Earnings call transcript: Frontera Energy Q1 2025 sees stock surge post-earnings

Published 09/05/2025, 17:48
 Earnings call transcript: Frontera Energy Q1 2025 sees stock surge post-earnings

Frontera Energy Corp (FEC) reported its first-quarter 2025 earnings, revealing a net income of $27.5 million, or 35 cents per share, and a revenue of $190.77 million. The results exceeded market expectations, propelling the stock to rise by 8.69% to $5.13 in pre-market trading. The company’s operational focus and strategic initiatives played a significant role in this performance, despite challenges in the oil market. According to InvestingPro data, the company’s last twelve months revenue stands at $1.11 billion, with an EBITDA of $380.41 million, showcasing its operational scale.

Key Takeaways

  • Frontera Energy’s Q1 2025 earnings per share (EPS) of 35 cents surpassed forecasts.
  • The company’s stock surged by 8.69% following the earnings announcement.
  • Operational improvements and strategic financial maneuvers are underway.
  • Production challenges were noted, but future guidance remains steady.
  • Frontera is recognized for its ethical practices and strong infrastructure.

Company Performance

Frontera Energy demonstrated resilience in Q1 2025, achieving a net income of $27.5 million despite a challenging oil price environment. The company’s focus on operational efficiencies and cost control helped mitigate the impact of lower oil prices. Frontera’s strategic drilling and exploration activities in key Colombian regions also contributed to its robust performance.

Financial Highlights

  • Revenue: $190.77 million
  • Net income: $27.5 million (35 cents per share)
  • Operating EBITDA: $83.5 million, down from $113 million in the previous quarter
  • Total cash position: $199.8 million
  • Weighted average Brent sales price: $74.35
  • Production costs per barrel: $27.74

Earnings vs. Forecast

Frontera Energy’s actual EPS of 35 cents exceeded market forecasts of 34 cents, reflecting a positive surprise for investors. This performance is notable given the company’s previous quarterly challenges and indicates a strong rebound in operational efficiency.

Market Reaction

Following the earnings release, Frontera Energy’s stock price increased by 8.69%, reaching $5.13. This movement reflects investor confidence in the company’s strategic direction and financial health. The stock’s rise comes as a relief in a market characterized by volatility and uncertainty. InvestingPro analysis indicates the stock is currently trading significantly below its Fair Value, with two key ProTips highlighting management’s aggressive share buybacks and oversold RSI conditions. Subscribers can access 5 additional ProTips and comprehensive valuation metrics through the Pro Research Report.

Outlook & Guidance

Frontera Energy maintains its full-year production guidance of 41,000 to 43,000 barrels of oil equivalent per day, despite Q1 production challenges. The company continues to focus on strategic infrastructure investments and operational improvements. Future initiatives include a potential LNG import facility and ongoing exploration in key regions. With a beta of 1.22 and a market capitalization of $282 million, InvestingPro data shows the company’s financial health score as "FAIR," suggesting balanced risk-reward potential for investors considering current market conditions.

Executive Commentary

"Frontera remains focused on the delivery of its strategic objectives and generating value for shareholders," stated Gabriel De Alba, Chairman. CEO Orlando Cabrales emphasized, "We remain open to consider all options to surface the value of its assets and enhance shareholder value." CFO Rene Burgos Diaz added, "Our intention is to distribute the most amount of capital in the most efficient way."

Risks and Challenges

  • Market Volatility: Ongoing fluctuations in the global oil market could impact revenue.
  • Operational Delays: Previous production challenges highlight potential risks in drilling schedules.
  • Currency Fluctuations: Hedging strategies are in place, but currency volatility remains a concern.
  • Regulatory Changes: Potential changes in Colombian energy policies could affect operations.
  • Environmental Concerns: Increasing focus on sustainability may require additional investments.

Q&A

During the earnings call, analysts inquired about the ODL pipeline recapitalization strategy and the rationale behind high-premium share buybacks. Executives clarified the motivations for bond tender and consent solicitation, emphasizing their commitment to enhancing shareholder value through strategic financial decisions.

Full transcript - Frontera Energy Corp (FEC) Q1 2025:

Sergio, Conference Facilitator: Good morning. My name is Sergio, and I’ll be your conference facilitator today. Welcome to Frontera Energy’s First Quarter twenty twenty five Operating and Financial Results Conference Call. All lines are currently on mute to prevent any background noise. I would like to remind you that this conference call is being recorded today and is also available through an audio webcast on the company’s website.

Following the speakers’ remarks, there will be a time for questions. Analysts and investors are reminded that any additional questions can be directed to Frontera following today’s call at ir at fronteraenergy. Ca. This call contains forward looking information within the meaning of applicable Canadian securities laws relating to activities, events, or developments the company believes or expects will or may occur in the future. Forward looking information reflects the current expectations, assumptions, and beliefs of the company based on information currently available to it.

Although the company believes the assumptions are reasonable, forward looking information is not a guarantee of performance. Forward looking information is subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward looking information. The company’s MD and A for the quarter ended 03/31/2025 and the company’s annual information form dated 03/10/2025 and other documents it files from time to time with securities regulatory authorities describe the risk, uncertainties, material assumptions, and other factors that could influence actual results. Any forward looking information speaks only as of the date on which it is made, and the company disclaims any intent or obligation to update any forward looking information except as required by law. I will now like to turn the call over to mister Gabriel De Alba, chairman of the board of Frontera Energy.

Please go ahead.

Gabriel De Alba, Chairman of the Board, Frontera Energy: Thank you, operator. Good morning, everyone, and welcome to Frontera’s first quarter twenty twenty five operating and financial results conference call. Joining me on today’s call are Orlando Cabrales, Frontera’s CEO Rene Burgos Diaz, Frontera’s CFO. Also available to answer questions at the end of the call, we have Victor Vega, VP, Field Development, Reservoir Management and Exploration Alejandra Bonilla, general counsel Ivan Arevalo, VP operations and Renata Campagnaro, VP marketing, logistics, and business sustainability. Thank you for joining us.

Frontera remains focused on the delivery of its strategic objectives and generating value for shareholders. In the first quarter, the company generated $83,500,000 in operating EBITDA, recorded $27,500,000 in net income, dollars 13,600,000.0 in income from operations, produced $28,600,000 of adjusted infrastructure EBITDA and maintain a strong balance sheet, finishing the quarter with a total cash balance of $199,800,000 The Board is advancing on the strategic path for maximizing shareholder value, including on the infrastructure assets. The next step is to the recapitalization of its investments in the ODL pipeline through a new $220,000,000 non recourse secured loan and the development of key growth projects at Puerto Vallarta. The recapitalization will deliver approximately $115,000,000 in proceeds to Frontera today. After the refinancing of existing indebtedness, while maintaining future upside potential from this key transportation asset in Colombia.

Importantly, the financing excludes Puerto Valla from the security package, providing Puerto Vallarta greater flexibility to secure independent financing for new strategic growth projects. We would like to thank Goldman Sachs for their advice as the board reviews various alternatives. Frontera remains open to consider all options to surface the value of its assets and enhance shareholder value, including potential future strategic transactions involving its infrastructure business, which include a potential LNG import facility in Puerto Bahia. Regarding the ODL recapitalization, Frontera announced that it intends to commence a substantial issuer bid to purchase up to $65,000,000 of the company’s outstanding shares. Further, the company has also launched this morning a $65,000,000 cap tender and consent solicitation for its twenty twenty eight senior unsecured notes.

These efforts are consistent with the company’s strategy of returning capital to its stakeholders. The company is also declaring its quarterly dividend of $0.0625 per share or $3,500,000 in aggregate and plans to commence its NCIB program once the announced substantial issuer bid is completed. Assuming full uptake of this SIB and cap tender, the company will have returned $190,000,000 to its stakeholders since 2024 through normal course issuer bids, substantial issuer bids, declared dividends and bond buybacks. Looking ahead, Frontera will continue to consider similar investor focused initiatives in 2025 and beyond, including potential additional dividends, distributions, share or bond buybacks based on the overall results of the business, oil prices and the company’s cash flow generation. Additionally, the company will consider all options to enhance the value of its common shares in the short term and in so doing, consider other strategic initiatives or transactions.

I’d like now to turn the call over to Orlando Cabrales, Frontera’s CEO and Rene Burgos, Frontera’s CFO, who will share their views on our first quarter results. Orlando?

Orlando Cabrales, CEO, Frontera Energy: Thank you, Gabriel. Good morning, everyone, and thank you for joining us for today’s call. Frontera’s first quarter financial results in our Colombian and Ecuador upstream onshore business are in line with expectations despite some unforeseen challenges which resulted in lower than expected quarterly production due to delays in the heavy oil assets drilling campaign, lower than expected water handling at SARA, natural declines as well as greater need of well interventions in our light and medium blocks that have since been addressed. Despite these challenges, our second quarter production has been strong with estimated average daily volumes of approximately 42,400 BOE per day in May due in part to increase water handling volumes to 130,000 barrels of water per day at our Sahara Water Treatment plant. The company remains confident it will deliver its full year average production guidance of 41,000 to 43,000 BOE per day.

During the first quarter, the company drilled 13 development wells at our Quifa and CP6 blocks in Colombia and completed well workovers at 36 orders. On the exploration front, our focus remains on the Lower Magdalena Valley and Llanos Basins in Colombia during the first quarter. At the Cachicamo block, we finished drilling the Papidio-one well and is currently producing approximately 130 BOE per day. We also finished drilling the Greta Norte 1 well in February, which was deemed not commercial and the well will be blocked and abandoned. At the B1 Block, discussions with authorities and communities continue ahead of drilling the Hydra-one well in the second half of this year.

In addition, the company is also engaged in pre seismic and pre drilling activities related to social and environmental studies in the Janus 99 and BIM 46 blocks. In Ecuador, at the Espejo block, the Espejo Sur B3 Well remains on long term test and is producing three eighty barrels per day cross. The company continues to evaluate development options. Given the current lower oil price environment and global market volatility, we remain focused on the things we can control. Our strategy ensures that we have a stronger, profitable and more resilient company.

Frontera is proactive by identifying additional operational improvements, reducing capital spending and seeking greater cost and process efficiencies across our business while delivering our production targets and optimizing cash flow generation. In our standalone and growing Colombian infrastructure business, which includes the company’s interest in ODL, we generated adjusted infrastructure EBITDA of $28,600,000 during the quarter. ODL transported over 236,000 barrels of oil per day and declared a $151,000,000 dividend, dollars 52,900,000.0 net to Frontera, paying 50% of this amount in March 2025. These results highlight the strong cash generation capacity of our strategic infrastructure investments. At Puerto Bahia, we remain focused on starting up the reticle connection project.

With construction effectively complete, we aim to transport our first volumes through the connection in the third quarter of this year. Ongoing investment in the port, including the LPG JV with Gasco and Preser Gasco are progressing as planned. Additionally, we are also reviewing new investment opportunities to leverage the port’s extra key location, existing facilities and infrastructure build out options for profitable long term growth such as potential LNG import facility. Regarding our Guyana exploration business, on March thirteen of this year, the company and CDX announced the receipt of a communication from the government of Guyana indicating that the government was terminating the petroleum agreement and canceling the PPL for the quarantine block offshore Guyana. On 03/26/2025, Frontera sent a notice of intent to the government of Guyana alleging breaches of The United Kingdom Guyana Bilateral Investment Treaty and the Guyana Investment Act by the Government of Guyana.

The notice of intent initiated a three month period for consultations and negotiations between the parties to resolve the dispute amicably. The JV remains firmly on the view that its interest in the quarantine block remains in place and in good standing. Should the parties not reach a mutually agreeable solution, the JV and its other stakeholders are prepared to assert their legal rights. After the end of this quarter, we signed a commitment letter for a $220,000,000 non recourse secured financing supported by Frontera’s indirect interest in ODL and expect to enter into definite agreements shortly. The recapitalization will allow us to distribute value to our investors while maintaining the upside of this key asset in Colombia.

I would now like to turn the call over to Rene Burgos, Frontera’s CFO.

Rene Burgos Diaz, CFO, Frontera Energy: Thank you, Orlando, and thank you, Gabriel, and good afternoon, everybody. Thank you as always for your interest and support of the company. I’d like to take a moment to highlight a few key financial aspects of our quarterly results. For the first quarter, the company recorded an income of $27,500,000 or 35¢ per share. The company’s net income includes roughly $13,600,000 of operating income and $15,100,000 from share of income from associates, the ODL investment.

These were offset primarily by approximately 26,600,000.0 in deferred income tax expense and 17,300,000.0 in finance expenses. Operating EBITDA for the quarter was approximately $83,500,000 compared to 113,000,000 in the prior quarter. This is primarily the result of lower sales volumes partially offset by slightly higher Brent prices. Let’s take a moment to talk about our key per barrel indicators associated to our realized prices and cost. During the quarter, our weighted average Brent sales price was $74.35.

During the quarter, the company also witnessed lower average Vescona differentials on export sales of $4.38 as compared to $5.44 the prior quarter and over $1 per barrel reduction. Looking ahead, we continue to see a healthy appetite for the company’s crude, seeing differentials for the company’s barrels lower by over $2 from the Q1 levels. Purchase crude net margin associated to our dilution and transportation programs was $3.71, higher than the $3.42 for the third quarter. The quarter over quarter variance was a result of increased demand for diluent and fuel used for energy and lower volumes coming from our light and medium crude oil production. Taking a closer look into our operating cost, our production, energy, and transportation cost per barrel for the quarter totaled $27.74.

This compares to $24.30 for the prior quarter and $26.87 for q one twenty twenty four. Increased quarter over quarter production cost was primarily a result of the impact of lower quarter over quarter production as well as higher well intervention activities during the quarter. Energy costs also increased during the quarter mainly related to carbon credit purchases, an important part of our ESG strategy of offsetting our carbon footprint, and higher energy prices. Transportation costs had an increase as a result of increased tariffs for the Oceansa pipeline and trucking. On our infrastructure business, as Orlando highlighted, adjusted EBITDA for the quarter was $28,600,000 This compares to $27,500,000 in the fourth quarter.

The quarter over quarter increase was driven by positive results in the Allele segment due to the pipeline tariff increase and lower cost during the quarter. OJO volumes transported were 236,000 barrels per day, consistent with the previous quarter volumes. With respect to our capital expenditures, total CapEx for the quarter was $46,700,000 lower than both q four twenty twenty four and q one twenty twenty four levels. Our CapEx included the drilling of 13 development wells in Kipa and CP 6 and well into riches at 36 others. Well, as two exploration wells in Columbia and the Cachicamo Block at this cost per annum.

As of 03/31/2025, the company reported a total cash position of a hundred and 99,800,000.0 including $170,100,000 of unrestricted cash and cash equivalents. Turning now to risk management, our current risk management strategy supports our operations and planning. Frontera uses derivative instruments to manage exposure to oil prices and FX volatility. On the oil side, the company has entered into hedges successfully securing up to 40 per a 40% hedging ratio until June 2025, a 20% hedging ratio for its July and August net production at a $70 Brent strike price, protecting against the drop in oil prices. Also, we covered 40 of the company’s expected peso exposure until the third quarter of twenty twenty five and twenty percent of its exposure through the fourth quarter with floors at over the 4,200 peso level.

Both these hedges provide the company with cash flow visibility and help mitigate the impact of price fluctuations while also allowing the business to deliver on its 2025 targets. With respect to our 2025 financial targets, we would like to remind our investors that within our MD and A materials, we provide a detailed breakdown of our guidance, including sensitivity to the impact of our operating EBITDA at different oil price scenarios. Turning over to our infrastructure strategic review, we would also like to highlight some of the details of the ODL interest recapitalization transaction. As Orlando alluded, the company has signed a commitment by the WoodMacquarie Group expects to raise $220,000,000 in nonrecourse secured financing supported by the cash flows from Frontera’s direct interest in ODL. As a result of recapitalization, Frontera will receive approximately $115,000,000 in proceeds and will exclude Puerto Vallarta from the security package.

As our Chairman highlighted, as we complete this first important step, the ODL recapitalization, the focus of Santander remains to surface the value of its infrastructure assets. Santander remains open to considering all options, including a potential future separation of the infrastructure business and other strategic transactions, which could include a potential LNG import facility in Puerto Valla. We would like to thank Goldman Sachs for their advice as the board reviews these various alternatives. Finally, I’d like to take I’d like to provide an update on our investor value initiatives. Year to date in 2025, the company repurchased 1,000,000 of its 2028 unsecured notes.

As mentioned in our press release, Santander has also paid approximately $7,000,000 in dividends year to date. Together with this results announcement, the Board has declared a quarterly dividend of CAD 6.25 per share Canadian payable to shareholders of record as of 07/03/2025 to be paid on or around 07/17/2025. Regarding the company’s substantial issuer bids or SIBs, Frontera paid in January in SIBs. The SIB was widely participated and successful with an over 90% participation rate. We also announced today and subject to the closing of the financing related to the audio recapitalization, the intention to commence a new substantial issuer bid, through which the company will offer to purchase up to 65,000,000 of its common shares for cancellation at a fixed price per share.

The terms of the new SID, including pricing, will be determined in the course, and the company’s bank credit

Participant: participant is now exiting.

Rene Burgos Diaz, CFO, Frontera Energy: That it will be completed in July 2025. The SIB will not be conditional upon any minimum number of shares being tendered and will be subject to conditions customary for transactions of this nature. Santander continues to believe this format is the most efficient means to distribute capital to all of our shareholders and looks forward to the launching of this process in the next weeks. Additionally, we announced the launch of a cap cash tender and consent solicitation for twenty twenty eight senior notes. Montera is offering to purchase up to 65,000,000 of its notes.

Allow along with the tender, the company launched a solicitation of consent to affect certain proposed amendments to the indenture governing bid ups. The proposed the purpose of the tender offer and consolidation is to gain greater financial and operational flexibility while simultaneously reducing the company’s overall debt outstanding. Additionally, the company believes the proposed amendment shall permit the company to take certain actions previously limited by certain restrictions in the notes indenture, including, but not limited to, allowing for additional restricted payments, including those related to unrestricted subsidiaries, providing additional flexibility in managing working capital to support operational efficiency and financial resilience, increase the amount of per need indebtedness and liens, and reduce conditions and requirements limiting the company’s ability to pursue strategic transactions that may enhance the issuer’s growth and value in each case without violating the provisions of the new venture. The tender offer and consist solicitation will be subject to various conditions including without limitation that the company shall have obtained debt financing on the terms and conditions and yielding net cash proceeds reasonably satisfactory to the company. Request for documentation of this transaction should be directed to the information and tender agent at the offer website projects.sedali.com backslash frontera.

Questions regarding the offer or the solicitation should be directed to the loan manager and solicitation agents, Citigroup, or EDAL. More information can be found in this morning’s press release. And right now, I would like to now turn the

Orlando Cabrales, CEO, Frontera Energy: call back to Orlando. Thank you, Renee. Before I conclude today’s call, I would like to highlight that on March eleven of this year, Frontera was once again recognized by EdiSphere as one of the world’s most ethical companies. This is the fifth consecutive year that the company has received this distinction from EdiSphere, a global leader in defining and advancing the standards of ethical business practices. Additionally, we also released our 2024 sustainability report which highlights the progress we have made over the last years against our sustainability goals as we work towards a culture of corporate consciousness that allow us to state that we are committed to developing a sustainable a sustainability strategy throughout our business to drive operational efficiency.

Notably, we successfully achieved a % of our 2024 sustainability goals, which is a testament to unwavering commitment by all Frontera employees to responsibly manage our business. Thank you. With that, I would like to conclude by saying thank you to Gabriel and Rene for the comments and thank you everyone for attending our call. I will now turn the call back to our operator, who will open up for questions.

Sergio, Conference Facilitator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two.

If you are using a speakerphone, please lift the handset before pressing any case. We’ll pause for a moment to compile the q and a roster. Your first question comes from Peter Polley from Jefferies. Please go ahead.

Rene Burgos Diaz, CFO, Frontera Energy: Hi. Thank you for the call and the opportunity for a question. Can you please clarify how much of ODL’s annual dividend flow will be used or expected to be used to service this new debt being taken in the recapitalization given the new loans expected interest rate and amort pay profile? Thank you. Hi, Peter.

How are you? Thank you for joining the call. We have effectively, are securitizing the flows from ODL through this financing. So all of the cash flows associated with your dividend will be used to to service that, that new recap procedure penalty. Okay.

Thank you. Yep.

Sergio, Conference Facilitator: Thank you. Your next question comes from Thomas Klampka from Gramercy. Please go ahead.

Participant: Good morning, gentlemen. Can you, talk a little bit about the infrastructure recap plan? The original plan, I believe, was to to sell the infrastructure assets, and now you’re doing this asset financing instead. Can you talk about the the thought process process that you took?

Rene Burgos Diaz, CFO, Frontera Energy: John, how are you?

Orlando Cabrales, CEO, Frontera Energy: Good. Thank you.

Rene Burgos Diaz, CFO, Frontera Energy: Look, I can think that we you know, through the board, we conducted a very thorough and extensive process, as Javier said, with the support of of the Goldman team. After a review of the different alternatives, we believe that the the best course in action is to pursue this audio recapitalization, which allowed us to receive the most amount of cash proceeds associated with the potential transactions that were available while also retaining the equity of this business. I would like to point out that the OREO pipeline is one of the hidden gems within the Ecas Pedron pipeline portfolio. It sits in the Janos Basin, which we call which covers roughly 70% of all the current one p reserves in country. And it’s basically one of the main arteries together with a sense of feeding the crude oil in the country.

So we believe there’s there remains substantial upside there, and we believe that with this transaction, we unlock a partial of the value associated with the pipeline while retaining some of that upside. Similarly, now our focus turns into, you know, Puerto Valla, and I think that both Gabriel and and Orlando highlighted, you know, our next step is to continue with those efforts of maximizing value. And and we believe there are several strategic projects that are in the maturing stage and ones that are in the close to completion stage that will continue to unlock value and generate a lot of cash for the company and its investors. So our focus now turns to continue to maximizing that value. I know, or, Gabriel, or, Orlando, if you wanna if you wanna kinda add

Participant: to it. No. I I I mean, the only thing

Orlando Cabrales, CEO, Frontera Energy: I would add just to on the build building on what Elena said is that is that we I mean, we remain absolutely open to consider all the opportunities, all opportunity to enhance shareholder value. So including a potential separation of the infrastructure business and orders for the transactions involving the infrastructure business, which could include this potential LNG project that we are reviewing for

Rene Burgos Diaz, CFO, Frontera Energy: for for the country. So that that would

Orlando Cabrales, CEO, Frontera Energy: be my only my only add to what Glenn said.

Participant: Okay. And the the consent solicitation you’re doing for the for the twenty eighth, is that needed in order to do this ODL financing, or is that just to get additional flexibility away from this financing?

Rene Burgos Diaz, CFO, Frontera Energy: Both both positions are separate. You know, I I think that I I would perhaps rephrase your question and answer differently, Tom, which is we are listening to what investors wanted. Investors have asked us to repurchase debt. You know, with these flows, the company has the capacity to utilize these flows to pay a dividend, but it has chosen to use this to distribute, you know, relatively equally to investors, you know, to an SIB, but also to a a repurchase of debt. And in addition to that, we’re seeking additional flexibility because we do believe that this is a unique opportunity for us to capture within the Colombian market, and we need to be thinking strategically at all times.

So to answer your question, no. Completely unrelated, but if the things are focused on maximizing value for all of our stakeholders.

Participant: Okay. Thank you very much.

Sergio, Conference Facilitator: Thank you. Your next question comes from Josh Young from Bison. Please go ahead.

Josh Young, Analyst, Bison: Hey, guys. Thanks for taking my, my question. So so just, following up on the the last question, I think it’s great that you guys are doing the SIB and the tender for for the bonds. It it makes a lot of sense to me. The the thing that I don’t understand and that I’m not sure you guys have effectively communicated is the logic around the unusual nature of the special issuer bids that you’ve done.

I understand you might not be able to talk about the one you’re about to do, but you can certainly answer questions on the ones that you did last year. The percent premium that was offered was extremely high relative to any other example we could find among Canadian issuers. And it would seem if you were trying to maximize the value for all stakeholders and shareholders that you would offer a lower premium and try to retire more shares via, SIB rather than offering such an extreme premium on repeated SIBs and retire fewer shares. Could could you explain the the logic behind that? Trying to understand a little better what what what the logic is of of intentionally retiring fewer shares and losing some of that potential accretion?

Rene Burgos Diaz, CFO, Frontera Energy: It’s it’s a good question, and the answer speaks for itself. The reality is that 90% plus of our shareholders participated. So when you think about it, you know, even mathematically, everybody’s getting the result. Our intention is to distribute the most amount of capital in the most efficient way. And you gotta remember that there’s also other considerations as capital is returned.

That what we’re seeking to do is to make it in the most friendly, less friction form. And we’ve identified the SIB to be the most friendly and attractive form to do it. And, you know, to entice people to participate in SIBs, we found and to a lot of them to participate in SIBs on this side is to offer a high premium. And we are indifferent now as to a lower rate because ideally, what you want is every shareholder to participate. And I would call it 90 plus percent approval.

Basically, most shareholders, all shareholders participating. Significantly, all of our shareholders are participating.

Josh Young, Analyst, Bison: Okay. Thanks. And then just as a a follow-up on the bonds. Again, I think it’s a great idea for you guys to do a mix of buying back bonds at a huge discount. Was there a limit to how many bonds you were allowed to buy in the open market given the very large discount they were trading at until this announcement?

Or what’s the logic on doing a tender for more rather than continuing to buy maybe a little more aggressively the bonds

Rene Burgos Diaz, CFO, Frontera Energy: in the market? Thank you. Sorry, Josh. I didn’t quite understand that question, but let me see if I can try and answer. Because of, you know, the formal public nature of this, the the the, you know, the there are certain limits of how you can hypothetically buy.

But as to this one particular transaction, we’re within those limits, and we believe this is a an appropriate way for us to get everybody to participate and for us to be able to get give the opportunity to every bondholder to participate rather than doing it piecemeal. Well, we try to also do it piecemeal, I know has been a frustration for for some of the investors, is we struggle with the liquidity and the inability to purchase more because of that lack of liquidity. So all this to say, we believe this is the appropriate bidding, to to or form for us to offer in terms of our investors. And second, when we thought about the the amount and the rationale, again, we like I said to Tom, we heard investors loud and clear. Investors wanted us to allocate some other portions of some of our strategic initiatives to investors.

There are bondholders as well. So this is a call to that action. Great. Thank you. I appreciate it.

Sergio, Conference Facilitator: Thank you. Your next question comes from Diego. I’m sorry. He withdrew his question. Your next question comes from Preet Shreedhar from Cayuse Capital.

Please go ahead.

Preet Shreedhar, Analyst, Cayuse Capital: Hello. Hi. Can you hear me?

Rene Burgos Diaz, CFO, Frontera Energy: Sure.

Preet Shreedhar, Analyst, Cayuse Capital: I just had a question around, I guess, the range of valuations that you were seeing from the Goldman process for the ODL pipeline. I I guess you probably can’t give hard numbers, but I would be curious to to see how far off the the, like, bids were versus this refinancing option.

Rene Burgos Diaz, CFO, Frontera Energy: I will tell you this transaction is transaction that feeds us the most and retains the most value as it relates to the ODIO asset. Hello? Yep. Thanks. That that that’s it for me.

Alright. Good.

Sergio, Conference Facilitator: Ladies and gentlemen, if you would like to ask a question, please press star, then number one on your telephone keypad. There are no further questions at this time. Should you have any further questions, please email IR@FronteraEnergy.ca. This concludes the call for today. Thank you all for participating.

Rene Burgos Diaz, CFO, Frontera Energy: Thank you. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.