FRONTERA ANNOUNCES STRATEGIC SPIN-OFF OF ITS COLOMBIAN INFRASTRUCTURE BUSINESS TO UNLOCK INTRINSIC VALUE

Executive Summary

• Frontera Energy Corporation announced a strategic plan to spin off its Colombian Infrastructure business to create two independent, focused companies: Frontera Exploration & Production (E&P) and Frontera Infrastructure.
• The transaction is projected to be completed in the first half of 2026, subject to shareholder and regulatory approval.
• The separation aims to unlock intrinsic shareholder value by allowing each entity to pursue tailored strategies and appeal to distinct investor bases, with E&P focusing on upstream oil and gas and Infrastructure focusing on midstream assets and port operations.

Key Details

• Transaction Structure: Spin-off of Colombian Infrastructure business into a separate entity, leaving Frontera as a pure-play upstream E&P company.
• Timeline: Targeted completion in the first half of 2026.
• Frontera E&P Financials (LTM ended Sept 30, 2025):
  • Operating EBITDA: ~$336 million.
  • Net Leverage: 0.7x.
• Frontera Infrastructure Financials (LTM ended Sept 30, 2025):
  • Operating EBITDA: ~$16.2 million.
  • Infrastructure Adjusted EBITDA: $117.4 million.
  • Net Debt to Infrastructure Distributable Cash Flow: 2.0x.
  • Infrastructure Distributable Cash Flow: $75.6 million.
  • Infrastructure Free Cash Flow: $16.3 million.
• Asset Breakdown:
  • ODL Pipeline: Frontera holds a 35% equity interest via FPI. LTM EBITDA of $289 million; transported ~238,000 barrels of oil per day (30% of Colombia's total daily production). Paid ~$170 million in dividends/distributions since 2023.
  • Puerto Bahia: Frontera holds 99.97% equity interest. LTM EBITDA of $16.2 million.
    • Completed pipeline connection to Cartagena Refinery in 2025.
    • LPG project with partner GASCO expected operational in first half of 2026.
    • Dry terminal accounts for >55% of Colombian car import/export market; handled >3,600 TEUs in October 2025.
• Balance Sheet Allocation:
  • Total Debt and Lease Liabilities: $532.8 million (Consolidated).
  • Allocated to E&P: $330.8 million debt; $110.8 million cash.
  • Allocated to Infrastructure: $202.0 million debt; $47.8 million cash.
• CEO Commentary: CEO Orlando Cabrales Segovia stated the separation allows for clear priorities and tailored strategies, unlocking value not currently reflected in market capitalization and enabling future consolidation opportunities.

Notable Quotes

• "Over time, Frontera has consistently attracted interest from investors and strategic parties who recognize the distinct strengths and value propositions of the upstream oil and gas and infrastructure businesses... This strategic separation will result in two focused, independent companies, each with clear priorities and tailored strategies." — Orlando Cabrales Segovia, CEO