Frontera Energy Corporation

Good morning, my name is Joelle and I'll be your conference facilitator today. Welcome to Frontera Energy first quarter 2023 operating financial results conference call. All lines are currently on mute to prevent any background noise. I would like to remind you that this conference call is being recorded today and is also available through our audio webcast on the company's website. Following the speaker's remarks, there will be time for questions. Analysts and investors are reminded that any additional questions can be directed to the company at IR at F-R-O-N-T-E-R-A-E-N-E-R-G-Y.ca. This call contains forward-looking information within the meaning of applicable Canadian securities laws relating to activities, events, or developments the company believes or expects will 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 a guarantee of future performance. Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward-looking information. The company's MDNA for the quarter ended March 31, 2023, and the company's annual information form dated March 1, 2023. Another document it files from time to time with securities regulatory authorities describe the risks and uncertainties, material assumptions, and other factors that could influence actual results. Any forward-looking information speaks only as of the 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 now like to turn the call over to Mr. Gabriel D'Alba, Chairman of the Board of Frontera Energy. Mr. D'Alba.

Thank you, Operator. Good morning, and welcome to Frontera's first quarter 2023 earnings call. Joining me on today's call are Orlando Cabrales, Frontera CEO, and Rene Burgos, Frontera CFO. 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 Revalo, VP Operations. And Reeta Campanaro, VP Marketing, Logistics, and Business Sustainability. Thank you for joining us. The company delivered average daily production of 41,586 barrels per day, generated $91.9 million of operating EBITDA, and invested $131.5 million in capital expenditures, in line with its 2023 guidance. Consistent with the strategic focus of unlocking standalone value from our three businesses, upstream in Colombia and Ecuador, with our port and pipelines, and Guyana, the company successfully refinanced Puerto Valle's existing legacy project finance debt via a new 120 million loan facility with a group of lenders led by Macquarie Capital. With this refinancing complete, Frontera's standalone midstream business is fully capitalized and can operate and grow independently. The refinancing extended the tenor of the borrowings to December 2027 and provide for up to $30 million in additional funding to pursue strategic investment opportunities with a midstream business. Subsequent to the quarter end, the company designated Frontera Energy Guyana Holdings Ltd. and Frontera Energy Guyana Corp. as unrestricted subsidiaries and released from Terra Energy Guyana Corp as a note warrantor for its senior bonds due 2028. The designation is a positive forward step as the company nears the completion of our two-well commitment in Guyana and supports ongoing capital discipline. Speaking of Guyana, I'm excited to confirm that Frontera and its joint venture partner, CGX, have encountered oil-bearing intervals at the Way 1 well in the Western Channel Fan Complex, all of the northern portion of the current time block in formations of Maastrichtian and Campanian ages. The current depth of the Way 1 well is 19,142 feet, and drilling is progressing towards the planned TD of 20,500 feet. Orlando will provide more details on way one in a few minutes. We remain committed to successfully and safely completing this potential transformational opportunity. Finally, as you may have noticed beginning with last quarter's disclosure documents, the company is committed to providing greater clarity and insight into its three core businesses through its quarterly results and press releases, financial statements, management discussion, and analysis including this conference call. You'll hear more about this in a moment. As mentioned, the company remains focused on unlocking value from its three core businesses, upstream, midstream, and Guyana, to achieve strategic priorities and unlock shareholder value. I'll now turn the call over to Orlando Cabrales, Frontera's CEO, and our CFO, Rene Burgos, who will share their views on Frontera's first quarter results and the performance of our three core businesses. Orlando?

Thank you, Gabriel. Good morning, everyone. Thank you for taking the time to join us. I'm pleased with Frontera's first quarter operational and financial results. Despite community blockades in early February, which temporarily shut in production at our KIFA and CP6 operations, the company's third quarter production was largely in line with the prior quarter. Year-to-date, we are delivering average daily production of approximately 41,800 BOE per day, and so far, in the second quarter of the year, we have averaged approximately 42,500 BOE per day. Our first quarter average production and the strong production performance so far in the second quarter is a testament to the versatility and robustness of our assets and our operations teams hard work and dedication to quickly return production to pre-blockade levels. Taking a closer look at our three core businesses. In our Colombia and Ecuador upstream segment, we drilled 17 development wells at Kifa, Cahua, CP6, and Cubiro blocks. And we currently have five drilling rigs and two workover rigs active at our Kifa, CP6, Cubiro, and Corcel Guaitiquea blocks in Colombia. We drilled seven production wells at Kifa and five production wells at Cahua during the quarter. As we have highlighted previously, increasing water handling capacity at KIFA is key to Frontera's efforts to grow production. Our current water handling capacity at KIFA is approximately 1.5 million barrels of water per day. Earlier this year, we began commissioning Sahara, our reverse osmosis water treatment facility to process water from our KIFA block operations. As of April of this year, the Sahara plant has already processed 1.5 million barrels of water as part of its commissioning program, providing irrigation source water to the companies nearby Proagro Llano's palm oil plantation. I will note that every additional 100,000 barrels of water handled increases our net production at Kifan