Release Date: March 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Frontera Energy Corp (FECCF, Financial) met its 2024 guidance targets, including key upstream operating and financial objectives.
- The company closed the year with a strong balance sheet, including a $223 million cash position and reduced consolidated debt and lease liabilities by over $30 million.
- Frontera's infrastructure business segment delivered strong results, generating a 2024 adjusted infrastructure EBITDA of over $107 million.
- The company returned approximately $83 million to shareholders in 2024 through dividends, share repurchases, and substantial issuer bids.
- Frontera achieved 100% of its 2024 sustainability goals, including restoring 769 hectares of land and achieving its best total recordable incident rate performance ever.
Negative Points
- Frontera Energy Corp (FECCF) recorded a net loss of $24.2 million for the full year 2024.
- The company's production through March 9, 2025, was below guidance due to unexpected well failures.
- Operating costs increased due to higher well service activity, FX rates, and inflationary pressures on services and wages.
- The NPV10 of 2P reserves presented a small decrease mainly due to the reserves decrease.
- The infrastructure business saw a year-over-year decrease in adjusted infrastructure EBITDA due to higher costs from inflationary pressures and indexation on wages.
Q & A Highlights
Q: The 2025 CapEx guidance is down about 25% year-on-year. Can you explain what's driving these declines, especially given the flattish production year-on-year? Is CapEx being spent more efficiently, or has the CapEx profile changed significantly versus 2024?
A: (Orlando Cabrales Segovia, CEO) Our focus has been on value over volumes. We are indeed reducing development CapEx compared to last year, but our production guidance is higher. This is due to more efficient capital use and cost structure optimization. We are concentrating on developing the CPE-6 facilities and increasing production in Quifa through the SAARA facility, which were built last year.
Q: Is there any Brent price level at which you would reconsider elements of your CapEx plan or shareholder distributions, considering your hedges?
A: (Rene Burgos Diaz, CFO) We plan based on Brent prices of $75 to $80. Our hedges cover us at $70 Brent until mid-year. If prices decline significantly, we might need to adjust our plans, but currently, we are well-covered and sticking with our range of potential outcomes.
Q: Can you provide some color on the expected shareholder distributions for 2025, including share repurchases and dividends?
A: (Rene Burgos Diaz, CFO) Our distributions include NCIBs, dividends, and substantial issuer bids. The dividend and NCIB are straightforward capital returns, while other distributions depend on oil prices and business results. Since 2024, we've distributed over $83 million to shareholders, and we remain focused on shareholder distributions.
Q: Do you have any updates on the infrastructure business divestment?
A: (Orlando Cabrales Segovia, CEO) We are in the final stages of the infrastructure process and analyzing various options. We hope to announce something soon.
Q: What are your plans for the proceeds from the infrastructure business divestment?
A: (Rene Burgos Diaz, CFO) Capital allocation is the Board's remit. Once the process is finalized, the Board will determine the optimal way to distribute the capital. We will communicate with the market in due course.
Q: What is the percentage of production hedged for the first six months of the year?
A: (Rene Burgos Diaz, CFO) We have hedged roughly 40% of our net production at $70 Brent for the first six months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
