Mr. Orlando Cabrales reports

FRONTERA ANNOUNCES 2024 CAPITAL AND PRODUCTION GUIDANCE, ESTIMATED FOURTH QUARTER 2023 AND FULL-YEAR DAILY AVERAGE PRODUCTION AND PROVIDES AN UPDATE ON SHAREHOLDER INITIATIVES, INCLUDING INITIATING A DIVIDEND

Frontera Energy Corp. has released its full-year 2024 capital and production guidance, provided an update on its estimated fourth quarter 2023 and full-year average daily production, and provided an update on shareholder value initiatives, including the initiation of a quarterly dividend of 6.25 Canadian cents per share payable quarterly, following the release of year-end 2023 results. All values in this news release and the company's financial disclosures are in United States dollars, unless otherwise noted.

Key 2024 capital and production guidance highlights:

• Anticipated $400-million to $450-million in consolidated operating EBITDA (earnings before interest, taxes, depreciation and amortization) at $80/barrel average Brent while investing $272-million to $335-million in total consolidated capital expenditures, a 32-per-cent decrease at the midpoint compared with 2023. Deploying $230-million to $280-million, including $35-million to $45-million exploration investments, in the company's core Colombia and Ecuador upstream business, a 10-per-cent decrease at the midpoint compared with 2023, to deliver 40,000 to 42,000 barrels of oil equivalent/day full-year production for 2024.
• Investing $35-million to $45-million to drill three exploration wells including the high-impact Hydra-1 well in the VIM-1 block in Colombia and two wells in the Espejo block in Ecuador and additional seismic and predrilling activities in Colombia.
• Investing $40-million to $50-million in the company's stand-alone and growing Colombia infrastructure business mainly to build the 6.8-kilometre, 18-inch pipeline connection between the Reficar refinery and the company's Puerto Bahia's liquids terminal and to commission the SAARA reverse osmosis water treatment facility at Quifa.
• Estimating total production costs, including both production and energy costs, for 2024 to average $14.25 to $15.75, primarily driven by El Nino-related higher energy costs. Transportation costs for 2024 are forecasted to average $11 to $12 per boe.
• Hedging approximately 40 per cent of the company's estimated production after royalties at an average Brent price of $73.34 through June, 2024, providing revenue visibility and reducing exposure to price volatility.
• Initiating a quarterly dividend of 6.25 Canadian cents per share payable quarterly, following the release of year-end 2023 results, subject to regulatory approval, and repurchasing up to 3.95 million common shares for cancellation through the company's recently announced normal course issuer bid (NCIB).
• Considering future additional shareholder value-enhancing initiatives, including additional dividends, distributions or bond buybacks, based upon overall results of Frontera's businesses and the company's strategic goals.

Orlando Cabrales, chief executive officer (CEO), Frontera, commented:

"In 2023, we delivered estimated average daily production of approximately 40,919 boe/d, in line with our guidance range, while deploying significant capital to successfully advance our exciting offshore Guyana exploration program.

"Guided by our strategy of value over volumes and our track record of improving capital efficiency, in 2024 we will invest $272[-million] to $335-million in total capital, a 32-per-cent reduction compared to the midpoint of our 2023 guidance to generate $400[-million] to $450-million in consolidated operating EBITDA at $80/bbl average Brent prices while sustaining an estimated 40,000 to 42,000 boe/d full-year production.

"Our 2024 capital and production plan is fully funded, protected by a prudent hedging program, and leans into the most productive and profitable assets within our portfolio, capitalizing on outstanding near-field opportunities at our Quifa, CPE-6 and VIM-1 producing blocks, while delivering our quickest payback barrels with sustained future growth potential. We expect that our development program, together with our exploration investments led by our potentially high-impact Hydra-1 well in the VIM-1 block in Colombia, will deliver sustainable production and strong cash flows in 2024 and beyond.

"Frontera has generated approximately $1.5-billion in operating EBITDA over the last three years with strong cash flow expected in 2024. Since 2018, we have also returned more than $305-million to shareholders via dividends and share buybacks. For 2024, the company, subject to regulatory approval, seeks to pay a 6.25-Canadian-cent-per-share quarterly dividend following the release of year-end 2023 results in addition to its ongoing NCIB program announced last year. Additionally, the company's strategic review process for our exciting Guyana exploration business is advancing, where a data room has been opened and management presentations are under way. At Frontera, we remain committed to unlocking the sum of our parts and driving shareholder returns."

Enhancing shareholder returns

NCIB: Under the company's current NCIB, which commenced on Nov. 21, 2023, Frontera has repurchased 508,000 common shares for cancellation for approximately $3-million as of Feb. 14, 2024. The company is authorized to repurchase up to 3,949,454 of its common shares for cancellation, representing up to 10 per cent of its outstanding float.

Quarterly dividend: The board of directors has adopted a dividend policy to pay a dividend of 6.25 Canadian cents per share quarterly, following the release of year-end 2023 results. Dividend payments will be subject to quarterly review and approval by Frontera's board of directors and the determination to pay such dividends will be based on, among other things, the company's view of prevailing and prospective macroeconomic conditions and business performance. In addition, the payment of dividends is subject to the approval of the Toronto Stock Exchange, applicable law and the provisions of the indenture governing the company's unsecured notes. Each dividend, if declared by the board of directors, is intended to be payable to shareholders of record at the close of business on the second trading day of the first calendar quarter following the date of declaration.

Frontera remains committed to unlocking value and enhancing shareholder returns and will continue to consider future shareholder value enhancement initiatives in 2024, including potential additional dividends, distributions or bond buybacks, based on the overall results of its businesses and the company's strategic goals.

About Frontera's 2024 capital, production and cash flow guidance

Frontera's 2024 capital and production guidance is based on an average 2024 Brent price of $80/bbl, an average sales price oil differential of $4.50/bbl and an exchange rate of 4,100 Colombian pesos per U.S. dollar.

Other key 2024 guidance highlights include:

• Estimated $35-million to $45-million in dividends, net of taxes, to be received from the company's interest in the ODL pipeline.
• Debt service payments are estimated to be approximately $60-million to $70-million for 2024, including a payment of approximately $32-million for interest associated with the company's 2028 senior notes, and the repayment of the $18-million Bancolombia working capital loan.
• Pipeline Investment Ltd. (PIL) debt service payments include $15-million of amortization payments as well as interest payments on the facility. These amounts are net of additional committed financing, subject to certain conditions precedent, in connection with the construction of the Reficar pipeline.

Colombia and Ecuador upstream production and operating costs guidance

In the company's core Colombia and Ecuador upstream business, Frontera aims to deliver production of 40,000 to 42,000 boe/d, in line with 2023, while decreasing capital investment by approximately 10 per cent compared with 2023 levels to $230-million to $280-million.

The company will focus on its inventory of near-field development drilling opportunities at its Quifa, CPE-6 and VIM-1 producing blocks, invest in development facilities to enhance its water-handling capacity at CPE-6, and increase its gas processing capacity at VIM-1. Frontera's capital program also includes $35--million to $45-million in exploration opportunities, including drilling the high-impact Hydra-1 well in the VIM-1 block and two wells in Ecuador.

The company's 2024 average production guidance range does not include in-kind royalties, operational consumption, volumetric compensation or potential production from successful exploration activities planned in 2024. The company anticipates delivering $400-million to $430-million in operating EBITDA in 2024 from its upstream operations.

To provide enhanced clarity, as part of its 2024 guidance, the company is providing additional details on its key operating cost drivers, including a breakdown of production-associated energy costs.

The company estimates 2024 production costs to average $8.50 to $9.50 per boe, excluding energy costs. This estimate represents a 6-per-cent increase compared with estimated 2023 production costs levels reflecting the additional well intervention and workover activity in lieu of drilling expenditures, cost associated to additional water handling and treatment capacity associated with SAARA, and continuing inflationary pressures.

Energy costs, described as electricity consumption and the costs of localized energy generation, to average $5.75 to $6.25 per boe, representing a 33-per-cent increase compared with estimated 2023 energy costs levels, driven primarily by El Nino-related higher energy costs.

Transportation costs for 2024 are forecasted to average $11 to $12 per boe, compared with $10.50 to $11.50 per boe in 2023.

About Frontera's 2024 upstream spending

Frontera's anticipated total 2024 Colombia and Ecuador upstream capital expenditures of $230-million to $280-million represents an approximately 10-per-cent decrease at the midpoint of the company's 2023 capital budget. Capital expenditures will be directed to development and exploration activities as shown below.

Development activities

Frontera anticipates spending approximately $85-million to $95-million to drill up to 62 wells (60 producer wells and two injector wells) in 2024 and approximately $95-million to $115-million on development facilities primarily in support of enhanced production capacities at VIM-1, CPE-6 and Quifa.

Colombia:

• Quifa block: Frontera plans to drill 27 wells (26 producer wells and one injector well) in the Quifa SW field, and install additional flow lines in the Quifa block, including investments to increase water handling capacity via a connection to the SAARA project. At the Cajua field, Frontera plans to drill 11 producer wells.
• CPE-6 block: The company plans to drill 17 wells (16 producer wells and one injector well) and install additional flow handling and injector line facilities. In addition, the company plans to increase water handling capacity to 360,000 bbl/day. In 2023, the company doubled water handling capacity to approximately 240,000 bbl/day, which supported an increase in production to 5,487 boe/d in 2023, compared with 4,991 boe/d in 2022.
• VIM-1 block (Frontera 50-per-cent working interest, non-operator): The company plans to initiate phase 1 expansion of La Belleza facilities and flow lines to increase gas processing capacity from 20,000 to 30,000 cubic feet/day.
• Other fields: In Sabanero, the company expects to drill four production wells plus install additional injection facilities.
• Other Capex: The company plans to invest in new field production technologies to enhance operational efficiency and mitigate water production.

Ecuador:

• Perico (Frontera 50-per-cent working interest and operator): Building on the successful 2023 drilling and testing program in the new combined structural/stratigraphic U-sand play, Frontera intends to drill three wells and install additional flow lines and facilities.

Exploration: Colombia and Ecuador

In 2024, the company anticipates spending $35-million to $45-million on various exploration activities in Colombia and Ecuador including:

• Drilling the high-impact exploration Hydra-1 well in the VIM-1 block (Frontera 50-per-cent working interest, non-operator) targeting gas and condensate. Frontera plans to utilize new seismic processing technology to drill this prospect, expected to be spudded midyear 2024.
• Drilling two wells in the Espejo block (Frontera 50-per-cent working interest, non-operator) in Ecuador, near the Pashuri-1 discovery in lower United States. These two wells will satisfy the exploration commitments in the block.
• Acquire 3-D seismic and complete predrilling activities and civil works at the Llanos-119 blocks, complete predrilling activities in the Llanos 99 block and preseismic activities in the VIM-46 block.

About Frontera's 2024 Colombian infrastructure spending

In the company's stand-alone and growing Colombia infrastructure business, the company expects to generate in 2024 between $15-million and $25-million in segment operating EBITDA and between $95-million and $115-million in adjusted Infrastructure EBITDA. Frontera anticipates investing $40-million to $50-million primarily to build the pipeline connection between Frontera's liquids terminal at Puerto Bahia and the Cartagena refinery.

• Puerto Bahia: The construction of the Reficar connection is anticipated to cost approximately $30-million. The connection will be built, operated and maintained by Puerto Bahia and will have a capacity of up to 84,000 bbl/day. The connection will be capable of handling imported and domestically produced crudes. Frontera anticipates breaking ground in the first quarter of 2024 and connection start-up by end of 2024. Frontera is in the process of securing an additional $30-million in financing, subject to certain conditions precedent, for this project from its existing group of lenders led by Macquarie Group. The financing is expected to close this month.
• SAARA: During 2024, Frontera successfully completed the pilot phase of the SAARA project with Ecopetrol. Frontera intends to invest in the commissioning of the first phase of the project, the stabilization phase, to reach a minimum of 250,000 barrels of water per day available for the Quifa block, subject to final joint venture approval.

2024 hedging program

As part of its risk management strategy, Frontera uses derivative commodity instruments to manage exposure to price volatility by hedging a portion of its oil production. The company's strategy aims to protect 40 to 60 per cent of its estimated net after royalties' production using a combination of instruments, capped and non-capped, to protect the revenue generation and cash position of the company, while maximizing the upside, allowing the company to take a more dynamic approach to the management of its hedging portfolio. Consistent with this strategy, the company entered new put hedges totalling 2,574,826 bbl to protect a portion of the company's production through June, 2024.

The company is exposed to foreign currency fluctuations primarily arising from expenditures that are incurred in Colombian pesos and its fluctuation against the U.S. dollar. As of Feb. 14, 2024, the company had entered new positions of foreign currency derivatives contracts.

Estimated 2023 production

Frontera's estimated 2023 average daily production of approximately 40,919 boe/d was in line with the company's 2023 production guidance of 40,000 to 43,000 boe/d and an approximately 1-per-cent decrease compared with the company's 2022 average production. Frontera's estimated average daily production for the fourth quarter was approximately 39,267 boe/d. The lower production during the quarter was primarily the result of lower planned drilling activity, and natural declines in the company's light and medium oil fields.

About Frontera Energy Corp.

Frontera Energy is a Canadian public company involved in the exploration, development, production, transportation, storage and sale of oil and natural gas in South America, including related investments in both upstream and infrastructure facilities. The company has a diversified portfolio of assets with interests in 27 exploration and production blocks in Colombia, Ecuador and Guyana, and pipeline and port facilities in Colombia. Frontera is committed to conducting business safely and in a socially, environmentally and ethically responsible manner.

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