Q2 2026 Frontera Energy Corp Earnings Call

August 18, 2026

Speaker #1: Good morning. My name is Vincent, and I'll be your conference facilitator today. Welcome to Frontera Energy's second quarter 2026 operating and financial results conference call.

Operator: Good morning. My name is Vincent, and I'll be your conference facilitator today. Welcome to Frontera Energy's Q2 2026 operating and financial results conference call. All lines are currently on mute to prevent any background noise. I would like to remind you that this conference call is being recorded today and is also available through an audio webcast. Following the speakers' 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@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 will or may occur in the future. Forward-looking information reflects the current expectations, assumptions, and beliefs of the company based on information currently available to it.

Speaker #1: All lines are currently on mute to prevent any background noise. I would like to remind you that this conference call is being recorded today, and it is also available through an audio webcast.

Speaker #1: Following the speaker's remarks, there will be time for questions. Analysts and investors are reminded that any additional questions can be directed to Frontera following today's call at ir@fronterainfrastructure.ca.

Speaker #1: 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.

Operator: This call contains forward-looking information within the meaning of applicable Canadian securities laws relating to activities, events, or developments the company believes or expects will or may occur in the future. Forward-looking information reflects the current expectations, assumptions, and beliefs of the company based on information currently available to it.

Speaker #1: Forward-looking information reflects the current expectations, assumptions, and beliefs of the company based on information currently available to it. Although the company believes the assumptions are reasonable, forward-looking information is not a guarantee of future performance.

Operator: Although the company believes the assumptions are reasonable, forward-looking information is not a guarantee of future performance. Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward-looking information. The company's MD&A for the three and six months ended 30 June 2026, and the company's annual information form and other documents it files from time to time with securities regulatory authorities describe the risks, uncertainties, material assumptions, and other factors that could influence actual results. Any forward-looking information speaks only as of the date on which it is made, and the company disclaims any intent or obligation to update any forward-looking information, except as required by law. I would now like to turn the call over to Mr. Gabriel de Alba, Chairman of the Board of Frontera Energy. Mr. de Alba?

Speaker #1: 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.

Speaker #1: The company's MD&A for the three and six months ended June 30, 2026, and the company's Annual Information Form and other documents it files from time to time with securities regulatory authorities, describe the risks, uncertainties, material assumptions, and other factors that could influence actual results.

Speaker #1: 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.

Operator: Any forward-looking information speaks only as of the date on which it is made, and the company disclaims any intent or obligation to update any forward-looking information, except as required by law. I would now like to turn the call over to Mr. Gabriel de Alba, Chairman of the Board of Frontera Energy. Mr. de Alba?

Speaker #1: I would now like to turn the call over to Mr. Gabriel de Alba, Chairman of the Board of Frontera Energy. Mr. de Alba?

Speaker #2: Thank you, operator. Good morning, everyone, and welcome to Frontera's second quarter 2026 operating and financial results conference call. Joining me today are Orlando Cabrales, Frontera's CEO, and Andrés Sarmiento, Frontera's CFO.

Gabriel de Alba: Thank you, operator. Good morning, everyone, and welcome to Frontera's Q2 2026 operating and financial results conference call. Joining me today are Orlando Cabrales, Frontera's CEO, and Andrés Sarmiento, Frontera's CFO. Also available to answer questions at the end of the call are Alejandra Bonilla, our General Counsel, and Renata Campagnaro, our Vice President of Commercial and Projects. Thank you all for joining us. This quarter marked an important turning point for Frontera. on 1 June 2026, we completed the plan of arrangement with Parex Resources. With the completion of the Parex transaction, CAD 8.34 per share was returned to our shareholders, an important realization of value and the culmination of a multi-year effort to simplify the company, unlock value for our shareholders, and establish a stronger foundation for Frontera's next chapter.

Speaker #2: Also available to answer questions at the end of the call are Alejandra Bonilla, our General Counsel, and Renata Campañaro, our Vice President of Commercial and Projects.

Speaker #2: Thank you all for joining us. This quarter marked an important turning point for Frontera. On June 1, 2026, we completed the plan of arrangement with Pyrex Resources.

Gabriel de Alba: This quarter marked an important turning point for Frontera. on 1 June 2026, we completed the plan of arrangement with Parex Resources. With the completion of the Parex transaction, CAD 8.34 per share was returned to our shareholders, an important realization of value and the culmination of a multi-year effort to simplify the company, unlock value for our shareholders, and establish a stronger foundation for Frontera's next chapter.

Speaker #2: With the completion of the Pyrex transaction, $8.34 Canadian per share was returned to our shareholders—an important realization of value and the culmination of a multi-year effort to simplify the company, unlock value for our shareholders, and establish a stronger foundation for Frontera's next chapter.

Speaker #2: Frontera today is a fundamentally different company: simpler, not focused on infrastructure, with resilient cash-generating assets leveraged below one times adjusted EBITDA, and a differentiated growth opportunity through LNG and Puerto Bahía.

Gabriel de Alba: Frontera today is a fundamentally different company, simpler and focused on infrastructure, with resilient cash-generating assets, leverage below one times adjusted EBITDA, and a differentiated growth opportunity through LNG at Puerto Bahía. Together, this positioned the company to be a meaningful player in Colombia's energy security. With that transformation now complete, the board's mandate is equally clear: Focus on growth, execute, allocate capital with discipline, and create long-term value for our shareholders. As we move forward, we will continue to evaluate investments and financing decisions against clear risk-adjusted return criteria, while maintaining balance sheet discipline and a strong focus on long-term shareholder value. We also made important progress during the quarter on the next phase of Puerto Bahía's development. The take or pay agreement with Ecopetrol, together with the floating storage and regasification unit capacity secured with Excelerate Energy.

Speaker #2: Together, this positions the company to be a meaningful player in Colombia's energy security. With that transformation now complete, the board's mandate is equally clear: focus on growth, execute, allocate capital with discipline, and create long-term value for our shareholders.

Speaker #2: As we move forward, we will continue to evaluate investments and financing decisions against clear, risk-adjusted return criteria, while maintaining balance sheet discipline and a strong focus on long-term shareholder value.

Gabriel de Alba: As we move forward, we will continue to evaluate investments and financing decisions against clear risk-adjusted return criteria, while maintaining balance sheet discipline and a strong focus on long-term shareholder value. We also made important progress during the quarter on the next phase of Puerto Bahía's development. The take or pay agreement with Ecopetrol, together with the floating storage and regasification unit capacity secured with Excelerate Energy.

Speaker #2: We also made important progress during the quarter on the next phase of Puerto Bahía's development. The take-or-pay agreement with Ecopetrol, together with the floating storage and regasification unit capacity secured with Accelerate Energy, are substantial advances that put forward the commercial and technical foundation of our LNG regasification project.

Gabriel de Alba: These are substantial advances that put forward the commercial and technical foundation of our LNG regasification project. Our focus now is execution, delivering the milestones required to achieve first gas in early 2027, continuing to grow our existing port business, and operating our assets safely and efficiently. With that, I would now like to turn the call over to Orlando Cabrales, Frontera's CEO, and Andrés Sarmiento, Frontera's CFO, who will take you through our Q2 results in greater detail. Orlando?

Speaker #2: Our focus now is execution—delivering the milestones required to achieve first gas in early 2027, continuing to grow our existing port business, and operating our assets safely and efficiently.

Speaker #2: With that, I would now like to turn the call over to Orlando Cabrales, Frontera CEO, and Andrés Sarmiento, Frontera CFO, who will take you through our second quarter results in greater detail.

Speaker #2: Orlando?

Speaker #3: Thank you, Gabriel. Good morning, everyone, and thank you for joining us for today's call. Our second quarter results reflect the successful completion of our multi-year transformation and the solid underlying performance of our infrastructure assets.

Orlando Cabrales: Thank you, Gabriel. Good morning, everyone, and thank you for joining us for today's call. Our Q2 results reflect the successful completion of our multi-year transformation and the solid underlying performance of our infrastructure assets. Let me start with Puerto Bahía. Port revenues were $14.6 million in the Q2, compared with $12.7 million in the prior quarter and $11.3 million in the Q2 of 2025. Puerto Bahía has established itself as a key strategic partner to the automotive sector in Colombia. With ro-ro cargo volumes up approximately 85% year over year and 26% quarter over quarter. April 2026 established a new all-time record, handling 1,700 units in a single month, reflecting the strong underlying demand momentum, while LPG volumes continued to ramp up during the quarter. Turning to our ODL pipeline investment, we received $26.8 million in ODL dividends during the Q2 of 2025.

Speaker #3: Let me start with Puerto Bahía. Core revenues were $14.6 million in the second quarter, compared with $12.7 million in the prior quarter, and $11.3 million in the second quarter of 2025.

Speaker #3: Puerto Bahía has established itself as a key strategic partner to the automotive sector in Colombia, with railroad cargo volumes up approximately 85% year over year and 26% quarter over quarter.

Speaker #3: April 2026 established a new all-time record, handling 17,200 units in a single month, reflecting the strong underlying demand momentum. Meanwhile, LPG volumes continued to ramp up during the quarter.

Speaker #3: Turning to our ODL pipeline investment, we received $26.8 million in ODL dividends during the second quarter of 2025. During the quarter, ODL declared an additional return of capital of $5.2 million.

Orlando Cabrales: During the quarter, ODL declared an additional return of capital of $5.2 million. On our LNG regasification project, Puerto Bahía has entered into a seven-year take or pay agreement with Ecopetrol to provide integrated logistics and LNG regasification services in Cartagena. The agreement will be developed in two phases, with an initial two-year regasification capacity of 126 million cubic feet per day starting in 2027, increasing to 300 million cubic feet per day thereafter. To fulfill the contract, Puerto Bahía has also contracted with Excelerate Energy for the lease of a floating storage and regasification unit for an initial term of seven years, extendable for an additional five to eight years. I would now like to turn the call over to Andrés Sarmiento, Frontera's CFO.

Speaker #3: On our LNG regasification project, Puerto Bahía has entered into a seven-year take-or-pay agreement with Ecopetrol to provide integrated logistics and LNG regasification services in Cartagena.

Speaker #3: The agreement will be developed in two phases, with an initial two-year regasification capacity of 126 million cubic feet per day starting in 2027, increasing to 300 million cubic feet per day thereafter.

Speaker #3: To fulfill the contract, Puerto Bahía has also contracted with Accelerate Energy for the lease of a floating storage and regasification unit for an initial term of seven years, extendable for an additional five to eight years.

Speaker #3: I would now like to turn the call over to Andrés Sarmiento, Frontera's CFO.

Speaker #2: Thank you, Orlando and Gabriel. And good morning, everybody. Thank you, as always, for your interest and support for the company. I'd like to take a moment to highlight a few key financial aspects of our second quarter results.

Andrés Sarmiento: Thank you, Orlando and Gabriel, and good morning, everybody. Thank you, as always, for your interest and support for the company. I would like to take a moment to highlight a few key financial aspects of our Q2 results. For Q2, the company recorded an adjusted EBITDA of $30.5 million, compared to $28.5 million in the prior quarter and $25.9 million in Q2 2025, representing 18% growth year over year. Cash provided by operating activities from continuing operations was $26 million in the quarter, compared to cash used of $5 million in the prior quarter and cash used of $6.6 million in Q2 2025. Turning now to our balance sheet and liquidity. As at 30 June 2026, the company had a total cash balance of $56.3 million.

Speaker #2: For the second quarter, the company recorded an adjusted EBITDA of $30.5 million, compared to $28.5 million in the prior quarter and $25.9 million in the second quarter of 2025.

Speaker #2: Representing 18% growth year over year. Cash provided by operating activities from continuing operations was $26 million in the quarter, compared to cash used of $5 million in the prior quarter, and cash used of $6.6 million in the second quarter of 2025.

Speaker #2: Turning now to our balance sheet and liquidity, as of June 30, 2026, the company had a total cash balance of $56.3 million. Net debt was $114.2 million, down from $123.7 million at December 31, 2025, and our net debt to adjusted EBITDA ratio improved to 0.98 times, compared to 1.35 times a year ago.

Andrés Sarmiento: Net debt was $114.2 million, down from $123.7 million at 31 December 2025, and our net debt to adjusted EBITDA ratio improved to 0.98 times, compared to 1.35 times a year ago. Last 12 months, distributable cash flow was $78.8 million as at 30 June 2026, compared to $21.4 million at 31 March 2026, and $71.4 million a year ago. On capital allocation, we returned CAD 8.34 per common share to shareholders on 23 June 2026, in connection of the Parex arrangement. Capital expenditures from continuing operations were $1.5 million for the quarter and $2.5 million for the six months. During the quarter, investments in Puerto Bahía included $0.5 million toward the LPG project and $0.2 million toward the LNG project.

Speaker #2: Distributable cash flow for the last 12 months was $78.8 million as of June 30, 2026, compared to $21.4 million at March 31, 2026, and $71.4 million a year ago.

Speaker #2: On capital allocation, we returned $8.34 Canadian per common share to shareholders on June 23, 2026, in connection with the PAREX arrangement. Capital expenditures from continuing operations were $1.5 million for the quarter and $2.5 million for the six months.

Speaker #2: During the quarter, investments in Puerto Bahía included $0.5 million toward the LPG project and $0.2 million toward the LNG project. To support the LNG project, PAN Colombia approved a $30 million loan facility to Puerto Bahía, of which $10 million was disbursed in 2026, with an additional $20 million disbursed subsequent to quarter end in July 2026.

Andrés Sarmiento: To support the LNG project, Bancolombia approved a $30 million loan facility to Puerto Bahía, of which $10 million were 2026, with additional $20 million disbursements made subsequent to quarter end on July 2026. Proceeds are being used for advances to suppliers of the LNG project. Also subsequent to quarter end, the company entered into a letter of credit facility agreement with Macquarie Bank Limited for up to $12.6 million as security for our obligations under the FSRU international leasing agreement and operation service agreement with Excelerate Energy. I would now like to turn the call back over to Orlando.

Speaker #2: Proceeds are being used for advances to suppliers of the LNG project. Also, subsequent to quarter-end, the company entered into a letter of credit facility agreement with Macquarie Bank Limited for up to $12.6 million as security for our obligations under the FSRU International Leasing Agreement and operation service agreement with Accelerate Energy.

Speaker #2: I would now like to turn the call back over to Orlando.

Speaker #3: Thank you, Andrés. Before I conclude today's call, I would like to reiterate that, with our transformation now complete, Frontera enters this next phase as a simplified, standalone infrastructure platform with a strong balance sheet, leverage below one-time adjusted EBITDA, and a clear growth pathway through the LNG regasification project at Puerto Bahía, where we are targeting first gas in early 2027.

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

Speaker #3: I want to thank our employees for their continued dedication throughout this transformative period for the company. With that, I would like to conclude by saying thank you to Gabriel and Andrés for their comments, and thank you, everyone, for attending our call.

Speaker #3: I will now turn the call back to our operator, who will open it up for questions.

Operator: At this time, for those wishing to ask a question, please press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Again, if you wish to ask a question, please press star then the number one on your telephone keypad. There are no questions at this time. I will turn the call back over to Orlando Cabrales.

Speaker #1: At this time, for those wishing to ask questions, please press star, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Speaker #1: Again, if you wish to ask a question, please press star, then the number 1 on your telephone keypad. There are no questions at this time.

Speaker #1: I'll turn the call back over to Orlando Cabrales.

Speaker #3: Okay, no, thank you, operator, and thank you again, everyone, for attending this call. Have a good day.

Orlando Cabrales: Okay. Thank you, operator, and thank you again, everyone, for attending this call. Have a good day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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Q2 2026 Frontera Energy Corp Earnings Call

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