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

Executive Summary

• Frontera Energy Corporation has entered into a definitive arrangement agreement to divest its upstream Colombian exploration and production (E&P) assets to Parex Resources Inc. for a total firm value of approximately $750 million.
• The transaction involves an equity consideration of $525 million, comprising $500 million payable at closing and a $25 million contingent payment tied to the extension of the Quifa Association Contract.
• Following the transaction, Frontera will emerge as a pure-play infrastructure company and intends to distribute approximately $470 million to shareholders, representing a special dividend of roughly CAD$9.18 per share.

Key Details

• Transaction Value: Firm value of approximately $750 million.
• Equity Consideration: $525 million total, structured as:
  • $500 million payable upon closing (subject to customary adjustments).
  • $25 million contingent payment payable upon execution of a contractual amendment or binding agreement extending the term of the Quifa Association Contract within 12 months.
• Debt Assumption: Parex assumes all of Frontera’s obligations under:
  • $310 million 2028 Senior Unsecured Notes.
  • $80 million Chevron prepayment facility.
• Shareholder Distribution: Net cash proceeds of approximately $470 million to be distributed to shareholders, calculated as CAD$9.18 per share (based on 69,530,499 shares outstanding and USD/CAD rate of 1.3574).
• Premium: The equity consideration represents a 31% premium to the previous GeoPark proposal and an 112% premium to Frontera’s 90-day VWAP (CAD$6.20) prior to the GeoPark announcement.
• Previous Agreement Termination: Frontera terminated the prior arrangement agreement with GeoPark Limited and paid a $25 million Purchaser Break Fee.
• Post-Transaction Strategy: Frontera will retain its Infrastructure Business, including:
  • 35% equity interest in Oleoducto de los Llanos Orientales S.A. crude oil pipeline.
  • 99.97% equity interest in Sociedad Portuaria Puerto Bahia.
  • Interests in Guyana.
  • The Infrastructure Business generated approximately $77 million in Distributable Cash Flow in 2025.
• Cash Position: Expected to have approximately $50 million in cash and cash equivalents post-closing to support growth initiatives, including a potential LNG regasification project with Ecopetrol S.A.
• Closing Conditions: Subject to shareholder approval (66 2/3% vote required), BC Supreme Court approval, and regulatory approvals. Not subject to financing conditions.
• Timeline: Effective date of January 1, 2026; anticipated closing in the second quarter of 2026.
• Advisors:
  • Financial Advisor: Citi.
  • Fairness Opinion: BMO Nesbitt Burns Inc.
  • Legal Counsel: Blake, Cassels & Graydon LLP and McMillan LLP.
• Support Agreements: Catalyst Capital Group Inc. (41% ownership) and Gramercy Funds Management LLC (12% ownership) have entered into support agreements to vote in favor of the transaction.

Notable Quotes

• Gabriel de Alba, Chairman: "From the outset, the Board's mandate has been clear: to maximize value for Frontera's shareholders... This outcome underscores the strength of our management team, the quality of Frontera's assets and the Board's commitment to positioning the Company for its next chapter as a focused infrastructure platform."
• Orlando Cabrales, CEO: "For Frontera, this transaction marks the beginning of our next chapter as a pure-play infrastructure company with approximately $77 million in distributable cash flows, multiple near-term growth catalysts at Puerto Bahia... and a strong path to returning capital to our shareholders."