Frontera Energy (TSX:FEC) released second-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.

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Summary

Frontera Energy completed a significant transaction with Parex Resources, returning $8.34 Canadian per share to shareholders, marking a major step in simplifying and strengthening the company.

The company reported a second-quarter adjusted EBITDA of $30.5 million, up from $28.5 million in the prior quarter, indicating an 18% year-over-year growth.

Puerto Bahía's core revenues increased to $14.6 million, significantly up from previous quarters, driven by strong demand and strategic partnerships.

A new take-or-pay agreement with Ecopetrol and a lease agreement with Excelerate Energy are in place to advance the LNG regasification project, with first gas expected in early 2027.

The company's net debt decreased to $114.2 million, with a net debt to adjusted EBITDA ratio improving to 0.98 times, demonstrating stronger financial health.

Capital allocation included returning significant value to shareholders and targeted investments in the Puerto Bahía LNG and LPG projects.

Management emphasized a focus on disciplined capital allocation, growth, and long-term shareholder value as part of their strategic mandate.

Full Transcript

Gabriela, Investor Relations

Thank you for joining us. This quarter marked an important turning point for Frontera Energy. On June 1, 2026, we completed the Plan of Arrangement with Parex Resources. With the completion of the Parex transaction, $8.34 Canadian per share was returned to our shareholders—an important realization of value and the culmination of a multi-year effort to simplify the company, unlock value for our shareholders, and establish a stronger foundation for Frontera Energy's next chapter.

Frontera Energy 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 and Puerto Bahía. Together, this positioned 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.

As we move forward, we will continue to evaluate investments and financing decisions against clear risk-adjusted return criteria while maintaining balance sheet discipline and a strong focus on long-term shareholder value. We also made important progress during the quarter on the next phase of Puerto Bahía's development. The take-or-pay agreement with Ecopetrol, together with the floating storage and regasification unit capacity secured with Excelerate Energy, are substantial advances that put forward the commercial and technical foundation of our LNG regasification project.

Our focus now is execution—delivering the milestones required to achieve first gas in early 2027—continuing to grow our existing port business and operating our assets safely and efficiently. With that, I would now like to turn the call over to Orlando Cabrales, Frontera Energy's CEO, and Andres Armiento, Frontera Energy's CFO, who will take you through our second quarter results in greater detail. Orlando.

Orlando Cabrales, CEO

Thank you, Gabriela. Good morning everyone, and thank you for joining us for today's call. Our second quarter results reflect the successful completion of our multi-year transformation and the solid underlying performance of our infrastructure assets. Let me start with Puerto Bahía. Core revenues were $14.6 million in the second quarter, compared with $12.7 million in the prior quarter and $11.3 million in the second quarter of 2025. Puerto Bahía has established itself as a key strategic partner to the automotive sector in Colombia, with railroad cargo volumes up approximately 85% year over year and 26% quarter over quarter.

April 2026 established a new all-time record, handling 17,200 units in a single month, reflecting the strong underlying demand momentum, while LPG volumes continued to ramp 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. To fulfill the contract, Puerto Bahía has also contracted with Excelerate Energy for the lease of a floating storage and regasification unit for an initial term of seven years, extendable for an additional five to eight years. I would now like to turn the call over to Andres Armiento, Frontera Energy's CFO.

Andres Armiento, CFO

Thank you, Orlando and Gabriela, and good morning everybody. Thank you as always for your interest and support for the company. I'd like to take a moment to highlight a few key financial aspects of our second quarter. Results for the second quarter: the company recorded an adjusted EBITDA of $30.5 million, compared to $28.5 million in the prior quarter and $25.9 million in the second quarter of 2025, representing 18% growth year over year. Cash provided by operating activities from continuing operations was $26 million in the quarter, compared to cash used of $5 million in the prior quarter and cash used of $6.6 million in the second quarter of 2025. Turning now to our balance sheet and liquidity, as of June 30, 2026, the company had a total cash balance of $56.3 million. Net debt was $114.2 million, down from $123.7 million at December 31, 2025, and our net debt to adjusted EBITDA ratio improved to 0.98 times, compared to 1.35 times a year ago. Last 12 months distributable cash flow was $78.8 million as of June 30, 2026, compared to $21.4 million at March 31, 2026, and $71.4 million a year ago.

On capital allocation, we returned 8.34 Canadian dollars per common share to shareholders on June 23, 2026 in connection with the Parex arrangement. Capital expenditures from continuing operations were $1.5 million for the quarter and $2.5 million for the six months. During the quarter, investments in Puerto Bahía included $0.5 million toward the LPG project and $0.2 million toward the LNG project. To support the LNG project, Pan Colombia approved a $30 million loan facility to Puerto Bahía, of which $10 million were made in 2026, with an additional $20 million made subsequent to quarter end in July 2026.

Proceeds are being used for advances to suppliers of the LNG project. Also subsequent to quarter end, the company entered into a Letter of Credit Facility agreement with Macquarie Bank Limited for up to $12.6 million as security for our obligations under the FSRU Leasing Agreement and Service Agreement with Excelerate Energy. I would now like to turn the call back over to Orlando.

Orlando Cabrales, CEO

Thank you, Andres. Before I conclude today's call, I would like to reiterate that with our transformation now complete, Frontera Energy enters this next phase as a simplified standalone infrastructure platform with a strong balance sheet, leverage below one time adjusted EBITDA, and a clear growth pathway through the LNG regasification project at Puerto Bahía, where we are targeting first gas in early 2027. I want to thank our employees for their continued dedication throughout this transformative period for the company.

With that, I would like to conclude by saying thank you to Gabriela and Andres for their comments, and thank you everyone for attending. I will now turn the call back to our operator who will open it up for questions.

OPERATOR

At this time, for those wishing to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Again, if you wish to ask a question, please press star, then the number one on your telephone keypad. There are no questions at this time. I'll turn the call back over to Orlando Cabrales.

Orlando Cabrales, CEO

Okay. Thank you, Operator, and thank you again everyone for attending. Have a good day.

OPERATOR

This concludes today's conference call. Thank you for participating. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.