2019 Production Exceeds Guidance as Core Asset
Base Continues to Deliver Stable Production
Promising Llanos-119 Block Awarded as Part of
ANH Bid Round in Colombia
TORONTO, Jan. 20, 2020 /PRNewswire/ - Frontera Energy
Corporation (TSX: FEC) ("Frontera" or the "Company")
announces an operational update. All values in this news release
and the Company's financial disclosures are in United States dollars, unless otherwise
noted.
Production and Pricing Update
Frontera delivered strong, stable estimated full year production
of 70,875 boe/d in 2019. This level exceeded the high-end of 2019
production guidance of 65,000 to 70,000 boe/d and was in-line with
the prior year. Production from Colombia is estimated at 63,625 boe/d, up 1.2%
in 2019 as compared to 2018 while production from Peru is estimated at 7,250 bbl/d, down 11.3%
in 2019 as compared to 2018, reflecting increased downtime on the
Norperuano pipeline during the year. Fourth quarter 2019 total
estimated production of 70,905 boe/d was 1.0% higher than the prior
quarter and 1.4% lower than the prior year.
Production was weighted approximately 97% to Brent exposed oil
prices which averaged $62.42/bbl
during the fourth quarter of 2019, 0.6% higher than the prior
quarter. The Bloomberg posted Vasconia crude oil differential
during the fourth quarter of 2019 averaged $3.20/bbl, up from $2.30/bbl in the third quarter of 2019. For the
full year 2019, Brent oil price averaged $64.16/bbl, while the Bloomberg posted Vasconia
crude oil differential averaged $2.74/bbl.
Colombia Update
Colombia production averaged an
estimated 60,741 boe/d in the fourth quarter of 2019 a decrease of
4.6% compared to the third quarter of 2019, reflecting the impact
of higher than planned downtime due to weather events including
seasonal flooding and electrical storms, which resulted in power
outages in our heavy oil business unit and reduced drilling
activity in our light and medium oil and natural gas business
units.
During the fourth quarter of 2019, 10 of 17 planned development
wells were drilled at Quifa; a four well vertical development well
drilling program for the 2019 field expansion and reserves booking
program was deferred to 2020 as a result of strong production
performance during the year. The multilateral well pilot program
planned for the fourth quarter of 2019 was also deferred to 2020.
Additionally, during the fourth quarter of 2019 the water pumping
and disposal system at Quifa was optimized for additional water
disposal capacity in 2020.
Production from the Hamaca field on the CPE-6 block more than
tripled during 2019, exiting the year at 3,690 bbl/d, up from 1,010
bbl/d at the end of 2018. A total of eight new horizontal wells
were drilled in the Hamaca field during 2019. During the fourth
quarter of 2019 an additional water disposal well was drilled at
Hamaca which will enable the Company to target production growth to
between 4,000 and 5,000 bbl/d during 2020. The Company continues to
experience consistent well results at CPE-6, with flow rates higher
than previously modeled, which provides additional encouragement
for continued field expansion activity in 2020 and beyond. Four
development wells and two successful exploration wells were drilled
on the CPE-6 block during the fourth quarter of 2019, consistent
with the Company's planned fourth quarter drilling plan.
The light and medium oil and natural gas business units had
minimal activity during the fourth quarter, with no wells drilling
during the fourth quarter of 2019 on either the Guatiquia or Cubiro
blocks. Development drilling started on the Canaguay field on the
Canaguaro block during December with activity expected to
recommence in the first quarter of 2020 to appraise the Coralillo
field on the Guatiquia block once the Canaguay-3 well is
completed.
In December 2019, as part of the
successful Agencia Nacional de Hidrocarburos ("ANH") bid
round, the Company was awarded and signed a contract for the
Llanos-119 block ("LLA-119") onshore Colombia, in the prolific Llanos basin. The
LLA-119 block includes 26,956 gross acres with a 100% operated
working interest and an 8% base royalty plus 1% X-Factor. LLA-119
is on trend with existing light and medium oil producing Frontera
blocks including Cravoviejo, Mapache, Casimena and Cachicamo which
produce from reservoirs including the C5, C7 and Gacheta
formations. In addition to extending an existing field on the
Cravoviejo block, the Company has identified two additional
exploration opportunities on the block. Under the terms of the
award of the block the Company is committed to undertaking a 37.5
km2 3D seismic survey and the drilling one exploration
well.
In the Lower Magdalena Valley, the Company along with its
partner, Parex Resources Inc., drilled and completed the La
Belleza-1 exploration well on the VIM-1 block which targeted
multiple prospective horizons. The well is in the process of being
tested. Additionally, the natural gas business unit undertook a
work over and well service program during the fourth quarter of
2019 which has improved the decline profile at both La Creciente
and Guama.
The Company drilled 21 wells during the fourth quarter of 2019,
including 18 development wells and three exploration wells. Three
previously disclosed exploration wells on the Sabanero block were
subsequently reclassified as development wells of which two were
drilled during the fourth quarter of 2019. During the first quarter
of 2020, Frontera expects to drill 28 development wells (21 at
Quifa, six at CPE-6, and one at Canaguaro), and commence drilling
one exploration well (Asai-1 on the Guama block), targeting natural
gas and liquids.
Peru Update
Peru production averaged an
estimated 10,164 bbl/d in the fourth quarter of 2019 an increase of
56.1% compared to the third quarter of 2019 reflecting stable
production throughout the quarter and no downtime on the Norperuano
pipeline. As the expiry date of the Block 192 service
contract in early March approaches, we are in conversations with
the Peruvian authorities to ensure continuity of production in the
block.
Guyana Update
During the fourth quarter of 2019 the Company along with its
partner, CGX Energy (TSXV: OYL) ("CGX") completed a 3D
seismic program on the northern section of the Corentyne block
offshore Guyana. The 3D program
which is expected to be processed during the first half of 2020
covers approximately 582 km2 and will greatly
enhance the geological understanding of the block and allow for
further identification and de-risking of exploration prospects. The
Corentyne block lies adjacent to Block 58 in Suriname where
operator Apache Corporation, recently announced a significant
exploration discovery.
The additional 3D seismic program means that both the Corentyne
and Demerara blocks will be largely covered by high quality 3D
seismic. The additional Corentyne seismic will facilitate the
development of a higher quality ranked list of prospects and the
selection of a drilling location on each block for drilling during
the second half of 2020.
Shareholder Enhancement Initiatives
As at January 17, 2020 the Company
has repurchased for cancellation 2,070,728 shares at an average
cost of C$10.07 per share for a total
of C$20.9 million ($15.9 million), under the Company's 2019-2020
NCIB. A further 4,461,672 shares are available for repurchase under
the terms of the NCIB. A dividend of C$0.205 per share was paid on January 17, 2020, to shareholders of record as of
January 3, 2020. The dividend
reinvestment plan was taken up by 24.8% of shareholders of the
Company's outstanding shares as of the record date.
Hedging Update
The Company uses a combination of Brent oil price linked
purchased put options, zero cost collars, put spreads and three-way
collars to protect the Company's balance sheet and capital program
within hedging limits set by the Board of Directors.
For the first quarter of 2020, the Company has hedged an
estimated 54% of expected net production with floor
prices between $55.00/bbl and
$58.64/bbl and a ceiling price
of $73.75/bbl. This includes an estimated 15% of expected net
production being hedged using put spreads with strike prices of
$47.00/bbl and $57.00/bbl.
For the second quarter of 2020, the Company has hedged an
estimated 40% of expected net production with floor
prices between $55.00/bbl and
$57.00/bbl and a ceiling price
of $74.02/bbl. The estimated 40% of expected net
production being hedged using put spreads (10%) and three-way
collars (30%) have strike prices between $45.00/bbl and $47.00/bbl and $55.00/bbl and $57.00/bbl.
For the third quarter of 2020, the Company has hedged an
estimated 40% of expected net production using three-way collars
with floor prices between $50.00/bbl
and $60.00/bbl and a ceiling price of
$75.00/bbl.
For the fourth quarter of 2020, the Company has hedged an
estimated 15% of expected net production using put spreads with
floor prices between $50.00/bbl and
$60.00/bbl.
About Frontera:
Frontera Energy Corporation is a Canadian public company and
a leading explorer and producer of crude oil and natural gas, with
operations focused in South
America. The Company has a diversified portfolio of assets
with interests in more than 40 exploration and production blocks in
Colombia, Peru, Ecuador
and Guyana. The Company's strategy
is focused on sustainable growth in production and reserves.
Frontera is committed to conducting business safely, in a socially
and environmentally responsible manner. Frontera's common shares
trade on the Toronto Stock Exchange under the ticker symbol
"FEC".
If you would like to receive News Releases via e-mail as soon
as they are published, please subscribe here:
http://fronteraenergy.mediaroom.com/subscribe
Advisories:
Cautionary Note Concerning Forward-Looking
Statements
This news release contains forward-looking statements. All
statements, other than statements of historical fact, that address
activities, events or developments that the Company believes,
expects or anticipates will or may occur in the future (including,
without limitation, statements regarding estimates and/or
assumptions in respect of expected production levels, development
and drilling plans, (including timing and projected production
levels), the Company's exploration and development plans and
objectives, timing and expectations regarding the Company's
programs, and statements regarding the Company's NCIB and future
usage) are forward-looking statements. These forward-looking
statements reflect the current expectations or beliefs of the
Company based on information currently available to the Company.
Forward-looking statements are subject to a number of risks and
uncertainties that may cause the actual results of the Company to
differ materially from those discussed in the forward-looking
statements, and even if such actual results are realized or
substantially realized, there can be no assurance that they will
have the expected consequences to, or effects on, the Company.
Factors that could cause actual results or events to differ
materially from current expectations include, among other things:
production estimates and estimated economic return; uncertainties
associated with estimating oil and natural gas reserves; failure to
establish estimated resources or reserves; failure to establish
estimated resources or reserves; operating hazards and risks;
volatility in market prices for oil and natural gas; the
uncertainties involved in interpreting drilling results and other
geological data; fluctuation in currency exchange rates; inflation;
changes in equity markets; timing on receipt of government
approvals; perceptions of the Company's prospects and the prospects
of the oil and gas industry in Colombia and the other
countries where the Company operates or has investments; and the
other risks disclosed under the heading "Risk Factors" and
elsewhere in the Company's annual information form dated March
13, 2019 filed on SEDAR at www.sedar.com. Any
forward-looking statement speaks only as of the date on which it is
made and, except as may be required by applicable securities laws,
the Company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise. Although the Company
believes that the assumptions inherent in the forward-looking
statements are reasonable, forward-looking statements are not
guarantees of future performance and accordingly undue reliance
should not be put on such statements due to the inherent
uncertainty therein.
Production Levels
Reported production levels may not be reflective of
sustainable production rates and future production rates may differ
materially from the production rates reflected in this news release
due to, among other factors, difficulties or interruptions
encountered during the production of hydrocarbons.
BOE Conversion
The term "boe" is used in this news release. Boe may be
misleading, particularly if used in isolation. A boe conversion
ratio of cubic feet to barrels is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. In this news
release, boe has been expressed using the Colombian conversion
standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of
Mines and Energy.
Definitions
bbl/d
|
Barrels of oil per
day
|
bbl(s)
|
Barrel(s) of
oil
|
boe
|
Refer to "Boe
Conversion" disclosure above
|
boe/d
|
Barrels of oil
equivalent per day
|
C$
|
Canadian
dollars
|
NCIB
|
Normal Course Issuer
Bid (share buyback program)
|
View original
content:http://www.prnewswire.com/news-releases/frontera-announces-an-operational-update-300989551.html
SOURCE Frontera Energy Corporation