Frontera Announces First Quarter 2020 Results and the Program Adopted to Manage the COVID-19 Crisis and Lower Oil Price Environment

TORONTO, May 6, 2020 /CNW/ - Frontera Energy Corporation (TSX: FEC) ("Frontera" or the "Company") today reported financial and operational results for the first quarter ended March 31, 2020. All financial amounts in this news release are in United States dollars, unless otherwise stated.

First Quarter Operational and Financial Results:

• Production averaged 63,572 boe/d, which was 10% lower compared to the fourth quarter of 2019, and 6% lower than the first quarter of 2019. Production in Colombia averaged 58,187 boe/d reflecting stable production in heavy oil blocks and natural declines in light and medium oil and natural gas fields, as well as the negative impact of measures introduced to limit the spread of COVID-19. In Peru Block 192, community actions led to the suspension of production in early March 2020, with first quarter production in Peru averaging 5,385 boe/d.
• Cash generated by operating activities was $47 million, compared with $152 million in the fourth quarter of 2019 and $83 million in the first quarter of 2019, primarily due to a reduction in global crude oil prices. The Brent crude oil benchmark price averaged $50.82/bbl for the first quarter of 2020, 19% below the fourth quarter of 2019 and 20% below the first quarter of 2019.
• The Company reported a net loss of $388 million ($4.04/share), compared to a net income of $46 million ($0.47/share) in the first quarter of 2019, primarily due to a non-cash impairment charge of $151 million, a non-cash reduction of $168 million in deferred income tax assets and a $20 million write-down of oil inventory, all items related to lower oil prices.
• Operating EBITDA was $44 million compared with $137 million in the fourth quarter of 2019, and $145 million in the first quarter of 2019. The Company's risk management program resulted in realized gains of $15 million on settled positions during the quarter which partially offset the impact of lower Brent oil prices.
• Capital expenditures were $65 million in the first quarter of 2020, 51% lower than the fourth quarter of 2019, and 7% lower than the first quarter of 2019, as the Company reduced its planned drilling and exploration activities in line with the lower oil price environment. During the quarter, the Company drilled 19 wells, including 18 development wells and one exploration well.
• Operating netback was $16.21/boe, compared with $29.62/boe in the fourth quarter of 2019, and $30.23/boe in the first quarter of 2019. Lower benchmark prices and wider Vasconia differentials resulted in net sales realized price decreasing to $41.67/boe for the first quarter.
• A quarterly dividend of C$0.205/share, or $14 million, was paid on April 16, 2020, and the Company repurchased for cancellation 1,392,314 common shares at a cost of $10 million under its normal course issuer bid ("NCIB") program during the quarter.

Frontera's Program to Manage the COVID-19 Pandemic and the Current Oil Price Environment:

• As the gravity of the current COVID-19 pandemic started to become apparent, with its consequent impact on oil demand and prices, Frontera moved decisively to adopt a proactive strategy to manage through the crisis, enacting measures to protect its strong balance sheet while preserving flexibility and optionality for the future.
• A priority for Frontera has been to maintain a safe and healthy working environment in all of its operating areas, complying with all national health guidelines. In Colombia, the oil and gas sector has been declared a strategic industry by the government which has allowed the Company to adapt its operating procedures and continue producing and transporting oil and gas. Across the Company, field teams have been reduced and staff in Frontera's offices are working from home.
• Frontera has increased its support for local communities in Colombia and Peru by providing safety, medical and food supplies.
• The Company is focusing ongoing 2020 capital expenditures on activities that remain economic at low oil prices, primarily essential maintenance, well-workovers and activities that sustain production from higher netback fields.
• Frontera now expects full year capital expenditures will be in the range of $80 to $100 million, down from the original plan of $325 to $375 million.
• As a consequence of the very low oil prices in April, Frontera decided to temporarily shut-in production from certain fields in Colombia with lower field netbacks. This includes the highest water cut wells in Quifa. The Company exited the first quarter with Colombian production of around 54,000 boe/d as a result of the slowdown in development drilling and workovers as the COVID-19 pandemic started to intensify in March. The volumes presently shut-in are between 14,000 - 15,000 bbls/d, including nearly 5,000 bbls/d in the Quifa field. Combined with the shut-in of Peru production, current Frontera production totals 39,000 - 40,000 boe/d. The Company does not expect the shut-ins to affect future field performance and is planning to reactivate the shut-in production once market conditions improve.
• The Company has taken significant steps to reduce production and transportation costs (outlined further in the release) and has also benefited from a weaker Colombian peso. During this period, the Company is proceeding to renegotiate service provider contracts and energy tariffs in order to rebase its field operating costs. Based on the revised production plan, Frontera expects it can reduce cash outlays by up to $100 million in production costs and $30 million in transportation costs.
• Frontera has taken steps to reduce its 2020 general and administrative ("G&A") expenses by $30 - $35 million. The Company has made significant headcount reductions and directors, executives and other management of the Company have agreed to reductions in cash compensation between 25% and 10%.
• The Company ended the first quarter of 2020 with cash and cash equivalents (including restricted cash) of $361 million and no debt maturities until 2023. Assuming a flat Brent oil price of $30/bbl, the current value of the April through December 2020 oil hedge position is approximately $57 million.
• Frontera is withdrawing all of its previously stated 2020 guidance. Additionally, given current oil prices, in accordance with its dividend policy the Company has suspended its dividend program and does not expect to make further share repurchases under its NCIB until conditions improve.

Gabriel de Alba, Chairman of the Board of Directors, commented:

"Frontera has been managed to maximize long-term shareholder value regardless of the oil price environment without sacrificing one of the strongest balance sheets among our peers. Because of this disciplined approach, we began the second quarter with a strong cash position of $361 million, hedges in the money, and $350 million of debt which is not due until June 2023. We are well positioned to deal with the unforeseen challenges now facing our industry and global economy. We have taken decisive measures in response to the global oversupply of crude oil and demand weakness arising from the COVID-19 pandemic including reduction of our 2020 capital plan and the temporary closure of uneconomic production. We are focused on protecting our people, balance sheet and cash flow against the potential of an extended period of weaker commodity prices or pandemic-related work stoppages. We are ready to restore production and resume growth once recovery begins."

Richard Herbert, Chief Executive Officer of Frontera, commented:

"The Coronavirus crisis and resultant collapse in oil demand has led to current oil prices at historically low levels and significant uncertainty in the outlook for the rest of this year. Through our hedging program, our operational response to shut-in production which is not economic at present, and our relentless focus on cost savings, we have acted quickly to protect the Company's cash position and future growth potential. The Company retains the flexibility to make further adjustments as required by the circumstances and is well positioned to restore production and investment once the peak of the crisis has passed and recovery begins."

Operational and Financial Summary:

		Q1 2020		Q4 2019		Q1 2019
Operational Results
Average Production
Oil production - Colombia	(bbl/d)	56,150		58,517		63,052
Oil production - Peru	(bbl/d)	5,385		10,164		2,271
Natural gas production - Colombia	(boe/d)	2,037		2,224		2,651
Total	(boe/d)	63,572		70,905		67,974
Operating Netback ^(1)
Net sales realized price	($/boe)	41.67		56.22		54.33
Production costs	($/boe)	(12.48)		(13.76)		(11.40)
Transportation costs	($/boe)	(12.98)		(12.84)		(12.70)
Operating netback	($/boe)	16.21		29.62		30.23
Financial Results
Revenue	($M)	236,938		351,027		377,527
Net sales ^(1)	($M)	243,957		340,431		293,273
Net (loss) income ^(2)	($M)	(387,809		69,408		46,187
Per share – basic	($)	(4.04)		0.71		0.47
Per share – diluted	($)	(4.04)		0.70		0.47
General and administrative	($M)	15,015		22,897		16,492
Operating EBITDA ^(1)	($M)	44,143		137,052		144,855
Cash provided by operating activities	($M)	46,541		151,575		83,155
Capital expenditures	($M)	64,676		132,452		69,219
Total cash, including restricted cash ^(3)	($M)	361,269		455,811		487,188
Working capital	($M)	67,715		71,356		160,077
1. These metrics are Non-IFRS financial measures. Refer to the Advisories - "Non-IFRS Financial Measures" section below for further details.
2. Net (loss) income attributable to equity holders of the Company.
3. Includes $265 million of cash and cash equivalents, $30 million of short-term restricted cash and $66 million of long term restricted cash.

Operational Update:

In the Company's heavy oil business unit, in the Quifa SW field, 13 successful horizontal wells were drilled in the first quarter of 2020, confirming additional potential in the field for future development drilling. Also in the heavy oil area, in the Jaspe field on the Quifa block, the Company's joint venture partner EcoPetrol approved field commerciality. Frontera is now working on plans to start the development phase of this new field when conditions improve. In the Hamaca field on the CPE-6 block, one vertical well and four horizontal wells were drilled in the first quarter of 2020. The field's average production in the first quarter was 3,537 bbl/d and production reached 4,100 bbl/d during February as a result of the completion of a water handling and disposal expansion project. The Company has now expanded the production capacity of CPE-6 to manage more than 60,000 bwp/d, equivalent to oil production of 4,000 boe/d and 4,500 boe/d in preparation for future expansion.

In the Company's exploration project in the Lower Magdalena Valley, in the Guama block (Frontera 100% WI), the Asai-1 exploratory well was drilled and completed and is ready for testing. The integration of drilling data with petrophysical interpretation and wireline logs has identified multiple potential hydrocarbon bearing intervals in the Porquero Formation. Testing of the Asai-1 well is expected to commence once risk from COVID-19 to field personnel has passed.

Also in the Lower Magdalena Valley, in the VIM-1 block, the Company along with its partner, Parex Resources Inc., tested the La Belleza well in the Cienaga de Oro formation. As announced on February 6, 2020, the well was tested under natural flowing conditions and over a 328-hour period, the well produced a total of 32,728 bbls of 43 degree API oil, 147 mmcf of natural gas and 3,996 barrels of water. The average flow rate during the test was 2,395 bbl/d and 10.7 mmcf/d of gas (4,272 boe/d combined) at an average water cut of 12%. The flow rate during the final 24 hours of the test was 2,696 bbl/d and 11.8 mmcf/d of gas (4,766 boe/d combined) at an average watercut of 10%.  The joint venture partners are evaluating options to drill additional delineation wells and evaluating different options for gas commercialization and infrastructure requirements.

In offshore Guyana (Frontera 33.33% WI), the newly acquired 3D seismic data over the northern portion of the Corentyne block is being processed. This new information will be used to produce an interpretable data set to mature prospects for future drilling in this exciting part of the basin, which lies adjacent to recent discoveries in Guyana and Suriname. The joint venture has been engaged in discussions with the Government of Guyana on alternative approaches to its work commitments in that country, so as to preserve the integrity of its licenses.

In Peru, the Company closed in production from offshore Z-1 block in January 2020. In Block 192, force majeure was declared and accepted by the regulator PeruPetro effective February 27, 2020. There is currently no production in Peru and operations have been reduced to a minimum.

Operational Outlook and Measures Taken to Manage the Lower Price Environment:

On March 23, 2020, in response to the lower oil price environment caused by excess global supply and the COVID-19 pandemic, the Company announced a reduced oil production forecast and a major reduction in capital expenditure for 2020. Since that date, oil prices have continued to trend lower and thus the Company is taking several further steps designed to safeguard its people, balance sheet, and cash flow through a potential "lower for longer" commodity price environment.

Health, Safety, and the Environment: During the current COVID-19 pandemic Frontera is prioritizing its efforts on the health and well-being of its workers and people in local communities. The Company's field teams have been reduced with an extension of work shifts to reduce personnel rotation, and the Company has back-up teams and contingencies in place. Office staff are working from home where stay-at-home measures have been implemented. All operations follow national health guidelines to ensure the safety and well-being of employees company wide. Frontera has increased its support for local communities with safety, medical and food supplies. The Company has donated more than 6,000 prevention kits to rural and indigenous families in Colombia and 1,500 in Peru. Frontera is also helping to provide medicine and implementing medical brigades in its areas of influence. Additionally, the majority of the Company's employees are donating one-day of their salary, matched an equal amount by the Company, to help fund intensive care units and provide N95 masks and ventilators in Colombia.

Capital Expenditures: The Company has further reduced total planned 2020 capital expenditures to a range of $80 to $100 million from the original plan of $325 to $375 million. Ongoing capital expenditures will be focused upon activities that remain economic at low oil prices, primarily essential maintenance, well work-overs and activities that sustain production from higher netback fields. The Company has been reviewing its exploration commitments and alternatives with all governments, including requests for an extension of deadlines under these agreements. In Colombia, the ANH has issued a special decree to allow certain exploration commitments to be deferred by 12 months. Frontera has applied for extensions to the ANH to defer eligible Colombian exploration commitments and expects to receive a decision in the near-future. Frontera is in negotiations with governments in Peru and Ecuador to rephase exploration commitments in the light of the current crisis.

Production Shut-ins: Given the current low oil prices, Frontera has moved to temporarily shut-in parts of its production from a number of its fields and will move to reactivate these fields back into production when market conditions improve. In Colombia, production is being scaled-back at Quifa to reduce energy costs associated with the highest water cut wells. The impact will be to reduce Frontera's daily production in Quifa by approximately 5,000 bbl/d. Also in the heavy oil business unit, the Quifa satellite Cajua field has been shut down along with the Sabanero and Hamaca field in the CPE-6 block until conditions improve. In the light and medium oil area, the Cubiro block, Casimena Mapache, and Canaguaro fields have also been shut-in. The Company exited the first quarter with Colombian production of around 54,000 boe/d as a result of the slowdown in development drilling and workovers as the COVID-19 crisis started to intensify in March. The estimated shut-in volumes in Colombia are 14,000 - 15,000 bbl/d of current corporate production, and combined with the shut-in of Peru production, results in current Frontera production totals of 39,000 - 40,000 boe/d. Frontera does not expect the temporary shut-ins to affect future field performance and is planning to reactivate the shut-in production once market conditions start to improve.

Production Cost Reductions: The Company has taken significant steps to reduce production costs by renegotiating key contractor tariffs, eliminating non-essential maintenance, limiting staff and contractors to minimal operational levels during the crisis, and reducing water handling and injection volumes to facilitate cost reductions. Frontera has benefited from lower energy costs and the depreciation of the Colombian Peso ("COP") versus the US dollar. Approximately 80% of production costs (and significant transportation and G&A costs) are denominated in Colombian pesos, which has devalued to an exchange rate of approximately 4000:1 USD/COP from 3300:1 USD/COP in the original plan. Including reduced volumes related to the uneconomic production shut-ins, the Company believes it can reduce its total annual production costs by up to $100 million from its original plan.

Transportation Cost Reductions: The Company is implementing a number of initiatives to reduce transportation costs through the rest of the year, including renegotiating pipeline and services tariffs, freezing all truck tariffs, and subleasing spare storage capacity at Puerto Bahia. In March 2020, the Company asserted rights to cease payments for unused facilities ancillary to the Bicentenario/Caño Limon pipeline system, which is expected to reduce cash disbursements by approximately $30 million per annum.

General and Administrative Cost Reductions: Frontera expects to reduce its general and administrative overhead through restructuring efforts resulting in a more efficient and leaner company structure, as well as through savings from a weaker Colombian peso. Year to date, the Company worked to reduce its office headcount by 26%. Additionally, directors, executives and other management of the Company have agreed to reductions in cash compensation between 10% and 25%.  The Company currently expects full-year general and administrative expenses to be approximately $30 - 35 million below its original plan.

Suspension of Quarterly Dividend and Share Buyback Program: Consistent with the Board's previously stated quarterly dividend policy, which ties the quarterly dividend payments to the Brent oil price during the applicable quarter, the Company has suspended its dividend program. In addition, the Company does not expect to make any further share repurchases under its NCIB until market conditions improve.

Guidance Update:

Due to the ongoing unprecedented volatility in global crude oil prices, Frontera is withdrawing its previously announced full-year 2020 average production, production costs, transportation costs, operating EBITDA, and capital expenditures guidance as originally published in the news release on December 5, 2019, and subsequently revised on March 23, 2020.

Financial Liquidity:

Frontera maintains a strong liquidity position with a total cash position of $361 million as of March 31, 2020, including restricted cash of $96 million. The Company has borrowings consisting of $350 million of long-term unsecured notes maturing in 2023. During the first quarter, due to the ongoing fall in crude oil prices, the credit ratings of the Company's unsecured notes were downgraded by Standard & Poors to B+ (from BB-) with a negative outlook and by Fitch to B- (from B+) with a negative outlook. The Company has no mandatory principal payments on its unsecured notes until 2023.

Frontera has a $60 million Unsecured Letter of Credit facility expiring May 17, 2020. The Company is in the process of replacing this facility with various uncommitted bilateral lines of credit.

Hedging Update:

For the first quarter of 2020, hedged volumes were 46,400 bbl/d on average, resulting in $16 million of hedging income. In April, Frontera hedged 45,333 bbl/d, yielding a further $16 million in oil hedging gains. Assuming a flat Brent oil price of $30/bbl, the current value of the April through December 2020 oil hedge position is approximately $57 million. The Company continues to pursue opportunities to manage its hedge book depending on market conditions.

The following is the current hedging portfolio as of the date of this release:

Term	Type of Instrument	Notional Amount / Volume (bbl/d)	Put/Call/Spreads $
April	Put options	22,833	40
	3-ways	17,500	47/57/74
	Put Spread	5,000	47/57
	Total April	45,333
May	Put options	11,167	30
	3-ways	17,500	47/57/74
	Put Spread	5,000	47/57
	Total May	33,667
June	3-ways	5,000	47/57/74
	Put Spread	17,500	47/57
	Total June	22,500
Q2 2020	Average Q2	33,833
July	3-ways	22,133	50/60/75
August	3-ways	22,133	50/60/75
September	3-ways	22,133	50/60/75
Q3 2020	Average Q3	22,133
October	Put Spread	8,000	50/60
November	Put Spread	8,000	50/60
December	Put Spread	8,000	50/60
Q4 2020	Average Q4	8,000
Total Average 2020		21,322

First Quarter 2020 Conference Call Details

The Company will host a conference call for investors and analysts to discuss its results on Thursday, March 7, 2020 at 8:00 a.m. (MST) and 10:00 a.m. (EST/GMT-5). Participants should use the following dial-in numbers:

Participant Number (Toll Free North America):	1-877-269-6007
Participant Number (Toll Free Colombia):	01-800-518-5094
Participant Number (International):	1-706-758-5395
Conference ID:	2858496
Webcast:	www.fronteraenergy.ca

A replay of the conference call will be available until 11:59 p.m. (EST/GMT-5) Friday, March 20, 2020.

Encore Toll free Dial-in Number:	1-855-859-2056
International Dial-in Number:	1-404-537-3406
Encore ID:	2858496

About Frontera:

Frontera Energy Corporation is a Canadian public company and a leading explorer and producer of crude oil and natural gas, with operations focused in South America. The Company has a diversified portfolio of assets with interests in more than 40 exploration and production blocks in Colombia, Peru, Ecuador and Guyana. The Company's strategy is focused on sustainable growth in production and reserves. Frontera is committed to conducting business safely, in a socially and environmentally responsible manner. Frontera's common shares trade on the Toronto Stock Exchange under the ticker symbol "FEC".

If you would like to receive News Releases via e-mail as soon as they are published, please subscribe here: http://fronteraenergy.mediaroom.com/subscribe.

Advisories:

Cautionary Note Concerning Forward-Looking Statements

This news release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the impact of the reduce price of oil and natural gas, the impact of the COVID-19 pandemic on the Company's operations, the effectiveness or adequacy of the Company's program to manage the COVID-19 pandemic and current oil price environment, estimates and/or assumptions in respect of the Company's capital expenditure program, production, costs, future income generation capacity, the Company's exploration and development plans and objectives, including its drilling plans and the timing thereof, the impact of shut-ins on future field performance, ability to reduce production, transportation and G&A costs and the impact thereof, the ability of the Company to extend /negotiate alternative approaches to its work commitments, the ability of the Company to manage its various lines of credit, the Company's hedging program and its ability to mitigate the impact of lower oil prices, the payment and amount of future dividends and expectations regarding the NCIB and future usage) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are 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 statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: volatility in market prices for oil and natural gas (including as a result of demand and supply shifts caused by the COVID-19 pandemic and the actions of OPEC and non-OPEC countries and the procedures imposed by governments in response thereto); uncertainties associated with estimating and establishing oil and natural gas reserves; liabilities inherent with the exploration, development, exploitation and reclamation of oil and natural gas; uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; increases or changes to transportation costs; expectations regarding the Company's ability to raise capital and to continually add reserves through acquisition and development; the Company's ability to access additional financing; the ability of the Company to maintain its credit ratings; the ability of the Company to: meet its financial obligations and minimum commitments,  fund capital expenditures and comply with covenants contained in the agreements that govern indebtedness; political developments in the countries where the Company operates; geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates and stock market volatility and the other risks disclosed under the heading "Risks and Uncertainties" in the Company's MD&A dated May 5, 2020 and under the heading "Risk Factors" and elsewhere in the Company's annual information form dated March 5, 2020 filed on SEDAR at www.sedar.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

This news release contains future oriented financial information and financial outlook information (collectively, "FOFI") (including, without limitation, statements regarding expected capital expenditures, production costs and G&A ), and are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraph. The FOFI has been prepared by management to provide an outlook of the Company's activities and results, and such information may not be appropriate for other purposes. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's reasonable estimates and judgments, however, actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein. Any FOFI speaks only as of the date on which it is made and the Company disclaims any intent or obligation to update any FOFI, whether as a result of new information, future events or results or otherwise, unless required by applicable laws.

Non-IFRS Financial Measures

This news release contains financial terms that are not considered in the International Financial Reporting Standards ("IFRS"): Operating EBITDA, Operating Netback, and Net Sales. These financial measures, together with measures prepared in accordance with IFRS, provide useful information to investors and shareholders, as management uses them to evaluate the operating performance of the Company. The Company's determination of these non-IFRS measures may differ from other reporting issuers, and therefore are unlikely to be comparable to similar measures presented by other companies. Further, these non-IFRS measures should not be considered in isolation or as a substitute for measures of performance or cash flows prepared in accordance with IFRS. These financial measures are included because management uses this information to analyze operating performance and liquidity.

Management believes that EBITDA is a common measure used to assess profitability before the impact of different financing methods, income taxes, depreciation and impairment of capital assets and amortization of intangible assets.

EBITDA is a commonly used measure that adjusts net income (loss) as reported under IFRS to exclude the effects of income taxes, finance income and depletion, depreciation and amortization expense.

Operating EBITDA represents the operating results of the Company's primary business, excluding the items noted above, restructuring, severance and other costs, certain non-cash items (such as impairments, foreign exchange, unrealized risk management contracts, and share-based compensation) and gains or losses arising from the disposal of capital assets. In addition, other unusual or non-recurring items are excluded from operating EBITDA, as they are not indicative of the underlying core operating performance of the Company.

A reconciliation of Operating EBITDA to net income (loss) is as follows:

	Three Months Ended
($M)	March 31, 2020		December 31, 2019		March 31, 2019
Net (loss) income	(387,809)		69,408		46,187
Finance income	(4,678)		(3,162)		(6,030)
Finance expenses	15,260		17,438		13,675
Income tax expense	173,074		(42,540)		21,686
Depletion, depreciation and amortization	88,020		89,753		93,146
Impairment	148,134		3,389		—
Share-based compensation	1,217		(124)		572
Restructuring, severance and other costs	6,408		2,994		1,440
Share of income from associates	8,406		(24,398)		(23,498)
Foreign exchange loss (gain)	20,597		8,812		(602)
Unrealized (gain) loss on risk management contracts	(29,140)		10,333		6,187
Other loss (income), net	2,991		6,680		(11,294)
Non-controlling interests	1,663		(1,531)		3,386
Operating EBITDA	44,143		137,052		144,855

		2020		2019
	(in thousands of US$)	Q1		Q4		Q3		Q2		Q1
	Financial and Operational results:
	Operating EBITDA	44,143		137,052		124,586		179,665		144,855

Netbacks

Management believes that Netback is a useful measure to assess the net profit after all the costs associated with bringing one barrel of oil to the market. It is also commonly used by the oil and gas industry to analyze financial and operating performance expressed as profit per barrel. Operating Netback represents realized price per barrel plus realized gain or loss on financial derivatives, less production costs, transportation costs, royalties, and diluent costs, and shows how efficient the Company is at extracting and selling its product. Refer to the "Operating Netback" section on page 6 of the MD&A.

Net Sales

Net sales is a non-IFRS subtotal that adjusts revenue to include realized gains and losses from risk management contracts while removing the cost of dilution activities. This is a useful indicator for management as the Company hedges a portion of its oil production using derivative instruments to manage exposure to oil price volatility. This metric allows the Company to report its realized net sales after factoring in these risk management activities. The deduction of diluent cost is helpful to understand the Company's sales performance based on the net realized proceeds from production net of dilution, the cost of which is partially recovered when the blended product is sold. Net sales do not include the sales and purchases of oil and gas for trading as the gross margins from these activities are not considered significant or material to the Company's operations.  Refer to the reconciliation in the "Sales" section on page 7 of the MD&A.

Please see the MD&A for additional information about these financial measures.

Well Test Results and Production Levels

Disclosure of well tests results in this news release should be considered preliminary until detailed pressure transient analysis and well-test interpretations have been completed. Hydrocarbons can be seen during the drilling of a well in numerous circumstances and do not necessarily indicate a commercial discovery or the presence of commercial hydrocarbons in a well. There is no representation by the Company that the disclosed well results included in this news release are necessarily indicative of long-term performance or ultimate recovery. As a result, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company or that such rates are indicative of future performance of the well.

In addition, reported production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this news release due to, among other factors, difficulties or interruptions encountered during the production of hydrocarbons.

Boe Conversion

The term "boe" is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of cubic feet to barrels is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this MD&A, boe has been expressed using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy.

Definitions:

API	American Petroleum Institute
bbl(s)	Barrel(s) of oil
bbl/d	Barrel of oil per day
boe	Refer to "Boe Conversion" disclosure above
boe/d	Barrel of oil equivalent per day
bwp/d	Barrels of water per day
C$	Canadian dollars
mmcf	Million cubic feet
mmcf/d	Million cubic feet per day
Net Production	Net production represents the Company's working interest volumes, net of royalties and internal consumption

SOURCE Frontera Energy Corporation

[email protected], www.fronteraenergy.ca

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