FRONTERA ANNOUNCES DEFINITIVE AGREEMENT WITH PAREX TO DIVEST ITS COLOMBIAN E&P ASSETS PORTFOLIO FOR A FIRM VALUE OF APPROXIMATELY $750 MILLION, INCLUDING $525 MILLION EQUITY CONSIDERATION

Core Viewpoint - Frontera Energy Corporation has entered into a definitive agreement with Parex Resources Inc. to divest its Colombian exploration and production assets for a firm value of approximately $750 million, including $525 million in equity consideration, marking a significant strategic shift for the company towards becoming a focused infrastructure entity [1][2]. Transaction Details - The transaction involves Parex acquiring Frontera's upstream Colombian E&P business for $525 million, which includes $500 million payable at closing and a $25 million contingent payment [1][2]. - Parex will assume Frontera's obligations under $310 million of 2028 Senior Unsecured Notes and an $80 million prepayment facility with Chevron, resulting in a total firm value of approximately $750 million [1][2]. - The equity consideration represents a 31% premium over a previous agreement with GeoPark, which Frontera has now terminated [1][2]. Financial Implications - Following the transaction, Frontera plans to distribute approximately $470 million to shareholders, equating to about CAD$9.18 per share, which includes the contingent payment [1][2]. - The implied stock price of CAD$13.18 represents a premium of over 112% to the 90-day volume-weighted average price (VWAP) prior to the announcement of the GeoPark agreement [1][2]. Future Outlook - Post-transaction, Frontera will focus on its infrastructure business, which includes significant assets such as a 35% equity interest in a crude oil pipeline and a 99.97% interest in a port facility, generating approximately $77 million in distributable cash flow in 2025 [1][2]. - The company expects to have around $50 million in cash and cash equivalents after the transaction to support strategic growth initiatives, including a potential LNG regasification project [1][2]. Board and Management Commentary - The Board of Directors emphasized their commitment to maximizing shareholder value through a disciplined sales process, resulting in a $125 million increase in equity consideration for shareholders [1][2]. - The CEO highlighted the significance of the transaction for the consolidation of Colombia's E&P sector and the operational continuity it provides for employees and stakeholders [1][2].