Q3 2024 Frontera Energy Corp Earnings Call
Carlos Garcia-Ruiz Eduardo Diaz Carlos Garcia-Ruiz Carlos Garcia-Ruiz
Guadalupe Hayketeke: Guadalupe Hayketeke constitutional liberty and putting NOTHING on the line Guadalupe Hayketeke It's the freedom, even the most universal pride Guadalupe Hayketeke
We'll have another conversation. Have a wonderful day. BRUNO WIBG
Speaker Change: Good morning. My name is Ludi, and I'll be your conference facilitator today. Welcome to Frontera Energy's 3rd Quarter 2024 Operating and Financial Results Conference Call.
All lines are currently on mute to prevent any background noise.
Guadalupe Hayketeke: I would 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 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
Guadalupe Hayketeke: 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, beliefs of the company based on information currently available to it.
Guadalupe Hayketeke: Although the company believes the assumptions are reasonable, forward-looking information is not a guarantee of future performance.
Guadalupe Hayketeke: 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.
Guadalupe Hayketeke: The company's MDNA for the quarter ended September 30, 2024, and the company's annual information form dated March 7, 2024 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.
Guadalupe Hayketeke: 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.
Speaker Change: I would now like to turn the call over to Mr. Gabriel D'Alba, Chairman of the Board of Frontera Energy. Mr. D'Alba, please go ahead. Thank you. Good afternoon, everyone. My name is Gabriel D'Alba. I am the Chairman of the Board of Frontera Energy. I would like to welcome you all to today's event. I would now like to turn the call over to Mr. Gabriel D'Alba, Chairman of the Board of Frontera Energy.
Speaker Change: Thank you, operator. Good morning, everyone, and welcome to Fonterra's third quarter 2024 Operating and Financial Results Conference call.
Speaker Change: Joining me on the call today are Orlando Cabrales, Fonterra's CEO, and Rene Burgos, Fonterra's CFO.
Speaker Change: Also available to answer questions at the end of the call, we have...
Speaker Change: Victor Vega, VP Field Development, Reservoir Management and Exploration Alejandra Bonilla, General Counsel Ivan Arevalo, VP Operations and Renata Campagnaro, VP Marketing, Logistics and Business Sustainability
Thank you for joining us.
Speaker Change: For there remains focus on the execution of strategic objectives and priorities, which is upstream, infrastructure, and Guyana business segment.
Speaker Change: The company's upstream business continues to perform according to plan, overcoming unforeseen social issues during the year.
Speaker Change: The company is gaining momentum with crude production ramping up to average over 42,300 barrels per day so far in the forecourt. And the company is targeting forecourt average daily production above 42,500 barrels per day.
Speaker Change: and its standalone and growing infrastructure business, the company continues to advance the Strategic Alternatives Review in large areas this year.
Speaker Change: This process is actively ongoing with a virtual data room open and discussions with interested third parties underway.
Speaker Change: The company remains particularly excited about the long-term prospects of its Puerto Marían liquids and dry cargo port facility and its strong pipeline of catalysts, including the Replicar Connection, as well as the recently announced LPG Input Project with its JV partner, GASCO.
Speaker Change: With respect to his cadena assets, the company and its joint venture partner remain committed to potential development of the current-time block, as supported by the recent discoveries.
Speaker Change: While the company remains confident about the exciting potential of the Corinthian Block, it is reviewing all available alternatives to safeguard its interest in the Block and Guyana.
Speaker Change: Turning briefly to Fonterra's financial health, I'm pleased to report that subsequent to the quarter, S&P reaffirmed the company's credit rating at B, with a stable outlook, reflecting Fonterra's strong credit quality and financial position, underpinned by the company's low leverage.
Speaker Change: The company ended this quarter with a total debt of $531.2 million and a healthy cash position, including restricted cash of $240.3 million.
Speaker Change: for their historic financial position has supported the company's ability to deliver significant shareholder returns in 2021.
Speaker Change: Notably, after the quarter and with significant shareholder take-up, the company successfully executed on its $30 million SID, which saw over 90% of the company's shareholders participate.
Speaker Change: 3.9 million in declared quarterly dividends and 7.8 million to the repurchase of its common shares through the NCIB for an estimated aggregate yield of 100%.
Speaker Change: In addition to our quarterly dividends, the company announced yesterday its intentions to commence a new substantial e-service of up to $30 million, pursuant to which the company will offer to purchase, for cancellation, a portion of its common shares at a fixed price per share.
Speaker Change: The terms of the new SIV, including pricing, shall be communicated in due course, and the company expects that the new SIV will be completed in January 2025.
Speaker Change: From there, remain committed to unlocking value for stakeholders, including potential additional dividends, shared buybacks, distributions, or bond buybacks, which will be based on the company's results, capital generation, and the company's strategic goals.
Speaker Change: Thank you, Gabriel. Good morning, everyone, and thank you for joining us for today's call.
Speaker Change: Frontera delivered another strong quarter, generating $16.6 million in net income and $103.2 million in operating EBITDA, in line with our plan.
Speaker Change: Despite lower average rent prices and certain unexpected events that occurred during the quarter.
Speaker Change: We remain on track to meet our 2024 production and edit guidance.
Rene Diaz, Gabriel Alba, Orlando Segovia
to 40,616 DOE per day.
Speaker Change: driven by strong performance from the company's heavy oil assets as we completed successfully drilling campaigns in both the CP6 and Salonero blocks.
Speaker Change: An increased water disposal capacity in the CPE-6 block, where the company achieved another daily production record reaching 8,810 pallets per day.
Speaker Change: We increase our light and medium crude oil production, driven by improved performance in Ecuador, and where intervention activity performed during the first half of the year, which helped maintain light and medium crude production levels.
Speaker Change: We also increased our natural gas liquid production during the quarter with the completion and start-up of the compression facilities expansion and gas re-injection projects at our BIM 1 block.
Speaker Change: Following the completion of the BIM-1 gas re-injection project, natural gas volumes produced at BIM-1 were re-injected, reducing natural gas production and sales volumes.
[inaudible]
Speaker Change: And I am very pleased to report that our four-quarter production has averaged 42,300 barrels per day.
Speaker Change: We invested approximately 82 million dollars in capital expenditures during the quarter, primarily to drill 15 development wells at Kifa, CP6, and Sabaher.
Speaker Change: At Kifan, the company invested in new flowline facilities for new well production and connection for the Sahara project.
Speaker Change: Also invested in the development facilities and increasing water handling capacity at the CP6 block.
[inaudible]
Speaker Change: At the B1 block, all pre-drill activities related to civil work for the platform and roads were completed for the ERA-1 exploration well.
Speaker Change: However, exploration drilling activities are expected to resume early next year following delays associated to social issues.
Speaker Change: Additionally, two new exploration wells were sanctioned for the Cachicamo block.
expected to start in the fourth quarter of this year.
Speaker Change: The company is also engaged in pre-seismic and pre-drilling activities related to social and environmental studies in the YAML-99 and B-46 blocks.
Speaker Change: In Ecuador, in our Perico block, perform two work hours and one well service to increase production during the quarter.
Speaker Change: Furthermore, as part of our continuing drive to simplify our business,
Speaker Change: Frontera and the AMH mutually agreed to terminate CAR 15 and CAR 16 blocks exploration contracts.
Speaker Change: due to long-standing social and security restrictions in the contracted areas.
Reducing the company's exploration commitments by $53 million.
Speaker Change: In our infrastructure business, ODL continues to deliver strong operational and financial results, generating $68 million of EBITDA for the quarter.
Speaker Change: Net distribution to Frontera amounted to $12 million during the quarter, totaling $43 million year-to-date.
Speaker Change: At our Sahara project, we are currently processing approximately 50,000 bottles of water per day and expect to grow water handling capacity to 250,000 bottles by year-end, boosting heavy crude oil production at the Kifa block.
Speaker Change: I would now like to turn the call over to Rene Burgos, Fronteras CFO.
Rene Burgos: Thank you, Orlando. I'd like to take a moment to highlight a few key financial aspects of our third quarter results.
Speaker Change: For the third quarter, the company recorded a net income of $16.6 million, or $0.20 per share.
Speaker Change: Plus, from their shares of income from Associates of $13 million from its share of income from ODL.
Speaker Change: and 6 million in income related to risk management contracts primarily related to our FX hedging positions.
Speaker Change: His incomes were offset primarily by roughly $18 million in net finance expenses and approximately $10 million in income tax expenses, including $4 million in deferred income taxes.
Speaker Change: Operating EBITDA for the quarter was approximately $103 million dollars. Compared to the prior quarter, our EBITDA was affected by lower realization price and higher transportation costs, partially offset by lower production costs during the quarter.
Speaker Change: So far this year, Fruntera has generated $311 million in operating EBITDA and remains on track to meet its 2024 consolidated operating EBITDA guidance of $400 and $450 million at $80 barrel rent average price for the year.
Speaker Change: From a barrel standpoint, I would like to take a moment to share the key indicators related to our realized prices and costs.
Speaker Change: During the quarter, we saw weighted average Brent sales prices for Prometa were $77.95 and an average Vascone de French Rope on our export sales of $4.92.
Speaker Change: For the third quarter, the purchase credit margin was $3.05, higher than the $2.13 for the prior quarter.
Speaker Change: The quarter-over-quarter variance was the result of higher diminution needs for our heavy oil assets.
Speaker Change: Taking a closer look at our operating costs, our production, energy, and transportation costs per barrel for the quarter totaled $8.88, $5.11, and $12.12 respectively.
Speaker Change: This compares to $10.79, $4.74, and $10.92 in the per quarter.
Speaker Change: The decrease in production costs quarter over quarter were driven primarily by higher production as well as lower well inservation activity during the quarter.
Speaker Change: On the energy front, the increase was a result of higher energy use during the quarter due to increased production from our heavy oil assets.
Speaker Change: On transportation costs, costs increased during the quarter due to trucking and pipeline care increases that occurred, as well as higher volumes transported.
Speaker Change: Our operating net back in the third quarter was $40.59 per VLE compared with $46.40 per VLE in the third quarter.
Speaker Change: The decrease was mainly a result of lower realized prices driven by lower benchmark oil prices, which fell over $6 on a quarter-over-quarter basis.
Speaker Change: Partially upset by lower royalties, pain in cash, and lower production costs. Unknown participant is now joining. ...continue to show cash generation in the third quarter.
With cash flows from operations totaling $124 million.
Speaker Change: including a $90 million tax refund associated with the company's 2023 income tax return and the receipt of $12 million in dividend and capital payments from ODL.
Speaker Change: On the infrastructure side, adjusted infrastructure EBITDA in the second quarter of 2024 was $26.2 million compared with $27.8 million in the prior quarter.
Speaker Change: The quarter-over-quarter decrease was primarily due to lower liquid volumes, due in part to severe weather conditions, and an increase in cost and GME expenses in ODL.
Speaker Change: Digital Inflationary Pressures on Services and Wages Indexation. We expect these conditions to improve during the 4th quarter for both ODL and Puerto Vallarta.
Speaker Change: ODL volumes transported were 244,000 barrels per day during the third quarter, compared to 249,000 in the second quarter, mainly due to lower volumes transported from the Janus 34 block.
Speaker Change: As of September 30, 2024, the company reported a total cash deficit of $240 million, including $206 million in unrestricted cash.
Speaker Change: Turning now to risk management, our current risk management strategy continues to show how our heading disciplines support our operations and planning.
Speaker Change: Fonterra uses derivative instruments to manage exposure to alt price and FX volatility.
Speaker Change: On the oil side, the company entered into hedges, successfully securing a 40% hedging ratio until February 2025, protecting against a potential drop in oil prices.
Speaker Change: For the remainder of 2024, the company has hedged with strike prices between $75 and $78 spread. For 2025, the company has entered into hedges at $70 spread for January and February.
Speaker Change: Fonterra has also entered into four exchange rate hedges totaling $220 million, covering 40% of the company's expected peso exposure up to the third quarter of 2025, with puts between $4,100 pesos and $4,200 peso rates.
and others. Thank you. Bye bye.
Bye-bye. Bye.
Thank you. Bye.
Thank you. Thank you.
All right, we're back.
Speaker Change: These hedges provide the company with stability and will help mitigate impacts from future fluctuations while allowing the business to deliver on its targets.
Speaker Change: Finally, I'd like to provide an update on our Stakeholder Value Initiative. Under the current NTAB, which commenced on November 21st, 2023, the company has refurged approximately 1.6 million common shares, or just over 2% of our total common shares outstanding for cancellation, for approximately $9.5 million after November 7th.
Speaker Change: For data announced, they will file with the TSX a Notice of Intention to commence a new SID once the current one expires.
Speaker Change: With respect to our portal we visited on October 16th, we paid approximately 3.9 million dollars or 6.25 cents per share of Canadian to shareholders.
Speaker Change: Together with yesterday's results announcement, the board declared a quarterly dividend of $6.25 per share of Canadians being able to shareholders of record as of January 3rd, 2025 on and around January 17th, 2025.
Speaker Change: Additionally, the company recently announced the successful completion of its SIB announcement in August of this year. The company purchased for cancellation close to 3.4 million common shares for an aggregate consideration of $30 million at a fixed price of $12 CAD per share. The SIB was widely accepted as shown by the over 90% of the company's shareholders participating.
Speaker Change: Furthermore, From Theta also announced the intention to commence a new substantial issuer bid through which the company will offer to purchase up to $30 million of its common shares for cancellations at a fixed price.
Speaker Change: The terms of the new SIB, including price, will be determined in due course, and the company expects that it will be completed in January 2025. The SIB will not be conditional upon any minimum number of shares being tendered, and will be subject to conditions customary for a transaction of this nature.
Speaker Change: The company believes this format is the most efficient means to achieve a capital to all of our shareholders and looks forward to launching this process in the next few weeks. I would like to turn the call back now to Orlando.
Orlando Cabrales: Thank you Rene. Before I wrap up today's call, I would like to highlight that during the quarter, Frontera achieves 73% of its sustainability goals for the year.
Orlando Cabrales: Proterra made purchases from local suppliers that represent around 11% of its total purchases, exceeding our annual goal of 9%.
Orlando Cabrales: Additionally, our efforts to maintain close and empathic relationships with all of our stakeholders, including our employees.
Speaker Change: was recognized as Frontera received the Great Place to Work Award and ranked 17th as one of the best companies to work for in Colombia.
Speaker Change: Our work plan in favor of cyber security has been effective and we have managed to maintain our rate of material cyber security incidents at zero.
Speaker Change: And finally, we are continuing the strategic review process for our infrastructure business.
Orlando Cabrales: where a virtual beta room is available and discussions with potential third parties are ongoing.
Orlando Cabrales: In addition, to unlock value for Puerto Allia, where the construction of the connection to the Refical Refinery is over 60% completed.
Orlando Cabrales: And we are expecting that the connection shall become operational by the end of the year.
Orlando Cabrales: With respect to the LPG import project, working groups have been assembled and vehicle engineering work is underway.
Orlando Cabrales: On our Guyana business, as Gabriel said in his remarks, we remain confident about the potential development of the quarantine block as supported by our discoveries and are reviewing all available alternatives to safeguard our interests in the block and Guyana.
Speaker Change: With that, I would like to conclude by saying thank you to Gabriel and Rene for the comments and thank you everyone for attending our call.
Speaker Change: I will now turn the call back to our operator who will open up for questions.
Speaker Change: Thank you, and ladies and gentlemen, at this time, for those wishing to ask a question.
Speaker Change: Please press star followed by the number 1 on your telephone keypad.
[inaudible]
Speaker Change: And your first question comes from the line of Darshal Dema with Bloomberg Intelligence. Please go ahead.
Speaker Change: Hi, good morning Gabriel, Orlando, and Rene. Congratulations on a great quarter. I just wanted to ask you, I think the question which is on everyone's mind is, do you have any updates on the GIANA license and what are the alternative solutions you were mentioning you're going to explore?
Thank you.
Speaker Change: Well, thank you. Thank you for the question. As I mentioned, we remain committed to the potential development of the block.
And that belief is supported by the discourse.
Speaker Change: We are also confident that we have complied with all the obligations under the Petroleum Agreement and the Exploration License.
And as I said, we are reviewing different alternatives.
Speaker Change: to protect our interests in the license. So I don't have more to say at this point in time.
Speaker Change: And of course, we will continue counseling these matters with the borough.
Speaker Change: Okay, thank you. And do you have any timeline? When can we expect the next updates on Guyana, perhaps?
Speaker Change: We don't have a timeline at this point in time, no.
Speaker Change: Okay, thank you. And my second question is on production. I saw your production has been accelerating in October compared to already strong production from FreeQ. Do you see the same trends throughout the Q4 and perhaps early next year?
Speaker Change: Yes, as we said, we are envisioning that the four-quarter production would be above 40,000 to 500,000 barrels.
Speaker Change: So, we are confident based on the performance of the heavy oil assets.
Speaker Change: and the increasing in water handling capacity at CP6 and KIFA, as well as the performance of Sabanero. So we are confident for that.
Thank you.
Thank you. That's all for me now.
Thank you.
Speaker Change: And your next question comes from the line of Christian Farrow with KNG Securities. Please go ahead.
Christian Farrow: Hello, well thanks for the presentation and for taking the questions. I have four questions. I'd like to go quick.
Speaker Change: Are you seeing a normalization by the fourth quarter and should or should we expect these high values to to continue? That's the first question.
Okay, we are
Speaker Change: What we've been seeing in the market, I think you're going to see consistency. We do not expect a high variation. Actually, we are quite excited about the heavy crude mix because of current status of geopolitics. So the short term is we will probably continue to see the levels that we're seeing today.
Speaker Change: My second question is regarding this $90 million tax refund that you got this quarter.
Speaker Change: Could you provide us some color on the reason behind this and if we should expect any other tax refund for the incoming quarters?
That's a good question.
Speaker Change: So, as part of the ongoing process, we file taxes once a year. We file our taxes in early the first quarter, and then subsequently, if we're due a refund, that refund is managed during the year. So the payment that we received in July, or the third quarter, is associated with our 2023 income tax filing.
Speaker Change: What I will point to is that Forbidda has historically carried NOLs within its operation and you can see a balance of these within our deferred tax asset.
announced that we'd carry in our balance sheet.
Speaker Change: This year, we successfully were able to recover that amount onto our refund of, as we highlighted, moving forward, we still remain to have some additional deferred tax assets that we expect to capture next year.
Speaker Change: Alright, thank you. My third question is regarding this infrastructure business divestment. I want to know if you could comment a bit more on how the discussions are going and if you have any plans for the use of the proceeds in case you decide to go through with the sale or spinoff. Thanks.
Speaker Change: So I would say it's a little premature to talk about results. I think our goal here is to maximize the most value from these assets, and I think both Orlando and Gabriel said it well. We are positioning the company to unlock the most value for all of our investors.
Speaker Change: So as of today, I think Orlando highlighted that we have engaged counterparties in discussions. We have a virtual data room open and as soon as we have something to announce, we will announce it to the market and then kind of give them some guidance as to how would that be materialized.
Speaker Change: That said, and I think we also need to kind of, as our advisories point out, there is no guarantee that it certainly may occur. However, we are very excited about the potential value-unlocking associated from our infrastructure assets.
All right, thank you.
Speaker Change: And my last question is, what we've been seeing, heavy share repurchases over the past months. Are you planning on increasing your bond repurchases, considering the low price, so you can lock that profit in your P&L? Thanks.
Speaker Change: Orlando Segovia, Gabriel Alba, Orlando Segovia, Gabriel Alba, Orlando Segovia, Gabriel Alba,
Speaker Change: I think that, you know, both Orlando and also Gabriel highlighted that all options are on the table.
Speaker Change: One of the things that you know we're visualizing is how do we deploy the cash generated from our business.
Speaker Change: We are very excited about the results from the first SIB and even more excited about the results of the second SIB.
Speaker Change: We have actually bought some bonds in the past. I think today we bought roughly $5 million and we will continue to.
Speaker Change: if the market's available to continue to do some of those purchases. As to guidance going forward, it is certainly something on the radar, so you will need to kind of just stay tuned and see how this develops.
Alright, thank you so much.
Yep, thank you.
Speaker Change: And your next question comes from the line of Joaquin Robert with Balance Capital. Please go ahead.
Speaker Change: Thank you for the presentation. It was good to see ODL getting the tariff bump and we wanted to focus on this because we understood that inflation updates on regulated crude tools have been suspended until Integral started to do it. You've been a little muffled. I'm sorry to interrupt you but I really want to hear your question. Can you perhaps like speak a little bit more clearly in the phone on me?
Can you try again?
This is Better Yet.
Speaker Change: Okay, good. So it was good to see ODL getting the tariff bump and we wanted to focus on this because we understood that inflation updates on regulated crude tolls.
have been suspended until integral tariff revisions took place.
Speaker Change: Or at least that was the case for SENSA. Is that suspension over or the ODL pipe has a different remuneration scheme? If the latter is the case, was the bump related to an inflation update or an integral tariff review or a contractual change with offtakers?
Speaker Change: Look, that's a terrific question and what I would say is excited to hear questions about our very exciting infrastructure assets in these calls.
Speaker Change: The tariff adjustment is in recognition from the government. There have been no adjustments as ordinarily scheduled.
Speaker Change: Ordinarily, the review should have happened two years ago. It didn't happen. The government currently is reviewing the framework under which some of these tariffs are adjusted.
Speaker Change: And at the request of the pipeline operators, it granted this adjustment, which by the way doesn't cover the full path of inflation, but rather a portion of the inflation that we've seen over the past couple of years.
Speaker Change: As an interim step, while the full process continues to be vetted by all the stakeholders, is being consumers of pipelines, pipeline operators, and the government.
So, to answer your question, no, there is no...
Speaker Change: There is no final, there's no final, there's no completed tariff adjustment. It's ongoing. Yes, the tariffs were adjusted for both OSINSA and ODL. ODL starts at, on September, and OSINSA starts in January. And we continue to see an eye as to how this develops.
Speaker Change: I would say this is very positive for our pipeline business, but not so positive for our oil business. So there's a balance here, but again, we're excited to receive this question and thank you very much for it. Hopefully that clarifies your...
Your doubt.
Yes, thank you.
Juan Villegas, you might be on mute.
Juan Villegas: Yeah, do you hear me? Is it better now? Is it better?
Hello? Yes, we're listening.
Yes, perfect. Thank you very much. Congrats for the results.
Speaker Change: Is it anything, anything that you could share regarding like number of people like in the data room is the data room still open for potential new buyers or any timing of it? Anything you can share on that?
Speaker Change: That's the first question. And then the second question is regarding Puerto Aya. I know that Puerto Aya has a little bit more than a hundred million dollars linked to that port. Just confirming that any potential...
Speaker Change: said divestment would be together with that debt, right? And then I have a final question about maybe those together, if you can.
Speaker Change: Let me take the first one and Rene can take the second one. As I said, and Gabriel said it as well, the VDR is open. We are having active participation from different interested parties.
Speaker Change: and discussions are ongoing and nothing more that we can report at this point in time, but that is the indication that we are getting to it.
Okay.
And Juan, on your second question about the debt.
Speaker Change: So just to clarify, the company has roughly a hundred, actually it's a hundred and ten million dollars of debt today.
Speaker Change: That debt sits at our infrastructure holding company called Pipeline Investment Limited, which is the owner of our ODL shares, and it's also part owner of our interest in Puerto Vallarta, because we hold Puerto Vallarta to different vehicles.
are 99.97% interest.
Speaker Change: Depending on the outcome of a transaction, that debt could certainly be fully repaid, but it would be outcome dependent.
Was that clever, your question?
Speaker Change: yes yes okay but but maybe maybe just to be sure so so there's no no chance that if if you sell it that that remains at frontera
at the holding together with the people.
Speaker Change: that there is not a frontera, that there is not a guarantee by frontera, so frontera acts as a sponsor in this transaction, not as a debtor or guarantor.
Speaker Change: Depending on the outcome of the transaction, there could be a piece of debt that remains, but it is outcome-dependent. It will ultimately depend on the transaction that the board chooses and moves forward on.
Speaker Change: And the last question is regarding 2025, are you sharing any sort of, I don't know, soft guidance or indication about CAPEX for next year and volumes?
Speaker Change: No, not at this point in time, we are working on that, so we will do it in the near future.
Speaker Change: Okay, and you cannot share if it will be lower or same or above the current level, right?
Speaker Change: Okay, I think the one thing that we already shared is how we're looking to end the year so we can point to where our production is. And I think that the other thing that I would add is that under Orlando and the board's leadership, our goal is on sustainable and cash flow over volume, so you should see more of the same. But again, we're finalizing numbers and having the discussions internally, and as soon as those are available, we will look to share that with the rest of the world.
Speaker Change: Okay, all right. I was referring in particular about COVID, sorry, but that's okay.
Okay, thank you very much.
Thank you, Juan. Thank you.
Speaker Change: Hi, thank you for taking my questions. Can you hear me?
Yes, sir.
Speaker Change: Perfect. I just have a couple of questions. Most of the questions have been already answered, but if you can give us some color of how much on share buybacks you've already done so far this year, and how much do you expect
Speaker Change: In a million dollars just under Sunday I'm out of nowhere, namely
Speaker Change: related to cash flow, you expect to do during the fourth quarter and the first quarter of 2025. If you can give me some color on that just to understand.
[inaudible]
Speaker Change: There is a question. So, so far this year, we've completed through the NCIB, and this is going to include some data from last year, right? Because we launched it in November.
Speaker Change: Well, we've done 1.6 million shares of our MTAB, roughly costing us a little bit under $10 million. In addition to that, we did the SAB that we completed in August, so we bought 3.4 million shares, so that's a total of 5 million shares.
Speaker Change: And we bought those shares for, again, $30 million. Subscribed to $40 million. And now we just announced today our intention to launch an additional SIV. We haven't arrived at a price for that SIV.
Speaker Change: only in amount or volume. We expect this to be widely accepted just like the other one was, but that will be for an additional $30 million for a total of, you know, close to $70 million. And that is, that's what's going to get us through at least through January of 2025.
Rene Diaz, Gabriel Alba, Orlando Segovia
Speaker Change: Perfect, so 30 million dollars we should say conditional cash flow that will be used to share buybacks until January 2025.
Okay, um...
Speaker Change: The next question is about the potential additional dividends. I know that you have $240 million in cash right now.
Speaker Change: In my notes, the SIB is an efficient way for us to distribute capital to all of our shareholders. And that's why when we think about...
Speaker Change: The level of participation of, I think it was 92% of all of our shareholders participated in our SIV.
Speaker Change: So we're using both dividends and SIVS as a means to return this capital to our shareholders in a way that we believe is most efficient.
Speaker Change: But again, to answer your question, we believe that we will continue with our quarterly dividends subject to any other decision that may be determined by our board.
Speaker Change: And I think that the message from Jules Rene, Gabriel, and myself have been clear in terms of that based on the company's results, the cash flow generation, and the strategic goals of the company.
Speaker Change: We will continue exploring the returns to our investors in shared buybacks, dividends, and bond buybacks.
Speaker Change: Okay, perfect. And the last question is when I look at your cash flow generation, I saw that around 60 million dollars in working capital pressures consumption there. Can you give us some color about that? If we'd be transitory?
Words related to that.
That's it. Thank you for taking my questions.
Thank you.
Speaker Change: And once again, if you would like to ask a question, please press the star one on your telephone keypad.
Speaker Change: Your next question comes from the line of Juan Cruz with Morgan Stanley. Please go ahead.
Good morning team Frontera, congrats on the results. Two questions.
Speaker Change: First one, with regards to the infrastructure asset sale, can you let us know if you're working with one potential buyer or is it multiple?
Speaker Change: potential acquirers as number one and number two, with regards to the bonds that you have purchased and intend to purchase going forward, is the intention to keep those bonds outstanding or do you want to cancel them?
Do you have a question, Mr. Alba?
Speaker Change: The second question is with regards to the bonds that you have purchased in the market and that you intend to purchase in the future, do you want to...
Speaker Change: Are you intending to keep those bonds outstanding or do you intend to cancel them?
Speaker Change: on the first one and you can play the second one, I mean it is a competitive process.
Speaker Change: So, it is a competitive process. Just to address your first question.
Speaker Change: Competitive means more than one, that's what I would assume. If you want me to get one dictionary, I can look up a dictionary. Competitive definitely means more than one.
Speaker Change: It can be a competition of one. And you won just by being the only one. There's no competition. Right. On your other question. Look, no, Bonsai we repurchase the intention is for those to be cancelled.
You intend to cancel them. Okay, cool.
Speaker Change: Thank you. And once again, if you would like to ask a question, please press star 1.
Speaker Change: Your next question comes from the line of Joe DiDonato with CGX, please go ahead.
Hi, this question is for Gabriel. I think...
Speaker Change: The whole issue with CGX, I think the shareholders have been extremely patient, waiting well over a year for any kind of information regarding what's going on. I don't seem to understand why everything has to be so cryptic and so secretive.
I have been invested with CGX since the year 2000.
We're going on 25 years soon.
Speaker Change: And I'm looking for a bit more information than we are.
working to try to unlock potential.
Speaker Change: that were flubbed in a lot of people's opinions in terms of delivery of information to the public.
Enough is enough.
Speaker Change: You need to explain yourself a little bit better today, please.
Speaker Change: and Joe thank you very much for the question I think this is not the channel for that question
Speaker Change: This is a channel for you guys to actually go chat with the team at PGX.
But look, understood, listened, and thank you for your question.
Gabriel
runs.
Speaker Change: is a board of director on CGX and he, Frontera, is a major shareholder of CGX. I don't understand why the secrecy.
Speaker Change: There's no secrecy. We cannot speak on behalf of CGX. So again, I'll point you to questions about CGX in the journal. I'll point them to CGX.
Thank you.
Speaker Change: Thank you, presenters. And 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 all for participating. You may now disconnect.
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