Mr. Orlando Cabrales reports

FRONTERA ANNOUNCES FOURTH QUARTER AND YEAR END 2023 RESULTS

Frontera Energy Corp. has released financial and operational results for the fourth quarter and year ended Dec. 31, 2023, and the results of its annual independent reserves assessment conducted by DeGolyer and MacNaughton Corp. All financial amounts in this news release and the company's financial disclosures are in U.S. dollars unless otherwise stated. All of the company's booked reserves for the year ended Dec. 31, 2023, are located in Colombia and Ecuador.

Gabriel de Alba, chairman of the board of directors, commented: "During 2023, Frontera continued to take concrete steps to deliver significant value to shareholders. The company delivered [earnings before interest, taxes, depreciation and amortization] of $467-million, at the higher end of guidance for 2023, closing the year with a strong balance sheet including $190-million cash position, and having a fully funded plan for 2024.

"Our significant infrastructure business generated adjusted infrastructure EBITDA of approximately $120-million and keeps building momentum following the announcement of the connection agreement between Refineria de Cartagena SAS and Puerto Bahia's liquids terminal. On its Guyana exploration business, Frontera, and its [joint venture] partner CGX Energy Inc., with support from Houlihan Lokey, is pursuing a review of strategic options, including a farm-down of its interest in offshore Guyana, following the announcement of a second discovery in the Corentyne block. Lastly, the company during the fourth quarter of 2023 renewed its normal course issuer bid program and repurchased approximately 741,700 common shares for cancellation, returning $5.9-million to shareholders in 2023.

"Frontera recently announced the initiation of a new quarterly dividend and remains committed to enhancing shareholder returns. The company will continue to consider future shareholder value enhancement initiatives in 2024 and beyond, including potential additional dividends, distributions or bond buybacks, based on the overall results of our businesses and strategic goals."

Orlando Cabrales, chief executive officer, Frontera, commented: "Frontera successfully achieved its strategic, capital and production targets across the company's three core businesses in 2023.

"Through our Colombia and Ecuador upstream onshore business, we delivered average daily production of 40,919 [barrels of oil equivalent per day], with an increase to our heavy crude oil production of 9 per cent year over year, while maintaining our production costs, transportation costs and capital expenditures within guidance.

"Our commitment to sustained production and value over volumes continues to be supported by our upstream Colombia and Ecuador reserves, which closed the year with 108.7 million and 164.1 million boe in [total proven] and [proven plus probable] gross reserves, respectively. [It] achieved a three-year average gross reserves replacement ratio of 79 per cent for 2P reserves and 104 per cent for 1P reserves, while maintaining a reserve life index of 7.3 years for 1P reserves and 11.0 years for 2P reserves, and a significant 2P net present value of $3.5-billion before tax discounted at 10 per cent.

"In our stand-alone and growing infrastructure business, we generated full-year adjusted infrastructure EBITDA of approximately $120-million. ODL transported over 243,000 [barrels per] day, generated $285-million in full-year EBITDA and distributed over $135-million to its shareholders. Proportional to its 35-per-cent interest, the company received $47-million in capital distributions, and Frontera's adjusted infrastructure EBITDA benefited from $100-million associated with ODL's EBITDA. Puerto Bahia generated approximately $20-million in operating EBITDA, reached a connection agreement, started preconstruction activities with Reficar and successfully refinanced its existing legacy project finance debt with room to grow.

"In our potentially transformational Guyana exploration business, as announced in the Dec. 11, 2023, news release, we successfully completed the second well of our two-well program, where we believe that approximately 514 to 628 [million] boe PMean unrisked gross prospective resources are present in multiple Maastrichtian horizons in the northern portion of the Corentyne block.

"Frontera is committed to sustainability and achieved 108 per cent of its 2023 [environmental, social and governance] goals. We started the operation of our first solar farm named Ikotia in December, which we expect will reduce CPE-6 power consumption from the grid and offset 50 per cent of the block's Scope 1 emissions.

"As we turn now to 2024, we remain focused on executing our recently announced 2024 plan and continuing to deliver sustainable value-focused production, strong operational and financial results, and driving shareholder returns."

Fourth quarter and full-year operational and financial results:

• The company recorded net income of $92.0-million or $1.04 per share in the fourth quarter of 2023, compared with net income of $32.6-million or 37 cents per share in the prior quarter and net income of $197.8-million or $2.25 per share in the fourth quarter of 2022. For the year ended Dec. 31, 2023, the company reported net income of $193.5-million, compared with net income of $286.6-million for the year ended Dec. 31, 2022.
• Production averaged 39,267 boe/d in the fourth quarter 2023 (consisting of 23,002 bbl/d of heavy crude oil, 13,795 bbl/d of light and medium crude oil combined, 4.76 million cubic feet per day of conventional natural gas, and 1,635 boe/d of natural gas liquids) compared with 40,802 boe/d in the prior quarter and 41,806 boe/d in the fourth quarter of 2022. Lower production during the quarter was a result of lower planned drilling and workover activity in the fourth quarter, natural decline and unplanned maintenance on an injector well in Quifa. In 2023, Frontera's production averaged 40,919 boe/d (consisting of 23,359 bbl/d of heavy crude oil, 14,856 bbl/d of light and medium crude oil combined, 6,042 thousand cubic feet per day of conventional natural gas, and 1,644 boe/d of natural gas liquids), within the company's 2023 guidance of 40,000 to 43,000 boe/d.
• Operating EBITDA was $121.0-million in the fourth quarter of 2023 compared with $137.8-million in the prior quarter and $145.0-million in the fourth quarter of 2022. The decrease in operating EBITDA quarter over quarter was primarily a result of lower commodity prices and lower volumes sold in the fourth quarter. Frontera's weighted-average Brent price was $81.88 per bbl in 2023, generating $467.2-million of EBITDA.
• Cash provided by operating activities in the fourth quarter of 2023 was $73.4-million, compared with $154.0-million in the prior quarter and $138.3-million in the fourth quarter of 2022. The decrease quarter over quarter was primarily due to changes in working capital mainly related to income taxes withheld, lower commodity prices and volumes sold.
• The company reported a total cash position of $190.0-million at Dec. 31, 2023, compared with $221.2-million at Sept. 30, 2023, and $313.0-million at Dec. 31, 2022. The company generated $411.8-million of cash from operations in 2023, compared with $620.5-million in 2022. During the year, the company primarily invested $442.7-million in capital expenditures, including $153.7-million related to the Wei-1, $12.7-million related to the acquisition of the IFC interest on ODL, $56.9-million in net debt service payments and $5.9-million in share buyback.
• As at Dec. 31, 2023, the company had a total crude oil inventory balance of 1,076,394 bbl compared with 1,330,418 bbl at Sept. 30, 2023. As of Dec. 31, 2023, the company had a total inventory balance in Colombia of 551,715 barrels, including 322,639 crude oil barrels and 229,076 barrels of diluent and others. This compared with 812,797 as of Sept. 30, 2023, and 683,416 barrels as at Dec. 31, 2022. The decrease in inventory balance was primarily due to inventory drawn for export sales. Inventory balances in the fourth quarter related to Ecuador and Peru were 44,479 barrels and 480,200 barrels, respectively.
• Capital expenditures were approximately $82.3-million in the fourth quarter of 2023, compared with $74.1-million in the prior quarter and $134.2-million in the fourth quarter of 2022. During the fourth quarter, the company drilled 14 development wells at its Quifa SW, Cajua and CPE-6 blocks as well as one exploration well, Perico Norte-A4, on the Perico block in Ecuador. For full-year 2023, the company executed approximately $442.7-million in total capital spending, including $157.3-million in total capital spending related to the Wei-1 well, within its 2023 capital guidance of $420-million to $475-million, and compared with $417.6-million in 2022.
• The company's net sales realized price was $73.28 per boe in the fourth quarter of 2023, compared with $74.13 per boe in the prior quarter and $75.24 per boe in the fourth quarter of 2022. The decrease in net sales realized price quarter over quarter was primarily driven by the decrease in Brent benchmark oil price compared with the previous quarter, partially offset by lower royalties. The company's net sales realized price in 2023 was $69.15 per boe, compared with $82.34 per boe in 2022.
• The company's operating netback was $47.51 per boe in the fourth quarter of 2023, compared with $48.54 per boe in the prior quarter and $53.13 per boe in the fourth quarter of 2022. The decrease in operating netback quarter over quarter was primarily due to a lower net sales realized price and higher production costs, resulting from higher well service activity costs and higher energy costs. The company's operating netback for the year ended Dec. 31, 2023, was $44.69 per boe, compared with $59.76 per boe in 2022.
• Production costs (excluding energy cost), net of realized foreign exchange hedge impact, averaged $9.69 per boe in the fourth quarter of 2023, compared with $8.82 per boe in the prior quarter and $8.48 per boe in the fourth quarter of 2022. The increase quarter over quarter was due to higher technical assistance and maintenance costs, partially offset by lower cost associated to well service activities. Frontera's total production costs, including energy cost, net of realized foreign exchange hedge impact, averaged $13.25 per boe in 2023, within the company's 2023 guidance range of $12.50 to $13.50 per boe.
• Transportation costs averaged $11.02 per boe in the fourth quarter of 2023, compared with $11.73 per boe in the prior quarter and up from $10.55 per boe in the fourth quarter of 2022. The decrease during the quarter was mainly due to an increase in local sales volumes to the thermal market. Frontera's transportation costs averaged $11.21 per boe in 2023, within the company's 2023 guidance range of $10.50 to $11.50 per boe.
• Total ODL volumes transported were 252,810 bbl/d during the fourth quarter of 2023, up 13 per cent versus the fourth quarter of 2022. Total volumes transported through ODL for 2023 were 243,617, and it received capital distributions of $47-million during the year.
• Puerto Bahia liquids volumes were 52,754 bbl/d during the fourth quarter down 21 per cent compared with the third quarter of 2022, driven mainly by lower imported crude volumes, and 60,718 bbl/d for full-year 2023 compared with 62,422 bbl/d in 2022. Puerto Bahia liquids revenues were $7.6-million during the fourth quarter, up 12 per cent compared with the fourth quarter of 2022, mainly due to higher tariffs. For full-year 2023, Puerto Bahia liquids revenues were $32.1-million compared with $29.6-million in 2022, mainly due to higher tariffs.
• Adjusted infrastructure EBITDA in the fourth quarter of 2023 was $30.7-million, compared with $26.6-million in the fourth quarter of 2022 and $119.8-million for full-year 2023.
• In the company's exciting Guyanese exploration business, the discovery of 228 feet of net pay in Kawa-1 and 114 feet of net pay in Wei-1, on North Corentyne, was confirmed. Results further demonstrate the potential for a stand-alone shallow oil resource development across the Corentyne block.
• Total costs associated for the Wei-1 well are estimated to be $189-million following the successful implementation of several cost-saving initiatives. Frontera's direct and indirect working interest in the Corentyne block is estimated at up to 72.52 per cent and 93.42 per cent, respectively.
• During the fourth quarter of 2023, the company repurchased for cancellation 280,500 common shares at a cost of approximately $1.7-million.

Year-end 2023 reserves evaluation

Frontera announced the results of its annual independent reserves assessment for the year ended Dec. 31, 2023, conducted by DeGolyer and MacNaughton, in accordance with the definitions, standards and procedures contained in the Canadian oil and gas evaluation handbook maintained by the Society of Petroleum Evaluation Engineers (Calgary chapter), National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities), and CSA staff notice 51-324, based on the reserves report (as defined below). All of the company's booked reserves for the year ended Dec. 31, 2023, are located in Colombia and Ecuador.

Key highlights:

• Added 4.2 MMboe of 2P gross reserves, for total company 2P gross reserves of 164.1 MMboe consisting of 64 per cent heavy crude oil, 24 per cent light and medium crude oil, 8 per cent conventional natural gas, and 4 per cent natural gas liquids, compared with 174.8 MMboe at Dec. 31, 2022;
• Year-end 2023 gross proven developed producing reserves increased by 2 per cent to 40.0 MMboe and the proven developed producing reserves replacement ratio was 105 per cent;
• Delivered three-year average gross PDP, 1P and 2P reserves replacement ratio of 129 per cent, 104 per cent and 79 per cent, respectively.

• Delivered a 1P gross reserves life index of 7.3 years compared with 7.4 years at Dec. 31, 2022, and a 2P reserves life index of 11.0 years compared with 11.6 years at Dec. 31, 2022;
• The net present value of the company's 2P reserves, discounted at 10 per cent before tax, is $3.5-billion ($21.60 per 2P boe) at Dec. 31, 2023, compared with $3.7-billion ($21.24 per 2P boe) at Dec. 31, 2022; the decrease in NPV10 for the 2P reserves is primarily due to a decrease in the forecast oil price used to calculate the NPV10; however, the NPV10 per boe increased by 2 per cent driven by operational efficiencies and reduced future development costs;
• Reduced the future development cost for 2P reserves by $300-million to $1.2-billion at Dec. 31, 2023, compared with $1.5-billion at Dec. 31, 2022; the reduction is primarily due to the company's focus on sustained production, value over volumes and an optimized development plan.

Frontera's sustainability strategy

Frontera achieved 108 per cent of its 2023 sustainability goals, started the operation of its first solar farm (Ikotia) in December that will reduce almost 8,000 tonnes carbon dioxide equivalent from the power generation in CPE6 in 2024 and offset 50 per cent of its Scope 1 emissions. The company also completed 5,737 cumulative hectares preserved and restored in key connectivity corridors in Casanare and Meta (Colombia), and recycled 45 per cent of its operating water and 12 per cent of its solid waste. Frontera handed over 1,000 hectares to the National Parks Association in Colombia, which contributed to the declaration of the Serrania de Manacacias as a national park in Meta, a major environmental milestone for the country.

The company invested approximately $5.5-million in education, including economic development, and quality of life initiatives, benefiting 94,875 people through 256 social projects in Colombia, Ecuador and Guyana. Frontera purchased $73.3-million worth of goods and services from local suppliers in nearby operation areas. In 2023, Frontera was included in the Bloomberg Gender-Equality Index and was recognized for the fourth consecutive year as one of the most ethical companies in the world by the Ethisphere Institute.

Enhancing shareholder returns

Since 2018, Frontera has returned more than $306-million to shareholders through dividends and share buybacks while maintaining a strong balance sheet.

Normal course issuer bid: Under the company's current NCIB, which commenced on Nov. 21, 2023, Frontera is authorized to repurchase for cancellation up to 3,949,454 of the company's common shares. As of March 7, 2024, the company has repurchased approximately 624,600 common shares for cancellation for approximately $3.7-million.

Dividend: Pursuant to Frontera's dividend policy, Frontera's board of directors has declared a dividend of 6.25 Canadian cents per common share to be paid on or around April 16, 2024, to shareholders of record at the close of business on April 2, 2024. This dividend payment to shareholders is designated as an eligible dividend for purposes of the Income Tax Act (Canada). This dividend is eligible for the company's dividend reinvestment plan to provide shareholders of Frontera who are resident in Canada with the option to have the cash dividends declared on their common shares reinvested automatically back into additional common shares, without the payment of brokerage commissions or services charges.

Additional reserves results details

The attached reserves tables provide a summary of the company's oil and natural gas reserves based on forecast prices and costs, effective Dec. 31, 2023, as applied in the reserves report. The company's net reserves after royalties at Dec. 31, 2023, incorporate all applicable royalties under Colombian and Ecuadorean fiscal legislations based on forecast pricing and production rates evaluated in the reserves report, including any additional participation interest related to the price of oil applicable to certain Colombian and Ecuadorean blocks as at year-end 2023.

About Frontera's year-end 2023 estimated reserves

The company's year-end 2023 estimated reserves were evaluated by D&M in its report dated March 7, 2024, with an effective date of Dec. 31, 2023, in accordance with the definitions, standards and procedures contained in the COGE handbook, National Instrument 51-101 and CSA staff notice 51-324. D&M is an independent qualified reserves evaluator as defined in NI 51-101.

Additional reserves information as required under NI 51-101 will be included in the company's statement of reserves data and other oil and gas information on Form 51-101F1, which is expected to be filed on SEDAR+ on March 7, 2024.

Fourth quarter and year-end 2023 conference call details

A conference call for investors and analysts will be held on Friday, March 8, 2024, at 10 a.m. Eastern Time. Participants will include Mr. de Alba, Mr. Cabrales, Rene Burgos, chief financial officer, and other members of the senior management team.

Analysts and investors are invited to participate using the following dial-in numbers.

Participant number (toll-free North America):  1-888-644-6383

Participant number (toll-free Colombia):  01-800-518-4036

Participant number (international):  1-416-764-8650

Conference ID:  01718743

Webcast audio:  at the Frontera website

A replay of the conference call will be available until 11:59 p.m. Eastern Time on March 15, 2024.

Encore toll-free dial-in number:  1-888-390-0541

International dial-in number:  1-416-764-8677

Encore ID:  718743

About Frontera Energy Corp.

Frontera 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 mid-stream 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.

We seek Safe Harbor.