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.

Stronger peso and oil prices shift Colombian investment landscape.

The Colombian peso (COP) experienced a 2.1% appreciation during March 2026, driven by a recovery in global oil prices and key domestic developments. According to the latest analysis from Bancolombia (BVC: BCOLOMBIA / NYSE: CIB), the performance of the currency coincided with the results of national legislative elections and recent monetary policy adjustments by the Banco de la República.

Global energy markets recorded a significant increase in crude prices throughout the month. Brent crude rose 63% to end March at $118 USD per barrel, while West Texas Intermediate (WTI) increased 51% to close at $101 USD per barrel. These price movements have been largely attributed to geopolitical tensions in the Middle East, which continue to influence international commodity flows and investor sentiment.

On the domestic front, the Gran Coalición por Colombia primary election recorded a turnout of more than 5 million voters. Market analysts indicated that the high participation rate was viewed as a positive indicator of institutional stability. Simultaneously, the Board of Directors of the Banco de la República increased the national policy interest rate by 100 basis points, bringing the benchmark rate to 11.25%. This decision aligns with regional efforts to manage inflationary pressures through tighter monetary control.

International market conditions also reflect a shift in expectations regarding the Federal Reserve. Due to ongoing conflict in the Middle East and persistent economic indicators, markets currently anticipate that the US central bank will maintain existing interest rates without cuts for the remainder of the year.

Looking forward to April, the research team at Bancolombia—led by Chief Economist Laura Clavijo, Macroeconomic Manager Jose Luis Mojica, and International and FX Analyst Maria Paula Gonzalez—projects that the exchange rate will trade within a range of $3,625 COP to $3,725 COP. This forecast accounts for continued volatility and heightened uncertainty in both global and domestic financial markets.

Bancolombia (photo © Loren Moss)

Monetary tightening impacts investment outlook in Colombia.

Colombia’s Banco de la República is preparing for a significant shift in monetary policy as inflationary risks deteriorate. According to the latest report from the Dirección de Investigaciones Económicas, Sectoriales y de Mercados at Bancolombia (NYSE: CIB), persistent internal pressures and a less favorable external environment are driving the need for a more restrictive stance.

Bancolombia’s analysts expect the Junta Directiva of the Banco de la República to increase its policy interest rate by 100 basis points, bringing it to 11.25 percent. This forecast suggests that the first half of 2026 will be characterized by a more aggressive tightening cycle than previously anticipated, with the rate potentially reaching 12.75 percent.

The international landscape is playing an increasingly decisive role in these local policy configurations. A recent week of central bank decisions globally revealed a shift in tone among major financial institutions, primarily due to rising uncertainty stemming from the conflict in Iran. This geopolitical tension has directly impacted costs for energy, transportation, and agricultural inputs.

“The increase responds to the need to send a clear signal of commitment to price stability.” — Dirección de Investigaciones Económicas, Sectoriales y de Mercados at Bancolombia.

In the US, economic activity shows signs of moderation, yet producer price inflation in February exceeded expectations. The yield curve for US Treasuries, managed by the US Department of the Treasury, has shown mixed behavior as the conflict escalates, with the spread between 10-year and 3-month bonds reaching levels not seen since 2023. Inflation expectations in the US have rebounded in the short term, though they remain anchored over longer horizons.

Domestically, the business indices from think-tank Fedesarrollo showed mixed results for February. However, there are positive indicators in the labor market, as the urban unemployment rate across the 13 primary metropolitan areas continued its downward trend. Additionally, goods exports recorded an advance during the same period.

In the local fixed-income market, the TES fixed-rate curve saw a recovery last week. However, the March Financial Institutions Survey suggests that devaluations of TES may persist in the short term. Long-term TES Class B placements in the first quarter reached 1.0 percent of the GDP.

Chart based on data from Grupo Cibest & the Banco de la República.

Energy markets remain volatile as crude oil inventories in the US increased beyond expectations in the third week of March. Despite this, the price of Brent crude rose toward the end of the week, driven by skepticism regarding a potential ceasefire in the Middle East. The Colombian peso appreciated over the past week, tracking the intensity of the regional conflict.

The equity market results for the fourth quarter of 2025 remained neutral and aligned with market expectations. Global volatility continues to be shaped by energy shocks, geopolitical strife, and a cautious approach toward investments in artificial intelligence.

The projected rate hike by the Banco de la República is intended to send a definitive signal of commitment to price stability. This adjustment reflects not only recent inflation trends but also a strategic effort to prevent the further deterioration of expectations in a high-risk environment.

Headline image: Bogotá headquarters of Banco de la República (Banrepublica). Photo credit Juan Enrique Rodríguez, courtesy Banrepublica

Governance concerns and profit drops dominate shareholder assembly.

The Ecopetrol (NYSE: EC, BVC: ECOPETROL) General Shareholders’ Meeting concluded at the Corferias convention center in Bogotá, marked by a decline in annual profits and an intensifying debate regarding the continuity of the company’s president, Ricardo Roa. During the assembly, shareholders approved a dividend of $121 COP per share for minority holders and a total payment of $4 trillion COP to the Colombian government, which serves as the majority shareholder. The government’s payout is scheduled for distribution in two installments, to be completed by June 30, 2026.

Click on above image to view shareholder meeting

The financial results for the 2025 fiscal year revealed a significant contraction in net income, which fell to $9 trillion COP from the $14.9 trillion COP reported in 2024. Roa attributed this decline primarily to the volatility of international crude prices. He noted that the average price of Brent crude dropped from $80 USD per barrel to $68 USD per barrel over the period. According to company data, every $1 USD drop in the price of Brent corresponds to a reduction of approximately $500 billion COP in net profit and $700 billion COP in EBITDA. Despite the lower earnings, the company maintained a production level of 745,000 barrels per day and achieved a reserve replacement rate of 121%, the highest in five years.

Governance issues remained the primary focus of the assembly. Minority shareholders expressed concern over the legal challenges facing Roa, who is currently under investigation by the Fiscalía General de la Nación for alleged influence peddling. Additionally, the Consejo Nacional Electoral (CNE) has raised accusations regarding the alleged violation of spending caps during the presidential campaign of Gustavo Petro, which Roa managed. Angela Maria Robledo, Chair of the Board of Directors, defended the decision to retain Roa, stating that the board has activated a evaluation protocol while respecting the constitutional principle of the presumption of innocence.

Shareholders Erupt In Anger At CEO Ricardo Roa:

Abuchean a Ricardo Roa en asamblea de Ecopetrol

“¡Fuera, fuera!”: Este es el momento del tenso abucheo de los accionistas al presidente de la empresa

Videos: Néstor Gómez pic.twitter.com/uyjh4chpl2

— EL TIEMPO (@ELTIEMPO) March 27, 2026

“Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol,” stated Martín Ravelo, President of the USO.

The Unión Sindical Obrera (USO), the primary labor union representing nearly one-third of the company’s workforce, has issued an ultimatum for Roa’s removal. Martin Ravelo, president of the USO, warned that the union will initiate a national strike and affect crude production if Roa is not aparted from his position by Monday, March 30. Ravelo expressed concern that Ecopetrol, which is subject to the regulations of the Securities and Exchange Commission (SEC) and the Office of Foreign Assets Control (OFAC), could face federal intervention. He highlighted that Ecopetrol’s current debt has reached $30 billion USD, exacerbated by rising interest rates, and warned that the company lacks the cash flow to respond to potential demands for early repayment of international obligations.

President Gustavo Petro responded to the union’s concerns via social media, stating that the executive branch will take measures to shield the company’s financial future. Petro emphasized the importance of maintaining investment during periods of high oil prices to prepare for future market downturns. He also criticized past administrations for failing to invest sufficiently in clean energy during previous price cycles. In contrast, Ravelo called for the board to maintain its independence from political influence, noting that four of the nine board members have already left formal records supporting Roa’s departure.

Ecopetrol also addressed the national gas supply, with Roa announcing that new regasification alternatives at Puerto Bahía and on the Pacific coast are expected to begin operations in the second half of 2026. These projects are intended to contribute between 186 and 430 Gbtud to the national grid. A third regasification facility in Coveñas is projected to start operations in 2029 with a capacity of 400 Gbtud. Despite these operational plans, the immediate focus of the international investment community remains fixed on the board’s upcoming meeting on Monday, where the leadership deadlock must be resolved to avoid a potential halt in national production.

Headline photo: Former Senator Jorge Robledo admonishes the Ecopetrol board of directors at the March 2026 shareholders’ meeting.