FRONTERA ANNOUNCES FOURTH QUARTER AND YEAR END 2021 RESULTS FRONTERA ANNOUNCES FOURTH QUARTER AND YEAR END 2021 RESULTS /* Style Definitions */ span.prnews_span { font-size:8pt; font-family:"Arial"; color:black; } a.prnews_a { color:blue; } li.prnews_li { font-size:8pt; font-family:"Arial"; color:black; } p.prnews_p { font-size:0.62em; font-family:"Arial"; color:black; margin:0in; } .prngen7{ BORDER-TOP:1pt; BORDER-RIGHT:1pt; VERTICAL-ALIGN: BOTTOM; BORDER-BOTTOM:black 1pt solid; TEXT-ALIGN: RIGHT; PADDING-LEFT:0.50em; BORDER-LEFT:1pt; PADDING-RIGHT:0.50em } .prngen5{ BORDER-TOP:black 1pt solid; BORDER-RIGHT:1pt; VERTICAL-ALIGN: BOTTOM; BORDER-BOTTOM:black 1pt solid; TEXT-ALIGN: RIGHT; PADDING-LEFT:0.50em; BORDER-LEFT:1pt; PADDING-RIGHT:0.67em } .prngen8{ BORDER-TOP:1pt; BORDER-RIGHT:1pt; VERTICAL-ALIGN: BOTTOM; BORDER-BOTTOM:black 1pt solid; TEXT-ALIGN: RIGHT; PADDING-LEFT:0.50em; BORDER-LEFT:1pt; PADDING-RIGHT:0.67em } .prngen10{ BORDER-TOP:1pt; BORDER-RIGHT:1pt; BORDER-BOTTOM:1pt; TEXT-ALIGN: RIGHT; 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All financial amounts in this news release are in United States dollars, unless otherwise stated. Gabriel de Alba , Chairman of the Board of Directors, commented: "Frontera continues to deliver on its strategic, operational and financial objectives. In 2021, Frontera generated operating EBITDA of $373.2 million , an increase of 117% compared to 2020 and within the Company's tightened and increased full-year operating EBITDA guidance range. Frontera also averaged 37,818 boe/d, in-line with 2021 guidance. Frontera's production costs averaged $11.46 /boe and its transportation costs averaged $10.43 /boe, both within 2021 guidance ranges. The Company reported a year end cash position of $320.8 million and released approximately $105.6 million of restricted cash. Frontera increased its uncollateralized credit lines to $89.6 million at year-end and repurchased approximately 3.86 million common shares, or 7.4% of the public float, for cancellation for approximately $21.5 million under its current NCIB as of December 31, 2021 ." Orlando Cabrales , Chief Executive Officer (CEO), Frontera, commented: "Frontera delivered strong fourth quarter results. Production averaged 38,605 boe/d, up 6% compared to the previous quarter and the Company's year-end production exit rate was 40,457 boe/d excluding Petrosud. Frontera's daily production on March 1, 2022 was approximately 42,000 boe/d and the Company's year-to-date average to March 1, 2022 is approximately 40,500 boe/d. Compared to the previous quarter, cash provided by operating activities in the fourth quarter increased by 43%, the Company's operating netback increased 26%, the Company's net sales realized price increased 17% and the Company's transportation costs decreased 12%. During the fourth quarter, Frontera began early production of ~2,400 boe/d (gross) at the La Belleza discovery on VIM-1, completed the Conciliation Agreement with Cenit and Bicentenario which eliminated more than $1 billion in contingent liabilities, acquired 100% of the issued and outstanding shares in Petroleos Sud Americanos S.A. which added ~1,300 boe/d production and signed an agreement to acquire the remaining 35% interest in el Dificil block held by PCR Investments S.A., adding an additional ~500 boe/d of production when the deal closes in the second half of 2022. Subsequent to year end, we discovered hydrocarbon bearing reservoirs in multiple formations at the Jandaya-1 exploration well in Ecuador and we were awarded Block VIM-46 in the 2021 Colombia Bid Round. Importantly, we discovered approximately 200 feet of net pay within multiple horizons at the Company's potentially transformational Kawa-1 exploration well, offshore Guyana ." Fourth Quarter 2021 Operational and Financial Summary Year Ended December 31 Q4 2021 Q3 2021 Q4 2020 2021 2020 Operational Results Heavy crude oil production (bbl/d) 20,912 18,168 21,074 19,326 24,384 Light and medium crude oil production (bbl/d) 16,300 17,160 19,502 17,218 21,519 Total crude oil production (1) (bbl/d) 37,212 35,328 40,576 36,544 45,903 Conventional natural gas production (1) (mcf/d) 4,663 5,033 6,356 5,022 8,807 Natural gas liquids (1) (boe/d) 575 211 254 393 352 Total production (2) (boe/d) (3) 38,605 36,422 41,945 37,818 47,800 Inventory Balance Colombia (bbl) 326,861 943,121 119,792 326,861 119,792 Peru (bbl) 480,200 480,200 995,585 480,200 995,585 Total Inventory (bbl 807,061 1,423,321 1,115,377 807,061 1,115,377 Oil and gas sales, net of purchases (4) ($/boe) 75.12 67.13 42.20 66.54 38.20 Realized (loss) gain on risk management contracts ($/boe) (1.87) (2.68) (2.00) (4.01) 2.42 Royalties ($/boe) (3.62) (4.83) (0.47) (2.66) (0.57) Dilution costs ($/boe) (0.10) (0.15) (1.85) (0.72) (1.78) Net sales realized price (5) ($/boe) 69.53 59.47 37.88 59.15 38.27 Production costs (6) ($/boe) (12.71) (11.44) (12.95) (11.46) (10.73) Transportation costs (7) ($/boe) (9.02) (10.24) (11.36) (10.43) (11.60) Operating netback (4) ($/boe) 47.80 37.79 13.57 37.26 15.94 Financial Results Oil and gas sales, net of purchases (4) ($M) 269,525 164,731 172,980 815,793 645,348 Realized (loss) gain on risk management contracts ($M) (6,692) (6,570) (8,205) (49,119) 40,924 Royalties ($M) (12,974) (11,848) (1,925) (32,572) (9,686) Dilution costs ($M) (368) (366) (7,584) (8,773) (30,088) Net sales (4) ($M) 249,491 145,947 155,266 725,329 646,498 Net income (loss) (8) ($M) 629,376 38,531 48,636 628,133 (497,406) Per share – basic ($) 6.60 0.40 0.50 6.50 (5.13) Per share – diluted ($) 6.40 0.39 0.48 6.29 (5.13) General and administrative ($M) 12,144 12,656 19,851 52,134 55,121 Operating EBITDA (4) ($M) 148,323 72,646 35,639 373,199 172,342 Cash provided by operating activities ($M) 113,482 79,114 42,055 327,380 226,781 Capital expenditures (9) ($M) 135,458 103,220 24,871 314,257 108,103 Cash and cash equivalents - unrestricted ($M) 257,504 318,791 232,288 257,504 232,288 Restricted cash short and long-term ($M) 63,321 100,692 168,934 63,321 168,934 Total cash ($M) 320,825 419,483 401,222 320,825 401,222 Total debt and lease liabilities ($M) 560,315 563,173 538,244 560,315 538,244 Consolidated total indebtedness (Excl. Unrestricted Subsidiaries) (4)(10) ($M) 416,883 401,148 362,001 416,883 362,001 Net Debt (Excluding Unrestricted Subsidiaries) (4)(10) ($M) 207,578 130,680 146,978 207,578 146,978 1. Reference to heavy crude oil, light and medium crude oil combined,  conventional natural gas or natural gas liquids production in the above table and elsewhere in this MD&A refer to the heavy crude oil, light and medium crude oil combined, conventional natural gas, and natural gas liquids, respectively, product types as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (" NI 51-101 "). 2. Represents W.I. production before royalties and total volumes produced from service contracts. Refer to the "Further Disclosures" section on page 36 of the MD&A. 3. Boe has been expressed using the 5.7 to 1 Mcf/bbl conversion standard required by the Colombian Ministry of Mines & Energy. Refer to the "Further Disclosures - Boe Conversion" section on page 36 of the MD&A. 4. Non-IFRS financial measures. Refer to the "Non-IFRS Financial Measures" on page 11 of this press release and the "Non-IFRS Measures" section on page 22 of the MD&A. This section also includes a description and details for all per boe metrics included in operating netback. 5. Per boe is calculated using sales volumes from development and producing (" D&P ") assets. Volumes purchased from third parties are excluded. 6. Per boe is calculated using production. 7. Per boe is calculated using net production after royalties. 8. Net income (loss) attributable to equity holders of the Company. 9. Capital expenditures include costs, net of income and cost from exploration and evaluation (" E&E ") assets. 10. "Unrestricted Subsidiaries" include CGX Energy Inc.(" CGX "), Frontera ODL Holding Corp., including its subsidiary Pipeline Investment Ltd. (" PIL "), Frontera BIC Holding Ltd., Frontera Bahía Holding Ltd., including its subsidiary Sociedad Portuaria Puerto Bahía S.A. (" Puerto Bahia "). Fourth Quarter Operational and Financial Results: Production averaged 38,605 boe/d, up 6% compared to 36,422 boe/d in the prior quarter and 41,945 boe/d in the fourth quarter of 2020. In 2021, Frontera averaged 37,818 boe/d, in-line with the Company's 2021 guidance of 37,500-39,500 boe/d compared with 47,800 boe/d in 2020. See the table above for production by product type for the prior quarter, fourth quarter of 2020, and year end 2021 and 2020. Frontera's year-end production exit rate was 40,457 boe/d excluding production from the Petrosud acquisition. Frontera's daily production on March 1, 2022 was approximately 42,000 boe/d consisting of approximately 21,500 bbl/d of heavy oil, 17,850 bbl/d of light and medium crude oil, 9,400 mmcf/d of conventional natural gas and 1,000 bbl/d of natural gas liquids. The Company's year-to-date average to March 1, 2022 was approximately 40,500 boe/d consisting of approximately 21,000 bbl/d of heavy oil, 16,850 bbl/d of light and medium crude oil, 9,400 mmcf/d of conventional natural gas and 1,000 bbl/d of natural gas liquids. Operating EBITDA was $148.3 million in the fourth quarter compared with $72.6 million in the prior quarter and $35.6 million in the fourth quarter of 2020. The increase in operating EBITDA quarter over quarter was primarily a result of two more cargoes sold during the fourth quarter of 2021. Frontera generated $373.2 million of EBITDA in 2021, up 117% compared to $172.3 million in 2020. Frontera's $373.2 million of EBITDA in 2021 was within its 2021 EBITDA guidance of $360 - $380 million . The Company reported a total cash position of $320.8 million at December 31, 2021 compared to $419.5 million at September 30, 2021 . Cash utilization during the period included $39.6 million of debt service and interest, $8.5 million in the Petrosud acquisition and $6.2 million to repurchase shares. The Company's restricted cash position was $63.3 million at December 31, 2021 compared to $100.7 million in the third quarter of 2021, a release of approximately $37.4 million . The decrease in restricted cash quarter over quarter is primarily due to the release of approximately $28.9 million related to a pipeline settlement agreement that was approved on November 11, 2021 (the " Conciliation Agreement "). In 2021, the Company released approximately $105.6 million of restricted cash. The Company anticipates releasing additional restricted cash in the second quarter of 2022 as the Company continues to optimize its credit lines. Cash provided by operating activities was $113.5 million in the fourth quarter of 2021, compared with $79.1 million in the prior quarter and $42.1 million in the fourth quarter of 2020. At December 31, 2021 , the Company had a total inventory balance of 807,061 bbls compared to 1,423,321 bbls at September 30, 2021 . Sales volumes, net of purchases in the fourth quarter increased by 46% compared with the prior quarter, reducing the inventory volumes in Colombia in the quarter. The Company has various uncommitted bilateral credit lines. As of December 31, 2021 , the Company had increased its uncollateralized credit lines to $89.6 million , an increase of $69.6 million compared to December 31, 2020 . Subsequent to the quarter, the Company increased its credit lines by approximately $16 million. Under the Company's current Normal Course Issuer Bid (" NCIB" ) which commenced on March 17, 2021 and ends March 16, 2022 , the Company repurchased for cancelation 989,300 common shares during the fourth quarter of 2021 at a cost of approximately $6.2 million . As of March 1