This news is classified in: Traditional Energy Oil and Gas Natural Gas & LNG
Feb 23, 2023
Frontera Energy Corporation today announced the results of its annual independent reserves assessment conducted by DeGolyer and MacNaughton CORP (" D&M "). All dollar amounts in this news release and the Company's financial disclosures are in United States dollars, unless otherwise noted. All of the Company's booked reserves for the year ended December 31, 2022 are located in Colombia and Ecuador .
Orlando Cabrales , Chief Executive Officer, commented:
"I am pleased with Frontera's 2022 reserves results. We increased average daily production by over 9% to 41,370 Boe/d compared to 2021 while delivering 2P gross reserves of 175 mmboe with a NPV before taxes of $3.7 billion , an increase of 22% year over year. Importantly, we grew CPE-6 2P net reserves to 41 mmboe, while increasing annual average production to approximately 5,000 boe/d, demonstrating our success in increasing reserves from less developed fields and passing Quifa for the most reserves by block in the Company. We also increased gross gas and liquids reserves by 11% year-over-year to 21 mmboe, supporting our efforts to further diversify our future production mix. Over the last three years Frontera has averaged 16.6 mmboe gross 2P reserves additions, achieved 108% reserves replacement ratio and a 11.6 year reserve life index. Looking ahead, the Company will invest $170 - $200 million in 2023 on its exciting lower risk and near field exploration portfolio in Colombia and Ecuador and high-impact Guyana exploration program, reloading the Company's reserves hopper for future growth."
For the year ended December 31, 2022 Frontera:
Added 11.6 MMboe of 2P gross reserves, for total Company 2P gross reserves of 174.8 MMboe consisting of 64% heavy crude oil, 23% light and medium crude oil, 8% conventional natural gas and 4% natural gas liquids, compared to 178.3 MMboe at December 31, 2021 .
Added 3.8 MMboe of 3P gross reserves, for a total of 218.5 MMboe at December 31, 2022 , compared to 229.8 MMboe at December 31, 2021 .
The Company's three-year average gross 1P Reserves Replacement Ratio is 95% including 52% in 2022, 175% in 2021 and 57% in 2020. The Company's three-year average gross 2P Reserves Replacement Ratio is 108% including 77% in 2022, 131% in 2021 and 116% in 2020.
Delivered a 1P gross reserves life index of 7.4 years compared to 8.7 years at December 31, 2021 , and a 2P reserves life index of 11.6 years compared to 13 years at December 31, 2021 .
The Net Present Value (" NPV ") for the net 2P reserves, discounted at 10% before tax, is $3.7 billion at December 31, 2022 , compared to $3 billion at December 31, 2021 . The increase in NPV for the 2P reserves is primarily due to an increase in the forecast oil price used to calculate the NPV. See the Net Present Value After Tax summary table below for more information.
Frontera's 2022 year-end gross 2P reserves of 174.8 mmboe include additions of 4.8 mmboe by technical revisions mainly in CPE-6 and VIM-1 blocks, extensions of 4 mmboe mainly from CPE-6 block, 2.4 mmboe from the Company's acquisition of the remaining 35% working interest (" W.I. ") in Colombia's El Dificil block held by PCR Investments S.A. (a wholly-owned subsidiary of Petroquímica Comodoro Rivadavia S.A. (" PCR ")), and 0.8 mmboe from exploration activities at Perico and Espejo blocks in Ecuador , offset by production of 15.1 mmboe and 1.1 mmboe in La Creciente block currently closed due to low production volumes and economics. See the reconciliation table below for more information.
In 2023, Frontera intends to invest $170 - $200 million on its Colombia , Ecuador , and Guyana exploration programs, reloading its reserves hopper for future growth.
Colombia and Ecuador : In 2023, the Company anticipates spending $50 - $60 million on various exploration activities in Colombia and Ecuador including drilling the Chimi-1 well (spud on February 16, 2023 ), Winner-1 and Tubara South-1 exploration wells in VIM-22 block in Colombia and the Yin Sur-1 well in Ecuador ; complete civil works on the VIM-1 block at the Hydra well location; carry out initial seismic activities at VIM-46 block; complete an 80-kilometre seismic acquisition program and begin civil works at the Sol Nor-1 and Sol Nor-2 locations at the LLA-119 block; and complete an 164-kilometre seismic acquisition program and Environmental Impact Assessment at LLA-99.
Guyana : On the Corentyne block, offshore Guyana , Frontera anticipates spending approximately $120 - $140 million on the Wei-1 well. The Wei-1 well is located approximately 14 kilometres northwest of the Joint Venture's previous Kawa-1 light oil and condensate discovery and will target Maastrichtian, Campanian and Santonian aged stacked sands within channel and fan complexes in the northern section of the Corentyne block. The Wei-1 well will appraise both the Kawa-1 discovery as well as explore additional opportunities within the Corentyne block.
For the year ended December 31, 2022 , the Company's reserves were evaluated by D&M, in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook maintained by the Society of Petroleum Evaluation Engineers (Calgary Chapter) (the " COGE Handbook "), National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (" NI 51-101 ") and CSA Staff Notice 51-324, and are based on the Reserves Report (as defined below).
(1) Gross reserves represent Frontera's W.I. before royalties.
(2) See "Boe Conversion" section in the "Advisories", at the end of this press release.
(3) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10%
probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
(1) Net reserves represent Frontera's W.I. after royalties.
(2) See "Boe Conversion" section in the "Advisories", at the end of this press release.
(3) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability
that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
The following tables provide a summary of the Company's oil and natural gas reserves based on forecast prices and costs effective December 31, 2022 , as applied in the Reserves Report. The Company's net reserves after royalties at December 31, 2022 , incorporate all applicable royalties under Colombia and Ecuador fiscal legislations based on forecast pricing and production rates evaluated in the Reserves Report, including any additional participation interest related to the price of oil applicable to certain Colombian and Ecuadorian blocks, as at year-end 2022.
(1) See "Boe Conversion" section in the "Advisories", at the end of this press release.
(2) Includes Cajua and Jaspe fields in the Quifa block and the Sabanero block.
(3) Includes the Cubiro, Cravoviejo, Canaguaro, Guatiquia, Casimena, Corcel, Neiva, Cachicamo and other producing blocks.
(4) Includes the VIM-1 and El Difícil blocks.
(5) Includes the Espejo and Perico blocks, which are currently in early evaluation period to better quantify resources.
(6) Gross refers to Frontera's W.I. before royalties. Net refers to Frontera's W.I. after royalties.
(7) Gross production distribution: light & medium crude oil 6.2 mmboe, heavy crude oil 7.9 mmboe, conventional natural gas 0.6
(8) All of the Company's booked reserves are located in Colombia and Ecuador.
(1) See "Boe Conversion" section in the "Advisories", at the end of this press release.
(2) Gross refers to Frontera's W.I. before royalties. Net refers to Frontera's W.I. after royalties.
(6) Acquisition of 35% working interest in El Difícil field.
(7) Associated with La Creciente block which is currently closed due to low production volumes and economics.
(8) Production represents the Company's production for the twelve-month period ended December 31, 2022 for assets with associated
(1) The Reserves Report and the Company's December 31, 2021 reserves report (the " 2021 Reserves Report ") used the average Brent
projected price of three major international independent auditors: GLJ Ltd. (" GLJ "), McDaniel and Associates Consultants Ltd.
(" McDaniel ") and Sproule Associates Ltd. (" Sproule "). The 2021 price forecast reflects prices used in the Company's 2021 Reserves
Report and the 2022 price forecast reflects prices used in the Reserves Report.
(1) RLI does not have a standardized meaning and may not be comparable to similar measures presented by other companies, and
therefore should not be used to make such comparisons.
(2) Calculated by dividing the total relevant net reserves category by the 2021 production of 13.7 MMboe.
(3) Calculated by dividing the total relevant net reserves category by the 2022 production of 15.1 MMboe.
(1) See "Advisories" at the end of this press release. The Reserves Report used the average Brent projected price of three major
international independent auditors: GLJ, McDaniel and Sproule. The full January 1, 2022 price forecast will be included in the Reserves
Report. The January 1, 2021 price forecast is included in the 2021 Reserves Report.
(2) Includes future development costs (" FDC ") as at December 31, 2021, of $792 million for 1P and $1,269 million for 2P.
(3) Includes FDC as at December 31, 2022, of $945 million for 1P and $1,541 million for 2P.
(4) Calculated by dividing the December 31, 2022 NPV10 value by 85,592,075 shares outstanding as at December 31, 2022 and a
USD:CAD foreign exchange rate of 1.3549. Per share valuations do not attribute any value to the Company's material ownership in
midstream and infrastructure assets as well as any equity value for its ownership in CGX Energy Inc. (TSXV:OYL) (" CGX ").
(5) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent
probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
(1) See "Advisories" at the end of this press release. The Reserves Report used the average Brent projected price of three major
Report. The January 1, 2021 price forecast is included in the 2021 Reserves Report.
(2) The tax calculations used in the preparation of the Reserves Report are done at the field level in accordance with standard practice,
and do not reflect the actual tax position at the corporate level, which may be significantly different.
(3) Includes FDC as at December 31, 2021, of $792 million for 1P and $1,269 million for 2P.
(4) Includes FDC as at December 31, 2022, of $945 million for 1P and $1,541 million for 2P.
(5) Calculated by dividing the December 31, 2022 NPV10 value by 85,592,075 shares outstanding as at December 31, 2022 and a
USD:CAD foreign exchange rate of 1.3549. Per share valuations do not attribute any value to the Company's material ownership in
(6) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent
probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
(1) Does not include $8.009 million in FDC from Ecuador.
The Company's 2022 year-end estimated reserves were evaluated by D&M in their report dated February 15, 2023 , with an effective date of December 31, 2022 (the " Reserves Report "), in accordance with the definitions, standards and procedures contained in the COGE Handbook , NI 51-101 and CSA Staff Notice 51-324. D&M is an independent qualified reserves evaluator as defined in NI 51-101.
Additional reserves information as required under NI 51-101 will be included in the Company's statement of reserves data and other oil and gas information on Form 51-101F1, which is expected to be filed on SEDAR on March 1, 2023 . See " Advisory Note Regarding Oil and Gas Information " section in the " Advisories ", at the end of this news release.
Frontera Energy Corporation is a Canadian public company involved in the exploration, development, production, transportation, storage and sale of oil and natural gas in South America , including related investments in both upstream and midstream facilities. The Company has a diversified portfolio of assets with interests in 32 exploration and production blocks in Colombia , Ecuador and Guyana , and pipeline and port facilities in Colombia . Frontera is committed to conducting business safely and in a socially, environmentally and ethically responsible manner.
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