Slide 1: Investor Day 2019
Slide 2: Advisories
Advisories This presentation contains forward-looking statements. All statements, other than statements of historical fact that address activities, events or developments that Frontera Energy Corporation (the “Company” or “Frontera”) believes, expects or anticipates will or may occur in the future (
Slide 3: Advisories
Advisories Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or mo
Slide 4: Agenda
Agenda ✓ Safety Briefing ✓ Chairman’s Welcome ✓ Strategy & Key Initiatives ✓ Operations & Production ✓ Break ✓ Exploration ✓ Transportation ✓ Puerto Bahía ✓ Finance ✓ Closing Remarks and Q&A
Slide 5: Chairman’s Welcome
Chairman’s Welcome
Slide 6: Strategic Implementation
Strategic Implementation Substantial Progress Made Towards Key Board Priorities People • Completion of executive team transition to drive execution of strategy • Ongoing implementation of optimization and efficiency programs • More efficient organizational structure in place and getting leaner all t
Slide 7: Company Strategy
Company Strategy Sustaining Base Production for the Next Three to Five Years from Core Assets Optimizing Cash Generation and Delivering Enhanced Shareholder Returns Core Portfolio of Stable Assets with Growth Options Maintain Strong Balance Sheet, Financial Flexibility and Low Leverage Ratios to Enh
Slide 8: Frontera Offers Deep Value Following Restructuring
Frontera Offers Deep Value Following Restructuring Improved Liquidity Driven by Share Buyback and Stock Split Enterprise Value (US$)/2019 Guidance (Boe/d)(1) Enterprise Value (US$)/2P Reserves (2018/2017) (1) $50,000 18.00 $45,000 16.00 $40,000 14.00 $35,000 12.00 $30,000 10.00 $25,000 8.00 $20,000
Slide 9: Strategy & Key Initiatives
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Slide 10: The Frontera Leadership Team
The Frontera Leadership Team Presenting Speakers Gabriel de Alba Richard Herbert David Dyck Andrew Kent Grayson Andersen Chairman Chief Executive Officer Chief Financial Officer General Counsel VP, Capital Markets Duncan Nightingale Erik Lyngberg Renata Campagnaro Alejandro Piñeros Alejandra Bonilla
Slide 11: The Frontera Leadership Team
The Frontera Leadership Team Presenting Speakers Gabriel de Alba • Managing Director and Partner of The Catalyst Capital Group Inc. Chairman • International experience restructuring public and private companies, unlocking value for investors • Over 36 years of experience with major international oil
Slide 12: Regional Strategic Focus
Regional Strategic Focus North Andean Core Areas Exploration Watching Brief Development Production Exploration Country Entry Production Core Frontera Focus Region 12
Slide 13: Regional Strategic Focus
Regional Strategic Focus North Andean Core Areas Core Focus Area – NW South America (North Andean Region) Colombia – Ecuador – Northern Perú • Major production opportunities and remaining exploration potential One of the richest oil Guyana • New exploration province regions in • Five billion Boe fou
Slide 14: Company Strategy
Company Strategy Enhancing Frontera’s Portfolio and Unlocking Value Pursue Strategic Unlock Sustain Base Production Growth Opportunities Additional Value + • Carefully manage core Potential to add new • Drive down cost structure portfolio of stable assets reserves through: • Ongoing capital allocati
Slide 15: Core Assets Deliver Stable Base Production
Core Assets Deliver Stable Base Production Seven Year Production Profile from Restructuring to Growth Frontera Daily Production (before royalties Boe/d) In the Portfolio Future Opportunities 90,000 Restructuring Transition Growth • VIM-1/Guama • Onshore Perú 80,000 • Guyana (new Block 192 contract)
Slide 16: Frontera: A Five Year Journey to Sustainability and Growth
Frontera: A Five Year Journey to Sustainability and Growth Frontera is in Transition 2016 - 2018 Investment restrictions, limited exploration, mature field decline Manage mature field decline 2019 - 2020 New developments and exploration Strong cash generation 2022 + Growth through access to new oppo
Slide 17: Key Initiatives to Unlock and Create Value
Key Initiatives to Unlock and Create Value What We Have Done, What We Are Doing, Where We Are Going 2018 2019 Plan Future • Restrictive hedges rolled off • Improve balance sheet • Hedge to protect the balance Corporate • G&A reduced by 10-15% sheet and capital program efficiency with improved • Lead
Slide 18: Key Initiatives to Unlock Value
Key Initiatives to Unlock Value Enhancing the Portfolio and Unlocking Value Termination of ship-or-pay transportation agreements and reduced pipeline tariffs 2018 Series of initiatives intended to address liquidity and valuation concerns Focus on efficiency and costs to generate strong cash flow for
Slide 19: Initiatives that Create Significant Value
Initiatives that Create Significant Value LONG-TERM Long-Term High Impact Strategy CASH IMPACT • Termination of ship-or-pay contracts in 2018 HIGH Transportation • Reduce transportation commitments through tariff reductions • Bring production and transportation costs to standard levels Cost HIGH • O
Slide 20: Operations & Production
Operations & Production
Slide 21: Our Portfolio
Our Portfolio Large Diversified Asset Base with Significant Acreage and Infrastructure CORE • Quifa • Guatiquía • Cubiro SUSTAINING • CPE-6 • Z-1 • Near field exploration GROWTH • Colombia new acreage • Offshore Guyana • Ecuador bid rounds • New contract opportunity Block 192 • Farm-in opportunities
Slide 22: Core Assets Deliver Stable Base Production
Core Assets Deliver Stable Base Production Seven Year Production Profile from Restructuring to Growth Frontera Daily Production (before royalties Boe/d) In the Portfolio Future Opportunities 90,000 Restructuring Transition Growth • VIM-1/Guama • Onshore Perú 80,000 • Guyana (new Block 192 contract)
Slide 23: Quifa: Cornerstone of Heavy Oil Production
Quifa: Cornerstone of Heavy Oil Production Stable Production at 27,000 Bbl/d for Five Years Recent Exploration Discoveries 30,000 Quifa, Cajua, Jaspe & Sabanero 25,000 Bbl/d (before royalties) 20,000 15,000 10,000 5,000 0 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 PD 1P 2P 3P Block Expansion Exploration Pot
Slide 24: Quifa: Key Characteristics, Activities and Features
Quifa: Cornerstone of Heavy Oil Production Key Characteristics, Activities and Features Contract Name Quifa Contract Contract Type Exploration, Development and Exploitation Contract Term Expiry December 2031 2018 Production (before/after royalties) ~27,500 Bbl/d; ~23,000 Bbl/d 2017 2P Net Reserves 6
Slide 25: Quifa: New Drilling and Water Control Technologies
Quifa: New Drilling and Water Control Technologies New Methods and Tools Improve Oil Rates Typical Drilling Curve Better Water Control Improves Returns Conventional Slotted Liner Promotes Fingering Surface Casing AICD: Autonomous Inflow Control Device Reduces Fingering Effect ESP Viscous Fingering E
Slide 26: Quifa: Continuous Improvement Initiatives
Quifa: Continuous Improvement Initiatives Reduce Drilling Time, Improve Costs 2018 High Performance Notes: • Drilling time reduction • Maximizing cleaning hole practices • Improved time running 7 inch casing and cement jobs • ROP improvement • 2019 pilot test for two casing strings wells on- going i
Slide 27: Guatiquía: Cornerstone of Light Oil Production
Guatiquía: Cornerstone of Light Oil Production Stable Production at 15,000 Bbl/d for Three Years ACAA, Candelilla, Yatay, Coralillo 20,000 18,000 Bbl/d (before royalties) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 1P 2P 3P Block Expansion Exploration Pot
Slide 28: Guatiquía: Building on Deep Llanos Success
Guatiquía: Building on Deep Llanos Success Key Characteristics, Activities and Features Contract Name Guatiquía Contract Contract Type Exploration, Development and Exploitation Contract Term Expiry August 2035 2018 Production (before/after royalties) ~15,300 Bbl/d; ~14,300 Bbl/d 2017 2P Net Reserves
Slide 29: Coralillo: Part of the Guatiquía Complex
Coralillo: Part of the Guatiquía Complex Expanding Our Core Light Oil Area Coralillo Development Plan 7,000 6,000 Bbl/d (before royalties) 5,000 4,000 3,000 2,000 1,000 0 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Guatiquía 20,000 18,000 16,000 Bbl/d (before royalties) 14,
Slide 30: Coralillo Field
Coralillo Field Key Characteristics, Activities and Features Contract Name Guatiquía Contract Type Exploration and Production Contract Term Expiry June 2038 2019 Estimated Capital Expenditures $25 MM Net Acreage 3,882 Working Interest 100% PAP After 5 MMBbl Base Royalty Rate 6% to 25%(1) Notes: Key
Slide 31: Coralillo Field: Multiple Light Oil Target Zones
Coralillo Field Multiple Light Oil Target Zones Guadalupe LS1A LS-3 Guadalupe Lower Sand 1 Lower Sand 3 Productive Reservoir Present in Candelilla – Yatay fields Average Φ 12-19 13-19 16 Guadalupe, Lower Sand 1 and Lower Sand 3 API° 13-18 15-22 36-44 31
Slide 32: Coralillo Field: Improved Drilling Performance
Coralillo Field Improved Drilling Performance and Costs Savings 3 – SECTION 2 – SECTION Indicator 3-Section 2-Section Drilling Avg. Time (Days) 26.2 22.5 Avg. Cost $3.5 MM $3.0 MM CSG 9,625” @ 2,500 ft Cost/Foot $287.5 $247.5 Completion Avg. Cost $1.3 MM $1.3 MM CSG 13,375” @ 2,000 ft Best Design Ne
Slide 33: Cubiro: Additional Light Oil Potential
Cubiro: Additional Light Oil Potential Core Growth Area with Development Drilling and Pressure Maintenance Cubiro 14,000 12,000 Bbl/d (before royalties) 10,000 8,000 6,000 4,000 2,000 Successful Waterflood Pilot 0 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Project 1P 2P 3P Block Expansion Exploration Potent
Slide 34: Cubiro
Cubiro Key Characteristics, Activities and Features Contract Name Cubiro Contract Type Exploration and Production Contract Term Expiry September 2037 2018 Production (before/after royalties) ~3,550 Bbl/d; ~3,275 Bbl/d 2017 2P Net Reserves 16,341 MMBbl 2019 Estimated Capital Expenditures $35 MM Net A
Slide 35: Cubiro: Multizone Light Oil Opportunities
Cubiro: Multizone Light Oil Opportunities Development Drilling and Waterflooding Multiple Productive Zones Carbonera C-3 Carbonera C-5 Carbonera C-7 C3 C5 C7 Average Φ 22 23 24 API° 34 40 40 35
Slide 36: Cubiro: Successful Waterflooding Pilot Project
Cubiro Successful Waterflooding Pilot Project 36
Slide 37: Cubiro: Drilling Efficiency Improvements
Cubiro: Drilling Efficiency Improvements Improved Drilling Performance and Over 40% Costs Savings MECHANICAL STATUS CSG 9,625” @ 500 ft Indicator 2015 2017-2018 Design Conventional Slim Rig Capacity (HP) 1,500 1,000 – 1,200 Drilling Avg. Time (Days) 20.2 19.5 Avg. Cost $2.6 MM $1.9 MM Cost/foot $332
Slide 38: Hamaca Field (CPE-6)
Hamaca Field (CPE-6) Large Oil In Place, Reserves, Production Upside CPE-6 9,000 8,000 7,000 6,000 5,000 4,000 Phase 4 3,000 Phase 3 2,000 Phase 2 1,000 Phase 1 0 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 1P Block Expansion 38
Slide 39: Hamaca Field
Hamaca Field Key Characteristics, Activities and Features Contract Name CPE-6 Contract Type Exploration and Production Contract Term Expiry January 2042 2018 Production (before/after royalties) 940 Bbl/d (both) 2017 2P Net Reserves 24 MMBbl 2019 Estimated Capital Expenditures $17 MM Net Acreage 26,7
Slide 40: Hamaca Field: A Mini Quifa
Hamaca Field: A Mini Quifa Field Expansion Projection from 1,000 Bbl/d to 5,000 Bbl/d Production 6.00 300 5.00 250 MBbl/d (before royalties) Mbbl/d of water 4.00 200 3.00 150 2.00 100 1.00 50 0.00 0 Jan2018 Jan2019 Jan2020 Jan2021 Jan2022 Jan2023 Jan2024 Jan2025 Jan2026 Jan2027 Jan2028 Jan2029 Jan20
Slide 41: Hamaca Field: Large Oil in Place
Hamaca Field: Large Oil in Place Extensive Seismic Improves Reservoir Understanding Net Pay Map – Basal Sand Unit D H D H H LEGEND Development Wells Water Disposal Well Future Development Clusters 3D Seismic HAMACA FIELD Arenas (366 km2) Basales Isopach shows CPE-6 BLOCK Incised valleys 2D Seismic w
Slide 42: Hamaca Field: Basal Sands are the Target Formation
Hamaca Field Basal Sands are the Target Formation A A’ HAMACA AREA CARBONERA C7 Secondary Reservoir UNIT Main Reservoir BASAL SANDS UNIT 42
Slide 43: Perú
Perú
Slide 44: Perú: Onshore and Offshore Blocks
Perú Onshore and Offshore Blocks Provide Upside Opportunity Area of Current Disruption 44
Slide 45: Perú Block 192
Perú Block 192 Nine Months Remaining on Service Contract Heavy Oil Medium Oil Light Oil 45
Slide 46: Perú Block 192
Perú Block 192 Key Characteristics, Activities and Features Contract Name Lote 192 Contract Type Temporary Services Contract Term Expiry 9 months once production is restored 2018 Production (before/after royalties) ~7,390 Bbl/d; ~6,210 Bbl/d 2017 2P Net Reserves 4.4 MMBbl Net Acreage 1,266,037 Worki
Slide 47: Perú Z-1
Perú Z-1 Offshore Production with Exploration and Natural Gas Opportunities 47
Slide 48: Perú Z-1: Potential Gas Development Scheme
Perú Z-1 Potential Gas Development Scheme 48
Slide 49: Perú Z-1
Perú Z-1 Key Characteristics, Activities and Features Contract Name Lote Z1 Contract Type Exploration and Production License Contract Term January 2042 2018 Production (before/after royalties) ~775 (both) 2017 2P Net Reserves 4.6 MMBbl 2019 Estimated Capital Expenditures $18 MM Net Acreage 216,689 W
Slide 50: Core Assets Deliver Stable Base Production
Core Assets Deliver Stable Base Production Seven Year Production Profile from Restructuring to Growth Frontera Daily Production (before royalties Boe/d) In the Portfolio Future Opportunities 90,000 Restructuring Transition Growth • VIM-1/Guama • Onshore Perú 80,000 • Guyana (new Block 192 contract)
Slide 51: Operations Summary
Operations Summary Stable Production in Colombia of over 65,000 Boe/d from Core and Sustaining Asset Portfolio • Effectively managing natural production decline: • Colombia has a strong and sustainable platform of producing assets with significant development potential that can compensate for natura
Slide 52: Break
Break
Slide 53: Exploration
Exploration
Slide 54: Exploration Strategy: Colombia Provides the Core
Exploration Strategy: Colombia Provides the Core Opportunities in Three Core Basins of Colombia 54
Slide 55: Core Assets Deliver Stable Base Production
Core Assets Deliver Stable Base Production Seven Year Production Profile from Restructuring to Growth Frontera Daily Production (before royalties Boe/d) In the Portfolio Future Opportunities 90,000 Restructuring Transition Growth • VIM-1/Guama • Onshore Perú 80,000 • Guyana (new Block 192 contract)
Slide 56: Quifa
Quifa
Slide 57: Quifa: Cornerstone of Heavy Oil Production
Quifa: Cornerstone of Heavy Oil Production Stable Production at 27,000 Bbl/d for Five Years Recent Exploration Discoveries 30,000 Quifa, Cajua, Jaspe & Sabanero 25,000 Bbl/d (before royalties) 20,000 15,000 10,000 5,000 0 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 PD 1P 2P 3P Block Expansion Exploration Pot
Slide 58: Quifa: Key Characteristics, Activities and Features
Quifa: Cornerstone of Heavy Oil Production Key Characteristics, Activities and Features Contract Name Quifa Contract Contract Type Exploration, Development and Exploitation Contract Term Expiry December 2031 2018 Production (before/after royalties) ~27,500 Bbl/d; ~23,000 Bbl/d 2017 2P Net Reserves 6
Slide 59: Jaspe: Recent Wells Confirm Thick Oil Column
Jaspe: Recent Wells Confirm Thick Oil Column Multiple Productive Zones C7 59
Slide 60: Lower Magdalena Valley (VIM-1 and Guama)
Lower Magdalena Valley (VIM-1 and Guama)
Slide 61: Lower Magdalena Valley Basin
Lower Magdalena Valley Basin Oil, Natural Gas and Natural Gas Liquids Exploration Opportunities 61
Slide 62: Lower Magdalena Basin
Lower Magdalena Basin Key Characteristics, Activities and Features Contract Name La Creciente Contract Type Exploration and Production Contract Term August 2034 Acreage 26,653 Working Interest 100% Base Royalty Rate 6.4% natural gas and 8% condensate Key Features: Notes: • High productivity gas rese
Slide 63: VIM-1: Lower Magdalena Valley Basin
VIM-1: Lower Magdalena Valley Basin New Farm-In Agreement with Parex 63
Slide 64: VIM-1, Lower Magdalena Basin
VIM-1, Lower Magdalena Basin Key Characteristics, Activities and Features Contract Name VIM-1 Colombia Farm-in agreement between Frontera and Parex(1) Contract Type Conventional E&P No. 16 2014 ANH bid round Contract Term Two phases as noted below Acreage 223,650 Working Interest 50% (non-operationa
Slide 65: Guama: Exploration and Production Contract
Guama: Exploration and Production Contract Liquids Rich Natural Gas Potential 65
Slide 66: Guama: Exploration and Production Contract
Guama: Exploration and Production Contract Key Characteristics, Activities and Features Contract Name Guama Contract Contract Type Exploration and Production Contract Term April 10, 2007, Phase 1 & 2 unified up to September 2020 (Exploration) Net Acreage 70,993 Working Interest 100% Base Royalty Rat
Slide 67: Guama: Schematic Play Opportunities
Guama Schematic Play Opportunities and Exploratory Well Asaí 1 Guama Block Exploration Area Exploitation Area LIGIA - 1 Asaí-1 Loc Guama Field GUAMA FIELD SW NE ALLUVIUM 1 INACTIVE TUBARA SHALLOW GAS "AA" SHALE DIAPIR GUAMA SHALLOW PLAY "A" BIOGENIC GAS 4 "B" OVERPRESSURED > 10 ppg required Mud Weig
Slide 68: Caguan
Caguan
Slide 69: CAG-6 and CAG-5: Northern Putumayo Basin
CAG-6 and CAG-5: Northern Putumayo Basin Large Acreage Position Provide Multiple Exploration Opportunities 69
Slide 70: CAG-6 Exploration & Production
CAG-6 Exploration & Production Seismic Coverage Provides Confidence in Exploration Potential N S 200 msec Pepino/ Eocene Subtle relief Subtle relief Subtle relief Villeta/ K PreK Unc PreK 4 km 70
Slide 71: CAG-5 Exploration & Production
CAG-5 Exploration & Production Geological Understanding of the Basin Identifies Future Opportunities New 2D seismic Limonero Discovery Preliminary location of Stratigraphic well Airú-mandur Structure R: Villeta, 28 API 25 km 71
Slide 72: CAG-6 and CAG-5: Location and Contractual Matter
CAG-6 and CAG-5: Location and Contractual Matter Key Characteristics, Activities and Features Key Features: Cag-6 • Proven oil prone basin Current Phase Phase 0, previous consultation process • On trend with producing oil fields Partners FEC: 50% ; Repsol: 50% • Three-way dip hanging wall closure in
Slide 73: Guyana
Guyana
Slide 74: Guyana: One of the World’s Hottest Exploration Basins
Guyana: One of the World’s Hottest Exloration Basins Ownership and JV Farm-in Terms Subject to consent from the government of Guyana, CGX and Frontera have formed a two thirds/one third Joint Venture to explore CGX’s two offshore blocks The Joint Venture partners are already moving forward with arra
Slide 75: Guyana: Exciting Exploration Opportunities
Guyana: Exciting Exploraiton Opportunities On Trend with Multiple Targets and Play Types Primary 75
Slide 76: Guyana
Guyana Key Characteristics, Activities and Features Contract Name Petroleum Prospecting License (PPL) Contract Type Petroleum Prospecting License (PPL) First Corentyne well to be drilled by November 27, 2019 Second Corentyne well to be drilled by November 27, 2022 Contract Term First Demerara well t
Slide 77: Guyana: Blocks Well Positioned to Trap Oil
Guyana Blocks Well Positioned to Trap Oil Position of CGX/Frontera Joint Oil is trapped onshore in the Oil is trapped on the slope in Guyana at the Tambaredjo field (Suriname) Venture Blocks Hammerhead and Pluma locations Oil migrates through sands and along Oil is trapped deep faults at shelf edge
Slide 78: Guyana Summary
Guyana Summary Blocks Well Positioned to Trap Oil • Oil in onshore Suriname, oil & gas seeps in onshore Guyana, and recent discovery of oil at Hammerhead and Pluma- vertically and laterally updip of Liza- prove migration of oil through the shelf area of offshore Guyana • Frontera blocks are well-pos
Slide 79: Ecuador
Ecuador
Slide 80: Ecuador: Existing Discoveries with Available Infrastructure
Ecuador: Existing Discoveries with Available Infrastructure Available Blocks During March 2019 Bid Round 80
Slide 81: Core Assets Deliver Stable Base Production
Core Assets Deliver Stable Base Production Seven Year Production Profile from Restructuring to Growth Frontera Daily Production (before royalties Boe/d) In the Portfolio Future Opportunities 90,000 Restructuring Transition Growth • VIM-1/Guama • Onshore Perú 80,000 • Guyana (new Block 192 contract)
Slide 82: Transportation
Transportation
Slide 83: 2018 OPEC+ Cuts
2018 OPEC+ Cuts Better Heavy Oil Differentials 83
Slide 84: Key Fundamentals for 2019
Key Fundamentals for 2019 OPEC Committed to Oil Prices Above $60 Bbl OPEC+ suggests a commitment to the oil cuts. However, the market is in a wait and see mode. • OPEC started to reduce crude oil exports in December 2018 • However, several OPEC+ countries ramped up production strongly ahead of their
Slide 85: Commercial Outlook for 2019
Commercial Outlook for 2019 Continued Diversification of Our Counterparties and Markets USWC Market: Frontera is committed to supply this market which is constrained to receive U.S. shale production due to the Jones’s Act Long term growth opportunities in Asia; Frontera is: • Developing a new ample
Slide 86: Colombian Pipeline Capacity
Colombian Pipeline Capacity ~1.0 Million Bbl/d of Capacity for 875,000 Bbl/d of Supply Total Capacity Colombia (Bbl/d) ODL 340 OCENSA P135 135 OCENSA BASE (I- II) 616 OCENSA BASE (III) 415 OCENSA Unloading 60 Monterrey - Porvenir 53 Santiago - Porvenir 45 OGD 40 OAM 101 ODC 220 OTA 60 86
Slide 87: Trucking in Colombia
Trucking in Colombia Trucking Provides Flexibility 87
Slide 88: Trucking in Colombia
Trucking in Colombia Current Truck Operations • Utilizing 32 loading and 18 unloading stations • Using our control system (Pegaso) for real time monitoring • Moving: • 38 MBbl/d of crude oil and products • 14 MBbl/d of production fluids and water • Using 250 Trucks/day from 36 contracted companies,
Slide 89: Transportation and Diluent Cost
Transportation and Diluent Cost Reduced Transportation and Diluent Costs Over Time Transportation Cost ($/Boe) 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 - 2014 2015 2016 2017 YTD2018 2019E Transportation Costs Diluent Costs Disrupted Capacity Dilution and blending to meet pipeline qual
Slide 90: NorPeruano Pipeline Inventory
NorPeruano Pipeline Inventory Over $70 Million of Value 1,700,000 $100,000,000 1,600,000 1,500,000 $90,000,000 1,400,000 $80,000,000 1,300,000 1,200,000 $70,000,000 1,100,000 1,000,000 $60,000,000 900,000 Bbl $50,000,000 800,000 700,000 $40,000,000 600,000 500,000 $30,000,000 400,000 $20,000,000 300
Slide 91: Supply and Transport Achievements 2018
Supply and Transport Achievements 2018 Attention to Detail Generates Significant Savings • Savings in operational optimizations: • Dilution consumption reduction through third party purchases and collaborative agreements • Fuel cost reduction through a refining agreement • Capacity assignment to thi
Slide 92: 2019 Transportation Opportunities
2019 Transportation Opportunities Continued Focus Will Deliver Optimized Prices and Costs 1. To optimize logistics costs and revenues: • Reduce pipeline tariffs for the regulation period 2019- 2023 • Taking advantage of Frontera storage capacity in Puerto Bahía to purchase diluent every time market
Slide 93: Puerto Bahía
Puerto Bahía
Slide 94: Puerto Bahía (Frontera 39.2% Ownership)
Puerto Bahía (Frontera 39.2% Ownership) Only Deep Water Port in Cartagena 2.67 MMBbls Storage Expandable 2 9 1 4 8 3 10 5 TANK #2 - Heated Fuel Oil TANK #5 – Heated TANK #8 TANK #10 Fuel Oil TANK #3 Crude Naphtha Crude TANK #4 TANK #9 Crude Crude TANK #1 Heated Crude 94
Slide 95: Puerto Bahía
Puerto Bahía Key Characteristics, Activities and Features • Only multi-purpose port in Colombia capable to take in Panamax (general cargo vessels) and Suezmax (liquid bulk vessels) • Close proximity to the Cartagena Refinery, ideal for liquid bulk operations • Location near the Panama Canal ideal fo
Slide 96: Finance
Finance
Slide 97: 2019 Guidance
2019 Guidance Strong EBITDA, Lower Capex, Stable Costs 2019 Guidance Metrics(1) 2018 2019 Guidance Operating EBITDA(2) $400 - $450 MM $400 - $450 MM Capital Expenditures $440 - $460 MM $325 - $375 MM Average Daily Production 70 – 72 MBoe/d 65 – 70 MBoe/d (before royalties) Average Daily Production 6
Slide 98: 2019 EBITDA Sensitivities
2019 EBITDA Sensitivities Using 2019 Budget Estimates of $65.00/Bbl Brent, 3,000:1 USDCOP, Differential of $8.40/Bbl Brent Oil ($/Bbl) ($5) (85) 85 +$5 Production Cost ($/Bbl) +$1.0 (26) 26 ($1.0) Transport Cost ($/Bbl) +1.0 (23) 23 ($1.0) Impact of Differentials +1.0 (21) 21 ($1.0) ($/Bbl) FX Rate
Slide 99: 2019 Guidance
2019 Guidance Strong EBITDA, Lower Capex, Lower Costs Daily Production, before royalties (Boe/d) Operating EBITDA and Capex ($MM) 80,000 500 450 70,000 400 60,000 350 50,000 300 40,000 250 30,000 200 150 20,000 100 10,000 50 - - Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 2019E 2017 2018F 2019E Operatin
Slide 100: Hedging Policy and Position
Hedging Policy and Position Oil Hedges Using Puts and COP/USD Foreign Exchange Hedging Percentage of Monthly Production Hedged at $55/Bbl Brent COP/USD Foreign Exchange Hedging ($MM) 70% 60 60% 50 50% 40 40% 30 30% 20 20% 10% 10 0% 0 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Feb-19 Mar
Slide 101: Balance Sheet Strength
Balance Sheet Strength Strong Cash Position, Low Leverage Ratios Balance Sheet Metrics – September 30, 2018 Total Cash(1)/Cash and Cash Equivalents ($MM) $786/$587 Net Debt/EBITDA(2) 0.0x Debt to Book Capitalization(3) 22.7% Interest Coverage(4) 12.0x 2019 Hedged Production ~17% Dividend (January 3,
Slide 102: Improved Capital Efficiency Processes
Improved Capital Efficiency Processes Enable Better Capital Allocation and Project Selection Various evaluation and follow-up tools: Oversight Scorpion Charts Biweekly Corporate Investment Full-life economics After Action Reviews Committee Portfolio Optimization Continuous Quarterly lookbacks BoD CE
Slide 103: Oversight: Key Investment Financial Metrics
Oversight: Key Investment Financial Metrics Discipline in Economic Evaluations of Projects to Deploy Capital Metric Acceptable ranges Comments Typically 25-35% range for managed decline IRR >15% projects IE >0.3 Capital <1 Development wells efficiency Payback, <1.5 Near field exploration years 3-5 F
Slide 104: Lessons Learned on Capital Efficiency in 2018
Lessons Learned on Capital Efficiency in 2018 Improved Costs and Operational Efficiency Lessons learned Actions for 2019 • Cost per foot drilled can be further • New well designs piloted and ready to roll-out Development improved • Better calibration of production estimates • Over optimistic product
Slide 105: Economic Analysis of Work-Overs and Well-Services
Economic Analysis of Work-Overs and Well-Services Significant Value Created 105
Slide 106: Field Development Drilling Lookback Analysis
Field Development Drilling Lookback Analysis Plan (5 well types weighted average) Actuals/Reforecast Cumulative production (MBbls) @ Brent Actuals Metric %Var. $63/Bbl (Norm $63) CapEx $63 $53 (16%) (MM) Reserves 8 7 (12%) MMBbls NPV@12 $88 $78 (11%) %(MM) IE 1.6 1.7 - Months 106
Slide 107: Cost Reduction Initiatives
Cost Reduction Initiatives G&A and Operating Costs Improvements 2018 Improved G&A by 10-15% by redesigning support functions and structure 2019 Internal savings plan Structural review of aiming to further assets to reduce per reduce costs and G&A barrel costs and preserve cash 107
Slide 108: Closing Remarks
Closing Remarks ——- \ ani: aan X allah hy Iss
Slide 109: Core Assets Deliver Stable Base Production
Core Assets Deliver Stable Base Production Seven Year Production Profile from Restructuring to Growth Frontera Daily Production (before royalties Boe/d) In the Portfolio Future Opportunities 90,000 Restructuring Transition Growth • VIM-1/Guama • Onshore Perú 80,000 • Guyana (new Block 192 contract)
Slide 110: 2019 Guidance
2019 Guidance Strong EBITDA, Lower Capex, Stable Costs 2019 Guidance Metrics(1) 2018 2019 Guidance Operating EBITDA(2) $400 - $450 MM $400 - $450 MM Capital Expenditures $440 - $460 MM $325 - $375 MM Average Daily Production 70 – 72 MBoe/d 65 – 70 MBoe/d (before royalties) Average Daily Production 6
Slide 111: Q&A
Q&A
Slide 112: Lunch
Lunch
Slide 113: Legal & Regulatory
Legal & Regulatory
Slide 114: Outline of Contract Terms and Types
Outline of Contract Terms and Types Colombia and Perú have Similar Oil and Gas Regimes Petroleum licenses are granted by a governmental agency (ANH and Perúpetro) National Oil Company’s are different: Colombia’s National Oil Company (Ecopetrol) has experience in upstream, midstream and downstream ma
Slide 115: Outline of Contract Terms and Types
Outline of Contract Terms and Types Colombia and Perú have Similar Oil and Gas Regimes Both countries have strong control entities which impact the way in which some of our most important stakeholders act: Grantors of National oil Pipelines licenses companies Impact of Government Entities in Colombi
Slide 116: Guyana: Main Legal Considerations
Guyana Main Legal Considerations Although some aspects of the Dutch legal system remain, English common law is the basis for the legal system of Guyana CGX’s petroleum licenses were granted by the Minister Responsible for Petroleum on behalf of the Republic of Guyana There is no National Oil Company
Slide 117: Key Legal Issues
Key Legal Issues Successful Track Record in Litigation Decided in favor of Frontera in December 2017 4 investigations have been closed Corcel Arbitration (concerning high participation provision in an E&P Contract) Contraloria Achievements with the ANH • Transfer of commitments to more prospective a
Slide 118: HSEQ
HSEQ
Slide 119: HSEQ Embedded in Our Strategy
HSEQ Embedded in Our Strategy We are Committed to Safety and Responsibility to the Environment Health Safety Environment Quality (Salud Ocupacional) (Seguridad Industrial) (Gestión Ambiental) (Calidad) Prevent occupational Prevent incidents and Protect the environment Continuous diseases and improve
Slide 120: Environmental Scope: Colombia
Environmental Scope: Colombia Operating in a Complex Environment Authorities Legal instrument Licenses Regional Environmental Seismic (42) Authorities (18) permits National Environmental Exploration (62) Authorities licenses Production (29) (ANLA) Archeological Exploration (9) ICANH licenses Product
Slide 121: 2018 HSEQ Indicators
2018 HSEQ Indicators Continuous Improvement is the Focus • Total (Frontera + Contractors) Recordable • Total Vehicle Accident Frequency Rate is Incident Rate is 2.76, which is below the 0.23, which is below the 0.27 Company Company’s internal target of 3.60 target limit • Frontera’s individual Total
Slide 122: HSEQ Performance
HSEQ Performance Continuous Improvement is the Focus INDICATOR 2018 Target 2018 Actual Fatalities 0 0 Loss Time Injury Frequency Rate 0.27 1.59 Recordable Incident Rate 3.60 2.76 Vehicle Accident Frequency Rate 0.27 0.23 Contained Spills - 66 Non Contained Spills - 13 We are strongly committed to re
Slide 123: Communities
Communities _ f '
Slide 124: Frontera’s Stakeholders
Frontera’s Stakeholders Vast Array of Stakeholders with Differing Needs The Corporate Affairs Team is in charge of leading the relations with Seven of the identified Stakeholders. FRONTERA Additionally, there is a direct engagement strategy with the Industry and Suppliers & Contractors due to the im
Slide 125: Social Engagement Strategy
Social Engagement Strategy Policies, Guidelines and Framework The Corporate Affairs team SUSTAINABILITY has built solid internal POLICY systems to set in place the actions that are implemented in the engagement strategy with our stakeholders. CSR Guidelines – Human Rights and Gender Declaration Thes
Slide 126: Social Engagement Strategy: Social Investment Framework
Social Engagement Strategy Social Investment Framework Productivity of Local Development of Economic Fabric Human Capital Competitive Territories for Sustainable Local Strengthening of Development Development of Social and Quality Infrastructure Institutional Fabric 126
Slide 127: Social Investment Framework: Indigenous Communities
Social Engagement Strategy Social Investment Framework At Frontera we interact with over 55 indigenous communities in our areas of influence. Autonomy and self- government Infrastructure Strengthening with a great Competitiveness of the ethnic differential and sustainable culture scope development F
Slide 128: Indigenous Communities: Risk Factors
Indigenous Communities Risk Factors High Level of Land Restitution New Regulation Incidence •In the framework of •Currently there is •The indigenous the Peace new legislation being communities in the Agreement the discussed related to areas of our restitution of land to prior consultations operation
Slide 129: Colombia Field Blockades
Colombia Field Blockades Frontera Compared to the Industry 500 473 455 450 403 400 350 300 266 250 200 179 Only One Blockade had an Impact to 150 Production 100 53 48 43 50 13 22 0 2014 2015 2016 2017 2018 FEC NationalPaís) ACP (Empresas Company The Stakeholder Engagement Strategy Implemented at Fro
Slide 130: Government Relations
Government Relations Lookback Analysis on 2018 Performance We have created steady and reliable relations with the National Government allowing us to execute more efficiently: Previous Consultations: relationship with the Ministry of Interior permits us to have this process done even in four months i
Slide 131: Electoral Calendar in Colombia
Electoral Calendar in Colombia Regional Elections in 2019 DEPUTIES, COUNCILORS MAYOR AND AND JAC REGIONAL MEMBERS GOVERNORS ELECTION (LOCAL ELECTION MANAGEMENT DAY BOARDS) DAY October 27, October 27, 2019 2019 LAW OF GUARANTEES Prohibits governors, mayors, general secretaries and directors of decent
Slide 132: Perú Framework
Perú Framework We Manage the Communities but not the Pipeline Closure of Block Environmental and 192 due to pipeline High risk of social conflicts disruptions occurrence Request for a new Local communities Prior Consultation & NGO’s opposition Medium risk of on Block 192 to activity on Block occurre
Slide 133: Regulatory and Regional Partners
Regulatory and Regional Partners Partner of Choice Where we Operate 133
Slide 134: Our 2017-2018 Recognitions
Our 2017-2018 Recognitions Lookback Analysis on 2018 Performance 134
Slide 135: Our 2017-2018 Recognitions
Our 2017-2018 Recognitions Lookback Analysis on 2018 Performance Our Ethnic Communities Engagement and Social Investment Strategies were awarded by the Global Compact Network Canada for it’s contribution to the Sustainable Development Goals. We are currently participating in 2019 awards with our Gen
Slide 136: Investor Relations Contact
INVESTOR RELATIONS CONTACT: Grayson M. Andersen Corporate Vice President, Capital Markets Calle 110, No 9 – 25, Piso 16 Bogota, DC, Colombia +57 (314) 250-1467 gandersen@fronteraenergy.ca ir@fronteraenergy.ca