Consistent with its increased working interest in the Corentyne block in Guyana, as previously announced on July 22, 2022, and reflective of the spending commitment at the upcoming Wei-1 exploration well, Frontera Energy Corporation has increased its total capital expenditure for the year to US$435-US$495 million.
The company made this disclosure on Wednesday as part of its second-quarter earnings release to shareholders. Frontera is expected to have its interest in the Corentyne Block increased to 68% following a farm-out of controlling interest by cash-strapped joint venture partner, CGX Energy. In exchange, Frontera will handle CGX’s share of expenses for the Wei-1 well to be drilled in October, as well as clear off previous loan commitments for CGX.
With respect to capital expenditure, the Canadian explorer said this stood at US$93.8 million in the second quarter of 2022, compared with US$113.5 million in the prior quarter and US$61.2 million in the second quarter of 2021.
It expounded that capital expenditures during the quarter included US$39.1 million on development drilling primarily at Quifa, CPE-6 and Guatiquia blocks in Colombia, US$19.0 million for Guyana exploration, US$11.4 million on development facilities mainly related to additional flow handling and injector line facilities at the Guatiquia block, road improvements at the CPE-6 block, and increased expenditures related to environmental requirements at the Quifa block.
Orlando Cabrales, Chief Executive Officer (CEO) of Frontera, commented that he is very pleased with the entity’s financial and operating results in the second quarter of 2022. He was keen to note that the company increased production by 1% to 41,586 barrels of oil-equivalent per day (boe/d) including record production at CPE-6 block, improved its operating netback by 16% to $68.01/boe, increased its net sales realized price by 12% to $91.50/boe, grew its cash provided by operating activities by 114% to US$246.6 million and generated US$190.7 million in EBITDA.
Cabrales said this is the fourth consecutive quarter of growth in these important metrics. The CEO noted as well that the company unlocked opportunities within its portfolio with drilling successes during the quarter in Guyana at Kawa-1 and in Ecuador at Yin-1.
He said Frontera has a healthy balance sheet with a sizeable amount of cash on hand and low debt balances, adding: “We continue to manage operating costs during a time of rising inflationary pressures.”
Looking ahead to the second half of the year, Cabrales said Frontera remains on track to optimise capital efficiency and free cash flow after development capital expenditure, while maintaining strong capital discipline and a targeted investment approach.