Frontera Announces First Quarter 2023 Results

Recorded a Net Loss of $11.3 Million

Generated Operating EBITDA of $91.9 Million

Delivered 41,586 Boe/d Q1 Average Daily Production,
41,800 Boe/d YTD Average Daily Production,
42,500 Boe/d March and April 2023 Average Daily Production

Generated $16.9 Million of Income and Adjusted Midstream EBITDA of $28.2 Million
From Standalone and Growing Midstream Business

Drilled Wei-1 Well to 19,142 Feet (5,834 Metres) Measured Depth,
Encountered Oil-Bearing Intervals

Repurchased 461,200 Common Shares for $4.2 Million Through NCIB

Recognized as One of the Most Ethical Companies in the World
for a Third Consecutive Year by Ethisphere

CALGARY, AB, May 3, 2023 /CNW/ - Frontera Energy Corporation (TSX: FEC) ("Frontera" or the "Company") today reported financial and operational results for the first quarter ended March 31, 2023. All financial amounts in this news release are in United States dollars unless otherwise stated.

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

"Frontera's first quarter results were in-line with its 2023 capital and production guidance. The Company delivered average daily production of 41,586 boe/d, generated $91.9 million of operating EBITDA, and invested $131.5 million in capital expenditures.

Consistent with its strategic priorities, the Company successfully refinanced Puerto Bahía's existing legacy project finance debt via a new $120 million loan facility with a group of lenders led by Macquarie Capital, which extended the tenor of the borrowings and provided for up to $30 million in additional funding to pursue strategic investment opportunities within its Midstream business. With the refinancing complete, Frontera's standalone midstream business is fully capitalized with funding to grow. Subsequent to the quarter, the Company designated Frontera Energy Guyana Holding Ltd. and Frontera Energy Guyana Corp. as unrestricted subsidiaries and released Frontera Energy Guyana Corp. as a note guarantor for its senior bonds due 2028. The designation is a positive forward step as the Company nears the completion of its exploration obligations in Guyana and supports ongoing capital discipline.

The Company remains focused on aligning its Upstream, Midstream, and Guyana core businesses to achieve the Company's strategic priorities and unlock shareholder value."

Orlando Cabrales, Chief Executive Officer (CEO), Frontera, commented:

"I'm pleased with Frontera's first quarter operational and financial results. Despite community blockades in early February which temporarily shut-in production at our Quifa and CPE-6 operations, the Company's first quarter production was largely in-line with last quarter. YTD, we are delivering average daily production of approximately 41,800 boe/d and in March and April we averaged 42,500 boe/d. This is due to better than expected performance from our new Cajua wells where current gross average heavy oil production is 4,860 bopd, higher VIM-1 liquids and NGL production, better performance at CPE-6, Coralillo 1 and 3 wells, as well as the Tapiti-1 well.

The Company continues to focus on managing costs across the business. Frontera's field breakeven of approximately $34 - $38/boe ensures operational resilience even in volatile market conditions and under varying oil price scenarios.

We expect improved profitability throughout the rest of the year as we advance our development portfolio in Colombia and Ecuador, increase Quifa and CPE-6 water-handling infrastructure and facilities as we lay the foundation for the Company's path to grow production to 50,000 boe/d, leverage our advantaged transportation and logistics structure to maximize realized prices and mature our self-sustaining and growing midstream business.

During the quarter, Frontera and its Joint Venture partner spud the Wei-1 well and we are currently at 19,142 feet. We have encountered oil-bearing intervals so far and are currently drilling ahead to our planned total depth.

Importantly, during the quarter, Frontera was recognized for a third consecutive year by Ethisphere as one of the World's Most Ethical Companies in 2023. The Company was added to the 2023 Bloomberg Gender-Equality Index, achieved ISO certification in Ecuador and was recognized by Friendly Biz for our LGBT+ friendly workplace."

First Quarter 2023 Operational and Financial Summary

		Q1 2023	Q4 2022	Q1 2021
Operational Results
Heavy crude oil production  ^(1)	(bbl/d)	22,270	22,144	21,214
Light and medium crude oil production  ^(1)	(bbl/d)	16,518	17,073	17,248
Total crude oil production	(bbl/d)	38,788	39,217	38,462
Conventional natural gas production ^(1)	(mcf/d)	8,590	9,097	9,530
Natural gas liquids production ^(1)	(boe/d)	1,291	993	966
Total production ^(2)	(boe/d) ^(3)	41,586	41,806	41,100
Inventory Balance
Colombia	(bbl)	1,032,876	683,416	937,583
Peru	(bbl)	480,200	480,200	480,200
Ecuador	(bbl)	98,125	75,164	16,328
Total Inventory	(bbl	1,611,201	1,238,780	1,434,111
Oil and gas sales, net of purchases^(4)	($/boe)	69.16	82.67	90.12
Realized (loss) on risk management contracts^(5)	($/boe)	(1.16)	(1.32)	(1.06)
Royalties^(5)	($/boe)	(3.36)	(6.04)	(7.58)
Other dilution costs^(5)	($/boe)	(0.09)	(0.07)	(0.12)
Net sales realized price ^(4)	($/boe)	64.55	75.24	81.36
Production costs^(5)	($/boe)	(12.07)	(11.56)	(13.34)
Transportation costs^(5)	($/boe)	(11.20)	(10.55)	(9.72)
Operating netback per boe ^(4)	($/boe)	41.28	53.13	58.30
Financial Results
Oil and gas sales, net of purchases ^(6)	($M)	189,376	261,059	228,826
Realized (loss) on risk management contracts	($M)	(3,175)	(4,182)	(2,682)
Royalties	($M)	(9,213)	(19,076)	(19,244)
Other dilution costs	($M)	(256)	(235)	(298)
Net sales^(6)	($M)	176,732	237,566	206,602
Net income (loss) ^(7)	($M)	(11,330)	197,796	102,228
Per share – basic	($)	(0.13)	2.29	1.08
Per share – diluted	($)	(0.13)	2.25	1.05
General and administrative	($M)	12,669	12,761	14,656
Outstanding Common Shares	Number of Shares	85,188,573	85,592,075	94,070,294
Operating EBITDA ^(6)	($M)	91,922	144,994	132,998
Cash provided by operating activities	($M)	845	138,312	114,748
Capital expenditures ^(6)	($M)	131,452	134,165	113,545
Cash and cash equivalents - unrestricted	($M)	162,272	289,845	257,373
Restricted cash short and long-term ^(8)	($M)	30,877	23,202	66,146
Total cash ^(8)	($M)	193,149	313,047	323,519
Total debt and lease liabilities ^(8)	($M)	519,471	511,552	558,281
Consolidated total indebtedness (Excl. Unrestricted Subsidiaries) ^(9)	($M)	400,361	407,808	410,161
Net Debt (Excl. Unrestricted Subsidiaries)^(9)	($M)	279,843	178,534	199,303

1. References to heavy crude oil, light and medium crude oil combined, conventional natural gas and natural gas liquids in the above table and elsewhere in this news release refer to the heavy crude oil, light and medium crude oil combined, conventional natural gas and natural gas liquids, respectively, product types as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101").

2. Represents W.I. production before royalties. Refer to the "Further Disclosures" section.

3. Boe has been expressed using the 5.7 to 1 Mcf/bbl conversion standard required by the Colombian Ministry of Mines & Energy. Refer to the "Further Disclosures - Boe Conversion" section.

4. Non-IFRS ratio (equivalent to a "non-GAAP ratio", as defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure ("NI 52-112" ). Refer to the "Non-IFRS and Other Financial Measures'' section.

5. Supplementary financial measure (as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section.

6. Non-IFRS financial measure (equivalent to a "non-GAAP financial measure", as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section.

7. Net (loss) income attributable to equity holders of the Company.

8. Capital management measure (as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section.

9. "Unrestricted Subsidiaries" as of March 31, 2023, include CGX Energy Inc. ("CGX"), listed on the TSX Venture Exchange under the trading symbol "OYL", Frontera ODL Holding Corp., including its subsidiary Pipeline Investment Ltd. ("PIL"), Frontera BIC Holding Ltd., and Frontera Bahía Holding Ltd. ("Frontera Bahia"), including its subsidiary Sociedad Portuaria Puerto Bahia S.A ("Puerto Bahia"). On April 11, 2023, Frontera Energy Guyana Holding Ltd. and Frontera Energy Guyana Corp. were designated as unrestricted subsidiaries. Refer to the "Liquidity and Capital Resources" section on page 23 of the PMD&A.

First Quarter 2023 Operational and Financial Results:

• The Company recorded a net loss of $11.3 million or $0.13/share in the first quarter of 2023, compared with net income of $197.8 million or $2.29/share in the prior quarter and net income of $102.2 million or $1.08/share in the first quarter of 2022. The Company's first quarter net loss included an operating loss of $2.7 million (including $30.3 million in impairment, exploration expenses, and other costs), finance expenses of $15.2 million, foreign exchange loss of $11.8 million, and income tax expense $7.5 million partially offset by $13.6 million of share of income from associates and finance income of $4.3 million.
  
  
• Production averaged 41,586 boe/d in the first quarter of 2023, compared to 41,806 boe/d in the prior quarter and 41,100 boe/d in the first quarter of 2022. See the table above for production by product type for the prior quarter and first quarter of 2022. First quarter production was impacted by temporary production shut-ins at the Company's Quifa and CPE-6 blocks in early February due to road blockades in the municipality of Puerto Gaitan, Meta Department, Colombia. Year to date to May 1, 2023 Frontera has averaged approximately 41,800 boe/d (consisting of 22,600 bbl/d of heavy crude oil, 16,500 bbl/d of light and medium crude oil, 8,500 mcf/d of conventional natural gas and 1,200 boe/d of natural gas liquids). In March and April 2023, Frontera averaged approximately 42,500 boe/d consisting of consisting of 23,300 bbl/d of heavy crude oil, 16,500 bbl/d of light and medium crude oil, 8,500 mcf/d of conventional natural gas and 1,200 boe/d of natural gas liquids).
  
  
• Operating EBITDA was $91.9 million in the first quarter of 2023 compared with $145.0 million in the prior quarter and $133.0 million in the first quarter of 2022. The decrease in operating EBITDA quarter-over-quarter was primarily a result of lower commodity prices and lower sales volumes.
  
  
• Cash provided by operating activities in the first quarter of 2023 was $0.8 million, compared with $138.3 million in the prior quarter and $114.7 million in the first quarter of 2022. The decrease in cash provided by operating activities quarter-over-quarter was primarily due to lower Brent benchmark oil prices and fluctuations in working capital.
  
  
• The Company reported a total cash position of $193.1 million at March 31, 2023, compared to $313.0 million at December 31, 2022 and $323.5 million at March 31, 2022. During the quarter, the Company invested $131.5 million in capital expenditures including $75.7 million in capital expenditures related to Guyana, $3.5 million in debt service payments and $4.2 million in share buybacks. In addition, the company obtained net proceeds from the PIL Loan Facility of $114.9, which was used to fully repay the 2025 Puerto Bahia Debt.
  
  
• The Company's restricted cash position was $30.9 million at March 31, 2023 compared to $23.2 million at December 31, 2022 and $66.1 million in the first quarter of 2022. The increase in the Company's restricted cash position was primarily due to funding a Debt Reserve Account related to the new PIL loan facility.
  
  
• As at March 31, 2023, the Company had a total inventory balance of 1,611,201 bbls compared to 1,238,780 bbls at December 31, 2022 and 1,434,111 bbls at March 31, 2022. The Company actively manages its volumes, ending the quarter with more than 370,000 bbls of increased inventory balance in the first quarter compared to the prior quarter, which was subsequently sold in the second quarter of 2023.
  
  
• Capital expenditures were approximately $131.5 million in the first quarter of 2023, compared with $134.2 million in the prior quarter and $113.5 million in the first quarter of 2022. Capital expenditures in the first quarter included $75.3 million on the Wei-1 well offshore Guyana, $32 million on development drilling in the Quifa, Cajua, CPE-6 and Cubiro blocks, $12.4 million on exploration activities in Colombia and Ecuador and $8.6 million on development facilities including construction of a storage tank in the CPE-6 block and the expansion of fluid transfer and the interconnection of fields in the Quifa block.
  
  
• The Company's net sales realized price was $64.55/boe in the first quarter of 2023, compared to $75.24/boe in the prior quarter and $81.36/boe in the first quarter of 2022. The decrease in the Company's net sales realized price quarter-over-quarter was primarily driven by the decrease in the Brent benchmark oil price and higher differential prices, partially offset by lower royalties.
  
  
• The Company's operating netback was $41.28/boe in the first quarter of 2023, compared with $53.13/boe in the prior quarter and $58.30/boe in the first quarter of 2022. The decrease in operating netback quarter-over-quarter was primarily due to lower net sales realized price as a result of lower average Brent benchmark oil prices, higher differentials and incremental increases in transportation costs.
  
  
• Production costs averaged $12.07/boe, within the Company's 2023 guidance range, in the first quarter of 2023 compared with $11.56/boe in the prior quarter and $13.34/boe in the first quarter of 2022. The increase in production costs quarter-over-quarter was primarily as a result of inflationary pressures and increased tariffs on products and services.
  
  
• Transportation costs averaged $11.20/boe, within the Company's 2023 guidance range, in the first quarter of 2023 compared with $10.55/boe in the prior quarter and $9.72/boe in the first quarter of 2022. The increase in transportation costs quarter-over-quarter was mainly due to additional volumes transported and increased trucking tariffs for 2023.
  
  
• The Company recorded a realized loss on risk management contracts of approximately $3.2 million in the first quarter of 2023 compared to a realized loss of approximately $4.2 million in the prior quarter and a loss of $2.7 million in the first quarter of 2022. The realized loss on risk management contracts in the first quarter of 2023 was primarily a result of cash paid for premiums related to put options settled during the period. See the Hedging section below for more information.
  
  
• The Company has various uncommitted bilateral credit lines. As of March 31, 2023, the Company had increased its uncollateralized credit lines to $125.3 million, an increase of $6.9 million compared to December 31, 2022.

Continuing Progress On Frontera's ESG Strategy

On March 13, 2023 Frontera was recognized for a third straight year by Ethisphere, a global leader in defining and advancing the standards of ethical business practices, as one of the 2023 World's Most Ethical Companies. In 2023, 135 honourees were recognized spanning 19 countries and 48 industries. Frontera was one of only two honourees in the oil and gas industry.

On January 31, 2023 Frontera was included in the 2023 Bloomberg Gender-Equality Index ("GEI"), a modified market capitalization-weighted index developed to gauge the performance of public companies dedicated to reporting gender-related data. This reference index measures gender equality across five pillars: leadership & talent pipeline, equal pay & gender pay parity, inclusive culture, anti-sexual harassment policies, and external brand.

Frontera was also recognized in the first quarter as a Top 20 Best Places to Work in Colombia by the Great Place to Work® Institute ("GPTW") and achieved ISO certification for its operations in Ecuador and its recognition for operations safety.

Enhancing Shareholder Return

Frontera remains committed to enhancing shareholder returns. As part of its 2023 plan, the Company strives to unlock shareholder value from its upstream Colombia and Ecuador business, its standalone and growing midstream business and its potentially transformational offshore exploration program in Guyana

During the first quarter of 2023, under the Company's NCIB which expired on March 16, 2023, Frontera repurchased approximately 0.5 million of the Company's common shares ("Common Shares") for cancellation for approximately $4.1 million. In total, the Company repurchased 4.3 million Common Shares (or approximately 89% of its shares outstanding).

Consistent with its strategic priorities, the Company successfully refinanced Puerto Bahía's existing legacy project finance debt, via a new $120 million loan facility with a group of lenders led by Macquarie Capital, which extended the tenor of the borrowings and provided for up to $30 million in additional funding to pursue strategic investment opportunities within its Midstream business. With the refinancing complete, Frontera's standalone midstream business is fully capitalized with funding to grow.

Subsequent to the quarter, the Company designated Frontera Energy Guyana Holding Ltd. and Frontera Energy Guyana Corp. as unrestricted subsidiaries and released Frontera Energy Guyana Corp. as a note guarantor for its senior bonds due 2028. The designation is a positive forward step as the Company nears the completion of its exploration obligations in Guyana and will ensure future capital discipline.

Frontera's Three Core Businesses

Frontera has three core businesses: (1) its Colombia and Ecuador Upstream Onshore business, (2) its standalone and growing Colombia Midstream business, and (3) its potentially transformational Guyana Exploration business offshore Guyana.

The Company is focused on unlocking shareholder value from its business and is committed to providing greater clarity and insight through its various disclosures including quarterly results press releases such as this one.

1. Colombia and Ecuador Upstream Onshore

During the quarter, Frontera produced 40,581 boe/d from its Colombian operations (consisting of 22,270 bbl/d of heavy crude oil, 15,513 bbl/d of light and medium crude oil, 8,590 mcf/d of conventional natural gas and 1,291 boe/d of natural gas liquids). The Company continued to diversify its production mix in the first quarter of 2023, increasing natural gas liquids production to 1,291 boe/d, up 30% compared to 993 boe/d in the prior quarter and 966 in the first quarter of 2022.

In the first quarter of 2023, the Company drilled 17 development wells at Quifa, Cajua, CPE-6 and Cubiro blocks. This compares to 17 development wells in the prior quarter. In 2023, the Company intends to drill 55 gross development wells.

Currently, the Company has 5 drilling rigs and 2 workover rigs active at its Quifa, CPE-6, Cubiro and Corcel/Guatiquia blocks in Colombia.

Quifa and Cajua

Production from the Quifa and Cajua blocks averaged approximately 16,829 bbl/d of heavy crude in the first quarter of 2023 compared to approximately 16,470 bbl/d of heavy crude oil in the fourth quarter of 2022. The Company drilled 12 production wells (seven wells at Quifa and five wells at Cajua) on the blocks in the first quarter of 2023. During the quarter, the Company also expanded fluid transfer and the interconnection of fields in the Quifa block.

Increasing water handling capacity at Quifa is key to Frontera's efforts to grow production at Quifa. The Company's current water handling capacity is approximately 1.5 million bwpd. In 2023, Frontera began commissioning SAARA (previously Agrocascada), its reverse osmosis water treatment facility. As of April 2023, the plant has already processed 1.5 million barrels of water as part of its commissioning program, providing irrigation source water to the Company's nearby ProAgrollanos palm oil plantation.

At Cajua, the Company drilled five horizontal wells in the first quarter which increased gross average production to 3,873 bopd of heavy crude in March compared to 2,226 bopd in December 2022. Current gross average production at Cajua is 4,860 bopd.

CPE-6

At CPE-6, production averaged approximately 4,850 bbl/d of heavy crude oil in the first quarter 2023 compared with approximately 5,214 bbl/d in the fourth quarter of 2022. First quarter production was impacted by temporary production shut-ins at the Company's Quifa and CPE-6 blocks in early February due to road blockades in the municipality of Puerto Gaitan, Meta Department, Colombia. During the quarter, the Company drilled four production wells and constructed an additional storage tank which will increase on-site storage capacity to 20,000 bbls.

Guatiquía

At Guatiquia, production averaged approximately 7,333 bbl/d of light and medium crude oil in the first quarter of 2023 compared with approximately 7,941 bbl/d in the fourth quarter of 2022. The Company completed a workover of the Coralillo 3 well in February, increasing production by 500 bbl/d and supporting additional opportunities for potential production growth from existing wells and new wells in the area.

Cubiro

During the quarter, the Company drilled three producing wells (two horizontal and one vertical) in the Cubiro block (Copa 36H, Copa 32H and Copa K Norte 1), increasing production by 360 bopd of 39° API light oil to 2,145 bbl/d in the first quarter of 2023, successfully implementing new solids control technology in the completion of the horizontal sections of the wells.

VIM-1

At VIM-1 (Frontera 50% W.I., non operator), production averaged 1,675 bbl/d of light and medium crude oil in the first quarter of 2023 compared to approximately 1,370 bbl/d of light and medium crude oil in the fourth quarter of 2022. During the quarter, the operator successfully began gas reinjection, increasing liquids production to approximately 4,000 bbl/d.

VIM-22

At VIM-22, the Chimi-1 and Winner-1 wells were spudded on February 16, 2023 and March 30, 2023 respectively. Non-commercial gas was found in the Tubara Formation, however interpretation of logging while drilling logs and integration with drilling data concluded that the wells did not contain commercial net hydrocarbon pay. The wells were subsequently plugged and abandoned. Also during the quarter, the Company completed civil works for the Tubara Sur-1 exploratory well. During the three months ended March 31, 2023, the Company recorded an impairment charge of exploration and evaluation assets in Colombia of $15.2 million as a result of the Company's decision to proceed with steps to relinquish the VIM-22 block, which remains subject to approval by the Agencia Nacional de Hidrocarburos ("ANH").

VIM-46

At VIM-46, the Company has begun pre-seismic and pre-drilling activities to the environmental management plan in advance of completing a 100 km² 3D seismic acquisition program. Socialization and land permitting is expected to commence in August 2023.

Llanos 99

At Llanos 99, the Company successfully completed the acquisition of 165 km² of 3D seismic, without security or social issues between the end of February and the end of April 2023. The Company is currently completing the restoration phase of the operation. Social and administrative closure is anticipated to be completed in the second quarter of 2023. The Company is also advancing consultation activities and an environmental impact study as part of the environmental permitting process for future exploration drilling.

Llanos 119

At Llanos 119, Frontera has begun pre-seismic activities related to the environmental management plan in advance of completing an 80 km² seismic acquisition program. Socialization and land permitting is expected to commence in August 2023. Pre-drilling activities including land permitting, civil work designs and goods and services contracting procedures are underway in advance of civil works activities which are expected to begin in December 2023 for the Solopiña Norte-1 well.

Ecuador

In Ecuador, first quarter 2023 gross production averaged approximately 2,010 bbl/d of light and medium crude oil, compared to approximately 2,492 bbl/d in the fourth quarter of 2022. Frontera's share of production in Ecuador for the three months ended March 31, 2023 was 1,005 bbl/d of medium crude oil compared to 1,246 bbl/d in the prior quarter.

At the Perico block (Frontera 50% W.I. and operator), the Company has drilled three out of four exploration commitment wells (Jandaya-1, Tui-1 and Yin-1 exploration wells), which are currently on long-term test as the Company completes environmental impact assessments in advance of obtaining production environmental licenses. Pre-drilling activities for the Yin Sur-1 exploratory well is underway, which the Company expects to drill in the third quarter of 2023.

At the Espejo block (Frontera 50% W.I. and non-operator), the operator has drilled two out of four commitment wells (Pashuri-1 and Caracara-1 exploration wells), where preliminary logging information from both wells indicates the presence of hydrocarbons. The Pashuri-1 well has been producing from U sandstone since November 2022. Current production is 305 bopd with 38.5% watercut at stable conditions. Further analysis is being carried out and the operator is currently interpreting a new 3D seismic survey data to define the location of the third exploratory commitment well.

Peru

During the three months ended March 31, 2023, the Company recognized an asset retirement obligation expense resulting from the acquisition of the remaining 51% working interest ("W.I"). in Block Z1 in Peru from BPZ Resources Inc.

Subsequent to the quarter, the Company reached an agreement to finalize the sale of Frontera Energy OffShore Perú, the 100% consolidated entity that owns the 100% W.I. in Block Z1, for a payment of $10 million to a third party, subject to completion of certain conditions precedent. As a result of this transaction, the Company expects to no longer recognize any asset retirement obligation related to Block Z1 and to generate a $35.8 million asset retirement obligation recovery once the agreement is finalized.

2. Midstream Colombia

Frontera has investments in certain infrastructure and midstream assets, including storage, port and other facilities in Colombia and the Company's investments in pipelines ("Midstream Colombia Segment").

The Midstream Colombia Segment principally includes a 35% equity interest in the Oleoducto de los Llanos Orientales S.A. ("ODL") pipeline through Frontera's wholly-owned subsidiary, Pipeline Investment Limited ("PIL") and the Company's 99.80% interest in Puerto Bahia.

About ODL and Puerto Bahia

The ODL pipeline is a 260-kilometre, 24-inch pipeline with throughput capacity of 300,000 bbl/d at 18° API that transports Frontera's heavy crude oil from the Quifa SW and Cajua fields and part of the CPE-6 field, as well as other third-party production from the Llanos basin, including from Ecopetrol, Hocol, Geopark and Parex, and connects the OCENSA pipeline at Cusiana and Monterrey to the export terminal in Coveñas. Ecopetrol's Cenit Transporte y Logística de Hidrocarburos S.A.S. owns the remaining 65% of ODL.

Puerto Bahia is a state-of-the-art liquids and dry cargo facility port terminal strategically located on a 155-hectare site in the Bay of Cartagena.

Midstream Colombia Segment Results

	March 31
($M)	2023	2022
Revenue	11,146	10,332
FEC liquids port facility	1,664	1,452
Third party liquids port facility	5,832	5,358
General Cargo	3,650	3,522
Cost	(5,117)	(4,679)
General administrative expenses	(1,342)	(1,671)
Depletion, depreciation and amortization	(1,232)	(1,476)
Restructuring, severance and other costs	(103)	(174)
Puerto Bahia Income from operations	3,352	2,332
Share of income from associates - ODL	13,572	9,094
Segment income	16,924	11,426
Segment cash flow from operations activities	7,608	17,024

The Company's Midstream Colombia Segment income increased $5.5 million for the three months ended March 31, 2023 to $16.9 million, compared with $11.4 million in the same period of 2022. For the three months ended March 31, 2023, the Puerto Bahia liquids terminal revenues increased by 10% compared with the same period of 2022. The liquids terminal revenues during the first quarter of 2023 and 2022, correspond to 67% and 66% of total revenues, respectively. General cargo terminal revenues increased by 4% compared with the same period in 2022, due to higher volumes of breakbulk cargo.

Cash provided by operating activities of the Midstream Colombia Segment for three months ended March 31, 2023 was $7.6 million compared to $17.0 million in the same period of 2022, the reduction is mainly due to $9.0 million of dividends collected during first quarter of 2022, while $18.2 million of dividends were collected following the quarter end, in April 2023.

	Three months ended March 31
($M)	2023	2022
Adjusted Midstream Revenue^(1)	38,231	23,003
Adjusted Midstream Operating Cost^(1)	(7,741)	(6,296)
Adjusted Midstream General and administrative^(1)	(2,314)	(2,312)
Adjusted Midstream EBITDA	28,177	14,395

^1. Non-IFRS financial measure (equivalent to a "non-GAAP financial measure", as defined in NI 52-112). Refer to the "Non-IFRS and Other Financial Measures'' section.

The Adjusted Midstream EBITDA for the first quarter of 2023 was $28.2 million compared to $14.4 million in the same period of 2022, with the increase a result of the Company's increased indirect ownership interest in ODL from 59.93% to 100% as of September 2022, higher volumes transported at the pipeline facility and handled at the liquids terminal facility.

For additional information regarding the Company's Midstream segment please refer to the Company's MD&A. 

Puerto Bahia

Puerto Bahía continues to streamline its cost structure, and increased its operating margin to 30% in the three months ended March 31, 2023, from 23% in the same period of 2022. This cost reduction is the result of the implementation of efficiency initiatives such as an optimized tariff model for logistic operators, the substitution of hired services for in-house solutions, and the negotiation of contracts with suppliers. 

In the first quarter of 2023, the roll-on roll-out business continued to increase its market share by capturing new car brands and by entering the transshipment business. As a result, total roll-on roll-out units increased by 25% in the first quarter of 2023, when compared with the same period in 2022. In the liquids terminal, revenues increased by 10% in the first quarter of 2023, when compared with the same period in 2022, driven by increased throughput volumes. 

Puerto Bahia has an $8 million capital program for 2023, up from $1.5 million in 2022, which is focused on port infrastructure and acquiring the necessary equipment to capture mature business opportunities. In addition, Puerto Bahia is strengthening its project and engineering team to expand its execution capabilities, while also advancing the necessary permits and licensing for the new business operations, which includes the expansion of the port utilized area.

3. Guyana Exploration

On January 23, 2023 Frontera and CGX, joint venture partners (the "Joint Venture") in the Petroleum Prospecting License for the Corentyne block offshore Guyana (the "License"), announced the spud of the Wei-1 well (the "Well"), on the Corentyne block, approximately 200 kilometres offshore from Georgetown, Guyana. The Well, planned to be drilled to a total depth of 20,500 feet, to date has been successfully drilled to a depth of 19,142 feet (5,834 metres). The Wei-1 well is located approximately 14 kilometres northwest of the Joint Venture's previous Kawa-1 light oil and condensate discovery.

The Well has encountered oil-bearing intervals in the western channel fan complex of the northern portion of the Corentyne block in formations of Maastrichtian and Campanian ages. A comprehensive logging campaign in the Maastrichtian and Campanian intervals indicated the presence of oil, confirmed by downhole analysis. Logging while drilling (LWD) and cuttings indicate the presence of hydrocarbons in the upper portion of the Santonian; fluid samples have not yet been fully obtained. Side-wall core samples will be attempted in the Santonian interval when drilling resumes. Preliminary indications from the secondary targets in the Maastrichtian and Campanian are positive, however no assurance can be given that these activities will ultimately produce hydrocarbons in commercial quantities.

While performing additional well logging and data acquisition operations, a wireline fluid sampling tool became stuck in the Well and was not recovered. An open hole sidetrack will begin shortly from below the last casing point and will progress to the planned total depth. The Joint Venture expects to complete Wei-1 operations within the original 4-5 month timeframe as announced on January 23, 2023.

The Joint Venture has updated its Well total cost estimates to $175-$190 million to successfully reach the target total depth, and complete its drilling program. The increase in cost includes the delays associated with the late arrival of the rig, costs associated with fishing and sidetrack operations and associated post well evaluations.

During the three months ended March 31, 2023, Guyana exploration and infrastructure expenditures were $75.3 million compared to $53.5 million during the same period of 2022.

Hedging Update

As part of its risk management strategy, Frontera uses derivative commodity instruments to manage exposure to price volatility by hedging a portion of its oil production. Consistent with this strategy, the Company entered into new put hedges totaling 1,275,000 bbls to protect a portion of the Company's production through June 2023. The following table summarizes Frontera's 2023 hedging position as of May 3, 2023.

Term	Type of Instrument	Open Positions (bbl/d)	Strike Prices Put/ Call
April	Put	14,333	70
May	Put	13,871	70
June	Put	13,833	70
2Q-2023	Total Average	14,011

Frontera Energy Provides Notice of First Quarter 2023 Financial Results Conference Call

A conference call for investors and analysts will be held on Thursday, May 4, 2023 at 11:00 a.m. Eastern Time. Participants will include Gabriel de Alba, Chairman of the Board of Directors, Orlando Cabrales, Chief Executive Officer, René Burgos, Chief Financial Officer and other members of the senior management team.

Analysts and investors are invited to participate using the following dial-in numbers:

Participant Number (Toll Free North America):                       1-888-664-6383
Participant Number (Toll Free Colombia):                               01-800-518-4036
Participant Number (International):                                         1-416-764-8650
Conference ID:                                                                        49513969
Webcast Audio:                                                                       www.fronteraenergy.ca

A replay of the conference call will be available until 11:59 p.m. Eastern Time on May 11, 2023.

Encore Toll free Dial-in Number:                                             1-888-390-0541
International Dial-in Number:                                                  1-416-764-8677
Encore ID:                                                                               513969

About Frontera:

Frontera Energy Corporation is a Canadian public company involved in the exploration, development, production, transportation, storage and sale of oil and natural gas in South America, including related investments in both upstream and midstream facilities. The Company has a diversified portfolio of assets with interests in 31 exploration and production blocks in Colombia, Ecuador and Guyana, and pipeline and port facilities in Colombia. Frontera is committed to conducting business safely and in a socially, environmentally and ethically responsible manner.

If you would like to receive news releases via email 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 information within the meaning of Canadian securities laws. Forward-looking information relates to activities, events or developments that the Company believes, expects or anticipates will or may occur in the future. Forward-looking information in this news release includes, without limitation, statements regarding the Company's continued commitment to aligning its Upstream, Midstream and Guyana core businesses to achieve its strategic priorities and unlock shareholder value; statements relating to the Company's guidance and objectives for 2023, including its expectations regarding improved profitability throughout the remainder of 2023; statements regarding the Company's continued focus on managing costs and its field breakeven figures; statements regarding the Company's path to a 50,000 boe/d future; expectations regarding expected impacts of the Company's reverse osmosis water treatment facility (SAARA - previously Agrocascada) and increased water handling capacity at Quifa; anticipated exploration, development and drilling activities and seismic acquisition expectations regarding drilling of the Wei-1 well on the Corentyne block, including project evolution, drilling objectives, timelines, target zones and anticipated cost estimates for the Wei-1 well, statements regarding preliminary Wei-1 well results date and additional analysis being conducted on well data. statements regarding the anticipated sale of Frontera Energy OffShore Perú, the 100% consolidated entity that owns the 100% W.I. in Block Z1 and the resulting impacts therefrom; and expectations with respect to the Company's hedging strategy. All information other than historical fact is forward-looking information.

Forward-looking information reflects the current expectations, assumptions and beliefs of the Company based on information currently available to it and considers the Company's experience and its perception of historical trends, including expectations and assumptions relating to commodity prices and interest and foreign exchange rates; the current and expected impacts of the COVID-19 pandemic, actions of the Organization of Petroleum Exporting Countries ("OPEC+") and the impact of the Russia-Ukraine conflict, and the expected impact of measures that the Company has taken and continues to take in response to these events; expectations regarding the Company's ability to manage its liquidity and capital structure and generate sufficient cash to support operations, capital expenditures and financial commitments; the performance of assets and equipment; the Company's ability to achieve the increased oil and water handling capacity at Quifa in the time frames indicated; the availability and cost of labour, services and infrastructure; the execution of exploration and development projects; the receipt of any required regulatory approvals and outcome of discussions with governmental authorities; the success of the Company's hedging strategy; and the impact and success of the Company's ESG strategies.

Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be placed on such information. Forward-looking information is subject to a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to the Company. The actual results may differ materially from those expressed or implied by the forward-looking information, 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. The Company's annual information form dated March 1, 2023, its annual management's discussion and analysis for the year ended December 31, 2022, and other documents it files from time to time with securities regulatory authorities describe the risks, uncertainties, material assumptions and other factors that could influence actual results and such factors are incorporated herein by reference. Copies of these documents are available without charge by referring to the company's profile on SEDAR at www.sedar.com. All forward-looking information 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 information, whether as a result of new information, future events or results or otherwise.

Non-IFRS Financial and Other Measures

This news release contains various "non-IFRS financial measures" (equivalent to "non-GAAP financial measures", as such term is defined in NI 52-112), "non-IFRS ratios" (equivalent to "non-GAAP ratios", as such term is defined in NI 52-112), "supplementary financial measures" (as such term is defined in NI 52-112), and "capital management measures" (as such term is defined in NI 52-112), which are described in further detail below. Such financial measures do not have standardized IFRS definitions. The Company's determination of these financial measures may differ from other reporting issuers and they are therefore unlikely to be comparable to similar measures presented by other companies. Furthermore, these financial measures should not be considered in isolation or as a substitute for measures of performance or cash flows as prepared in accordance with IFRS. These financial measures do not replace or supersede any standardized measure under IFRS. Other companies in our industry may calculate these financial measures differently than we do, limiting their usefulness as comparative measures. The Company discloses these financial measures, together with measures prepared in accordance with IFRS, because management believes they provide useful information to investors and shareholders, as management uses them to evaluate the operating performance of the Company. These financial measures highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS financial measures. Further, management also uses non-IFRS measures to exclude the impact of certain expenses and income that management does not believe reflect the Company's underlying operating performance. The Company's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period and to prepare annual operating budgets and as a measure of the Company's ability to finance its ongoing operations and obligations.

Set forth below is a description of the non-IFRS financial measures, non-IFRS ratios, supplementary financial measures and capital management measures used in this news release.

Operating EBITDA

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 expenses, and depletion, depreciation and amortization expense. Operating EBITDA is a non-IFRS financial measure that represents the operating results of the Company's primary business, excluding the following items: restructuring, severance and other costs, post-termination obligation and payments of minimum work commitments and 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. Since the three and six months ended June 30, 2022, the Company changed the composition of its Operating EBITDA calculation to exclude certain unusual or non-recurring items as post-termination obligations and payments of minimum work commitments, which could distort future projections as they are not considered part of the Company's normal course of operations.

A reconciliation of net income to operating EBITDA is as follows:

	Three Months Ended March 31
($M)	2023	2022
Net income	(11,330)	102,228
Finance Income	(4,301)	(607)
Finance expenses	15,221	12,235
Income tax expense (recovery)	7,520	(12,751)
Depletion, depreciation and amortization	66,713	38,784
Expense of impairment, recovery of asset retirement obligation and others	29,896	(4,429)
Post-termination obligation	157	228
Shared-based compensation non-cash portion	(499)	5,088
Restructuring, severance and other costs	1,572	331
Share of income from associates	(13,572)	(9,094)
Foreign exchange loss (income)	11,760	(3,642)
Other (income) loss	(6,305)	6,019
Unrealized gain on risk management contracts	(4,825)	(1,144)
Non-controlling interests	(85)	(248)
Operating EBITDA	91,922	132,998

Capital Expenditures

Capital expenditures is a non-IFRS financial measure that reflects the cash and non cash items used by a company to invest in capital assets. This financial measure considers oil and gas properties, plant and equipment, infrastructure, exploration and evaluation assets expenditures. Refer to the reconciliation in the "Capital Expenditures" section on page 21 of the MD&A.

Operating Netback and Oil and Gas Sales, Net of Purchases

Operating netback is a non-IFRS financial measure and operating netback per boe is a non-IFRS ratio. Operating netback is used to assess the net margin of the Company's production after subtracting all 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 and is an indicator of how efficient the Company is at extracting and selling its product. For netback purposes, the Company removes the effects of any trading activities and results from its midstream segment from the per barrel metrics. Refer to the reconciliation in the "Operating Netback" section on page 7 of the MD&A. Refer to the "Operating Netback and Oil and Gas Sales, Net of Purchases" section on pages 20 and 21 of the MD&A for a description of each component of the Company's operating netback and how it is calculated. Oil and gas sales, net of purchases, is a non-IFRS ratio that is calculated using oil and gas sales less the cost of volumes purchased from third parties including its transportation and refining cost, divided by the total sales volumes from D&P assets, net of purchases. Refer to the reconciliation in the "Operating Netback and Oil and Gas Sales, Net of Purchases'' section on pages 20 and 21 of the MD&A.

Net Sales

Net sales is a non-IFRS financial measure that adjusts revenue to include realized gains and losses from risk management contracts while removing the cost of other 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 for other dilution costs and cost of purchases 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 also exclude sales from port services, as it is not considered part of the oil & gas segment. Refer to the reconciliation in the "Sales" section on page 8 of the MD&A.

Midstream Colombia Calculations

Each of Midstream Revenue, Midstream Operating Cost and Midstream General and Administrative is a non-IFRS financial measure, and each is used to evaluate the performance of the Midstream Colombia Segment's operations. Midstream Revenue includes revenues of the Midstream Colombia Segment including ODL's revenue direct participation interest. Midstream Operating Cost includes costs of Midstream Colombia Segment including ODL's cost direct participation interest. Midstream General and Administrative includes general and administrative costs of the Midstream Colombia Segment including ODL's general and administrative direct participation interest. Refer to the reconciliation in the "Midstream Colombia Calculations" section on page 21 of the MD&A. Midstream Cash and Midstream Debt is a non-IFRS financial measure or contains a non-IFRS financial measure, and is used to evaluate the performance of the Midstream Colombia Segment's cash position and monitor the Midstream Colombia Segment's debt. Midstream Cash includes cash of Midstream Colombia Segment including ODL's cash direct participation interest. Midstream Debt includes debt of the Midstream Colombia Segment including ODL's debt direct participation interest. Refer to the reconciliation in the "Midstream Colombia Calculations" section on page 21 of the MD&A. Midstream EBITDA is a non-IFRS financial measure used to assist in measuring the operating results of the Midstream Colombia Segment business. Refer to the calculation of non-IFRS results of the EBITDA Midstream Colombia segment on page 17 of the MD&A.

Net Sales Realized Price

Net sales realized price is a non-IFRS ratio that is calculated using net sales (including oil and gas sales net of purchases, realized gains and losses from risk management contracts less royalties and other dilution costs). Net sales realized price per boe is a non-IFRS ratio which is calculated dividing each component by total sales volumes, net of purchases. Refer to the "Net sales realized price" section on page 22 of the MD&A for a reconciliation of this calculation.

Production Cost Per Boe, Transportation Cost Per Boe, Royalties Per Boe and Other Dilution Costs Per Boe

Production costs mainly include lifting costs, activities developed in the blocks, and processes to put the crude oil and gas in sales condition. Production cost per boe is a supplementary financial measure that is calculated using production cost divided by production (before royalties). Refer to the "Production cost per boe" section on page 23 of the MD&A for a reconciliation of this calculation. Transportation costs include all commercial and logistics costs associated with the sale of produced crude oil and gas such as trucking, pipeline and refining processing fees. Transportation cost per boe is a supplementary financial measure that is calculated using transportation cost divided by net production after royalties. Refer to the "Transportation cost per boe" section on page 23 of the MD&A for a reconciliation of this calculation. Royalties include royalties and amounts paid to previous owners of certain blocks in Colombia and cash payments for PAP. Royalties per boe is a supplementary financial measure that is calculated using the royalties divided by total sales volumes, net of purchases. Other dilution costs include all costs associated with the dilution services. Other dilution costs per boe is a supplementary financial measure that is calculated using the Other dilution costs divided by total sales volumes, net of purchases.

Realized (loss) gain on risk management contracts per boe

Realized (loss) gain on risk management contracts includes the gain or loss during the period, as a result of the Company's exposure in derivative contracts. Realized (loss) gain on risk management contracts per boe is a supplementary financial measure that is calculated using Realized (loss) gain on risk management contracts divided by total sales volumes, net of purchases.

Working Capital

Working capital is a capital management measure to describe the liquidity position and ability to meet its short-term liabilities. Working Capital is defined as current assets less current liabilities.

Restricted cash short and long-term

Restricted cash (short and long term) is a capital management measure, that sum the short-term portion and long term portion of the cash that the Company has in term deposits that have been escrowed to cover future commitments and future abandonment obligations or insurance collateral for certain contingencies and other matters that are not available for immediate disbursement.

Total cash

Total cash is a capital management measure to describe the total cash and cash equivalents restricted and unrestricted available and consists of the cash and cash equivalents and the restricted cash short and long-term.

Total debt and lease liabilities

Total debt and lease liabilities are capital management measures to describe the total financial liabilities of the Company, and comprises the debt of unsecured notes, loans and liabilities from leases of various properties, power generation supply, vehicles and other assets,

Oil and Gas Information Advisories

This news release includes terms and phrases such as "oil-bearing intervals" and "presence of hydrocarbons". Such terms and phrases should not be interpreted to mean there is any level of certainty in regards to the volume of oil, natural gas or condensates present therein, or that such volumes may be produced profitably or in commercial quantities.

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.

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 news release, 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:

bbl(s)	Barrel(s) of oil
bbl/d	Barrels of oil per day
boe	Refer to "Boe Conversion" disclosure above
boe/d	Barrel of oil equivalent per day
Mcf	Thousand cubic feet
W.I.	Working Interest
Net Production	Net production represents the Company's working interest volumes, net of royalties and internal consumption

SOURCE Frontera Energy Corporation

Brent Anderson, Director, Investor Relations, at 1 403 705 8827, [email protected], www.fronteraenergy.ca