Frontera Energy has announced financial results for the second quarter of 2023, showcasing a substantial net income of CA$80.2 million or CA$0.94 per share. This marks a significant upswing from the previous quarter’s net loss of CAD$11.3 million or (CA$0.13 per share) and a considerable improvement from the net income of CA$13.5 million or CA$0.14 per share in the same period of 2022.
The company’s Q2 net income composition included a notable operating income of CA$55.6 million, with a net recovery of asset retirement obligations and impairment expenses accounting for CA$35.5 million. Share of income from associates contributed CA$14.3 million, while a foreign exchange gain added CA$17 million and finance income amounted to CA$1.5 million. These gains were partially offset by finance expenses of CA$15.7 million and income tax expenses of CA$2.6 million.
Frontera Energy reported an average production of 42,049 barrels of oil equivalent per day (boe/d) in the second quarter of 2023. Comparatively, production stood at 41,586 boe/d in the previous quarter and the same period of the previous year.
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The increase in production was attributed to successful development drilling in the Quifa and CPE-6 blocks, along with the initiation of injection facilities in the VIM-1 block. However, declines in light and medium crude oil production and conventional natural gas production were noted due to natural factors, coupled with the return of the Neiva and Orito blocks following the culmination of the blocks’ production contracts.
Frontera’s operating EBITDA for the second quarter of 2023 was CA$116.5 million, marking a significant 27% increase from CA$91.9 million in the previous quarter. This growth can primarily be attributed to heightened sales during the quarter.
Capital expenditures for the same period totaled approximately CA$154.9 million, demonstrating a surge from CA$131.5 million in the prior quarter and CA$93.8 million in the second quarter of 2022. The capital spending was primarily directed towards a range of activities, including development well drilling, infrastructure improvements, exploration efforts, and the completion of Wei-1 exploration drilling activities.
Frontera will soon hold a 72.7% Participating Interest (PI) in the Corentyne Block as per an amended Joint Operating Agreement (JOA) with CGX Energy, its partner.
The amendment, CGX announced on August 10, will effectively see Frontera farming into the Corentyne Block to cover “unexpected additional costs of the Wei-1 well due to delays associated with the late release of the rig by a third-party, costs associated with a lost sampling tool, and the drilling of the bypass well.”
CGX said it will have to transfer 4.7% of its PI to Frontera in exchange for funding its additional expected outstanding share of the JV’s costs associated with the Wei-1 well for up to approximately CA$16.5 million
