This news is classified in: Traditional Energy Oil and Gas Natural Gas & LNG
Mar 28, 2023
Frontera Energy Corporation announces that Frontera's wholly-owned subsidiary, Pipeline Investment Limited, which owns a 35% equity interest in Oleoducto de los Llanos Orientales S.A. and Macquarie Group have entered into a credit agreement (the " Credit Agreement ") through which the Lender will provide a US$120 million loan facility (the " New Loan ") to PIL, guaranteed by Sociedad Portuaria Puerto Bahía S.A., Frontera Bahía Holding Ltd. and Frontera ODL Holding Corp., the parent company of PIL. The New Loan is effectively supported by the cash flows from Frontera's standalone and growing midstream business, is non-recourse to Frontera and remains subject to customary closing conditions.
Gabriel de Alba , Chairman of the Board of Directors, commented:
"Frontera continues to generate shareholder value from across its portfolio by unlocking the sum of its parts. This Credit Agreement refinances Puerto Bahia's debt, extending its term to December 2027 and most importantly, provides Frontera's midstream segment with optionality to execute its key strategic initiatives. The Company looks forward to continuing to build value for shareholders."
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Orlando Cabrales , Chief Executive Officer of Frontera, commented:
" Puerto Bahia is a state-of-the-art liquids and dry cargo facility port terminal strategically located in the Bay of Cartagena. Frontera, through its separate midstream business, owns 99.8% of Puerto Bahia . This successful refinancing is another positive step forward for Frontera as we seek to position our standalone and growing midstream business to unlock shareholder value."
Catalina Hayata , Managing Director and Head of Latin America Private Credit in Macquarie's Group's Commodities and Global Markets business, commented:
"This loan facility not only assists with the refinancing of Puerto Bahia's debt, but also demonstrates our support of Frontera's efforts to grow its midstream business. As we expand our presence in Latin America , we look forward to providing capital solutions to our key clients in the region and identifying new ways to deliver innovative financing solutions in a growing market."
The proceeds of the New Loan will be primarily used to repay in full the existing senior loan of Puerto Bahía maturing in June 2025 , which has an outstanding balance plus accrued interest of $106.2 million . The New Loan will also pay transaction fees and expenses and fund a 6-month debt service reserve account. Any remaining amounts shall be distributed to Frontera or any of its affiliates, at Frontera's discretion, or kept by Puerto Bahia to finance future growth projects. The Credit Agreement also includes an accordion feature for up to $30 million , which may be drawn by Puerto Bahia , subject to Lender' consent in order to fund additional investment opportunities, including potential liquids and dry terminal expansion projects.
The New Loan pays semi-annually, amortizes during the term of the loan, and has a scheduled $45 million payment due upon maturity in December 2027 . The New Loan has two tranches which include a $100 million amortizing tranche that pays a Secured Overnight Financing Rate (" SOFR ") 6-month term plus margin of 7.25% per annum and a $20 million bullet maturity tranche that pays a fixed rate of 11.00% per annum.
In September 2022 , Frontera acquired the remaining 40.07% interest it did not already own in PIL for an aggregate cash consideration of approximately $47.4 million , including $21 million immediately following the closing of the transaction. The transaction was an important milestone for the Company as it increased Frontera's direct interest in the ODL pipeline to 35%, strengthened Frontera's midstream cash flows, and created a self-sustaining and growing midstream business.
The ODL pipeline is a 260-kilometre, 24-inch pipeline with throughput capacity of 300,000 bbl/d at 18° API that transports Frontera's heavy crude oil from the Quifa SW and Cajua fields and part of the CPE-6 field, as well as other third-party production from the Llanos basin, including from Ecopetrol, Hocol, Geopark and Parex, and connects the OCENSA pipeline at Cusiana and Monterrey to the export terminal in Coveñas. Ecopetrol's Cenit Transporte y Logística de Hidrocarburos S.A.S. owns the remaining 65% of ODL.
Puerto Bahia is a state-of-the-art liquids and dry cargo facility port terminal strategically located on a 155-hectare site in the Bay of Cartagena. Inaugurated in 2015, Puerto Bahia provides loading, unloading, receipt, storage and dispatch import and export services.
Puerto Bahia's liquid bulk terminal operational capacity is 2.6 MMbbl, distributed amongst eight storage tanks with heating and blending functionalities, 16 loading and unloading stations for tanker trucks, two docking positions for barges and a liquid jetty with two docking positions for vessels with up to 1.2 million barrels of capacity.
The barge platform features four berths and eight tanker truck stations that are interconnected with the storage tanks.
Puerto Bahia's general dry cargo terminal features a 290-metre long, 44-metre wide berthing platform and covers a total area of 16 hectares (40 acres) with covered and uncovered storage capacity and equipment for cargo handling.
Puerto Bahia's 18-metre natural depth makes it the only private multi-purpose terminal in Colombia capable of receiving Panamax ships (large cargo and vessels) and Suezmax tankers (liquid purpose vessels) simultaneously.
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 31 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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