Frontera Energy Corporation

Good day ladies and gentlemen, my name is Sergio and I'll be your conference operator today. Welcome to Frontera Energy's fourth quarter and year-end 2022 operating and financial results control. All lines are currently on mute to prevent any background noise. I'd like to remind you that this conference call is being recorded today and is also available through audio webcast on the company's website. Following the speakers remarks there will be a time for questions Analysts and investors are reminded that any additional questions can be directed to the companies at ir.fronterraenergy.ca. This call contains forward-looking information with meaning of applicable Canadian security laws relating to activities, events, or developments to company beliefs or may occur in the future. Forward-looking information reflects the current expectations. assumptions and beliefs of the company based on information currently available to it. Although the company believes the assumptions are reasonable, forward-looking information is not guaranteed of future performance. Forward-looking information is subject to a number of risks and uncertainties that may cause the actors of the company to differ materially from those discussed in the forward-looking information. The company's MD&A for the quarter ended December 31, 2022. and the company's annual information for dated March 1, 2023, and other documents filed from time to time with security regulatory authorities describe the risk, uncertainties, material assumptions, and other factors that could influence actual results. Any forward-looking information speaks only as of date on which it is made, and the company disclaims any intent or obligation to update any forward-looking information except as required by law. I would like to turn the call over to Mr. Gabriel de Alba, Chairman of the Board of Frontera Energy. Please go ahead.

Thank you, Operator. Good morning and welcome to Frontera's fourth quarter and year-end 2022 earnings call. Joining me on today's call are Orlando Cabrales, Frontera's Chief Executive Officer, and Rene Burgos-Diaz, Frontera's Chief Financial Officer. Also available to answer questions at the end of the call, we have Victor Vega, VP, Field Development, Reservoir Management, and Exploration. Alejandra Bonilla, General Counsel. Ivana Valo, VP Operations. And Renata Campanaro, VP Marketing, Logistics, and Business Sustainability. Thank you for joining us. 2022 was a strong financial and operational year for Frontera. The company delivered average daily production of 41,382 BOE per day, a 9% increase compared to 2021 production average, and in line with its increased and tightened 2022 production guidance. The company increased full year operating EBITDA by 70% to $641.9 million, within the company's $90 to $100 per barrel in the 2022 guidance range. The company finished the year with a total cash position of approximately $313 million, including restricted cash of $23 million. Frontier remains committed to enhancing shareholders' returns. In 2022, the company returned over $91 million to shareholders through its NCIB and SAB programs. Since 2018, Frontera has returned more than $300 million to shareholders through dividends and share buybacks while maintaining strong credit metrics. In addition, since 2017, the company has resolved more than $2.6 billion in continuing liabilities and commitments. permanently eliminating legacy issues. The company is focused on unlocking shareholder value from its upstream Colombia and Ecuador business, its standalone and growing midstream business, and its potentially transformational offshore exploration program in Guyana. In 2022, Frontera advanced the company's exciting development and lower risk exploration portfolio in Colombia and Ecuador, and started investments in additional water handling facilities at KIFA and CP6 in support of the company's 50,000 barrels per day production target. Also in 2022, Frontera strengthened its midstream portfolio with the acquisition of the remaining 40% interest in pipeline investment limited. Frontera now owns 35% of the ODL pipeline, which generated over $215 million in EBITDA in 2022. Since 2019, the company has increased its interest in Puerto Bahia by approximately 60% to 99.8%. Frontera's interest in the ODL pipeline and in Puerto Bahia creates a unique standalone midstream business which provides shareholders with significant upside potential. In Guyana, The joint venture discovered light oil and condensate at Tahoe One Well, offshore Guyana, and has successfully drilled the first prospective geologic horizons in the upper Maastrichtian at the Way One Well. The joint venture's second exploration well in the Quarantine Block, which is performing several days ahead of schedule. Fronteras assets, strong operating performance, and sun balance sheet, has positioned the company to deliver its 2023 objectives and to continue generating value for shareholders by unlocking the sum of the parts. I will now turn the call over to Orlando Cabrales, Frontera's CEO, and our CFO, René Burgos, who will share their views on the four quarter and full year results. Orlando.

Thank you, Gabriel, and good afternoon, everyone, and thank you for taking the time to join us this morning. I'm pleased with Fronteras' 2022 operating and financial results. We delivered record production at CP6, which contributed to 2% quarter-over-quarter production growth to 40,806 BOE per day and 9% year-over-year growth to 41,382 BOE per day. The company increased water handling capacity at KIFA to approximately 1.55 million barrels of water per day at year-end, and we plan to grow to 2 million barrels of water per day by mid-2024 as the Sahara Water Treatment Facility comes online. And at CP6, the company expects to increase oil and water handling capacity to 240,000 barrels of water per day in 2023 and 480,000 barrels of water per day in 2025, building the foundation to grow production to 50,000 BOE per day. The company safely and responsibly executed $340 million in capital spending in support of its Colombian and Ecuador upstream onshore business and $104 million on its exciting Guyana offshore exploration program. I'm also pleased with the company's continued efforts to manage its cost structure. While production costs were higher year-over-year due to increased energy tariffs, maintenance, internal transportation costs, and well services, Frontera's transportation costs and G&A were in line with 2021. The company also increased its operating net back by 60% to $59.78 per VOE, increased its net sales realized price by 40% to $82.59 per VOE, reduce its restricted cash position by approximately 40 million dollars, and increase its uncollateralized credit lines to 118 million dollars. In our midstream segment, we revamped Puerto Bahia's leadership, adding expertise in the container business to drive incremental opportunities in the dry cargo terminal. For the year ended 2022, revenues from third party liquids and general cargo through Puerto Vallina increased 41% to approximately $40 million compared to 2021. Over 80% of Puerto Vallina's EBITDA is now generated from third parties. For 2022, the midstream business generated approximately $47 million in segment cash flow from operations. Frontera achieved 102% of its 2022 ESG goals, offset 52 of emissions, preserve and restore 1,747 hectares of key connectivity corridors in Casanare and Meta, and recycle 15% of its operating water and 17% of its solid waste in the Colombian operations. The company invested approximately 4.31 million on education, inclusive economic development, and quality of life initiatives benefiting 73,000 people through 218 social projects in Ecuador, Peru, and Colombia. Importantly, I am pleased to confirm the company's 2023 production guidance of 40,000 to 43,000 BOE per day. In 2022, we further diversify our production mix, increasing our conventional natural gas production to approximately 9,700 MCF per day, up 94% compared to 2021. We also grew natural gas liquids production to approximately 960 BOE per day in 2022, up 144% compared to 2021. In the fourth quarter of 2022, we drilled 17 development wells at Kefa, Kahua, CP6, and Coahuila blocks, and one injector well at Kefa. This compares to 14 development wells in the prior quarter. In 2022, the company drilled 67 development wells compared to 42 in 2021. Currently, the company has five drilling rigs and three work order rigs active at Ixquifa, CP6, Cubiro, and Corcel Guaipiquilla and BIM 22 blocks in Colombia. In Guyana, Frontera and CGX joint venture partners in the petroleum prospecting license for the quarantine block, commenced drilling operations on the Way 1 well on January 20, 2023, and the well is currently at 15,400 feet measured depth. There have been no lost time, safety, or environmental incidents since starting operations. Drilling operations have gone as planned, and the first prospective geological horizons in the upper Maastrichtian have been successfully drilled several days ahead of schedule. Geophysical logs are currently being obtained in the open hole section within which hydrocarbon shoals were encountered. When drilling operations resume, Deeper prospective horizons in the lower Maastrichtian, Campanian, and Sontanian sections will be targeted. The Wave 1 well is located approximately 14 kilometers northwest of the joint ventures previous Kawa 1 light oil and condensate discovery. The Wave 1 well is targeting Maastrichtian, Campanian, and San Antonio-age stacked sands within channel and fan complexes in the northern section of the quarantine block. The well is expected to take approximately four to five months from spot to reach total depth. Subsequent to the quarter, the government of Guyana approved an appraisal plan for the northern section of the quarantine block, which commenced with the Wave 1 well. Following completion of Wave 1 drilling operations and upon detailed analysis of the results, the joint venture may consider future wells. for its appraisal program to evaluate possible development facility in the CAWA 1 discovery area and throughout the northern section of the quarantine block. Any future drilling is contingent on positive results at wave 1, and the JV has no further drilling obligations beyond the wave 1 well. I would also note that on February 27, 2023, the JV completed the process of relinquishing the Demerara block through a mutual termination agreement with the government of Cayenne. Turning now to 2022 reserves, I'm pleased with Frontera's 2022 reserves results. As I mentioned earlier, we increased average daily production by 9%, in 2022 compared to 2021, while delivering 2P gross reserves of 175 million barrels with an NPD before taxes of $3.7 billion, an increase of 22% year over year. Importantly, we grew CP6 2P net reserves to 41 million barrels, while increasing annual average production to approximately 5,000 VOE per day, demonstrating our success in increasing reserves from less developed fields and passing KIFA for the most reserves by block in the company. And we increased our gross PVP reserves replacement ratio to 150% primarily driven by the advances in the development of KIFA, AMACA, and BIN1. We also increased gross gas and liquids reserves by 11% year-over-year to 21 million barrels, supporting our efforts to further diversify our production mix. Over the last three years, Frontera has averaged 16.6 million barrels gross to peer reserves additions, achieved 108% reserves replacement ratio, and an 11.6 years reserves life index. Looking ahead, we will invest between $170 million to $200 million in 2023. on our exciting lower risk and near field exploration portfolio in Colombia and Ecuador and the high impact Guyana exploration program reloading our research opportunity set for future growth. I would now like to turn the call over to René Burgos, Fronteras Chief Financial Officer.