Frontera Energy Corporation

Good morning, my name is Vincent and I'll be your conference facilitator today. Welcome to Frontera Energy's second quarter 2026 operating and 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 an audio webcast. Following the speaker's remarks, there will be time for questions. Analysts and investors are reminded that any additional questions can be directed to Frontera following today's call at ir.fronterainfrastructure.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 MD&A for the three and six months ended June 30, 2026. and the company's annual information form and other documents it files from time to time with securities regulatory authorities describe the risks 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 de Alba, Chairman of the Board of Frontera Energy. Mr. de Alba?

Thank you, operator. Good morning, everyone, and welcome to Frontera's second quarter, 2026 Operating and Financial Results Conference Call. Joining me today are Orlando Cabrales, Frontera's CEO, and Andres Sarmiento, Frontera's CFO. Also available to answer questions at the end of the call are Alejandra Bonilla, our General Counsel, and Renata Campagnaro, our Vice President of Commercial and Projects. Thank you all for joining us. This quarter marked an important turning point for Frontera. On June 1st, 2026, we completed the plan of arrangement with Pyrex Resources. With the completion of the Parix transaction, $8.34 Canadian per share was returned to our shareholders. An important realization of value and the culmination of a multi-year effort to simplify the company, unlock value for our shareholders, and establish a stronger foundation for Frontera's next chapter. Frontera today is a fundamentally different company, simpler, and focus on infrastructure with resilient cash generating assets leveraged below one times adjusted EBITDA and a differentiated growth opportunity through LNG at Puerto Bahia. Together, this positioned the company to be a meaningful player in Colombia's energy security. With that transformation now complete, the board's mandate is equally clear. Focus on growth Execute, allocate capital with discipline, and create long-term value for our shareholders. As we move forward, we will continue to evaluate investments and financing decisions against clear risk-adjusted return criteria while maintaining balance sheet discipline and a strong focus on long-term shareholder value. We also made important progress during the quarter on the next phase of Puerto Bahia's The take or pay agreement with Ecopetrol together with the floating storage and regasification unit capacity secured with Xcelerate Energy. These are substantially advances that put forward the commercial and technical foundation of our LNG regasification project. Our focus now is execution, delivering the milestones required to achieve first gas in early 2027 continuing to grow our existing port business and operating our assets safely and efficiently. With that, I now like to turn the call over to Orlando Cabrales, Frontera CEO, and Andres Sarmiento, Frontera CFO, who will take you through our second quarter results in greater detail. Orlando.

Thank you, Gabriel. Good morning, everyone. and thank you for joining us for today's call. Our second quarter results reflect the successful completion of our multi-year transformation and the solid underlying performance of our infrastructure assets. Let me start with Puerto Bahia. Poor revenues were $14.6 million in the second quarter compared with $12.7 million in the prior quarter and $11.3 million in the second quarter of 2025. Puerto Aria has established itself as a key strategic partner to the automotive sector in Colombia with railroad cargo volumes up approximately 85% Year-over-year and 26% quarter-over-quarter. April 2026 established a new all-time record handling 1,700 units in a single month, reflecting the strong underlying demand momentum while LPG volumes continue to ramp up during the quarter. Turning to our ODL pipeline investment, we received $26.8 million in ODL dividends during the second quarter of 2025. During the quarter, ODL declared an additional return of capital of $5.2 million. On our LNG regressification project, Puerto Aria has entered to provide integrated logistics and energy regasification services in Cartagena. The agreement will be developed in two phases, with an initial two-year regasification capacity of 126 million cubic feet per day, starting in 2027, increasing to 300 million cubic feet per day thereafter. To fulfill the contract, Puerto Vallarta has also contracted with Xcelerate Energy for the lease of a floating storage and reclassification unit for an initial term of seven years, extendable for an additional five to eight years. I would now like to turn the call over to Andres Sarmiento, Fronteras, CFO.

Thank you, Orlando and Gabriel. And good morning, everybody.

Thank you, as always, for your interest and support for the company. I'd like to take a moment to highlight a few key financial aspects of our second quarter results. For the second quarter, the company recorded an adjusted EBITDA of $30.5 million compared to $28.5 million in the prior quarter and $25.9 million in the second quarter of 2025, representing 18% growth year over year. Cash provided by operating activities from continuing operations was $26 million in the quarter Compared to cash used of $5 million in the prior quarter And cash used of $6.6 million in the second quarter of 2025 Turning now to our balance sheet and liquidity As of June 30, 2026 The company had a total cash balance of $56.3 million dollars Net debt was $114.2 million, down from $123.7 million at December 31st, 2025. And our net debt to adjusted EBITDA ratio improved to 0.98 times compared to 1.35 times a year ago. Last 12 months, Distributable cash flow was $78.8 million as of June 30, 2026, compared to $21.4 million at March 31, 2026, and $71.4 million a year ago. On capital allocation, We returned $8.34 Canadian dollars per common share to shareholders on June 23rd, 2026 in connection of the PAREC's arrangement. Capital expenditures from continuing operations were $1.5 million for the quarter and $2.5 million for the six months. During the quarter, investments in Puerto Bahia included $0.5 million toward the LPG project and $0.2 million toward the LNG project. To support the LNG project, PAN Colombia approved a $30 million loan facility to Puerto Valle, of which $10 million were 2026 with additional $20 million disbursements made subsequent to quarter end on July 2026. Proceeds are being used for advances to suppliers of the LNG project. Also subsequent to quarter end, the company entered into a letter of credit facility agreement with Macquarie Bank Limited for up to $12.6 million as security for our obligations under the FSRU International Leasing Agreement and Operation Service Agreement with Accelerate Energy. I would now like to turn the call back over to Orlando.

Thank you, Andres. Before I conclude today's call, I would like to reiterate that with our transformation now complete, Frontera enters This next phase as a simplified standalone infrastructure platform with a strong balance sheet leveraged below one time adjusted EBITDA and a clear growth pathway through the LNG regasification project at Puerto Bahia where we are targeting first gas in early 2027. I want to thank our employees for their continued dedication throughout this transformative period for the company. With that, I would like to conclude by saying thank you to Gabriela and Andres for their comments and thank you everyone for attending our call. I will now turn the call back to our operator who will open it up for questions.

At this time, for those wishing to ask a question, please press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Again, if you wish to ask a question, please press star then the number one on your telephone keypad.

There are no questions at this time.

I'll turn the call back over to Orlando Cabrales.

Okay, now thank you, operator, and thank you again for everyone for attending this call.

Have a good day. This concludes today's conference call. Thank you for participating.

You may now disconnect.