Frontera Energy Corporation · TSX:FEC
Frontera Energy — Q4 2018 Earnings Presentation
32 slides from Frontera Energy's earnings presentation, March 2019
Slide 1: Enhancing the Portfolio
Enhancing the Portfolio March 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: Company Overview
Company Overview
Slide 4: Largest Independent O&G Company in Latin America
icanacus - CARIBBEAN ba See SEA + z> COSTA RICA PANAMA VENEZUELA COLOMBIA FRONTERA alae ATLANTIC OCEAN North Andean La rgest a Independent “* O&G Company in Latin America 4 A2 Countries Blocks PACIFIC OCEAN BOLIVIA «| SEFRONTERA
Slide 5: Frontera Energy
Frontera Energy North Andean Focus Capital Structure ($U.S.) Q4 2018 Production Mix Shares Outstanding (TSX: FEC; MM)(1) 98 Natural Gas Market Cap ($MM)(2) $942 5% Heavy Oil Total Cash(3) /Cash and Cash Equivalents ($MM) $588 / $446 Long-Term Debt ($MM)(4) $350 71.9 41% Mboe/d Enterprise Value ($MM)
Slide 6: 2019 Guidance
2019 Guidance Strong EBITDA, Lower Capex, Stable Costs 2019 Guidance Metrics(1) 2018 Actual 2019 Guidance Operating EBITDA(2) $423 MM $400 - $450 MM Capital Expenditures $446 MM $325 - $375 MM Average Daily Production 71.0 MBoe/d 65 – 70 MBoe/d (before royalties) Production Cost ($/Boe)(2) $12.51 $1
Slide 7: 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 8: 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 20,000 $150 10,000 $100 - $50 $0 2017 2018 2019E Operating EBITDA Capex Production Cost ($/Bo
Slide 9: 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 10: 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 and (new Block 192 contra
Slide 11: 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 (Perico & Espejo) • New contract opportunity Block 192 • Farm-in opport
Slide 12: Balance Sheet Strength
Balance Sheet Strength Strong Cash Position, Low Leverage Ratios Balance Sheet Metrics – December 31, 2018 Total Cash(1)/Cash and Cash Equivalents ($MM) $588/$446 Net Debt/EBITDA(2) (0.2)x Debt to Book Capitalization(3) 26.9% Interest Coverage(4) 12.5x 2019 Hedged Production ~27% Dividends (YTD 2019
Slide 13: Sustainability & Shared Value Model
Corporate Responsibility and Partner of Choice Committed to Sustainable Operations Sustainability & Shared Value Model 2018 and 2017 United Nations Global Compact awards recipient Nominated by World Finance as “The Most Sustainable Oil and Gas Company” Certified under the ISO 9001:2008, ISO 14001:20
Slide 14: Core Assets
Core Assets
Slide 15: 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 Reserves Balances: • As of December 31, 2018 (before/after royalties) • 1P: 45.0/38.6 MMBbl • 2P: 56.8/48.4 MMBbl Key Characteristics: • ~300 wells on production • Facilities ca
Slide 16: Guatiquía: Building on Deep Llanos Success
Guatiquía: Building on Deep Llanos Success Stable Production at 15,000 Bbl/d for Three Years Key Activities: • Two development wells in 2019 • Cocodrilo exploration in 2020 • Potential expansion of Yatay field Key Characteristics: • High productivity light and medium oil reservoirs • Existing under
Slide 17: Cubiro: Additional Light Oil Potential
Cubiro: Additional Light Oil Potential Waterflood to Increase Recovery Efficiency and 3X Production Potential Key 2019 Activities: • Six development wells • Two water injector wells • Start water injection throughout the whole field Key Features: • Growing production during the next two years Succes
Slide 18: Sustaining & Growth Assets
Sustaining & Growth Assets
Slide 19: Guyana: Exciting Exploration Opportunities
Guyana Exciting Exploration Opportunities • Over 1.8 million gross acres in the hottest offshore exploration basin in the world • Two well commitment plus a two well option • Multiple play types with vertical and lateral migration derisked by ten discoveries on adjacent block • First well, Utakwaaka
Slide 20: Ecuador: Intracampos Exploration Bid Round
Ecuador: Intracampos Exploration Bid Round Awarded the Perico and Espejo Blocks (Frontera 50% / GeoPark 50%) • Four year exploration term with two year extension • Proven hydrocarbon basin near existing production and infrastructure • Prospective, low-risk exploration blocks located in Sucumbíos Pro
Slide 21: Hamaca Field (CPE-6)
Hamaca Field (CPE-6) Large Oil In Place, Reserves, Production Upside 2018 Reserves Balance (before/after royalties) • 1P: 21.6/21.6 MMBbl • 2P: 27.4/27.4 MMBbl • ~ 190 wells for a 5 MBbl/d and 250 MBbl/d of water plateau Key 2019 Activities: • Drill 7 producer wells and 1 injector well Key Features:
Slide 22: Peru
Peru Potential for New Contract & Shallow Offshore Exploration Block 192 • Production gradually ramping up following the restart of the NorPeruano pipeline on March 1, 2019 • Notified by Petroperú on November 30, 2018 of a force majeure event resulting in the shut down of production from Block 192 •
Slide 23: Realizing Value from Non-Core Assets
Realizing Value from Non-Core Assets Midstream and Infrastructure Assets Hold Significant Value 1) ODL Pipeline 2) Puerto Bahía 35.0% Indirect Interest(3) 39.2% Indirect Interest(1) • Ships the Company’s heavy crude oil from Quifa SW and Cajua fields to Coveñas export terminal via • Greenfield liqui
Slide 24: Investment Opportunity
Investment Opportunity Enhancing the Portfolio Experienced, Focused asset 93% oil weighted technically- Partner of base in North with Brent price focused exposure Choice Andean Region management team in place Strong balance sheet with targeted Attractive, low- Improved quarterly Over 90% near- risk
Slide 25: Appendix
Appendix
Slide 26: Fourth Quarter 2018 Operational & Financial Highlights
Fourth Quarter 2018 Operational & Financial Highlights Strong Operating EBITDA and Improving Cost Structure Q4 2018 Q3 2018 % Chg. Price / Revenue / Production Production Before Royalties (Boe/d) 71,924 66,393 8% Brent oil prices decreased 10% quarter-over-quarter to Production After Royalties (Boe/
Slide 27: 2018 Reserves Evaluation Results
2018 Reserves Evaluation Results Replaced 103% of 2018 Production and Strong 2P NPV10 Value 2P Net Reserves - MMBOE NPV by Category @ 10% (MMUSD) 175 25 -24 3,000 150 2,523 2,500 125 2,206 1,932 587 2,000 1,918 100 402 778 566 714 75 154 154 155 1,500 458 577 611 50 1,000 1,072 1,222 25 500 775 817
Slide 28: Transportation Costs
Transportation Costs P-135 Arbitration Settlement, Termination of Ship or Pay Contracts Quarterly Transportation Cost ($/boe) $14.28 $13.77 $12.68 $12.89 Transport $11.81 Cost ($/Boe) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Fees Paid on Suspended $4.16 $6.02 $7.00 $3.94 $0.00 Pipeline Capacity ($/Boe) Termina
Slide 29: 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 30: Proven Management Team
Proven Management Team Proven Leadership with Global Experience • Over 36 years of experience with major international oil & gas companies, including BP, Talisman Energy, and Richard Herbert Phillips Petroleum CEO • Responsible for major exploration and development initiatives in 26 years at BP, inc
Slide 31: Independent Board of Directors
Independent Board of Directors Engaged and Active in Unlocking Shareholder Value 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 35 years of interna
Slide 32: 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