets now classified as held for sale.

“In total, this strategy will have unlocked approximately $1.3 billion of capital for investors.” — Gabriel de Alba, Chairman of the Board, Frontera Energy Corporation

The Parex transaction

On April 30, 2026, Frontera shareholders approved a plan of arrangement under which Parex Resources, through a wholly-owned subsidiary, will acquire all of Frontera’s Colombian upstream business — including its oil and gas exploration and production assets, a reverse-osmosis water-treatment facility, and a palm-oil plantation. The transaction carries an enterprise value of $750 million USD. The cash purchase price consists of $500 million USD payable at closing, subject to customary adjustments, plus an additional $25 million USD contingent payment tied to specified development milestones to be achieved within 12 months of closing.

At the same shareholder meeting, investors approved a reduction of Frontera’s capital account of up to $647 million CAD (approximately $470 million USD) to fund a return of capital to shareholders from the net proceeds of the transaction. The Supreme Court of British Columbia issued its final order approving the arrangement on May 4, 2026. Closing remains subject to the satisfaction of remaining conditions and is expected in May 2026.

Chairman Gabriel de Alba said the company would retain roughly $50 million USD of cash to support growth opportunities at the remaining infrastructure business, including an LNG regasification project being developed in partnership with Ecopetrol (NYSE: EC) (BVC: ECOPETROL). “In total, this strategy will have unlocked approximately $1.3 billion of capital for investors,” de Alba said.

ODL pipeline drives cash flow

Frontera holds a 35 percent equity interest in the Oleoducto de los Llanos (ODL) crude oil pipeline, which connects the Rubiales, Quifa, Caño Sur, Llanos-34, and other production blocks to the Monterrey and Cusiana stations in the department of Casanare. ODL’s share of income contributed $14.2 million USD to Frontera in the first quarter, compared with $15.1 million USD a year earlier, with the year-over-year decline reflecting higher depreciation, amortization, and operating costs.

ODL transported 233,875 barrels per day in the first quarter of 2026 at an average tariff of $4.70 USD per barrel, compared with 236,387 barrels per day at $4.73 USD per barrel in the first quarter of 2025. The pipeline declared $185 million USD in total dividends, of which $64.7 million USD is net to Frontera. The company expects to receive those distributions during 2026 in installments of approximately 40 percent in the second quarter, 35 percent in the third quarter, and 25 percent in the fourth quarter.

Long-term debt at Frontera totaled $167.8 million USD at the end of the first quarter and is expected to decline to approximately $131 million USD by year-end 2026, primarily through scheduled amortizations and cash-sweep mechanisms tied to ODL cash flows. From May 2025 through December 2026, long-term debt is expected to fall by more than $100 million USD.

Puerto Bahía expands cargo mix

Puerto Bahía, the multipurpose maritime terminal located in Cartagena adjacent to the Bocachica access channel and near the Reficar refinery, generated $12.7 million USD in revenue in the first quarter of 2026, compared with $10.0 million USD in the same period a year earlier. The 150-hectare facility comprises a hydrocarbons terminal with nominal capacity of 2,672,000 barrels and a general cargo terminal. Frontera holds a 99.97 percent equity interest in the port.

General cargo growth offset weaker liquids volumes. The general cargo terminal handled 38,067 roll-on/roll-off (RORO) units in the first quarter, more than double the 18,223 units handled a year earlier, alongside 3,851 twenty-foot equivalent units (TEUs) of containerized cargo, up from 1,256 TEUs in the first quarter of 2025. Break-bulk volumes declined to 25,216 tons/m³ from 41,198 tons/m³. RORO dwell times shortened from 40 days to 31 days year over year.

The liquids terminal handled 36,937 barrels per day in the first quarter of 2026, down from 51,579 barrels per day a year earlier. Ecopetrol volumes accounted for 26,273 barrels per day, Frontera-related volumes for 7,389 barrels per day, and other third-party volumes for 3,275 barrels per day. The company attributed the decline mainly to lower third-party throughput and the absence of certain trading flows.

Operating costs at the port rose to $7.6 million USD in the first quarter from $5.0 million USD a year earlier, driven by increased infrastructure maintenance in the liquids terminal and higher cargo volumes in the general cargo facility.

LPG and LNG projects advance

Puerto Bahía’s liquefied petroleum gas (LPG) project began initial operations in March 2026, providing capacity to handle up to 10,000 tons per month. The terminal is targeted to become fully operational during the first quarter of 2028. Capital expenditures during the first quarter totaled $1.0 million USD, including $0.4 million USD for major tank maintenance and $0.3 million USD for the LPG project.

The company is also advancing an LNG regasification project at Puerto Bahía in partnership with Ecopetrol, intended to support Colombia’s domestic gas supply as domestic production declines. Frontera is also pursuing expansion of containerized cargo operations.

Discontinued operations

Following the execution of the arrangement agreement, the Colombian E&P assets are now classified as discontinued operations under IFRS 5. Colombian production averaged 36,700 barrels of oil equivalent per day in the first quarter of 2026, comprising 25,394 barrels per day of heavy crude, 8,653 barrels per day of light and medium crude combined, 5,706 thousand cubic feet per day of conventional natural gas, and 1,652 barrels of oil equivalent per day of natural gas liquids. That compares with 39,010 barrels of oil equivalent per day a year earlier.

The operating netback from the discontinued Colombian operations was $41.79 USD per barrel of oil equivalent in the first quarter of 2026, compared with $34.22 USD per barrel of oil equivalent in the first quarter of 2025, supported by a higher Brent reference price of $78.38 USD per barrel against $74.98 USD per barrel a year earlier.

Frontera retains exploration and development interests in Guyana through subsidiaries that include CGX Energy Inc. (TSXV: OYL), which is not part of the Parex transaction. The company’s go-forward portfolio will be anchored by the ODL pipeline stake and Puerto Bahía, with the infrastructure business generating approximately $77 million USD of distributable cash flow in 2025, according to the management information circular dated March 30, 2026.

Above photo courtesy Frontera Energy Corporation.

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 second quarter saw Frontera generate $76.1 million in operating EBITDA, with an adjusted infrastructure EBITDA of $27.1 million. The company reported a total cash balance of $197.5 million at the end of the quarter, having reduced its upstream net debt by 30%. Over the past year, Frontera has returned over $144 million to shareholders through dividends and share buybacks and has also decreased the outstanding principal amount of its senior unsecured notes by more than 20%.

In Colombia, the company highlighted increased total production, attributing it to enhanced processing capacity at its SAARA project, new flow lines in heavy oil fields, a successful well intervention program, and new natural gas production from the VIM-1 block. Production costs saw a 10.3% quarter-over-quarter decrease, while transportation costs fell by 5.7%, which the company credits to higher domestic wellhead sales.

Concurrent with its financial reporting, Frontera announced a shake-up at the board of CGX Energy. Orlando Cabrales has been appointed as the new chairman of the board, with Alejandra Bonilla and René Burgos Díaz joining as new directors. These appointments follow the resignation of Dr. Suresh Narine as executive director and co-chairman and Gabriel de Alba’s decision to step down as a director.

Analysis of Frontera’s Financial Position

Frontera’s second-quarter results present a mixed but cautiously optimistic picture for investors. The reported operating EBITDA of $76.1 million, while substantial, should be viewed in the context of a volatile global oil market. The company’s ability to reduce upstream net debt by 30% and maintain a strong cash position of $197.5 million demonstrates a disciplined approach to capital management, a crucial factor in navigating fluctuating commodity prices. The return of over $144 million to shareholders in the last twelve months through dividends and share repurchases signals confidence from management in the company’s cash flow generation capabilities.

However, the significant impairment charge of $56.4 million on the Corentyne block in Guyana, booked by its joint venture CGX Energy, casts a shadow over Frontera’s growth prospects outside its core Colombian operations. This impairment, effectively writing down the value of the asset to zero, reflects the ongoing uncertainty surrounding the joint venture’s license with the Guyanese government. For investors, this development heightens the risk profile of Frontera’s Guyanese exploration efforts and places greater importance on the performance and stability of its Colombian production and infrastructure assets.

The company’s focus on operational efficiencies in Colombia, leading to a 10.3% decrease in production costs, is a positive indicator. This suggests that Frontera is actively working to control expenditures and maximize profitability from its existing assets. The 5.7% reduction in transportation costs, driven by higher domestic sales, also points to a strategic shift that could mitigate logistical expenses and improve margins. The standalone infrastructure business, generating $27.1 million in adjusted EBITDA, provides a stable and growing source of revenue, partially insulating the company from the volatility of the upstream oil and gas sector.

Looking ahead, Frontera has adjusted its capital expenditure guidance downwards by approximately $20 million, reflecting a more conservative spending approach in the current oil price environment. The revised Operating EBITDA guidance of $320 – $360 million at a $70/bbl Brent price, and adjusted infrastructure EBITDA guidance of $110 – $125 million, provide a clearer, albeit more cautious, outlook for the remainder of the year. For investors, the key takeaways are Frontera’s solid operational performance and disciplined financial management in its core Colombian business, contrasted with the significant geopolitical and operational risks associated with its Guyanese venture. The company’s ability to amicably resolve the Corentyne block license issue with the Government of Guyana will be a critical factor in unlocking future value.

CGX Energy Board Changes and Guyana Dispute

The changes to the CGX Energy board are a direct consequence of the challenges faced by the Frontera-CGX joint venture in Guyana. Frontera, as the majority shareholder of CGX and the primary financial backer of the joint venture, is asserting greater control over the strategic direction of the company in light of the ongoing dispute with the Guyanese government over the Corentyne block license. The appointment of Orlando Cabrales, Frontera’s CEO, as the new chairman of the CGX Board, along with the addition of Frontera’s General Counsel, Alejandra Bonilla, and CFO, René Burgos Díaz, solidifies Frontera’s influence over CGX’s governance and decision-making.

The root of the issue lies in the differing interpretations of the Corentyne block’s license validity. While the joint venture maintains that its license is in good standing, the Government of Guyana has expressed its view that the license expired in June 2024. This disagreement has led to a standstill in exploration and development activities, culminating in the $56.4 million impairment charge. The Guyanese government has indicated it may consider a meeting with the joint venture in October 2025 to discuss the matter, but there is no guarantee of a favorable outcome.

Frontera’s decision to install its own executives on the CGX board is a clear signal that it intends to take a more direct and assertive role in resolving this dispute. The new board will be tasked with navigating the complex legal and political landscape in Guyana to either reach a negotiated settlement or pursue legal action to protect the joint venture’s interests. The resignations of Dr. Suresh Narine and Gabriel de Alba represent a changing of the guard, likely intended to bring a fresh perspective and a more aggressive approach to the negotiations.

The likely outcome of this board overhaul will be a more unified and Frontera-driven strategy for the Guyanese assets. This could involve intensified negotiations with the Guyanese government, a more robust legal challenge, or a strategic decision to cut losses and exit the Corentyne block if a viable path forward cannot be found. For investors in both Frontera and CGX, the board changes are a pivotal development. A successful resolution could unlock significant value from the Corentyne block’s multi-billion-barrel potential. Conversely, a failure to resolve the dispute could result in a permanent loss of the investment and a significant blow to both companies’ long-term growth ambitions in the highly prospective Guyana-Suriname basin. The new leadership at CGX faces a critical test in the coming months, with the future of the company’s most promising asset hanging in the balance.

Aruchara-4 Drilling Rig (CNW Group/NG Energy International Corp.)

According to initial calculations by Computershare Investor Services Inc., the depositary for the offer, approximately 73.18 million shares were validly tendered and not withdrawn, leading to an oversubscription. Consequently, Frontera expects to repurchase 3.5 million shares, representing about 4.33% of its outstanding shares as of January 23, 2025. Shareholders who tendered their shares will have approximately 4.78% of their tendered shares purchased by the company. Following the cancellation of these shares, Frontera anticipates having approximately 77.29 million shares issued and outstanding.

The final number of shares to be purchased, and the exact proration factor, are subject to verification by the depositary. Frontera plans to issue a press release detailing the final results upon completing this process. The terms will make payment for the shares accepted for purchase of the offer and applicable law, while shares tendered but not purchased will be returned to shareholders.

The terms and conditions of the offer are outlined in the offer to purchase and issuer bid circular dated December 19, 2024, available on SEDAR+. Frontera also intends to recommence purchases of shares under a new normal course issuer bid following the announcement of its fourth-quarter and year-end results.

Frontera Energy Corporation operates in the exploration, development, production, transportation, storage, and sale of oil and natural gas in South America, with interests in 22 exploration and production blocks in Colombia, Ecuador, and Guyana, as well as pipeline and port facilities in Colombia.

Headline Image: Frontera Energy’s oil operations in Quifa, Colombia. Photo Credit: Frontera Energy.

Gabriel de Alba, chairman of the board of directors of Frontera Energy:

“Frontera’s focus remains centered on delivering on its strategic objectives and generating value for its stakeholders. Operationally, the company generated $97.2 million in quarterly Operating EBITDA, produced $25.7 million of Adjusted Infrastructure EBITDA, and maintained a robust balance sheet, finishing the quarter with a total cash balance of $182 million.

During the quarter, ODL declared a $157 million dividend ($54.9 million, net to Frontera), highlighting the strong cash generation capacity of this strategic infrastructure investment. The company also achieved an agreement in principle with Ecopetrol for the use of the company’s reverse osmosis water treatment facility (“SAARA”) under a two-year contract, a significant ESG and strategic milestone, for driving greater water disposal and crude oil production capacity at the Quifa block.

So far this year, the company has returned nearly $13 million of capital to our stakeholders, including $7.8 million in declared dividends, $4.1 million of common share repurchases and $1.5 million in buybacks of its 2028 unsecured notes. Moreover, the company, with support from Goldman Sachs, has launched a strategic alternatives process for its standalone and growing Colombian Infrastructure business, which may include a spin-off, a total or partial sale or other business combination.

The company will continue to consider future shareholder initiatives in 2024 and beyond, including potential additional dividends, distributions, or bond buybacks, based on the overall results of our businesses and the company’s strategic goals.”

Orlando Cabrales, chief executive officer of Frontera Energy:

“Frontera’s first quarter results were in-line with our expectations despite some unforeseen challenges. First quarter production declined approximately 3% on a quarter over quarter basis, impacted primarily by natural declines and well failures in our light and medium, and natural gas assets, temporary community blockades and delays related to strategic water disposal initiatives in the heavy oil assets partially offset by positive performance from our heavy oil assets.

Supported by another average daily production record at the CPE-6 block, we grew our heavy crude oil production during the quarter to approximately 23,400 bbls/d, a 2% increase over the prior quarter. Our heavy asset growth was driven primarily by higher field activity and investment as well as increasing oil production and water disposal capacity at both our Quifa and CPE-6 blocks and it could have been higher if community blockades and delays related to our strategic water disposal initiatives, including SAARA, had not taken place.

On the exploration side, we are excited about the spudding of our high impact Hydra-1 prospect on the VIM-1 block scheduled for June 2024.

We reiterate our production and capital guidance for 2024. Our 2024 drilling campaign started strong and continues to meet expectations. We expect improved production and profitability throughout the rest of the year as we advance our development portfolio in Colombia and Ecuador and increase water-handling infrastructure and facilities in CPE-6, as well as in Quifa after the agreement reached with Ecopetrol on SAARA.”

(Photo credit: Frontera Energy)

All shareholders of record at the close of business on January 3 will be eligible to receive the dividend, which was approved by the board of directors and is designated as an eligible dividend under the Canadian income tax act.

The dividend follows improved results in the third quarter of 2018. The Toronto-based company posted net income of $45.1 million USD in the third quarter, a turnaround from its net loss of $141.1 million USD in the third quarter of 2017 and net loss of $184.4 million USD last quarter.

READ MORE: Frontera Energy Signs Agreement with CGX Energy for Interest in Guayana Exploration Blocks

“Frontera performed well in the third quarter, generating significant cash flow and further strengthening our balance sheet in spite of production interruptions,” said Richard Herbert, chief executive officer of Frontera Energy.

According to the Toronto-based company, it received the consent of an overwhelming majority (91.2%) of the holders of the outstanding notes.

“These amendments give the company flexibility to use existing cash resources and projected future cash resources to implement measures expected to enhance shareholder value.” – Frontera Energy

The company said that it expects to make the consent fee payment to consenting holders on November 28 after the amendments become effective. All holders of the 9.7% notes will “be bound by the amendments,” said the firm, including any holders that did not give consent.

“These amendments give the company flexibility to use existing cash resources and projected future cash resources to implement measures expected to enhance shareholder value,” said Frontera Energy in a statement.

“These measures may include accelerating or increasing share buyback programs, dividend payments, and investments,” added the firm. “No decision has been made by the company to make any such payments at this time, other than its existing share buy-back program.”

Despite the optimism, credit rating agency Fitch Ratings has warned that the move is a “potential credit negative” given that it allows for large payouts to shareholders.

Looking at Frontera’s net income deficit and “low” reserve life levels “relative to its peers,” the New York-based rating agency believes Frontera needs to invest more into its operations. Thus, it concluded in its analysis that the “company’s credit quality could begin to deteriorate as a result of an increase in distributions to shareholders.”

Nevertheless, Gabriel de Alba, chairman of the board of directors of Frontera Energy, said that the move will give the firm more flexibility and improve cash flow.

“The successful consent solicitation is an overwhelming vote of confidence by our bondholders in Frontera’s credit profile and long-term outlook for free cash flow,” he said. “With the enhanced capital allocation flexibility it gives the company, this consent opens new avenues for the board to increase value for Frontera shareholders.

He added that, “while continuing to make disciplined decisions and taking actions to close the stock’s valuation gap, we can now move forward with evaluating additional strategic initiatives designed to enhance shareholder returns, with the full support of our bondholders.”

The find came at the Acorazado-1 exploration well and marked the Canadian oil company’s fourth discovery in 2018, which will help set the stage for its plans to drill 34 more wells during the fourth quarter of the year, according to the firm.

The Acorazado-1 well was drilled to a depth of 15,470 feet with 356 feet of gross thickness in the Mirador formation sandstone reservoir. “Open-hole wireline logging operations identified five separate, potentially hydrocarbon-bearing sections of the Mirador formation,” said the company in a statement.

Richard Herbert, chief executive officer of Frontera, noted that though there are indications of lowered reservoir pressure, the “well has identified a part of the structure which contains resources which have never been previously drilled and developed.”

Frontera Energy, which now has an output of 65,000 barrels of oil equivalent per day in Colombia and Peru and is pushing for production growth in 2019, plans to drill exploration and appraisal wells later this year at its Coralillo-3 and Cocodrilo-1 sits on the Guatiquia block in addition the Jaspe appraisal wells in the Quifa North area.

“Frontera’s strong production profile is well-timed with the upcoming expiration of our oil hedges at the end of October, which will increase our exposure to Brent oil prices by nearly $25 per barrel based on recent prices,” added Herbert.

Following the completion of “wireline logging operations combined with a limited pressure and sampling program,” the Toronto-based firm said it has confirmed the presence of hydrocarbons in “several potentially productive zones”

Drilling at the fully owned exploration well in the Llanos 25 block reached a depth of 15,470 feet and was completed “ahead of schedule and under budget,” said Frontera in a statement. Frontera Energy’s estimate for the pre-drill cost for drilling the well was between $35 million USD to $50 million USD.

The next step for the well will be to run and cement a liner in preparation for further testing, which will bring the well cost to date to $40 million. The testing process is expected to take “several weeks,” said Frontera.

“The company is encouraged by the results to date and will case the well and initiate a testing program,” added the firm. The testing program, depending upon results, is expected to take several weeks.

Additionally, the Frontera recently completed an unsuccessful exploratory drilling campaign as the technical operator on the Delfin Sur-1 well in the Z-1 block offshore of Peru. “Hydrocarbon shows were encountered but not in sufficient quantities to justify further evaluation,” said Frontera, adding that the well, which had a net capital cost for the company, “is being plugged and abandoned.”

The notes would be due 2023 with a coupon rate of 9.7%, replacing the previously issued notes that were due in 2021 at a rate of 10%. The new notes have been rated BB-(EXP) by S&P Global Ratings and B+(EXP)/RR4 by Fitch Ratings, according to Frontera Energy.

While the closing of the issuance is “expected to occur on or about June 25,” according to the company, it added in a statement that “there can be no assurances that the issuance and sale of the notes will be consummated.”

The notes have yet to be registered under the U.S. Securities Act (or securities laws in another nation), a requirement before they can be sold in the United States.