Infrastructure pivot frees up $1.3 billion USD for shareholders

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

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

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

The Parex transaction

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

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

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

ODL pipeline drives cash flow

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

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

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

Puerto Bahía expands cargo mix

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

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

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

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

LPG and LNG projects advance

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

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

Discontinued operations

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

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

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

Above photo courtesy Frontera Energy Corporation.

Sale to Parex shifts company focus to midstream assets and LNG.

Frontera Energy Corporation (TSX: FEC) announced a net loss from continuing operations of $663 million USD for the fourth quarter of 2025. This figure includes a non-cash impairment of $603 million USD related to the divestment of the company’s Colombian exploration and production (E&P) portfolio and a $17 million USD impairment regarding its Guyana interest. The company has scheduled a special meeting of shareholders for April 30, 2026, to vote on the divestiture of these assets to Parex Resources Inc. (TSX: PXT).

The definitive agreement for the divestiture establishes a firm value of approximately $750 million USD. The transaction includes up to $525 million USD in equity consideration. Following the completion of the sale, Frontera Energy Corporation intends to distribute approximately $470 million USD to shareholders, which equates to approximately CAD $9.18 per share. This distribution includes a $25 million USD contingent payment.

The divestment marks a strategic shift for the Calgary-based company as it transitions into an infrastructure-focused business model. The new structure is anchored by interests in the Oleoducto de los Llanos Orientales S.A. (ODL) pipeline and the Sociedad Portuaria Regional Puerto Bahía S.A. maritime terminal. For the full year of 2025, the infrastructure segment reported an adjusted EBITDA of $116.6 million USD and a distributable cash flow of $76.7 million USD.

“Frontera now enters its next phase as a more focused, cash-generative infrastructure company, well positioned to deliver durable returns.” — Gabriel de Alba, Chairman of the Board of Directors, Frontera Energy Corporation

A central component of this new strategy is the development of a potential liquefied natural gas (LNG) regasification project in partnership with Ecopetrol S.A. (NYSE: EC, BVC: ECOPETROL). Puerto Bahía has secured a take-or-pay agreement with Ecopetrol S.A., subject to certain conditions, for the project. The initiative is planned in two phases, starting with an initial capacity of approximately 126 million cubic feet per day (MMcfd), with projections to reach at least 300 MMcfd by 2029.

In terms of operational metrics for 2025, Frontera reported an average production of 39,011 barrels of oil equivalent per day (boed). The company recorded an operating EBITDA of $308 million USD for the year. Production costs averaged $9.23/boe, while energy costs were $5.49/boe and transportation costs reached $12.00/boe.

The year-end independent reserves assessment, conducted by DeGolyer and MacNaughton Corp, placed the company’s gross reserves at 94.4 million Boe for the 1P category and 133.8 million Boe for the 2P category. All of the company’s booked reserves as of December 31, 2025, are located within Colombia.

On the environmental and social front, the company reported that 70,162 tons of CO2 equivalent were absorbed through environmental compensation areas in 2025. Additionally, 35% of operational water was reused during the same period. The company also noted a total of $95.1 million USD in purchases from local goods and services suppliers.

Upon the anticipated closing of the arrangement in the second quarter of 2026, Frontera Energy will retain its midstream assets in Colombia and certain non-Colombian interests, including those in Guyana. The company expects to allocate $25 million USD from the sale proceeds to further fund its infrastructure business and strategic growth projects.