Frontera Energy Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2024

There are 11 speakers on the call.

Operator

Good morning. My name is Ludi, and I'll be your conference facilitator today. Welcome to Frontera Energy's Third Quarter 2024 Operating and Financial Results Conference Call. All lines are currently on mute to prevent any background noise. I would like to remind you that this conference call is being recorded today and is also available through audio webcast on the company's website.

Operator

Following the speakers' remarks, there will be time for questions. Analysts and investors are reminded that any additional questions can be directed to Frontera following today's call at irfronteraenergy. Ca. This call contains forward looking information within the meaning of applicable Canadian securities laws relating to activities, events or developments the company believes or expects will or may occur in the future. Forward looking information reflects the current expectations, assumptions, beliefs of the company based on information currently available to it.

Operator

Although the company believes the assumptions are reasonable, forward looking information is not a guarantee of future performance. Forward looking information is subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward looking information. The company's MD and A for the quarter ended September 30, 2024 and the company's annual information form dated March 7, 2024 and other documents it files from time to time with securities regulatory authorities describe the risks, uncertainties, material assumptions and other factors that could influence actual results. Any forward looking information speaks only as of the date on which it is made, and the company disclaims any intent or obligation to update any forward looking information except as required by law. I would now like to turn the call over to Mr.

Operator

Gabriel De Alba, Chairman of the Board of Frontera Energy. Mr. De Alba, Please go

Speaker 1

ahead.

Speaker 2

Thank you, operator. Good morning, everyone, and welcome to Frontera's Q3 2024 operating and financial results conference call. Joining me on the call today are Orlando Cabrales, Frontera's CEO and Rene Burgos, Frontera's CFO. Also available to answer questions at the end of the call, we have Victor Vega, Field Development, Reservoir Management and Exploration Alejandra Bonilla, General Counsel Ivan Avelo, VC Operations and Renata Campanero, VC Marketing, Logistics and Business Sustainability. Thank you for joining us.

Speaker 2

Frontera remains focused on the execution of its strategic objectives and priorities, with its upstream, infrastructure and Guyana Business segment. The company's off field business continues to perform according to plan overcoming unforeseen social issues during the year. The company is gaining momentum with crude production ramping up to average over 42,300 barrels per day so far in the Q4. And the company is targeting 4th quarter average daily production above 42,500 barrels per day. It is a standalone and growing infrastructure business.

Speaker 2

The company continues to advance the strategic alternatives review it launched earlier this year. This process is actively ongoing with a virtual data room open and discussions with interested parties underway. The company remains particularly excited about the long term prospects of its Puerto Vallad Liquids and dry hydro port facility and its strong pipeline of catalysts, including the Reficar collection as well as the recently announced LPG input project with JV partner, Gasco. With respect to the Kajana assets, the company and its joint venture partner remain committed to potential development of the current and block as supported by the recent discoveries. While the company remains confident about the exciting potential of the current and block, it is reviewing all available alternatives to safeguard its interest in the block and Guyana.

Speaker 2

Turning briefly to Frontera's financial health, I'm pleased to report that subsequent to the quarter, S and P reaffirmed the company's credit rating at B with a stable outlook, reflecting Frontera's strong credit quality and financial position, underpinned by the company's low leverage. The company ended this quarter with a total debt of $531,200,000 and a healthy cash position, including restricted cash of $240,300,000. Frontera's solid financial position has supported the company's ability to deliver significant shareholder returns in 2024. Notably, after the quarter and with significant shareholder takeoffs, the company successfully executed on its $30,000,000 SID, which saw over 90% of the company's shareholder participants. Together with the completion of the successful SIB, the company has returned more than €53,000,000 to shareholders in 2024, including €11,700,000 in quarterly dividends, dollars 3,900,000 in declared quarterly dividends and $7,800,000 to the repurchase of its common shares through the sale of NCIB for an estimated aggregate yield of 2%.

Speaker 2

In addition to our quarterly dividend, the company announced yesterday its intention to commence a new substantial issuer bid of up to €30,000,000 pursuant to which the company will offer to purchase for cancellation a portion of its common shares at a fixed price per share. The terms of the new SIB, including pricing, shall be communicated in due course and the company expects that the new SIB will be completed in January 2025. Frontera remains committed to unlocking value for its stakeholders, including potential additional dividends, share buyback, distributions or bond buybacks, which will be based on the company's results, capital generation and the company's strategic goals. I'd now like to turn the call over to Orlando Cabrales, Forterra's CEO and Rene Burgos, Forterra's CFO, who will share their views on our Q3 results. Orlando?

Speaker 3

Thank you, Gabriel. Good morning, everyone, and thank you for joining us for today's call. Frontera delivered another strong quarter, generating BRL 16,600,000 in net income and $103,200,000 in operating EBITDA, in line with our plan despite lower average Brent prices and certain unexpected events that occurred during the quarter. We remain on track to meet our 2024 production and EBITDA guidance. We increased our quarter over quarter average daily production by 2% to 40,616 BOE per day, driven by strong performance from the company's heavy oil assets as we completed successfully drilling campaigns in both the CPE6 and Sabanero blocks and increased water disposal capacity in the CPE6 block where the company achieved another daily production record reaching 8,810 barrels per day.

Speaker 3

We increased our light and medium crude oil production, driven by improved performance in Ecuador, our international activity performed during the first half of the year, which helped maintain light and medium crude production levels. We also increased our natural gas liquids production during the quarter with the completion and a start up of the compression facilities expansion and gas reinjection projects at our BIM-1 block. Following the completion of the BIM-1 gas rejection project, natural gas volumes produced at BIM1 were rejected, reducing natural gas production and sales volumes. And I am very pleased to report that our 4th quarter production has averaged 42,300 barrels per day. We invested approximately $82,000,000 in capital expenditures during the quarter, primarily to drill 15 development wells at Kifa, CP6 and Sabahner.

Speaker 3

At Kifa, the company invested in new flow line facilities for new well production and connection for the Sahara project, also invested in the development facilities and increasing water handling capacity at the CP6 block. At the B1 block, all pre drill activities related to civil work for the platform roads were completed for the Ira-one exploration well. However, exploration drilling activities are expected to resume early next year following delays associated to social issues. Additionally, 2 new exploration wells were sanctioned for the Tachikamo block expected to spot in the Q4 of this year. The company is also engaged in pre seismic and pre drilling activities related to social and environmental studies in the January 'ninety nine and B-forty six blocks.

Speaker 3

In Ecuador, in our Perrico block performed 2 work hours and 1 well service to increase production during the quarter. Furthermore, as part of our continuing drive to simplify our business, Frontera and the AMH mutually agreed to terminate Carbon5 and Carbon6 blocks exploration contracts due to long standing social and security restriction in the contracted areas, reducing the company's exploration commitments by $53,000,000 In our infrastructure business, ODL continues to deliver strong operational and financial results, generating $68,000,000 of EBITDA for the quarter. Net distributions to Prompera amounted to $12,000,000 during the quarter, totaling $43,000,000 year to date. At our Sahara project, we are currently processing approximately 50,000 barrels of water per day and expect to grow water handling capacity to 250,000 barrels by year end, boosting heavy crude oil production at the QIFA block. I would now like to turn the call over to Rene Urvos, Frontera's CFO.

Speaker 1

Thank you, Orlando. I'd like to take a moment to highlight a few key financial aspects of our Q3 results. For the Q3, the company recorded a net income of $16,600,000 or $0.20 per share. This quarter net income includes approximately $27,000,000 in income from operations plus compared shares of income from associates of $13,000,000 from its share of income from ODL and $6,000,000 in income related to risk management contracts, primarily related to our FX hedging positions. These incomes were offset primarily by roughly $18,000,000 in net finance expenses and approximately $10,000,000 in income tax expenses, including $4,000,000 in deferred income taxes.

Speaker 1

Operating EBITDA for the quarter was approximately $103,000,000 Compared to the prior quarter, our EBITDA was affected by lower realization price and higher transportation cost, partially offset by lower production cost during the quarter. So far this year, Frontera has generated $311,000,000 in operating EBITDA and remains on track to meet its 2024 consolidated operating EBITDA guidance of $400,000,000 $450,000,000 at $80 barrel Brent average price for the year. From a barrel standpoint, I would like to take a moment to share the key indicators related to our realized prices and cost. During the quarter, we saw weighted average Brent prices for Frontera were $77.95 and an average Vascona di Printero on our export sales of $4.92 For the Q3, the purchase equipment margin was $3.05 higher than the $2.13 for the prior quarter. The quarter over quarter variance was a result of higher dilution needs for our heavy oil assets.

Speaker 1

Taking a closer look at our operating costs, our production, energy and transportation costs per barrel for the quarter totaled $8.88 $5.11 $12.12 respectively. This compares to $10.79 $4.74 $10.92 in the prior quarter. The decrease in production costs quarter over quarter were driven primarily by higher production as well as lower well intervention activity during the quarter. On the energy front, the increase was a result of higher energy use during the quarter due to increased production from our heavy oil assets. On transportation costs, costs increased during the quarter due to trucking and pipeline tariff increases that occurred as well as higher volumes transported.

Speaker 1

Our operating netback in the 3rd quarter was $40.59 per BOE compared with $46.40 per BOE in the prior quarter. The decrease was mainly a result of lower realized prices, driven by lower benchmark oil prices, which fell over $6 on a quarter over quarter basis, partially offset by lower royalties, paid in cash and lower production. Unknown participant is now joining. The cash continues to show cash generation in the Q3 with cash flows from operations totaling $124,000,000 including a $90,000,000 tax refund associated with the company's 2023 income tax return and the receipt of $12,000,000 in dividend and capital payments from ODL. On the infrastructure side, adjusted infrastructure EBITDA in the Q2 of 2024 was $26,200,000 compared with $27,800,000 in the prior quarter.

Speaker 1

The quarter over quarter decrease was primarily due to lower liquid volume due in part to severe weather conditions and an increase in cost and G and A expenses in ODL. Due to inflationary pressures on services and wages indexation. We expect these conditions to improve during the Q4 for both ODL and Puerto Vallarta. ODL volumes transported were 244,000 barrels per day during the 3rd quarter compared to 249,000 in the 2nd quarter, mainly due to lower volumes transported from the Llanos 34 block. As of September 30, 2024, the company reported a total cash position of $240,000,000 including $206,000,000 unrestricted cash.

Speaker 1

Turning now to risk management. Our current risk management strategy continues to show our hedging discipline to support our operations and planning. Frontera uses derivative instruments to manage exposure to oil price and FX volatility. On the oil side, the company entered into hedges, successfully securing a 40% hedging ratio until February 2025, projecting against a potential drop in oil prices. For the remainder of 2024, the company has hedges with strike price between $75 $78 spread.

Speaker 1

For 2025, the company has entered into hedges at $70 spread for January February. Frontera has also entered into 4 exchange rate hedges totaling $220,000,000 covering 40% of the company's expected peso exposure up to the Q3 of 2025, with total between MXN 4,100 and MXN 4,200 rates. Apologies for the communication All right, we're back. These changes provide the company with stability and will help mitigate impacts from future fluctuations, while allowing the business to deliver on its targets. Finally, I'd like to provide an update on our stakeholder value initiatives.

Speaker 1

Under the current NCIB, which commenced on November 21, 2023, the company has repurchased approximately 1,600,000 common shares or just over 2% of our total common shares outstanding for cancellation or approximately 9,500,000 as of November 7. Frimpela announced that it would file with the PSX a notice of intention to commence a new SID once the current one expires. With respect to our quarterly dividend, on October 16, Frontenal paid approximately $3,900,000 or CAD 6.25 per share to shareholders. Together with yesterday's results announcement, the Board declared a quarterly dividend of CAD6.25 per share payable to shareholders of record as of January 3, 2025 on or around January 17, 2025. Additionally, the company recently announced the successful completion of its SIB announced in August of this year.

Speaker 1

The company purchased for cancellation close to 3,400,000 common shares for an aggregate consideration of $30,000,000 at a fixed price of CAD 12 per share. The SIB was widely accepted as shown by the over 90% of the company's shareholders participating. Furthermore, Frontera also announced its intention to commence a new substantial issuer bid through which the company will offer to purchase up to $30,000,000 of its common shares for cancellations at a fixed price. The terms of the new SIB, including price, will be determined in due course and the company expects that it will be completed in January 2025. The SIB will not be conditional upon any minimum number of shares being tendered and will be subject to conditions customary for a transaction of this nature.

Speaker 1

The company believes this format is the most efficient means

Speaker 3

to distribute capital to all of

Speaker 1

our shareholders and look forward to launching this process in the few weeks next few weeks. I would like to turn the call back now to Alain.

Speaker 3

Thank you, Rene. Before I wrap up today's call, I would like to highlight that during the quarter, Frontera achieved 73% of its sustainability goals for the year. Frontera made purchases from local suppliers that represent around 11% of its total purchases, exceeding our annual goal of 9%. Additionally, our efforts to maintain close and empathic relationships with all of our stakeholders, including our employees, was recognized as Frontera received the Great Place to Work award and ranked 17th as one of the best companies to work for in Colombia. Our work plan in favor of cybersecurity has been effective, and we have managed to maintain our rate of material cybersecurity incidents at 0.

Speaker 3

And finally, we are continuing the strategic review process for our infrastructure business, where a virtual data room is available and discussions with potential third parties are ongoing. In addition to unlock value for Porto Aurelia, where the construction of the connection to the Reficar refinery is over 60% completed, and we are expecting that the connection shall become operational by the end of the year. With respect to the LPG import project, working groups have been assembled and detailed engineering work is underway. On our Guyana business, as Gabriel said in his remarks, we remain confident about the potential development of the quarantine block as supported by our discoveries and are reviewing all available alternatives to safeguard our interest in the block and Guyana. With that, I would like to conclude by saying thank you to Gabriel and Rene for their comments, and thank you, everyone, for attending our call.

Speaker 3

We will now turn the call back to our operator who will open up for questions.

Operator

Thank you. And your first question comes from the line of Daraa Lemma with Bloomberg Intelligence.

Speaker 4

Hi, good morning, Gabriela, Orlando and Rene. Congratulations on a great quarter. I just wanted to ask you, I think the question which is on everyone's mind is, do you have any updates on the Guyana license? And what were what are the alternative solutions you were mentioning you're going to explore? Thank you.

Speaker 3

Well, thank you for the question. As I mentioned, I mean, we remain committed to the potential development of the block. And that belief is supported by the discoveries. We are also, I mean, confident that we have complied with all the obligations under the petroleum agreement and the exploration license. And as I said, we are, I mean, reviewing different alternatives to protect our interests in the license.

Speaker 3

So I don't have, I mean, more to say at this point in time. And of course, we will continue causing these matters with the borrower.

Speaker 4

Okay. Thank you. And do you have any time line when can we expect the next update on Guyana perhaps?

Speaker 1

We don't

Speaker 3

have a timeline at this point in time. No.

Speaker 4

Okay. Thank you. And my second question is on production. I saw your production has been accelerating in October compared to already strong production from 3Q. Do you see the same trends throughout the Q4 and perhaps early next year?

Speaker 3

Yes. As we said, we are envisioning that the 4th quarter production would be above 4,200,000, 500,000 barrels. So we are confident based on the performance of the heavy oil assets and the increasing in the work handling capacity at CP6 and KIFA as well as the performance of Sao Anero. So we are confident

Speaker 2

for that.

Speaker 4

Thank you. That's all for me now.

Speaker 1

Thank you.

Operator

And your next question comes from the line of Christian Farah with KNG Securities. Please go ahead.

Speaker 5

Hello. Well, thanks for the presentation and for taking the questions. I have four questions. I'd like to go quick. First question is, we're observing higher quality differentials despite lower Brent prices.

Speaker 5

Are you seeing a normalization by the Q4? And or should we expect these high values to continue? That's the first question.

Speaker 1

Okay. We what we've seen in the market, I think you're going to see consistency. We do not expect a high variation. Actually, we are quite excited about the heavy crude mix because of current status of geopolitics. So the short term is we will probably continue to see the levels that we're seeing today.

Speaker 5

All right. Thank you. My second question is regarding this $90,000,000 tax refund that you got this quarter. Could you provide us some color on the reason behind this? And if we should expect any other tax refund for the incoming quarters?

Speaker 5

Thanks.

Speaker 1

That's a good question. So as part of the ongoing process, we file taxes once a year. We file our taxes in early Q1. And then subsequently, if we do a refund, that refund is managed during the year. So the payment that we received in July or Q3 is associated with our 2023 income tax filing.

Speaker 1

What I would point to you is that Frambita has historically carried NOLs within its operation And you can see a balance of these within our deferred tax asset amounts that we carry in our balance sheet. This year, we successfully were able to recover that amount due to our refund of as we highlighted. Moving forward, we still remain to have some additional deferred tax assets that we expect to capture next year.

Speaker 5

All right. Thank you. My third question is regarding these infrastructure business divestment. I want to know if you could comment us a bit more on how the discussions are going and if you have any plans for the use of the proceeds in case you decide to go through with the sale or spin off? Thanks.

Speaker 1

So I would say it's a little premature to talk about results. I think our goal here is to maximize the most value from these assets. And I think both Orlando and Galvez said it well. We are positioning the company to unlock the most value for all of our investors. So as of today, I think Orlando highlighted that we have engaged counterparties in discussions.

Speaker 1

We have a virtual data room open. And as soon as we have something to announce, we will announce it to the market and then kind of give them some guidance as to how will that be materialized. That said, and I think we also need to kind as our advisories point out, there is no guarantee that that certainly may occur. However, we are very excited about the potential value unlocking associated from our infrastructure assets.

Speaker 5

All right. Thank you. And my last question is, while we've been seeing heavy share repurchases over the past months, are you planning on increasing your bond are you planning on increasing your bond repurchases considering the low price, so you can lock that profit in your P and L? Thanks.

Speaker 1

I think that both Orlando and also Gabriel highlighted that all options are on the table. One of the things that we're visualizing is how do we deploy the cash generated from our business, we do maximize value. We're very excited about the results from the first SIB and even more excited about the results of the second SIB. We have actually bought some bonds in the past. I think today we bought roughly $5,000,000 and we will continue to if the market is available to continue to do some of those purchases.

Speaker 1

As to guidance going forward, it is certainly something on the radar. So we will you will need to kind of just stay tuned and see how this develops.

Speaker 5

All right. Thank you so much.

Speaker 6

Yes. Thank you.

Operator

And your next question comes from the line of Joaquin Robert with Balance Capital. Please go ahead.

Speaker 7

Thank you for your presentation. It was good to see ODL getting the tariff bump and we wanted to focus on this because we understood that inflation updates on regulated grid tolls have been suspended until Integra started You

Speaker 1

sound a little muffled. I'm sorry to interrupt you, but I really want to hear your question. Can you perhaps like speak a little bit more clearly in the phone? Can you try again because it was clear? This is better, yes.

Speaker 7

Okay, good. So it was good to see ODL getting the tariff bump and we wanted to focus on this because we understood that inflation updates on regulated crude tolls have been suspended until integral tariff provisions took place or at least that was the case for SENSA. Is that suspension over or the ODL pipe has a different remuneration scheme? If the latter is the case, was the bump related to an inflation update or an integral tariff review or a contractual change with off takers?

Speaker 1

Look, that's a terrific question. And what I would say is excited to hear questions about our very exciting infrastructure assets in these calls. The tariff adjustment is a recognition from the government. There have been no adjustments as ordinarily scheduled. Ordinarily, the review should have happened 2 years ago.

Speaker 1

It didn't happen. The government currently is reviewing the framework under which some of these tariffs are adjusted. And at the request of the pipeline operators, it granted this adjustment, which by the way doesn't cover the full pass through of inflation, but rather a portion of the inflation that we've seen over the past couple of years. As an interim step, while the full process continues to be vetted by all the stakeholders, as being consumers of pipeline, pipeline operators and the government. So to answer your question, no, there is no final there's no final there's no completed tariff adjustment.

Speaker 1

It's ongoing. Yes, the tariff were adjusted for both Ocensa and ODL. ODL starts at on September and Ocensa starts in January. And we continue to see an eye as to how this develops. And again, I would say, well, this is very positive for our pipeline business, but not so positive for our old business.

Speaker 1

So there's a balance here. But again, very excited to receive this question and thank you very much for it. Hopefully, that clarifies your doubt.

Speaker 6

Yes. Thank you.

Operator

And your next question comes from the line of Juan Barrios with Picktad. Please go ahead. Juan Berrios, you might be on mute.

Speaker 1

Yes. Do you hear me? Is it better now? Is it better? Hello?

Speaker 1

Yes. We can

Speaker 3

hear you. Yes. We can hear you.

Speaker 1

Yes. Perfect. Thank you very much. Congrats for the results.

Speaker 8

I know that you have said that you're not sharing some information, but maybe you re ask on a different way. And if you cannot, it's fine. But regarding the M and A process of the pipeline, is it anything that you could share regarding like number of people like in the data room? Is the data room still open for potential new buyers or any timing of it? Anything you can share on that?

Speaker 8

That's the first question. And then the second question is regarding Puerto Aya. I know that Puerto Aya has a little bit more than $100,000,000 linked to that port. Just confirming that any potential divestment would be together with that debt, right? And then I have a final question about maybe those together, if you can.

Speaker 3

Let me take the first one and Renee can take the second one. As I said and Gabriel said it as well, the DVR is open. We are having active participation from different interested parties. Discussions are ongoing. Nothing more that we can report at this point in time, but that is indication that we are hearing today.

Speaker 1

It. Okay. And one on your second question about the debt. Just to clarify, the company has roughly $100,000,000 actually it's $110,000,000 of debt today. That debt sits at our infrastructure holding company called Pipeline Investment Limited, which is the owner of our ODL shares and it's also part owner of our interest in Puerto Vallarta, because we

Speaker 2

hope Puerto Vallarta will return to the year goals, 199.97

Speaker 1

percent interest. Depending on the outcome of a transaction, that debt could certainly be fully repaid, but it will be outcome dependent. Does that clarify your question? Yes. Yes.

Speaker 8

Okay. But maybe just to be sure, so there's no chance that if you sell it, that debt remains at Frontera, at the holding seller with the debt.

Speaker 1

That is not a Frontera, that is not guaranteed by Frontera. So Frontera acts as a sponsor in this transaction that has a debtor or guarantor. There depending on the capital of transaction, there could be a piece of that, that remains, but it is outcome dependent. It will ultimately depend on the transaction that the Board chooses and we expect to move forward on.

Speaker 8

Perfect. And the last question is regarding 2025. Are you sharing any sort of, I don't know, a soft guidance or indication about CapEx for next year and volumes?

Speaker 3

Not at this point in time. We are working on that. So we will do it in the near future.

Speaker 8

Okay. And you cannot share if it will be lower or same or above in the current levels, right?

Speaker 1

Okay. I think we the one thing that we already shared is how we're looking to end the year. So we can point to where our production is. And I think that the other thing that I would add is that the under

Speaker 2

Orlando and

Speaker 1

the Board's leadership, our goal is on sustainable and cash flow over volume. So you should see more of the same. But again, we're finalizing numbers and having the discussions internally. And as soon as

Speaker 2

those are available, we will look to

Speaker 1

kind of share that with the rest of the world. Okay. All right. I was referring in particular about CapEx, sorry, but that's okay. Okay.

Speaker 1

Thank you very much. Thank you, Juan. Thank you.

Operator

And your next question comes from the line of Diego Espinosa with BTG Pactual. Please go ahead.

Speaker 9

Hi. Thank you for taking my questions. Can you hear me?

Speaker 1

Yes, sir.

Speaker 9

Perfect. Just have a couple of questions. Most of the question has been already answered. But just if you can give us some color of how much on share buybacks you already done so far this year? How much do you expect in $1,000,000 just the amount of related to cash flow, you expect to do during the Q4 and the Q1 of 2025?

Speaker 9

If you can give me some color on that just to understand.

Speaker 1

Terrific question. So far this year, we've completed through the NCIB and this is going to include some data from last year, right, because we launched it in November, But we've done 1,600,000 shares of our MCAV, roughly costing us a little bit under $10,000,000 In addition to that, we did the SIB that we completed in August. So we bought 3,400,000 shares. That's a total of 5,000,000 shares. And we bought those shares for again $30,000,000 to total $40,000,000 And now we just announced today our intention to launch an additional SIB.

Speaker 1

We haven't made we haven't arrived at a price for that SAB, only an amount of volume. We expect this to be widely accepted just like the other one was, but that will be for an additional $30,000,000 for a total of close to $70,000,000 and that is that's what's going to get us through at least through January of 2025.

Speaker 9

Perfect. So $30,000,000 we should expect additional cash flow that will be used to share buybacks until January 2025. Okay. And then the next question is about potential additional dividends. I know that you have $240,000,000 in cash right now, substantial amount.

Speaker 9

So can you give some color on the use of that cash or?

Speaker 1

Look, the so two things. We will continue with our quarterly dividend, obviously subject to our Board position. And the other thing is the as I said in my notes, the SIB is an efficient way for us to distribute capital to all of our shareholders. And that's why when we think about the level of participation of I think it was 92% of all of our shareholders participated in our SIB. So the we're using both dividends and SIB as a means to return this capital to our shareholders in a way that we believe it is most efficient.

Speaker 1

But again, to answer your question, we believe that we will continue with our quarterly dividend subject to any other decision that may be determined by our Board.

Speaker 3

And I think that the message from Jose, Gabriel and myself have been clear in terms of that based on the company's results, the cash flow generation and the strategic goals of the company, we will continue exploring the returns to our investors in share buybacks, dividends and loan buybacks.

Speaker 9

Okay, perfect. And the last question is when I look at your cash flow generation, I saw that around $60,000,000 in working capital pressures consumption there. Can you give us some color about that? If it will be transitory or what is related to that?

Speaker 1

$60,000,000 if I can take this one offline and I can look into it off the top of my head. Give me one second.

Speaker 9

Okay, perfect. That's it. Thank you for taking my questions.

Speaker 1

Yes. Thank

Operator

you. Your next question comes from the line of Juan Cruz with Morgan Stanley. Please go ahead.

Speaker 6

Good morning, Tim Frontera. Congrats on the results. Two questions. First one, with regards to the infrastructure asset sale, can you let us know if you're working with 1 potential buyer or is it multiple potential acquirers? That's number 1.

Speaker 6

And number 2, with regards to the bonds that you have purchased and intend to purchase going forward, is the intention to keep those bonds outstanding or do you want to cancel them?

Speaker 3

That's it.

Speaker 1

Can you repeat the question, the second one please?

Speaker 6

Yes. The second question is with regards to the bonds that you have purchased in the market and that you intend to purchase in the future, do you want to are you intending to keep those bonds outstanding or do you intend to cancel them?

Speaker 3

Okay. Got it. On the first one and you can take the second one. I mean, it is a competitive process. So it is a competitive process, just to address your first question.

Speaker 3

On the Would that mean that there's

Speaker 6

more than one potential interested party? Competitive means more than one. That's what I would have

Speaker 3

Do you

Speaker 1

want me to get one generic dictionary or I can look up what's the dictionary?

Speaker 2

Competitive definitely means more than one.

Speaker 6

Well, it will be a competition of 1. And you won't, I've been the only one.

Speaker 1

It's no competition. It's no competition. Right. On your other question, look, no, I guess, bonds that we repurchased, the intention is for those to be canceled.

Speaker 6

You intend to cancel them. Okay, cool. Excellent. Thank you.

Operator

Thank you. Your next question comes from the line of Joe DiDonato with CGX. Please go ahead.

Speaker 10

Hi. This question is for Gabriel. I think the whole issue with CGX, I think shareholders have been extremely patient waiting well over a year for any kind of information regarding what's going on. I don't seem to understand why everything has to be so cryptic and so secretive. I have been invested with CGX since the year 2000.

Speaker 10

We're going on 25 years soon. And I'm looking for a bit more information than we are working to try to unlock potential. We had 2 excellent discoveries that were flubbed in a lot of people's opinions in terms of delivery of information to the public. Enough is enough. You need to explain yourself a little bit better today, please.

Speaker 1

And Joe, thank you very much for the question. I think this is not the channel for the question. This is a channel for you guys to actually go chat with the team at CGX. But love, understood, listened and thank you for your question.

Speaker 10

Gabriel runs or is a Board of Director on CGX and he Frontera is a major shareholder of CGX. I don't understand why the secrecy.

Speaker 1

Look, Joe, there's no secrecy. There's no we cannot speak on behalf of CGX. So again, I'll point you to questions about CDX and the shareholders. I'll point them to CDX. Thank you.

Speaker 1

Thank you. Thank

Operator

you, presenters. And there are no further questions at this time. Should you have any further questions, please e mail irfronteraenergy. Ca. This concludes the call.

Operator

Thank you all for participating. You may now disconnect.

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Earnings Conference Call
Frontera Energy Q3 2024
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