Frontera to Sell Assets in Ecuador for $7.8MM

Frontera Energy Corporation said it has entered into an agreement to divest its 50 percent working interest in the Perico and Espejo blocks in Ecuador for a total cash consideration of $7.8 million to an undisclosed buyer.

The transaction is subject to working capital and other customary adjustments as of the effective date of January 1, 2025, Frontera said in a news release, adding that the assets averaged net oil production of approximately 1,000 barrels of oil equivalent per day (boepd) in July.

The agreement includes an additional contingent consideration of $750,000, payable to Frontera upon the Perico block achieving cumulative gross production of 2 million barrels from January 1, 2025, according to the release.

Closing of the transaction is subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals for closing and operations takeover from the Ministry of Energy of Ecuador. It is expected to close by the second quarter of 2026, Frontera said.

The transaction is consistent with Frontera’s “strategy of maximizing value over volumes, and supports a stronger focus on the company higher-impact Colombian upstream operations,” according to the release.

Corentyne Block Dispute Update

Meanwhile, the government of Guyana said it would consider a final meeting with Frontera regarding a dispute at the Corentyne Block, located offshore in the Guyana-Suriname Basin.

In March, Frontera and its subsidiaries, Frontera Petroleum International Holding B.V. and Frontera Energy Guyana Holding Ltd., submitted a notice of intent to the government alleging its breaches of the United Kingdom – Guyana Bilateral Investment Treaty and the Guyana Investment Act. The company also initiated a three-month consultation and negotiation period aimed at resolving the dispute amicably, according to an earlier statement.

On July 23, the government of Guyana, through its legal counsel, responded to the company, rejecting their claims. The Government of Guyana reaffirmed its view that the Joint Venture’s interest expired on June 28, 2024, but noted that it may consider a final meeting with Frontera, and would inform the company whether such a meeting will occur in September, according to the statement.

Frontera Energy Guyana and joint venture partner CGX Resources Inc. said they “remain firmly of the view that its interests in, and the license for, the Corentyne block remain in place and in good standing and that the Petroleum Agreement has not been terminated”.

If the parties do not reach a mutually agreeable solution, the joint venture and its stakeholders “are prepared to assert their legal rights,” Frontera said.

The joint venture holds a 100 percent working interest in the Corentyne block, with Frontera Guyana and CGX Resources owning 72.52 percent and 27.48 percent, respectively, which includes a 4.52% interest which CGX Resources agreed to assign to Frontera Guyana in 2023. The assignment of the 4.52 percent participating interest remains subject to the approval of the government of Guyana, but is believed to be enforceable between Frontera Guyana and CGX Resources, according to the statement.

Frontera Energy describes itself as a Canadian public company involved in the exploration, development, production, transportation, storage and sale of oil and natural gas in South America, including strategic investments in both upstream and midstream facilities. The company has a diversified portfolio of assets which consists of interests in 22 exploration and production blocks in Colombia, Ecuador, and Guyana, and in pipeline and port facilities in Colombia.

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