Frontera Energy Corp (FECCF) Q2 2024 Earnings Call Highlights: Production Growth Amidst ...

GuruFocus News
4 min read

In This Article:

  • Production Increase: 5% quarter-over-quarter to 39,912 barrels per day.

  • Heavy Crude Oil Production: Increased 6% quarter-over-quarter to approximately 24,800 barrels per day.

  • Net Loss: $2.8 million or $0.03 per share for the second quarter.

  • Operating EBITDA: Approximately $110 million for the quarter.

  • Cash Flow from Operations: $150 million for the quarter.

  • Capital Expenditures: Roughly $80 million for the quarter.

  • Dividend Declared: $0.0625 Canadian per share, totaling $11.7 million year-to-date.

  • Share Buyback: $6.6 million year-to-date under NCIB.

  • Operating Netback: $46.40 per BOE, up from $43.97 per BOE in the prior quarter.

  • Total Cash Position: $215 million as of June 30, 2024.

  • ODL EBITDA: Approximately $68 million for the second quarter.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Frontera Energy Corp (FECCF) entered into a two-year contract with Ecopetrol to treat and dispose of water from the Quifa Block, which is expected to increase crude oil production capacity.

  • The company aims to increase processing capacity at the SAARA facility to 250,000 barrels per day by the end of 2024, enhancing production efficiency.

  • Frontera announced a joint venture with GASCO to develop LPG import facilities in Colombia, demonstrating a commitment to expanding energy infrastructure.

  • The company declared a quarterly dividend of $0.0625 Canadian per share and announced a substantial issuer bid to purchase $30 million of its common shares, indicating strong shareholder returns.

  • Production increased approximately 5% quarter over quarter, with heavy crude oil production growing by 6%, driven by increased water disposal capacity and new injector wells.

Negative Points

  • Frontera Energy Corp (FECCF) reported a net loss of $2.8 million for the second quarter, impacted by finance costs, risk management contract losses, and income tax expenses.

  • The company faced inflationary pressures on costs, particularly in production and well service activities, affecting overall profitability.

  • Despite increased production, light and medium crude oil production remained flat due to natural declines in Colombian fields.

  • The company experienced a decrease in purchased crude net margin, reflecting lower dilution and impacting operating netbacks.

  • Concerns were raised regarding the extension of licenses in Guyana, with potential implications for ongoing operations and strategic partnerships.

Q & A Highlights

Q: Could you explain the changes in your energy and production costs? A: Rene Burgos Diaz, CFO: Energy costs are down due to the normalization of electricity prices post-dry season, and we expect this trend to continue. However, production costs have increased due to additional workover activities and inflationary pressures, which we expect to normalize later in the year.

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