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.

Oil transportation provider Cenit (Spanish for Zenith), the pipeline operator owned by government controlled Ecopetrol announced last week “relief of up to 50% on pipeline transportation fees for oil producers” according to the headline of a printed statement released by Cenit. Reading the details however, the transporter is only offering delayed terms.

“Producers can pay only 50% of their rates during May and June, and the remaining balance will be due in 2 months,” said the statement.

“Even though this conjuncture also impacts the midstream segment due to the lower volumes transported through the systems due to the drop in demand, we are convinced that it is necessary to support producers and senders in general with financing initiatives so that the industry of hydrocarbons in Colombia continues to be a lever for the country’s economic and social development,” said Héctor Manosalva Rojas, president of Cenit.

Petroleum producers are not impressed

ACP had a very direct response to the initiative, saying that it does practically nothing to address the situation, but is little more than public relations. In a written public response, the ACP said:

1. The proposal of the transporters does not reduce the rates. It is not a 50% decrease in rates, but an offer of financing (for two months) with interest charged on this percentage. The measure does not supply the financial requirements of the senders against the current value of the rates, which, as indicated, are excessively high. This would only increase transportation costs, since after two months the same rate would have to be paid with interest (1.5% annual cash).
2. The financing offered by the carriers does not take into account the reality of the price crisis that the sector is experiencing, the duration of which is not clear. This price situation is leading private companies to close fields and therefore reduce their production. To date, production has been reduced by about 52,000 barrels per day and a further cut of 30,000 barrels per day is expected, starting next month. This not only affects the production of crude with consequences for the energy self-sufficiency of the country, but also reduces important resources of royalties, taxes and economic rights, considerably impacting the finances of the Nation and the contributions to the regions.
3. Regarding specific rate reductions, the real proposal of Ocensa (the pipeline that transports the largest volume of oil in the country) is to decrease rates by only 0.6%. In other words, it goes from a rate of $7.75 USD to $7.70 per barrel; a minimum adjustment when oil prices have fallen 71% since January and 42% in the last two months, and more, if one takes into account that in July 2019 the company increased tariffs by 10%.
4. Considering that the crude oil pipeline transportation rates have an operating cost weight of around 45%, what the industry requires and has requested is a 60% reduction when the Brent reference price is below US $ 45 a barrel.
5. The stage of negotiation between carriers and senders has been exhausted without success, taking into account that the offers presented by the carriers have not been the product of a negotiation, but rather unilateral announcements.
6. It is for this reason that the ACP has requested the Ministry of Mines and Energy to intervene in oil pipeline transportation tariffs, using its powers provided by the Petroleum Code, issuing a resolution that restores an economic balance in the hydrocarbon sector in this period of low prices, as a measure to help mitigate the current crisis.

Finance Colombia was able to reach Alejandro Ospina Angarrita, the president of UTIPEC, Colombia’s principal petroleum workers’ union, who generally is in agreement with the industry association on this topic.

Alejandro Ospina Angarrita is president of UTIPEC, Colombia’s principal petroleum workers’ union

Finance Colombia: What is UTIPEC’s proposal to solve the crisis?

Ospina: An immediate reduction of the pipeline transportation rates that are approved by the Ministry of Mines and Energy, and not just a financing of these costs as the transporters have proposed, in order to make production possible in the fields that are closed today and thus recovering the job that is being destroyed due to the low competitiveness of the Colombian oil industry.

The measure must be adopted immediately, and must be maintained until a revision of the tariff methodology is made, which overcompensates the investments made in these systems, so that it has brought us to the current situation which although in the past was bearable at high oil prices, it clearly does not reflect the reality of the business when compared to nearby competitors, such as in Ecuador, where a system of similar length, which must cross the Andes mountain range, offers rates of less than 30% of those collected in Colombia.

Finance Colombia: What should the administration of Ivan Duque and the ANH do?

Ospina: Pipeline tariffs are currently defined and approved by the Ministry of Mines and Energy, so it must be the national government that takes the exceptional measure, making the temporary adjustments and this same entity, which must carry out a review of the methodology with all market agents, to harmonize it with the reasonable remuneration of the investments.

The ANH, as administrator of the country’s hydrocarbon resource, and therefore promoter of the development of the industry in Colombia, must support producers, both the state controlled Ecopetrol and private companies, in the search for a competitive scheme to keep viable the oil activity. It is important to explain that Ecopetrol is the main entity affected by the current pipeline tariffs and consequently the Colombian state as the main shareholder of the company, since although Ecopetrol it is true, benefits from midstream activity, it is also true that there it only acts as operator of some of the systems, and co-owner of most of them, so in this business, there are other external beneficiaries; meanwhile the adverse impact of the tariffs affects Ecopetrol as the main producer and user of the same.

According to the most recent ACP economic report “Double covid-19 crisis and price war industry: impact for Colombia and the hydrocarbon sector,” with the current crisis it will be necessary to severely curtail investments and production of oil budgeted for 2020, and the group projects a daily drop of 35,000 barrels, which could reach 100,000 if the Brent reference crude price remains below $25 USD a barrel the rest of the year. This situation, added to the already high costs of operating in Colombia, means that the revenues per barrel fail to cover the average costs to produce oil in the country.

The ACP report, prepared based on information provided by the managers of a representative group of the private production companies, indicates that the national average of operating costs is between $20 – $25 dollars per barrel. For its part, the “break-even” or balance point to cover costs of production in Colombia is located between $40 and $45 dollars a barrel, that is, below this range, companies earn revenue that barely covers their current cost of production.

“The price crisis and high uncertainty have led companies to reduce investments, closing wells and fields, with a serious impact on employment, the contracting of goods and services and in the economic dynamics of the producing regions; this without counting the effect on the collection of royalties, taxes and contractual economic rights, and their impact on the finances of the nation,” said Francisco José Lloreda Mera, president of the ACP on a morning conference call with reporters today.

• A daily drop of around 35,000 barrels of oil is expected, which could reach 100,000 if Brent remains below $25 a barrel the rest of the year.
• ACP says that regulated oil transportation rates for pipelines represent around 45% of the total cost of operation.
• Tax revenues of the central government and the regions could fall more than 75% due to the petroleum crisis.

“The national government is aware of this, important measures have been taken, but an urgent intervention in pipeline transportation rates, as they are excessively high compared to the cost of production, are not internationally competitive, and are the main obstacle to companies in this difficult situation,” said Lloreda.

The industry leader further explained that “pipeline transportation is the only link in the chain of the sector whose cost in recent years has remained practically the same, representing around half of production costs, is not manageable by E&P companies because it is regulated by the Ministry of Energy, and various studies show that it is excessive; so it is essential that the tariffs are reviewed not only for the moment of price crisis and for the sustainability of the industry in the short term, but the current methodology should be structurally reformulated towards the future,” added Lloreda.

Measures taken to date

In order to mitigate the double crisis caused by Covid-19 and the fall in international prices, the Colombian government has advanced in actions for E&P (Exploration & Production) contracts with the National Hydrocarbons Agency (ANH) related to extension of terms and reduction of bank guarantees. Likewise, for all taxpayers, progress was made in the refund of VAT balances and flexibility in the tax schedule. Finally, additional measures were announced to defer payment of economic rights.

According to ACP, these decisions are extremely important to the industry and are expected to help preserve E&P contracts, future investment and to partially alleviate the burden on companies to support their sustainability during the crisis.

“The reduction of contributions of this sector to the national economy, which is projected at more than 75% compared to 2019, is critical at this time when more income is required to help the population more vulnerable to the economic and social emergency caused by Covid-19. We hope to continue advancing in the search for effective measures with the government that allows us to continue operating and mitigate the crisis in the sector, while preventing a devastating effect on employment and the regional & national economy,” emphasized Lloreda.

Photos courtesy ACP

The company said in a statement that it was notified on November 30 of the “force majeure event” that affected part of the NorPeruano pipeline “following a community dispute.”

The attack hit kilometer 93 of the pipeline, which is operated by Petroperú, in the Morono district, per Frontera Energy.

“The pipeline has been shut down by Petroperú as a result of damage caused by the attack,” said the firm. “As a result, Frontera has started to shut down production from Block 192, located over 200 kilometers from the site of the incident, while the authorities work to resolve the dispute and provide Petroperú access to the pipeline for repairs.”

Frontera Energy has produced an average of roughly 8,950 barrels of oil per day from Block 192 of late and hopes that the disruption will be short lived.

“It is expected that once access is granted, repairs will be completed in a short time,” stated Frontera Energy.

Located in the heart of coffee country in the department of Caldas, this route to transport oil will replace a section of pipeline that passes through the municipality of Dosquebradas.

The 55-kilometer pipeline, with an 8-inch diameter, will span the distance from the town of Chinchiná in Caldas to Pereira, the capital of the department of Risaralda, with the goal of expanding upon the Salgar-Cartago-Yumbo pipeline and improving the company’s ability to move fuel to the western side of Colombia.

The pipeline is owned by Ecopetrol subsidiary Cenit and has the ability to transport 22,500 barrels of fuel per day.

READ MORE: Ecopetrol Reports Income of $923 Million USD in First Quarter of 2018

Construction is being overseen by Montecz and is expected to be completed in the second half of 2019.

The contractor, reported by local paper El Tiempo to be Andrés Riaño Ravelo, a 41-year-old engineer working for Ismocol SA, was abducted in the municipality of Saravena in the Arauca department, where Ecopetrol maintains a large oilfield and significant operations.

The Bogotá-based oil giant confirmed that an Ismocol employee, a subcontractor of Ecopetrol logistics and transportation subsidiary Cenit, was kidnapped from its office in Saravena.

The office of the attorney general has launched an investigation into ELN ties and has confirmed that it is analyzing security camera footage of the incident. On Twitter, the agency specifically named Nelson Prieto, known as alias “Mompis,” with links to the guerrilla group and a warrant for homicide, according to the attorney general’s office, as an investigation target.

The abduction reportedly occurred around 7:30 am on the same day that UN Secretary-General Antonio Guerres arrived in the country for a two-day trip to discuss the nation’s peace process with Colombian President Juan Manuel Santos and assess the post-conflict progress so far.

ELN, of the National Liberation Army, which are now the country’s last large leftist armed guerrilla group, began formal peace negotiations in Ecuador with the Colombian government last February, just months after a peace deal with the larger Revolutionary Armed Forces of Colombia (FARC) was finalized.

While the group continued to allegedly carry out pipeline attacks throughout the first half of 2017, a bilateral ceasefire was reached by negotiators in September in the lead up to the first-ever visit to the country by Pope Francis. But that ceasefire expired this week, and ELN has seemingly wasted no time reinitiating belligerent actions.

The United Nations had been the lead monitoring organization for years of talks with FARC and agreed to stay on to oversee discussions with ELN. UN head Guerres spent several hours with Santos in Bogotá on Saturday before flying to the department of Meta to visit a FARC reintegration camp on Sunday.

Following three attacks against different sections of the Caño Limón-Coveñas oil pipeline on January 10, President Santos condemned ELN for the incidents and recalled his lead negotiator, Gustavo Bell, from the Ecuadorian capital Quito back to Bogotá.

Santos stopped short of saying that the negotiations would be halted, stressing that “my commitment to peace will be unwavering” and that Bell was being recalled so the principal officials could “evaluate the future of the peace process.”

Colombians will go to the ballot in May to elect a new president. Santos, who will exit after serving a maximum two terms, won the Nobel Peace Prize in 2016 and has been the most strident supporter of peace negotiations with both guerrilla groups while many conservative politicians continue to rail against an accord they believe afforded too many benefits to get FARC to lay down arms.

Two military members were injured in an apparent grenade attack on the Caño Limón-Coveñas pipeline that sent both to the hospital, where they were expected to recover fully. Some oil spilled, according to Ecopetrol, but the product was “contained in the crater left by the explosion,” said the Bogotá-based company in a statement.

The act is suspected to have been launched by the “José Daniel Suárez” faction of the National Liberation Army (ELN), which is now the country’s largest armed guerrilla group and has been formally negotiating a peace deal with the government since early last year in Quito.

Colombian President Juan Manuel Santos responded by formally recalling the country’s peace negotiator to Bogotá from Ecuador. The negotiator, Gustavo Bell, was set to re-engage in discussions to extend a three-month ceasefire that had expired just hours before the attacks.

“We were always willing to extend the ceasefire with ELN,” said Santos on Twitter, adding that “they inexplicably refused and today reinitiated terrorist attacks.” The president said that he told Gustavo Bell, the government’s chief negotiator, to return to Colombia and “evaluate the future of the peace process.”

Santos said on Twitter that he also instructed the military to “act with force and respond to this ELN aggression.”

“My commitment to peace will be unwavering,” added Santos, who won the Nobel Peace Prize in 2016, “but this comes through concrete action, not only words.”

Negotiations between the two sides officially began in February 2017, not long after the government finalized a peace agreement with the Revolutionary Armed Forces of Colombia (FARC), and had yielded some progress in the form of a 102-day bilateral ceasefire that was signed in the lead up to a national visit by Pope Francis and formally began on October 1.

According to Ecopetrol, another attack, near the Boyacá town of Cubará, hit a different section of the Caño Limón-Coveñas pipeline this morning, leading the oil company to initiate its official contingency plan to deal with the disruption and potential environmental fallout. “Pumping was immediately suspended” at eight wells, stated the company, and local communities were warned that preventive measures should be taken due to the potential risk of a an oil spill.

Yet another attack was suspected by Ecopetrol in the municipality of Aguazul in Casanare after the company detected a loss of pressure in the pipeline. It also suspended pumping and alerted the nearby communities. Ecopetrol stated this morning that it was then awaiting assistance from public security personnel to assess the situation before initiating its plan to “carry out the required repair and environmental recovery activities.”

Pipeline attacks on Caño Limón-Coveñas had remained an ongoing concern in the first half of 2017, typically attributed to ELN, but there have been fewer reported since the ceasefire began last September.

Photo: According to Ecopetrol, the attack in Boyacá left a large crater. (Credit: Ecopetrol)

After learning of the spill, Ecopetrol initiated its response plan set to protect the polluted waters from entering the Arauquita aqueduct that supplies many with drinking water.

Photo: Image of the oil spilled into the nearby river after the attack on the Caño Limón-Coveñas in Toledo. (Credit: Ecopetrol)

The company also notified and began working to mitigate environmental damage with public authorities in the towns of Cubará, Saravena, and Arauquita, and the departments of Norte de Santander and Arauca.

This marks the 46th attack on the oil transport system so far in 2017, according to Ecopetrol, and comes on the heels of two other attacks this month in Teorama in Norte de Santander and Saravena in Arauca.

In a statement, Ecopetrol said that it “rejects these illegal actions” that endanger people, damage the environment, and harm neighboring communities.

The company also revealed that it had identified an additional 10 holes, presumably made by those trying to siphon oil from the pipeline, in the Caño-Limón Coveñas pipeline.

Officials have been unable to properly repair the 480-mile pipeline following a large attack in May that caused an oil spill in Tibú in the department of Norte de Santander. The repairs have not been completed due to “continued harassment by firing helicopters” and “anti-personnel mines in some areas,” according to the Bogotá-based company. Ecopetrol said that assailants setting fire to equipment has also caused delays in the efforts to repair the damage.

Photo: An image distributed by Ecopetrol shows the environmental damage caused by an attack last week on the Caño Limón-Coveñas pipeline in the department of Arauca. (Credit: Ecopetrol)

The most recent pipeline attack occurred last Friday, July 21, in Saravena in the department of Arauca. In that incident, damage to Caño Limón-Coveñas, which is jointly owned by Ecopetrol and U.S. oil company Occidental, led to an oil spill that impacted some 2,500 square meters of land and vegetation.

In all, eight attacks have been reported since May 30 and oil theft has also been on the rise, according to Ecopetrol. Groups routinely damage the pipeline by opening it up to siphon off crude, and officials have discovered 17 of these illicit valves since May 30.

Previously, in the month of May alone, assailants stole roughly 100,000 barrels of oil. Their actions also led to the spillage of 11,064 barrels in the month, stated Ecopetrol.

In all of 2017, the company said that have been 38 known attacks against the oil infrastructure in Arauca, Boyacá, Cesar, and Norte de Santander. Additionally, at least 27 illicit valves have been detected this year on the Caño Limón-Covenas pipeline. Combined, the illegal actions against the pipeline have spilled oil that has impacted 13,300 square meters of land.

“Ecopetrol rejects these illegal actions that put the life and integrity of people at risk, violate international human rights, seriously affect the environment and the well-being of communities, as well as the normal development of oil activities.”

Ongoing disruptions to Caño Limón-Covenas in early 2017 left the pipeline out of service for more than one of the first three months of the year. That shutdown cost Colombia some 893,000 barrels of oil production, according to Ecopetrol.

The attack, which Ecopetrol says was carried out by “groups outside of the law” at 1:30 am in the Guamalito district of El Carmen, has caused oil to spill into the surrounding area and threaten the nearby Cimitarra stream. According to the state-controlled oil company, this waterway feeds into an aqueduct that some 3,500 locals in Guamalito rely on.

The company said the process has begun to both suspend pumping oil through the 485-mile pipeline and shut off the opening of the aqueduct. Along with mobilizing specialized personnel to clean up the oil spill, local disaster risk management personnel and other authorities have also been notified of the emergency. Ecopetrol has asked those from the community to steer clear of the area to so that they are not affected by the inhalation of gases.

According to Reuters, the attack did not initially affect production at the pipeline’s main feeder site, the Caño Limón field, or oil exports. The Caño Limón oil field is operated by Occidental Petroleum Corp., a U.S. exploration and production company based in Houston.

“This is a desperate waste of resources at a time when the country needs every dollar of oil revenue possible,” said Bancolombia in a note to investors.

Though Ecopetrol did not identify the perpetrators of the attack, former presidential cabinet member and current peace negotiator Juan Camilo Restrepo said on Twitter that the attack a “senseless action of the ELN against the aqueduct of Norte de Santander.” He added that, “with terrorist attacks like this that affect non-combatant civilian populations, the ELN makes the Quito negotiations difficult.”

The ELN, or National Liberation Army, became Colombia’s largest guerrilla group after the Revolutionary Armed Forces of Colombia (FARC) demobilized and handed over its weapons to the United Nations earlier this year. The ELN has been negotiating its own peace deal with the government and Restrepo in Quito, but its members have continued to conduct acts of violence and belligerence in the ensuing months, causing some in the nation to wonder if the talks can succeed.

Ecopetrol says that this was the 31st attack already this year on Caño Limón-Coveñas, one of two primary pipelines transporting oil in Colombia. “Ecopetrol repudiates these actions that endanger people’s lives, violate international humanitarian law, and seriously affect the environment and the well-being of communities as well as the development of oil activities,” said the company in a statement.

Photo credit: Ecopetrol