Q1 2024 Frontera Energy Corp Earnings Call
Julie: Good afternoon, my name is Julie, and I will be your conference call facilitator today. Welcome to Frontera Energy's first quarter 2024 Operating and Financial Results conference call. All lines are currently on mute to prevent any background noise.
Good afternoon my name is.
Julie: And that will be a conference call, especially.
Julie: Hey.
Julie: Welcome to Frontera Energy's first quarter, 'twenty, 'twenty, four operating and financial results Conference call.
Julie: Yeah.
Julie: To prevent any background noise.
Julie: I would like to remind you that this conference call is being recorded today and will be available through an 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 Frontera following today's call at IR at FronteraEnergy.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 may occur in the future.
Julie: I would like to remind you that this conference call is being recorded today.
Julie: So I've got about two audio webcast on the company's website.
Julie: Following the Speakers' remarks, there will be time for questions analysts and investors are reminded that any additional questions can be directed to frontera. Following todays call at IR at frontier about energy that's D. A.
Julie: This call contains forward looking information within the meaning of applicable Canadian securities laws relating to activities events or developments. The company believes are expects well may occur in the future.
Julie: 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.
Julie: Oh future preferments for looking information is subject to a number of risks and uncertainties that may cause.
Julie: The actual results of the company to differ materially from those discussed in the forward looking information.
Julie: The company's N DNA for the quarter ended March 31, 'twenty 'twenty four and the company's annual information form dated March 7th 'twenty 'twenty four and other documents its files from time to time with the securities regulatory authorities described the risks uncertainties assumptions and other factors.
Julie: That could influence actual results.
Julie: 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.
Julie: Forelooking information reflects the current expectations, assumptions, and beliefs of the company based on the information currently available to it. Although the company believes the assumptions are reasonable, forelooking information is not a guarantee of future performance. Forelooking 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 forelooking information. The company's MD&A for the quarter ended March 31, 2024 and the company's annual information form, dated March 7, 2024, and other documents on its files, from time to time with securities, regulatory, and other authorities, describe the risks, uncertainties, material assumptions, and other factors I would now like to turn the conference over to Mr. Gabriel de Alba, Chairman of the Board of Frontera Energy. Please go ahead.
Speaker Change: I'd now like to turn the conference over to Mr. Gabriel de Alba Chairman of the board of Frontera Energy. Please go ahead.
Gabriel de Alba: Co-creator, good morning, and welcome to Frontera's first quarter 2024 earnings call. Joining me on today's call are Orlando Cabrales, Frontera's CEO, and Rene Burgos, Frontera's CFO. Also available to answer questions at the end of the call are Victor Vega, VP, Field Development, Resource Management, and Exploration; and Alejandra Bonilla, General Counsel. Ivana Revalo, BP Operations. I'm Rene Diaz. Thank you. Have a good day!
Speaker Change: Thank you operator.
Speaker Change: Welcome to the third quarter earnings.
Gabriel de Alba: Earnings call.
Gabriel de Alba: Joining me on today's call are Oleg.
Gabriel de Alba: Okay.
Gabriel de Alba: With the C E O.
Gabriel de Alba: Okay.
Rene Burgos Diaz: I'm the CFO.
Gabriel de Alba: Okay great.
Gabriel de Alba: Question at the end of the call.
Gabriel de Alba: Yeah.
Gabriel de Alba: Good development.
Gabriel de Alba: Management.
Gabriel de Alba: Okay.
Gabriel de Alba: Okay.
Gabriel de Alba: Okay.
Gabriel de Alba: We were not able to operate.
Gabriel de Alba: Okay.
Gabriel de Alba: Right.
Gabriel de Alba: Okay.
Gabriel de Alba: END Thank you for joining us. Frontera is focused on delivering strategic objectives and generating value for stakeholders. In the first quarter, the company generated $97.2 million in operating EBITDA and $25.7 million of adjusted infrastructure EBITDA and maintained a robust balance sheet, finishing the quarter with a total cash balance of $182 million. During the quarter, all the undeclared amounts were $157 million dividends.
Speaker Change: Thank you for joining us.
Gabriel de Alba: We're very focused on delivering on its strategic objectives and generating value for stakeholders.
Gabriel de Alba: The first quarter, the company generated $97 2 million and operating EBITDA.
Gabriel de Alba: $25 7 million of adjusted infrastructure EBITDA I.
Gabriel de Alba: I maintain a robust balance sheet, finishing the quarter with a total cash.
Gabriel de Alba: Cash balance of 182 million.
Gabriel de Alba: During the quarter.
Gabriel de Alba: <unk> declared a $157 million dividend.
Gabriel de Alba: 54.9 million led to Frontera, highlighting the strong cash generation capacity of this strategic infrastructure investment. The company also reached an agreement in principle with Ecopetrol for the use of the company's reverse osmosis water treatment facility, VARA, through a two-year contract.
Gabriel de Alba: $54 9 million net due from Teva.
Gabriel de Alba: Highlighting the strong cash generation capacity.
Gabriel de Alba: Our strategic infrastructure investment.
Gabriel de Alba: The company also achieve an agreement in principle with Ecopetrol.
Gabriel de Alba: For the use of the company's reverse osmosis water treatment facility.
Gabriel de Alba: Through a two year contract.
Gabriel de Alba: This is a significant ESG and a strategic milestone which will drive greater production, water disposal, and crude oil production capacity at the Kiva Block. So far this year, the company has returned nearly $13 million of capital to our stakeholders, including $7.8 million in declared dividends. $3 million of common share purchases, and 1.5 million of buybacks of its 2028 unsecured debt. Moreover, the company, with support from Goldman Sachs, has launched a strategic alternative process for its stand-alone and growing Colombian infrastructure business, which may include spinoffs, a total or partial sale, or other business combinations.
Gabriel de Alba: These are significant gives you any fatigue milestone, which will drive greater produced water disposal and crude oil production capacity I think you have left.
Gabriel de Alba: So far this year.
Gabriel de Alba: <unk> has returned nearly $13 million of capital so at stake.
Gabriel de Alba: Stakeholders.
Gabriel de Alba: <unk> 7.8 million declared dividend three.
Gabriel de Alba: 3 million of common share repurchases.
Gabriel de Alba: $1 5 million of buybacks.
Gabriel de Alba: Turning 48 unsecured notes.
Gabriel de Alba: Moreover, the company, we support from Goldman Sachs as well as the strategic alternative process.
Gabriel de Alba: The standalone on growing Columbia and infrastructure.
Gabriel de Alba: This may include.
Gabriel de Alba: A total or partial sale or the business combination.
Gabriel de Alba: With over $1 billion of capital invested, Frontera's infrastructure assets are a unique investment opportunity in some of Colombia's most relevant infrastructure assets. The OEL pipeline connects the most prolific oil reserve areas in Colombia, the Meta and Castaneda Departments, which together hold 70% of the National 1P Crude Oil Reserve, to the rest of Colombia's mainstream network and transports 30% of the total country's oil output. ODL has paid over $1.3 billion in distributions since inception. Completed in 2015, Puerto Bahia's State-of-the-Art Liquid and Dry Cargo Port Terminal is strategically located in the heart of the Bay of Cartagena, waiting on its maritime concession.
Gabriel de Alba: With over $1 billion of capital embedded from there is infrastructure as it a unique investment opportunity.
Gabriel de Alba: Columbia's most relevant infrastructure assets.
Gabriel de Alba: There'll be a pipeline for next the most prolific oil reserves areas in Colombia.
Gabriel de Alba: Mr Desormeaux Department.
Gabriel de Alba: <unk> holds 70% of the national one key crude oil reserves.
Gabriel de Alba: The rest of Columbia Midstream network.
Gabriel de Alba: 30% of the cost of the total country on output.
Gabriel de Alba: Mobile postpaid over $1 2 billion in distributions since inception.
Gabriel de Alba: Completed in 2015 for data they are liquid and dry cargo port terminal.
Gabriel de Alba: Typically located in the heart of the Bayer go behind them.
Gabriel de Alba: Creating on their maritime concession.
Orlando Cabrales: The port owns over 150 hectares of freehold land, which includes 2.4 million barrels of oil and all product storage capacity, over 50 hectares of dry cargo storage capacity, and an additional 75 hectares of expansion capacity to develop the strategic initiatives. The recently announced connection agreement with the Refica Refinery plans to come online this year and is expected to drive additional hydrocarbon volume and strengthen Cartagena's role as a regional leader and economic hub for the hydrocarbon space.
Gabriel de Alba: <unk> owns.
Gabriel de Alba: 150 hectares of freehold land, which include $2 4 million barrels of oil I know product storage capacity over 50.
Orlando Cabrales: Zaikai withdraws capacity.
Orlando Cabrales: An additional 75 hectares.
Orlando Cabrales: And capacity to develop a strategic initiative.
Orlando Cabrales: The recently announced connection agreement with the refinery.
Orlando Cabrales: Planned to come online this year.
Orlando Cabrales: And is expected to drive additional hydrocarbon volume and a strengthening because again our goal as a REIT.
Orlando Cabrales: Either an economic hub for the hydrocarbons.
Orlando Cabrales: Looking ahead, the company will consider future shareholder initiatives in 2024 and beyond, including potential additional dividends, distributions, or bond buybacks, based on the raw results of our business and the company's strategic goals. I will now turn the call over to Orlando Cabrales, Frontera's CEO, and our CFO, Rene Burgos, who will share their views on our first quarter results. Orlando?
Orlando Cabrales: Looking ahead, the company will consider future shareholder initiatives in 2024 and beyond.
Orlando Cabrales Segovia: Including potential additional dividend distributions or bond buybacks based on the overall results of our business and the company's strategic goals.
Orlando Cabrales Segovia: I will now turn the call over to Orlando Cabrera.
Orlando Cabrales Segovia: From there our CEO.
Orlando Cabrales Segovia: CFO renewable growth will share their views on our first quarter results Orlando.
Orlando Cabrales: Thank you, Gabriel. Good morning, everyone, and thank you for joining us this morning. Frontera's first quarter results were in line with our expectations, despite some unforeseen challenges. First quarter production declined approximately 3% on a quarter-over-quarter basis, impacted primarily by light and medium natural declines and expected world failures, partially offset by our resilient heavy oil operation. During the quarter, our heavy crude oil production grew 2% on a quarter-over-quarter basis to reach approximately 23,400 barrels per day.
Orlando Cabrales Segovia: Thank you Gary and good morning, everyone and thank you for joining us this morning.
Orlando Cabrales: First quarter results were in line with our expectations.
Orlando Cabrales: Alright.
Orlando Cabrales: Challenges.
Orlando Cabrales: First quarter presumption decline approximately.
Orlando Cabrales: 3% on a quarter over quarter basis.
Orlando Cabrales: Impacted primarily by a leading natural decline.
Orlando Cabrales: Well failures, partially offset by our Brazilian operations.
Orlando Cabrales: During the quarter, our savvy good oil production grew 2% on a quarter over quarter.
Orlando Cabrales: Reaching approximately 23400 barrels per day.
Orlando Cabrales: We also experienced another average daily production record of $7,000 at the CP6 block; the growth in our heavy oil business came despite several challenges, including the impact of the community blockade, as well as delays associated with our Strategic Water Disposal Initiative. [inaudible] If these events had not materialized, we would have expected an increase in production of approximately 725 barrels per day. We expect activities in Sahara to start up during the second quarter and to continue ramping up during the rest of the year, supporting our heavy oil production operation in Kifa, with the objective of processing more than 250,000 barrels of water per day for the Kifa block once established.
Orlando Cabrales: Most experienced a monitor.
Orlando Cabrales: Daily production record of $7000.
Orlando Cabrales: Bill.
Orlando Cabrales: The growth in our heavy oil business.
Orlando Cabrales: Despite several challenges.
Orlando Cabrales: Clearly the impact of commodity cognitive lumpy.
Orlando Cabrales: A smaller release associated with our strategic one with both organizations.
Orlando Cabrales: Sorry.
Orlando Cabrales: These events.
Orlando Cabrales: Natasha.
Orlando Cabrales: We would have respected and increase production.
Orlando Cabrales: Approximately 725 barrels per day.
Orlando Cabrales: We expect activity in China.
Orlando Cabrales: To start <unk> during the second quarter as we continue ramping up with the rest of the year supported.
Orlando Cabrales: Our heavy oil production operations people.
Orlando Cabrales: He built yet.
Orlando Cabrales: More than 250000 barrels of water per day for the keep our block one satellites.
Orlando Cabrales: Additional activities supporting our growth outlook for our heavy oil also include a new water injector well in Kifa coming online this month, expected to provide an additional $100,000 of water per day. Additionally, we continue our efforts to expand our water handling capacity in City6, to continue to capitalize on our production growth. Since the end of 2022, we have increased water handling at the CP6 block from 120,000 bottles per day to 240,000 during 2023 and growing to 360,000 bottles of water per day this year. Our dream campaign on these blocks has also started strong and is meeting expectations. Partner today, we have through 20 development worlds for KIFA and CPC Explorers in our live media operations.
Orlando Cabrales: Additional activities supporting our growth outlook for our heavy.
Orlando Cabrales: Heavy oil.
Orlando Cabrales: Also include a new water injector, well and keefer.
Orlando Cabrales: Online this month.
Orlando Cabrales: We expected to provide an additional 100000 borrowers have wonderful day.
Orlando Cabrales: Also we continue our efforts to expand our water handling capacity and 66.
Orlando Cabrales: We capitalized on our production growth.
Orlando Cabrales: Yeah end of 2022 did not increase.
Orlando Cabrales: At the Cpuc's block from 120.
Orlando Cabrales: <unk> thousand barrels per day.
Orlando Cabrales: 140000 during 2023 and growing.
Orlando Cabrales: 360000 barrels of water per.
Orlando Cabrales: Quickly reduced here.
Orlando Cabrales: Our drilling campaign on these blocks.
Orlando Cabrales: Also started strong.
Orlando Cabrales: Meeting expectations.
Orlando Cabrales: Consequently, we have through 'twenty, the growing world the coupon.
Orlando Cabrales: Six months.
Orlando Cabrales: And our nice medium operations, we suffer some.
Orlando Cabrales: We suffered some unanticipated setbacks that resulted in lower levels of production than planned, including some unexpected oil failures. We will continue to invest in work order and work service activities in these blocks to recover production. Additionally, we continue to invest in our B1 block, including gas compression facilities that will aid in the re-injection of close to 20,000 to 30,000 MCF, which is expected to increase production at the B1 level. On the exploration side, we are excited about spotting the high-impact Igaray-1 well on the D1 flood schedule for June of this year.
Orlando Cabrales: Anticipated setbacks that resulted in lower levels of production on plan.
Orlando Cabrales: Adding some unexpected.
Orlando Cabrales: Phases.
Orlando Cabrales: We will continue to invest.
Orlando Cabrales: Yes.
Orlando Cabrales: On Wilson disease activity blocks to recover production.
Orlando Cabrales: Additionally, we continue to invest in our B one block.
Orlando Cabrales: Gas compression facilities.
Orlando Cabrales: The injection of close to.
Orlando Cabrales: Glenn 30000 Mcf.
Orlando Cabrales: This is expected to increase production at the deep one block.
Orlando Cabrales: On the exploration side.
Orlando Cabrales: We are excited about falling behind but EBITDA, one well on the <unk> one well is scheduled for June of this year.
Orlando Cabrales: The company completed important civil works activities, including platform and work construction, in advance of completing the work. We reiterate our production and capital guidance for 2024. Along with our drilling program, we expect improved production and profitability throughout the rest of the year as we advance our development portfolio in Colombia and Ecuador, along with our active pursuit of strategic alternatives for our interest in the quarantine block in Guyana, which is still ongoing. And I will soon announce a strategic alternative review for our growing Colombian infrastructure business.
Orlando Cabrales: The company completed important CB works activities into the platform well construction in advance of bringing the world.
Orlando Cabrales: We raised already.
Orlando Cabrales: Pork production and capital guidance.
Orlando Cabrales: 2024.
Orlando Cabrales: These activities along with our drilling program.
Orlando Cabrales: Expect improved production and profitability.
Orlando Cabrales: The rest of the year.
Orlando Cabrales: We advanced our development portfolio in Colombia, and Ecuador.
Orlando Cabrales: Along with our active pursue opportunities alternatives for our interest in the Caribbean block in Guyana.
Orlando Cabrales: He is still ongoing.
Orlando Cabrales: And our recently announced FERC alternative review for our growing Colombian infrastructure business.
Rene Burgos Diaz: The company remains focused on unlocking value from the sum of its parts. I would now like to turn the call over to Rene Urgoz Fronteras, CFO. Thank you, Orlando. Thank you, everyone, for joining us today.
Orlando Cabrales: We remain focused on unlocking value from the some of the swaps.
Speaker Change: I would now like to turn the call over to Brett who will go through data.
Rene Burgos Diaz: Paul.
Speaker Change: Thank you Randall thank.
Speaker Change: Thank you everyone for joining us today.
Rene Burgos Diaz: I'd like to take a moment to highlight a few essential aspects of our first quarter results. For the first quarter, the company recorded a net loss of $8.5 million, or 10 cents a share. This quarter's net loss follows approximately $44 million in income from operations plus share of income from associates, which includes $14 million of share income from ODL, offset by roughly $17 million in finance expenses, $9 million in losses related to risk management contracts, and approximately $27 million in income tax expenses, including almost $22 million in deferred income taxes, primarily due to the impact of non-deductible expenses and differences related to foreign currency fluctuations. During the quarter, Moving to Operating the GADOT.
Speaker Change: I'd like to take a moment to highlight a few key financial aspects of our first quarter results.
Rene Burgos Diaz: For the first quarter the company recorded a net loss of $8 5 million or <unk> 10 per share.
Rene Burgos Diaz: This quarters net loss further approximately $44 million and income from operations plus share up income from associates.
Rene Burgos Diaz: Which included $14 million, while income from ONEOK.
Rene Burgos Diaz: Offset by roughly $17 million in finance expenses.
Rene Burgos Diaz: $9 million in losses related to risk management contracts.
Rene Burgos Diaz: Approximately $27 million in income taxes.
Rene Burgos Diaz: Including almost $22 million and deferred income taxes.
Rene Burgos Diaz: Primarily due to the impact of nondeductible expenses and differences related to foreign currency fluctuations.
Rene Burgos Diaz: During the quarter the company assumes an income tax rate of 50%.
Rene Burgos Diaz: <unk> of the 15% surtax associated to the 2022 Colombian tax reform.
Rene Burgos Diaz: Moving to operating EBITDA.
Rene Burgos Diaz: Operating it up with a quarter was approximately $97 million. During the quarter, we saw weighted average rent sales prices for Frontera of $82.35, and average Pescona Differential on our export sales of 4.7. Compared to the prior quarter, our e-devout performance was impacted by lower sales volumes, as well as sustained high energy costs and inflationary effects on our operating costs. Taking a closer look at our operating costs, our production, energy, and transportation cost per barrel for the quarter totaled $10.21. $5.29 and $11.33 respectively.
Rene Burgos Diaz: Operating it up for the quarter was approximately $97 million.
Rene Burgos Diaz: During the quarter, we saw weighted average branch sales prices forefront of $82 35.
Rene Burgos Diaz: And average that kind of differential on our export sales of $4 seven.
Rene Burgos Diaz: Compared to the prior quarter, our EBITDA performance was impacted by lower sales volume.
Rene Burgos Diaz: As well as sustained high energy cost and inflationary effects.
Rene Burgos Diaz: Operating costs.
Rene Burgos Diaz: Keeping a closer look at our operating costs.
Rene Burgos Diaz: <unk> energy.
Rene Burgos Diaz: Energy and transportation costs per barrel for the quarter totaled $10 in 'twenty one.
Rene Burgos Diaz: $5 29.
Rene Burgos Diaz: $11 33, respectively.
Rene Burgos Diaz: This compares with $9.69, $5.06, and $11.02 in the previous quarter. The increase in production costs quarter over quarter was primarily a result of higher levels of activity, inflationary pressures on services, and wage indexation that typically occurs at the beginning of the year. Regarding energy prices, we continue to see the effect of sustained domestic high energy prices and the impact of FX fluctuations. We saw higher energy costs driven by higher activity in the CPE6 block and the startup of the Additional Water Handling Capacity. For the first quarter, electricity costs accounted for 30% of our energy consumption and 45% of our total energy. Gas generation for the quarter was strong, with gas from operations totaling $65.6 million.
Rene Burgos Diaz: This compares with $9 69.
Rene Burgos Diaz: $5 six.
Rene Burgos Diaz: And $11 <unk> in the prior quarter.
Rene Burgos Diaz: The increase in production costs quarter over quarter was primarily a result.
Rene Burgos Diaz: Higher well productivity.
Rene Burgos Diaz: Repurchases in services and wage indexation that typically occurs at the beginning of the year.
Rene Burgos Diaz: Regarding energy prices, we continue to see the effect of sustained domestic high energy prices and the impact of FX fluctuations.
Rene Burgos Diaz: We saw higher energy costs, driven by higher activity in the strategic block.
Rene Burgos Diaz: And the start up of the additional water handling capacity.
Rene Burgos Diaz: Sure.
Rene Burgos Diaz: For the first quarter electricity cost accounted for 30% of our energy consumption.
Rene Burgos Diaz: 40% of our total energy costs.
Rene Burgos Diaz: Cash generation for the quarter was strong with gases from operations saw a $65 6 million.
Rene Burgos Diaz: Thanks in part to the strong oil price environment, and insufficient working capital related to lower sales volumes was offset partially by lower income tax withheld. It's worth highlighting that during the quarter, Colombian tax authorities reduced the overall tax withholding rate on oil export sales from 9.9% to 5.6%.
Rene Burgos Diaz: Thanks in part to the strong Brent oil price environment.
Rene Burgos Diaz: Working capital related to lower sales volume.
Rene Burgos Diaz: Partially by lower income tax withheld.
Rene Burgos Diaz: It's worth highlighting that during the quarter government tax authorities, we do to the overall tax reporting based on oil export sales from nine 9% with five 6%.
Rene Burgos Diaz: Capital expenditures for the quarter were roughly $70 million, including primarily cost-associated water drilling campaigns for 21 development wells, Aqipa, Kahua, CPC, and the Perico Blocks for roughly $35 million. On the infrastructure side, adjusted EBITDA in the first quarter was $25.7 million compared with $27.3 million in the prior quarter. The over-quarter change was due to lower general cargo revenues for Puerto Vallarta.
Rene Burgos Diaz: Capital expenditure for the quarter were roughly $70 million, including primarily cost associated with our drilling campaign of 21 development well at <unk>.
Rene Burgos Diaz: Sure.
Rene Burgos Diaz: The FSA and the political block for roughly $35 million.
Rene Burgos Diaz: On the infrastructure side adjusted EBITDA in the first quarter was $25 7 million compared with $27 3 million in the prior quarter.
Rene Burgos Diaz: The quarter over quarter change was due to lower general cargo revenues for <unk>.
Rene Burgos Diaz: Lower transported volumes at OVL, lower-prime oil sales from agrogenerals as a result of lower-prime oil prices and higher operating costs across the segment due to inflationary pressures on services and a negative impact on foreign exchange. More specifically, and with respect to ODL, CDBA for the first quarter was $70.8 million, down 9% on a quarter-over-quarter basis due to lower transported volumes and inflationary pressures driving higher Additionally, ODL declared $157 million in dividends, including approximately $55 million net to Frontera, and a net, and an internal capital of close to $23 million or $8 million net performance data.
Rene Burgos Diaz: Yes.
Rene Burgos Diaz: Lower transported volumes at LDL.
Rene Burgos Diaz: Lower oil sales from our channel as a result of lower.
Rene Burgos Diaz: Our panel prices and higher operating costs across the segment due to inflationary pressures on circuited services had a negative impact from foreign exchange rates.
Rene Burgos Diaz: More specifically with respect to <unk> EBITDA for the first quarter was $7 8 million down 9% on a quarter over quarter basis, due to lower transported volumes and inflationary pressures driving higher operating costs as compared to the prior.
Rene Burgos Diaz: Additionally, ODM declared $157 million in dividends, including approximately 55 million metric tons data.
Rene Burgos Diaz: On a net.
Rene Burgos Diaz: And a return on capital of close to $23 million or $8 million from there.
Rene Burgos Diaz: These capital payments are payable in installments through 2024. In April 2024, the company received the first installment equal to 50% of the total capital distribution declared. As of March 31st, 2024, the company reported a total tax decision of $182 million, including $155 million of ownership. Turning now to risk management, our risk management strategy continues to show. Our hedging discipline supports our operations and planning. Frontera uses derivative instruments to manage exposure to oil price and FX volatility.
Rene Burgos Diaz: With capital payments are payable installments to 2024.
Rene Burgos Diaz: In April 2024, the company received the first installment equal to 50% of the total capital capital distributions declared.
Rene Burgos Diaz: As of March 31, 2024, the company reported a total cash position of $180 million, including $155 million of unrestricted cash.
Rene Burgos Diaz: Turning now to risk management, our current risk management strategy continues to show our hedging discipline support our operations and planning.
Rene Burgos Diaz: For internal use derivative instruments to manage exposure to oil price and FX volatility.
Rene Burgos Diaz: On the other hand, during the first quarter of 2024, the company successfully secured a 40% hedging ratio for the April to August 2024 period and 33 new hedges that protect a portion of our expected production for September 2024, protecting us from the potential drop in oil prices at an average strike price of $72.76 for the second and third quarters, respectively. Frontera has also entered into foreign exchange rates totaling $39 for approximately protecting the facial exposure above $39.70 for the third quarter.
Rene Burgos Diaz: On the auto side will be during the first quarter of 2024. The company successfully secured a 40% hedging ratio for the April through August 2024 period and enter into new hedges that protect a portion of our expected production for December 2020 for protecting us.
Rene Burgos Diaz: Avi potential drop in oil prices at an average strike price of 72.
Rene Burgos Diaz: $76 for the second and third quarter, respectively.
Rene Burgos Diaz: So on behalf of the entered into foreign exchange rates totaling $30 million.
Rene Burgos Diaz: Approximately protecting the peso exposure above $39 70 for the third quarter.
Rene Burgos Diaz: Frontera also entered into forward to protect the OEL capital distribution and the repayment of the Bank Colombia. Thanks for the nominee at Working Capital. We say this for a company with stability and will help mitigate future fluctuations in all businesses to deliver on this project. Finally, I'd like to provide an update on our shareholder development initiative. Under the company's current NCAV, which commenced on November 21, 2023, the company repurchased approximately 940,000 shares, or just over 1% of our total common circuit bandwidth, for cancellation for approximately $5.8 million as of March 8, 2024.
Rene Burgos Diaz: And then also enter into forward to protect and Odeon capital distribution and the repayment of the Bancolombia.
Rene Burgos Diaz: Denominated working capital loan.
Rene Burgos Diaz: As stated by the company with stability and will help mitigate future fluctuations in our business to deliver on bucket.
Rene Burgos Diaz: Finally, I'd like to provide an update on our shareholder value initiatives.
Rene Burgos Diaz: Under the current under the Companys current MTB, which commenced in November 2023, the company repurchased approximately 940000 shares.
Rene Burgos Diaz: Or just over 1% of our total common shares outstanding for cancellation for approximately $5 8 million as of March eight 2024.
Rene Burgos Diaz: Frontera is authorized to repurchase up to 3.9 million shares as part of its program. With respect to our announced dividend on April 16, Frontera paid approximately $3.9 million, or $0.0625 per share of Canadian, and will pay $0.0625 per share of Canadian to shareholders of record as of July 3, 2024, on or around July 17, 2024. I would like to now turn the call back to Orlando.
Rene Burgos Diaz: From Terra is authorized to repurchase up to three 9 million shares as part of its program.
Rene Burgos Diaz: With respect to our announced dividend on April 16th for GAAP paid approximately $3 9 million or $6 25 per share Canadian and we'll pay $6 25 per share Canadian to shareholders of record as of July <unk> 2024 on or around July 17, 2024.
Orlando Cabrales Segovia: I would like to now turn the call back Dortmund.
Orlando Cabrales: Thank you, Rene. Before I wrap up today's call, I would like to highlight that during the quarter, Frontera offset nearly 50% of its CO2 emissions from the production and consumption of energy in our operation and Carbon Creative Portugal. The company also achieved a total recordable incident rate of 0.72, and we used 20% of its water production and 37% of its operating waste.
Orlando Cabrales Segovia: Thank you Renee.
Orlando Cabrales: Before before I wrap up today's call.
Orlando Cabrales: I would like to highlight that during the quarter.
Orlando Cabrales: Offset nearly 50% of COPD patients.
Orlando Cabrales: As shown on consumption of energy in our operations.
Orlando Cabrales: Some cargo trade purchases.
Orlando Cabrales: The company also achieved a total recordable incident rate of 72.
Orlando Cabrales: We use 20% of its water production.
Orlando Cabrales: 37% of its operating waste.
Orlando Cabrales: The company also invested $0.5 million in social projects in communities near its operations in Colombia, Ecuador, and Guyana. On February 22nd, Frontera was recognized by EPISPHERE as one of the world's most ethical companies for the fourth consecutive year. It was also recognized for the second time as one of the 20 best workplaces for women in Colombia by the Great Place to Work Institute.
Orlando Cabrales: The company also invested $5 million in social projects and communities.
Orlando Cabrales: Its operations in Colombia.
Orlando Cabrales: Diana.
Orlando Cabrales: On February three cycles.
Orlando Cabrales: <unk> was recognized by Ethisphere as one of the most.
Orlando Cabrales: World's most ethical companies for the fourth consecutive year.
Orlando Cabrales: <unk> was also recognized for the second time as.
Orlando Cabrales: As one of the two best workplaces for women in Colombia by the Great place to work Institute.
Orlando Cabrales: And finally, a few thoughts on our strategic review process. The company, with support from Julian Loftin, continues to actively pursue strategic alternatives for its interests in the quarantine block in Guyana, including a possible foundation. And, as Gabriel mentioned, the company launched a strategic alternative review for its standalone and growing infrastructure business. Frontera's infrastructure business is comprised of the company's 35% equity interest in the OVL pipeline and its 99.97% equity interest in the Porto Aya pool.
Orlando Cabrales: And finally, a few thoughts on our strategic review processes.
Orlando Cabrales: The company we support.
Orlando Cabrales: <unk> continues.
Orlando Cabrales: IPP pursuing strategic alternatives for its interest in the currently Goldman Diana <unk>.
Orlando Cabrales: Including a <unk>.
Orlando Cabrales: Possible from them.
Orlando Cabrales: As Gary mentioned the company launched a strategic alternative review.
Orlando Cabrales: One alone on growing infrastructure business.
Orlando Cabrales: So instead of infrastructure business is comprised by the company's 35% equity interest in the pipeline.
Orlando Cabrales: It's 90 90, 997% equity interest in the portfolio.
Orlando Cabrales: The infrastructure business has generated $120 million of adjusted infrastructure EBITDA and $47.3 million in capital distributions in 2023. Frontera has retained Goldman Sachs as its financial advisor and may retain other advisors to assist the board in evaluating the various strategic, business, and financial alternatives. These processes are part of the company's effort to streamline the business portfolio and unlock value from the sum of its parts. Frontera believes the value of this asset is not reflected in the current stock price, and these processes aim to drive value for shareholders.
Orlando Cabrales: The infrastructure business has generated $120 million of adjusted infrastructure EBITDA.
Orlando Cabrales: And $47 3 million and capital distributions in 2023.
Orlando Cabrales: So there has to be taken Goldman Sachs as financial adviser and we retain all of our license to assist the board in our.
Orlando Cabrales: Evaluating the values and strategic business.
Orlando Cabrales: Financial alternatives.
Orlando Cabrales: These processes are part of the company's effort to streamline the business portfolio.
Orlando Cabrales: Rock value from the sum of its parts.
Orlando Cabrales: And third I believe the value of these assets is not reflected in the current stock price and these processes and to drive value for shareholders.
Orlando Cabrales: There can be no guarantee that the strategic review process will result in a... With that, I would like to conclude by saying thank you to Gabriel and Rene for your comments, and thank you everyone for attending our call. I will now turn the call back to our operator.
Orlando Cabrales: Yes.
Orlando Cabrales: Can be no guarantee that the strategic review process will result.
Orlando Cabrales: Results in a transaction.
Orlando Cabrales: With that I would like to conclude by saying Thank you to the arena dynamically comments and thank you everyone for attending our call.
Orlando Cabrales: I will now turn the call back to our operator.
Operator: Thank you. At this time, for those wishing to ask a question, please press star, then number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A lists. Your first question comes from Anne Mouw, from Bank of America. Please go ahead.
Orlando Cabrales: Thank you at this time for dose with safe to ask a question. Please press Star then the number one on your telephone keypad. Please pause for just a moment to compile the Q&A Rob.
Anne Jean Milne: Your first question comes from and Mt.
Anne Jean Milne: From Bank of America. Please go ahead.
Anne Jean Milne: Hi, good afternoon. Thank you very much for the call today and thank you for outlining some of your strategic initiatives that you're focusing on. I have two questions. One is sort of a broad question, and the other is a little bit more specific.
Anne Jean Milne: Hi, good afternoon. Thank you very much for the call today and thank you for outlining some of your strategic initiatives that you're focusing on.
Anne Jean Milne: I have two questions. One is sort of a broad question and the other is a little bit more specific.
Anne Jean Milne: The first one has to do with, I guess, the strategy for your bonds. They are one of the cheapest long-term bonds among the independents in Latin America and in Colombia, which sort of mystifies me because you have a good diversified asset base and you have good cash flow and relatively low leverage. At some point, would you consider doing either more of a buyback or an exchange for something, maybe more amortizing or something, just so you can be more in line with your peer group?
Anne Jean Milne: The first one has to do with I.
Anne Jean Milne: I guess the strategy towards your bonds. There are one of the cheapest swung him on the independence in Latin America and in Colombia.
Anne Jean Milne: Which sort of Mr. <unk>, maybe because you have a good diversified asset base.
Anne Jean Milne: And you have good cash flow and relatively low leverage.
Anne Jean Milne: At some point would you consider doing either but more of a buyback or in exchange for something maybe more amortizing or something.
Anne Jean Milne: So you can be more in line with your peer group I think that we could also eventually help your equity valuation that people are less concerned about about the debt and that there might not be any hidden problems. So that sort of a very generalized question.
Anne Jean Milne: I think that could also eventually help your equity valuation if people are less concerned about the debt and that there might not be any hidden problems. That's sort of a very generalized question. The second one, I think, has to do with the initiative that you outlined in your press release, which is looking at alternatives for your infrastructure assets. I just wondered if you have any idea of what the range of multiples is for this type of business in Latin America. Thank you very much.
Anne Jean Milne: The second one I think has to do with the.
Anne Jean Milne: Initiatives that you outlined in your press release switches for looking at alternatives for your infrastructure assets and just wondering if you have any idea of what.
Anne Jean Milne: The range of multiples are for this type of business in Latin America.
Anne Jean Milne: Very much.
Rene Burgos Diaz: Hi Anne, thank you very much for your question. I think I'll tackle the first one.
Speaker Change: Hi, and thank you very much for your question.
Speaker Change: I think I'll tackle the first one first.
Speaker Change: Bond strategy that we've been entered Q1 with very upfront that we are going to continue to seek out alternative path to maximize value to all of our stakeholders.
Rene Burgos Diaz: First, our bond strategy. I think that we've been in tune with very upfront that we're going to continue to seek out alternatives for us to maximize value to all of our stakeholders. You know, right now, we're very comfortable with our bonds at 2028 maturity. We're certainly disappointed with the overall trading levels, but we're going to keep an eye on it and, you know, proactively kind of do what's in the best interest of the company, shareholders, and also its stakeholders.
Speaker Change: Yeah, right now, we're very comfortable with our bonds at 2028 maturity. We're certainly disappointed with the overall trading levels were going to keep an eye and proactively cannot do what's in the best interest of the company shareholders analysts at stakeholders. Thus far this year, we've acquired roughly $1 5 million emotional and looking forward we will.
Rene Burgos Diaz: So, as far as this year, we've acquired roughly $1.5 million in nominal value. And, you know, looking forward, we will continue, kind of just, as our chairman laid out, seeking out opportunities to see where our best dollars are invested to maximize that value. As it relates to the infrastructure initiative, that is a very good question and one that we believe, which is what Orlando highlighted in his portion of the call when he said that the value of these assets is not reflected in our stock price today.
Rene Burgos Diaz: Can you kind of adjust.
Rene Burgos Diaz: As our chairman laid out seek out opportunities to see where our best dollar invested to maximize that value.
Rene Burgos Diaz: As it relates to the infrastructure initiative.
Rene Burgos Diaz: But I think a very good question and one that we believe.
Rene Burgos Diaz: This is on water lundell highlighted in his portion of the call. When you said that the value of these assets are not reflected in our stock price today.
Rene Burgos Diaz: These are assets, and perhaps when I compare to where our companies trade in the oil and gas field, you see oil and gas players trading through cash flow anywhere from two to three times, depending on the oil price cycle. We believe that these are assets that trade much higher than that, and we believe through this exercise, we're going to be able to unlock some of that value. I think that you can probably help me better by giving me some indications as to what you really think if you follow a lot of these market players.
Rene Burgos Diaz: These are assets and perhaps when I compare it to where our companies trade in the oil and gas VLCC oil and gas players trading to cash flow and Europe, probably two to three times, depending on the oil price cycle. We believe that these are assets that trade much higher than that and we believe through this exercise we are going to be able to unlock some of that value.
Rene Burgos Diaz: I think you can probably help me better by giving you some indications as to what you think the value product and follow a lot of these market players, but what we can say confidently that these assets better predictability as it relates to their cash flows chip Merritt a much higher multiple than what from tariffs over the west half.
Rene Burgos Diaz: But what we can say confidently is that these assets, their predictability to relate to their cash flows, should merit a much higher multiple than what Frontera would otherwise have. Yes, and maybe, if I may, just to build on what Rene said, and I think Gabriel emphasized this in his remarks, is that looking ahead, we will consider different shareholder initiatives, including for 2024 and beyond, of course, including potential additional dividends, distributions, or bond buybacks.
Speaker Change: Yes, maybe if I may just to build on what or what.
Speaker Change: And I think.
Rene Burgos Diaz: I would again emphasize these Indian in his remarks is that is that looking ahead, we will consider we consider different shareholder initiatives.
Rene Burgos Diaz: Including <unk> 24, and beyond of course, including potential additional divisions.
Rene Burgos Diaz: Distributions of bond buybacks.
Rene Burgos Diaz: So your companies will take... and the other colonies, we believe that the infrastructure asset has significant cash generation and different catalysts for long-term growth in those assets. So we're excited about it and ready to start working on this process.
Rene Burgos Diaz: <unk> taken on.
Rene Burgos Diaz: And the oil companies.
Rene Burgos Diaz: We really believe that the use of infrastructure assets.
Rene Burgos Diaz: Uh huh.
Rene Burgos Diaz: Significant.
Rene Burgos Diaz: Cash generation.
Rene Burgos Diaz: Different capital needs for long term growth.
Rene Burgos Diaz: In those in those assets. So we're excited about it.
Rene Burgos Diaz: I'm very pleased with our working on this process.
Speaker Change: Okay. Thank you.
Operator: Your next question comes from Oriana Covault from Balance. Please go ahead.
Rene Burgos Diaz: Your next question comes from Oriana Commvault from Bobbins. Please go ahead.
Oriana Covault: Hi, thanks for taking my questions. This is Oriana Covault with Balance.
Oriana Covault: Hi, Thanks for taking my questions. This is identical with balance I have two questions mainly the first one is a follow up on your announcement on this.
Oriana Covault: I mainly have two questions. The first one is a follow-up on your announcement about this evaluation of strategic opportunities. So, we read about these plans to monetize or spin off these assets, and we agree that it seems like a great way to unlock value for shareholders, given the different valuation multiples. We were just wondering if, in the case of a sale of these assets, or even a portion of the equity to be spun off the vehicle, does the indenture of your bonds or other debt documents mandate you to use the proceeds to repay debt, at least partially, or would this be something that you'd consider doing voluntarily, applying any eventual proceeds to bond buybacks?
Oriana Covault: Thanks.
Oriana Covault: <unk> strategic approach opportunity. So we're at about these plans to monetize Christina this assets.
Oriana Covault: We agree that it seems like a great way to unlock value for shareholders given the different valuation multiples. We would just wondering is indication of a sale of these assets or even a portion of the equity to be spun off the vehicle.
Oriana Covault: This deemed answer on your bonds or other Deb documents mandate to use the proceeds to repay debt at least partially or would this be something that you'd consider.
Oriana Covault: Sure.
Oriana Covault: Tiny.
Oriana Covault: Applying any eventual proceeds to fund buybacks.
Rene Burgos Diaz: Thank you, Oriana. On the bond, I'm sorry, on the potential profits... from us from a sale of these assets and the ability to repay that bond. It's a terrific question. I'll remind you that these are unrestricted subsidiaries of our bond. So there is no obligation of the company to use these proceeds to repay the bond. However, as I alluded earlier, we are looking at ways, and I think our chairman said it, our CEO said it, of generating funding for all of our stakeholders. So certainly, it would be a consideration, but it's certainly not an obligation.
Speaker Change: Thank you Deanna on the ban on sorry on the potential proceeds from us from a sale of these assets and the ability to.
Rene Burgos Diaz: Prepaid backed bonds.
Oriana Covault: Perfect, that's completely clear. Thanks, Rene.
Rene Burgos Diaz: It's a terrific question I'll remind you that these are unrestricted subsidiary our bond.
Oriana Covault: So.
Oriana Covault: There is no obligation.
Oriana Covault: Company.
Oriana Covault: To use these proceeds to repay the bond however.
Oriana Covault: Alluded earlier.
Oriana Covault: We are looking at.
Oriana Covault: And I think our chairman our.
Oriana Covault: Our CEO said it of gathering volumes for all of our stakeholders. So certainly it would be a consideration, but it's certainly not an obligation.
Orlando Cabrales: And just on the quarterly performance, just turning more on the production side of the angle, we noticed that it's running a tad below the low end of guidance. So, could you perhaps share some more color on the catalyst to drive production with the guidance in the upcoming quarters? Thanks.
Oriana Covault: Perfect Thats the company, indicating Miller and.
Orlando Cabrales: Just.
Orlando Cabrales: On the quarterly performance.
Orlando Cabrales: Just any more on the production side of yellow, we noticed that it's running a tad below the low end of guidance. If you could perhaps share some more color on <unk>.
Orlando Cabrales: Catalysts to drive production related guidance in the upcoming quarters.
Orlando Cabrales: Yes, well, as I said in my remarks, we are reiterating today our production and capital guidance. And basically, the additional production that we are seeing coming up in the following months is, as I mentioned, many, many. I mean, the first one is the new injector well in Quilpa, which is coming online very, very soon. We are also increasing the water handling capacity of CP6 from 240,000 to 360,000 in the next months as well. And as I mentioned, just to reiterate, we are seeing, again, record production in CP6.
Orlando Cabrales: Yes.
Orlando Cabrales: As I said in my in my in my remarks, we are ready to embrace the.
Orlando Cabrales: Raising today.
Orlando Cabrales: Our production and capital guidance.
Orlando Cabrales: Basically the additional production that we are seeing coming coming up in the in the following months.
Orlando Cabrales: Our as I mentioned.
Orlando Cabrales: Randy maybe ones I mean, the first one.
Orlando Cabrales: Is there is a new injector well in <unk>, which is coming online very very soon.
Orlando Cabrales: The early days.
Orlando Cabrales: We're also increasing.
Orlando Cabrales: The water handling capacity of CPC.
Orlando Cabrales: 240000 to 360 in the following months as well and as I mentioned just to reiterate we are we have seen again record production statistics.
Orlando Cabrales: And we are starting, and we expect to start, the Sahara facility in the second quarter after reaching an agreement, in principle, with Petrol on a two-year contract. So that will allow us to increase the water handling capacity for Quilpa to 250,000 barrels per day. So that is another one. The other one is in V1.
Orlando Cabrales: And we are starting and we expect to start.
Orlando Cabrales: The decider facility.
Orlando Cabrales: In the second quarter.
Orlando Cabrales: After reaching an agreement in principle with a return on our.
Orlando Cabrales: On a two years three years contract so that will allow us.
Orlando Cabrales: To increase.
Orlando Cabrales: Handling capacity 45 to 250000 barrels per day. So that is that is another one.
Orlando Cabrales: As I said, we are increasing our gas project compression facilities in V1. So that means more liquid production and some gas production. And we are also doing work order and work services activities in our light and medium blocks. So with those activities in mind, we feel comfortable today that we can reiterate our production guidance.
Orlando Cabrales: The only ones in the one as I said, we are increasing our our gas project compression facilities in June one so that will.
Orlando Cabrales: That means more liquids production and so on gas production.
Orlando Cabrales: And we're also doing work over on well services.
Orlando Cabrales: The activities.
Orlando Cabrales: In our in our light and medium blocks, so we dose abilities in mind.
Orlando Cabrales: We feel comfortable today that we congratulate our production guidance.
Oriana Covault: Perfect. That's completely clear. Thanks very much again, guys.
Speaker Change: Perfect that's coming into clear thanks, very much again.
Operator: Your next question comes from Ronan Rossi from Canaccord Junity.
Speaker Change: Thank you.
Roman Rossi Lores: Thank you. Our next question comes from Ron Rossi from Canaccord Genuity. Please go ahead.
Roman Rossi Lores: Good morning, guys, and thanks for taking the questions. I have a couple.
Roman Rossi Lores: Good morning, guys and thanks for taking the questions.
Roman Rossi Lores: I had a couple so the first one is regarding the wealth failures you mentioned in the remarks with government sorry to interrupt you.
Operator: So, the first one is regarding the wealth failures you mentioned. Roman, Roman, Roman, sorry to interrupt you. Hey, Roman, sorry to interrupt you. I'm having really trouble hearing you. You either have to back away from your phone, you sound muffled, or speak louder.
Speaker Change: We can directly I'm, having trouble hearing if you either had to back away from your phone some muscle.
Operator: <unk>.
Roman Rossi Lores: Okay, can you hear me better now? That's better. Thank you. Okay. So regarding the well failures you mentioned in your disclosure, just wanted to get a sense of the quantity of barrels that you lost and if all the production is back online.
Roman: Okay. Thank you gave me better now.
Roman Rossi Lores: That's better.
Roman Rossi Lores: Okay.
Roman Rossi Lores: Regarding the weld failures, you mentioned in your disclosure.
Roman Rossi Lores: Just wanted to get a sense on the quantity of the barrels that you loss.
Roman Rossi Lores: And.
Speaker Change: All of the production is back online.
Orlando Cabrales: Yes, production is back online. Those were unexpected failures, and with this additional activity that I mentioned earlier, work on world services, we are expecting to increase production in that aspect.
Roman Rossi Lores: Yes.
Orlando Cabrales: Election, the brochure is back online so those were unexpected failures.
Orlando Cabrales: With this additional activity that I mentioned earlier.
Speaker Change: Well I'll tell you this.
Orlando Cabrales: We are expected to increase productivity goals in that asset.
Roman Rossi Lores: Okay, and the second is regarding the Reficar connection. What are you expecting to compete against, and can you give us a sense on, you know, topics on a quarterly basis, given that you still have like $40 million to deploy during this year?
Orlando Cabrales: Okay.
Orlando Cabrales: And particularly regarding the reticle connection.
Roman Rossi Lores: Are you sticking to compete and Danny.
Speaker Change: Can you give us a sense on.
Roman Rossi Lores: Capex on a quarterly basis, given that you still have like 40 million to deploy during this year.
Orlando Cabrales: What is that recording again? I didn't understand that. Can you repeat that? You asked about the replica connection, but you asked another thing, which I didn't understand.
Roman Rossi Lores: One example, immediately within that.
Orlando Cabrales: It would be that you have.
Orlando Cabrales: About the electrical connections that you add one other thing, which I didn't understand.
Roman Rossi Lores: The second part is regarding quarterly CAPEX, as you have $40 million to deploy yet.
Orlando Cabrales: The second part is regarding.
Roman Rossi Lores: Quarterly Capex, so you have $40 million to deploy yet.
Orlando Cabrales: Okay, let me start with the reticle connection. The reticle connection is going very well. We are still planning to end the construction of the connection by the end of this year, as we have mentioned before. So that is on track, consistent with our plan. We have been making progress on different fronts, such as right-of-way negotiations and the awarding of the EPC contract. So we are on track to finalize the connection by the end of the year.
Roman Rossi Lores: Okay.
Orlando Cabrales: Let me start with the <unk>.
Orlando Cabrales: With the rapid car connection.
Orlando Cabrales: The reticle conventionally.
Orlando Cabrales: <unk> is going very well.
Orlando Cabrales: We I assume.
Orlando Cabrales: Planning to blend.
Orlando Cabrales: The construction of the connections by the end of this year as as we as we have mentioned mentioned before so that is that is on track.
Orlando Cabrales: Consistent with our plan.
Orlando Cabrales: We have been making progress on different on different fronts.
Orlando Cabrales: Right of way negotiations awarding of the EPC contract.
Orlando Cabrales: So we are we are we are on track to finalize the connection bye Bye bye bye at the end of the of the year.
Orlando Cabrales: On the other question, you also need to look at the bulk of our CapEx because I think you're focusing on the drilling campaign. And the drilling campaign, as it was alluded to, is going on strong, but a significant part of our drilling campaign is the associated facilities. And some of those just require that interconnection, flow lines, et cetera, to get everything to properly connect and to produce.
Orlando Cabrales: On the other.
Orlando Cabrales: Your question <unk> to look at the bulk of our Capex because I think you are progressing in the drilling campaign in the drilling campaign as it was alluded to in going on strong, but a significant part of our drilling campaign and the associated facilities and some of those just require that interconnection flow lines et cetera to get everything too.
Rene Burgos Diaz: So today, we've invested roughly $54 out of the $180-$210 million of the total program. I think that was your question. We can get more clarity, if you would like. Go ahead. Thank you. Your next question comes from Cameron Ross.
Cameron Ross: Preferably connect and to produce so to date, we've invested roughly $54 million out of the $180 million to $110 million of the total program either that was your question. We can get more clarity if you would like.
Cameron Ross: Thank you.
Operator: Your next question comes from Cameron Ross from Mangrove Partners. Please go ahead. Good afternoon.
Rene Burgos Diaz: Your next question comes from Cameron Ross from mangrove partners. Please go ahead.
Cameron Ross: Good afternoon.
Cameron Ross: I was hoping you could talk about the tax implications of a spin versus asset sale of the infrastructure asset in light of assets in light of the Nols at the company.
Cameron Ross: That's a very good question. Look, we're exploring the different alternatives. Ultimately, there is a... I don't have a set response to you.
Cameron Ross: That's a very good question look we're exploring different alternatives.
Cameron Ross: Ultimately there is a.
Cameron Ross: We'll have a response to you.
Rene Burgos Diaz: To be very transparent, that's the reason why we're doing this review today, or we're launching this review today. Ultimately, we're capable of distributing money to our shareholders. One, the second part of that answer is that every single asset has a certain tax basis, so it really does depend on the price at which it's struck and the value generated at that, and then how that money is mobilized and distributed. But in the coming quarters, we're hoping to give all of our investors a better picture of how that will look.
Speaker Change: To be very very transparent that we can what we are doing distribute today.
Rene Burgos Diaz: Launching distribute today.
Rene Burgos Diaz: Ultimately, we're capable of this few bidding discipline.
Rene Burgos Diaz: Distributing value to our shareholders.
Rene Burgos Diaz: One the second part of that answer is that every single asset has a certain tax basis. So it really does depend on the price, which is struck and the value generated at that and then how that money is mobilized and distributed.
Rene Burgos Diaz: But in the coming quarter, we're hoping to give all of our investors a better picture of that.
Rene Burgos Diaz: What I can say is that to the extent that we do have a cash transaction for any of our assets, we do not see an impediment to being able to deliver value associated with that cash to our investors. Okay, thank you.
Rene Burgos Diaz: That will look like.
Rene Burgos Diaz: All I can say is that to the extent that we do have.
Rene Burgos Diaz: A cash transaction for any of our assets, we do not see an impediment to be able to deliver value associated our cash to our investors.
Rene Burgos Diaz: Okay. Thank you.
Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star 1. There are no further questions at this time. Should you have any further questions, please email IR at FronteraEnergy.ca. This concludes the call. Thank you for joining us, and you may now disconnect.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
Operator: And there are no further questions at this time should you have any further questions. Please email IR at front center of energy that CA. This concludes the call. Thank you for joining and you may now disconnect.
Operator: Okay.
Operator: [music].