Frontera Energy Corporation (FEC) Earnings Call Transcript
August 18, 2026
Earnings Call Speaker Segments
Good morning, everyone. I'm Vincent, and I'll be facilitating your conference today. Welcome to the call covering Frontera Energy's operating and financial results for the second quarter of 2026. Every line is muted right now so that background noise stays out. I'd like to remind everyone that today's conference call is being recorded and can also be accessed via an audio webcast. After the speakers finish their remarks, we'll open things up for questions. Analysts and investors should note that any further questions can be sent to Frontera after today's call at <<email_hidden>>. This call includes forward-looking information as that term is defined under applicable Canadian securities laws, relating to activities, events, or developments that the company believes or expects will or may occur in the future. Forward-looking information reflects the company's current expectations, assumptions, and beliefs, based on information currently available to it. Although the company considers those assumptions reasonable, forward-looking information does not guarantee future performance. A number of risks and uncertainties apply to forward-looking information and may cause the company's actual results to differ materially from those discussed in it. The risks, uncertainties, material assumptions, and other factors that could influence actual results are described in the company's MD&A for the three and six months ended June 30, 2026, along with its Annual Information Form and other documents it files from time to time with securities regulatory authorities.
Any forward-looking statements are valid solely as of the date they are provided, and the company renounces any plan or duty to revise such information unless the law demands it. At this point I'd like to hand things over to Mr. Gabriel de Alba, who serves as Chairman of the Board of Frontera Energy. Mr. de Alba?
Thank you, operator. Good morning, everyone, and welcome to Frontera's conference call covering operating and financial results for the second quarter of 2026. With me today are Orlando Cabrales, Frontera's CEO, and Andrés Sarmiento, Frontera's CFO. Alejandra Bonilla, our General Counsel, and Renata Campagnaro, our Vice President of Commercial and Projects, are also on hand to take questions at the end of the call. Thank you all for joining us. This quarter was an important turning point for Frontera. On June 1st, 2026, we closed the plan of arrangement with Parex Resources. With the Parex transaction now complete, $8.34 Canadian per share went back to our shareholders: a significant realization of value and the culmination of a multi-year effort to simplify the company, unlock value for shareholders, and build a stronger foundation for Frontera's next chapter. Frontera today is a fundamentally different company: simpler and focused on infrastructure, with resilient, cash-generating assets, leverage below 1 times adjusted EBITDA, and a differentiated growth opportunity through LNG at Puerto Bahía. 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.
Going forward, every investment and financing choice we make will keep being measured against explicit criteria for return adjusted for risk, and we'll stay disciplined on the balance sheet while keeping a sharp emphasis on creating long-term value for shareholders. During the quarter, we also achieved meaningful progress on the next stage of Puerto Bahía's development. The take-or-pay contract with Ecopetrol, along with the floating storage and regasification unit capacity we secured through Excelerate Energy — these represent substantial advances that establish the commercial and technical basis for our LNG regasification project. Execution is what we're focused on now: delivering the milestones needed to reach first gas in early 2027, continuing to expand our existing port business, and running our assets in a safe and efficient manner. With that, I'd now like to hand the call over to Orlando Cabrales, Frontera's CEO, and Andrés Sarmiento, Frontera's CFO, who will walk you through our second quarter results in more detail. Orlando?
Thank you, Gabriel. Good morning, everyone, and thanks for being with us on today's call. The results we posted for the second quarter show that our multi-year transformation has been completed successfully, and they also demonstrate the solid underlying performance of our infrastructure assets. I'll begin with Puerto Bahía. Port revenues came in at $14.6 million in the second quarter, versus $12.7 million in the prior quarter and $11.3 million in the second quarter of 2025. Puerto Bahía has firmly established itself as a key strategic partner to the automotive sector in Colombia, with ro-ro cargo volumes rising roughly 85% year-over-year and 26% quarter-over-quarter. In April 2026, a new all-time record was set, with 17,200 units handled in a single month, which reflects the strong underlying demand momentum, while LPG volumes kept ramping up during the quarter. 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. 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.
Also, to meet the contract, Puerto Bahía signed a deal with Excelerate Energy to lease a floating storage and regasification unit, initially for seven years, with the option to extend for another 5 to 8 years. Andrés Sarmiento, Frontera's CFO, will now take over the call.
Thanks, Orlando and Gabriel, and good morning, everyone. As always, we appreciate your interest in and support of the company. I want to spend a moment drawing attention to several key financial points from our second quarter results. In Q2, the company posted adjusted EBITDA of $30.5 million, versus $28.5 million in the previous quarter and $25.9 million in the second quarter of 2025, which works out to 18% growth year-over-year. Cash provided by operating activities from continuing operations came to $26 million for the quarter, compared with cash used of $5 million in the prior quarter and cash used of $6.6 million in the second quarter of 2025. Now moving to our balance sheet and liquidity: as of June 30, 2026, the company's total cash balance stood at $56.3 million. Net debt was $114.2 million, a decrease from $123.7 million at December 31st, 2025, and our ratio of net debt to adjusted EBITDA improved to 0.98 times from 1.35 times a year ago. Distributable cash flow for the last 12 months totaled $78.8 million as at June 30, 2026, versus $21.4 million at March 31st, 2026, and $71.4 million a year ago. On capital allocation, we returned $8.34 Canadian per common share to shareholders on June 23rd, 2026, in connection with the closing of the Parex arrangement.
Continuing operations saw capital expenditures of $1.5 million during the quarter and $2.5 million across the six months. Investments in Puerto Bahía during the quarter comprised $0.5 million directed to the LPG project along with $0.2 million allocated to the LNG project. As support for the LNG project, a $30 million loan facility to Puerto Bahía was approved by Bancolombia, and $10 million of that was drawn in the second quarter of 2026, while further disbursements totaling $20 million were made after quarter end in July 2026. Those proceeds are going toward advances to suppliers for the LNG project. Additionally, after quarter end, the company signed a letter of credit facility agreement with Macquarie Bank Limited covering up to $12.6 million, serving as security for our obligations under the FSRU international leasing agreement and the operations service agreement with Excelerate Energy. At this point I'd like to hand the call back to Orlando.
Thank you, Andrés. Before wrapping up today's call, I want to restate that our transformation is now finished, and Frontera begins this next chapter as a simplified, standalone infrastructure platform — one with a strong balance sheet, leverage below 1 times adjusted EBITDA, and a clear pathway to growth through the LNG regasification project at Puerto Bahía, where our target is first gas in early 2027. I'd like to express my appreciation to our employees for their continued commitment throughout this transformative period for the company. With that, I'd like to close by thanking Gabriel and Andrés for their remarks, and thank you, everyone, for joining our call. I'll now hand the call back to our operator, who will open it up for questions.
Right now, anyone who wants to pose a question should press the star key and then the number 1 on their phone's keypad. We'll take a brief pause to put together the Q&A list. Once more, if you'd like to ask something, just hit star followed by the number 1 on your telephone keypad. At this moment we have no questions. I'll hand the call back to Orlando Cabrales.
No, thank you, operator, and thanks once more to all of you for joining us on this call. Have a good day.
That brings us to the end of today's conference call. We appreciate everyone joining us. You're welcome to disconnect at this point.
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