Thank you, operator. Good morning, everyone, and welcome to Frontera's Second Quarter 2025 Operating and Financial Results Conference Call.

. Joining me on today's call are Orlando Cabrales, Frontera's CEO; and Rene Burgos Diaz, Frontera's CFO.

Also available to answer questions at the end of the call, we have Victor Vega, VP, Field Development, Reservoir Management and Exploration; Alejandra Bonilla, General Counsel; Ivan Arevalo, VP, Operations; and Renata Campagnaro, VP, Marketing, Logistics and Business Sustainability. Thank you for joining us.

Throughout the second quarter, despite ongoing volatility in the global economy and oil markets, Frontera remained focused on executing its strategic priorities. The company achieved strong operational results and completed important initiatives aimed at creating value for its shareholders and bondholders.

The company delivered $76.1 million in operating EBITDA, generated $27.1 million in adjusted infrastructure EBITDA and ended the quarter with a strong cash balance of $197.5 million. Additionally, the company prioritized returning capital to all investors via a successful $80 million tender offer and consent solicitation of its senior notes due in 2028.

Through the consent solicitation, the company strengthened its financial flexibility and reduced outstanding debt obligations, reducing its upstream net debt by 20%. The amendments to the indenture aligns Frontera's indenture with industry standards and offer targeted operational flexibility, supporting the delivery of sustainable business and reserve growth, including growth from inorganic transactions.

Subsequent to the quarter, Frontera completed CAD 91 million substantial issuer bid, the largest in the company's history. The SIB had a 92.6% participation, demonstrating that the capital distribution strategy has proven to be effective and well received by the shareholders.

The company also declared a quarterly dividend of $0.0625 per share or approximately $3.5 million in aggregate and initiated daily stock buybacks via a non-course issuer bid program. Over the last 12 months, Frontera returned over $144 million to shareholders through dividends and share buybacks and also reduced its senior unsecured notes' principal by more than 20%, highlighting its commitment to returning capital to all investors.

In Guyana, the 90-day consultation and negotiation period, which was established following the notice of intent sent to the Government of Guyana has ended. On July 23, the company received a letter reaffirming the government's vision at the current time the license expired, but noted that it may consider a final meeting with the investors on a without prejudice basis in October 2025, and the joint venture will be informed as to whether such a meeting will occur in September 2025.

Following the expiry of the 90-day consultation and negotiation period arising from the notice of intent, and in view of the uncertainty introduced by the Government of Guyana, we have recognized an impairment of over $430 million related to our investment in the Corentyne block, in accordance with prudent accounting standards. The joint venture remains firmly of the view that its interest in and the license for the Corentyne block remain in place and in good standing and that the petroleum agreement has not been terminated.

We remain committed to working with the Government of Guyana to resolve these issues amicably. We're preparing to assert and protect our legal and contractual rights to all available legal remedies, as necessary.

Looking ahead, Frontera will continue to consider all options to realize the full value of its assets and enhance shareholder value. In doing so, we will continue to consider initiatives in 2025 and beyond including additional dividends, distributions, share or bond buybacks based on the overall results of the business, oil prices and the company's cash flow generation.

Additionally, the company will consider all options to enhance the value of its common shares in the short term and, in so doing, may consider other strategic initiatives or transactions. I'd like now to turn the call over to Orlando Cabrales, Frontera's CEO; and Rene Burgos, Frontera's CFO, who will share their views on our first quarter results.

Orlando?

Thank you, Gabriel. Good morning, everyone, and thank you for joining us for today's call.

Frontera's solid second quarter financial and operating results, achieved despite the ongoing market volatility, reflect the effective actions taken to deliver stakeholder value, maintain financial and operational flexibility and reduce long-term leverage. We have increased our total production quarter-over-quarter to 41,055 barrels per day driven by increased processing capacity at SAARA, investments in new flow lines in our heavy oilfields and a successful well intervention program within our light and medium blocks, and new commercialized volumes of natural gas production from the VIM-1 block.

During the quarter, we maintained our focus on operational improvements, reducing capital spending and cost and process efficiencies across our business, lowering our production costs by 10.3% to $9.1 per barrel quarter-over-quarter driven by fewer well interventions and the implementation of new production technologies in the fields. We also reduced our transportation cost by 5.7% to $11.62 per barrel quarter-over-quarter driven by higher domestic wellhead sales.

During the second quarter, the company drilled 26 development wells, mainly at our Quifa and CPE-6 blocks in Colombia, and completed 22 well workovers in other areas. On the exploration front, our efforts now turn to the Guapo-1 well where preparation and permits were secured and drilling is expected in the second half of the year.

Our stand-alone and growing Colombian infrastructure business, which includes the company's interest in ODL, generated an adjusted infrastructure EBITDA of $27.1 million. At Puerto Bahia, the Reficar connection was completed by the end of the quarter, and we are aiming for the first volumes to be transported during the third quarter of 2025.

The connection is a strategic asset for the Cartagena Bay, offering higher throughput of hydrocarbons and the lowest transportation cost and superior logistics for the refinery of Cartagena. Other strategic investment in the port, including the LPG JV with Empresas Gasco, are progressing on schedule.

The port is also pursuing additional investment opportunities that leverage its facilities and infrastructure for sustainable long-term growth. Following the end of the quarter, the company announced it has reached an agreement to divest its interest in the noncore Perico and Espejo fields in Ecuador.

The transaction is consistent with our strategy of maximizing value over volumes and supports a stronger focus on our higher-impact Colombian upstream operations. The divestment will provide the company a total cash consideration to Frontera of $7.8 million plus additional contingent consideration of $750,000 upon Perico achieving cumulative production of 2 million barrels as from January 1, 2025.

The closing of the transaction pending regulatory approvals is expected to occur in the second quarter of 2026. As a result, we are adjusting our 2025 production guidance to account for the impact of the Ecuador sale to 39,500 to 41,000 BOE per day.

In light of the current oil price environment, we are also adjusting our capital expenditure guidance downwards by approximately $20 million, reducing development facilities CapEx to $45 million to $65 million and exploration CapEx to $25 million to $35 million, reflecting our disciplined approach to capital spending and ability to identify ongoing operational efficiencies. Additionally, we are providing operating EBITDA guidance at a $70 Brent price with a target of between $320 million to $360 million and revising our adjusted infrastructure EBITDA guidance to between $110 million to $125 million.

I would now like to turn the call over to Rene Burgos, Frontera's CFO.

Thank you, Orlando, and thank you, Gabriel. Good morning, everybody, and thank you, as always, for your support and interest for our company.

I'll try to go through this very quickly as I'd like to just take a moment to highlight a few key financial aspects of our quarterly results. For the second quarter, the company recorded a net loss of $455.2 million or $5.89 per share.

Our net loss for the quarter resulted primarily from noncash impairment charges totaling $477 million related to the company's interest in the Corentyne license in our Ecuador asset divestment. Excluding these impairment charges, the company's net income for the quarter would have been approximately $48 million.

Our operating EBITDA for the quarter was approximately $76.1 million compared to $83.5 million in the prior quarter or a 9% reduction. This was primarily due to lower Brent prices, which were 11% lower on a quarter-over-quarter basis, partially offset by the lower production and transportation costs, which highlights our operational discipline.

Moving on to our key operational performance indicators. In the quarter, we saw average Brent fuel prices at $66.71.

We continue to see strong demand for the company's heavy crude barrels, which in turn has resulted in lower average differential on export sales of $1.69. This compares to the prior quarter of $4.38 and over $2 per barrel improvement.

Our purchased crude net margin associated with our dilution and transportation equipment was $3.53, lower than the $3.81 for the prior quarter. These are the result of improvement in our VIM-1 purchasing strategy.

Reviewing our operating costs, our production, energy and transportation cost per barrel for the quarter totaled $25.34. This compares to $27.74 for the prior quarter and over $2 reduction, resulting primarily from improvement across all of our cost categories.

The decrease in quarter-over-quarter production cost was primarily a result of lower volume ratio activities, as Orlando highlighted, and the adoption of new fuel technologies focused on reducing water production at the wellhead. Energy costs also decreased during the quarter, mainly related to lower market prices and also lower consumption per barrel.

Transportation costs also decreased as a result of reduced transported volumes resulting from higher domestic wellhead sales prices. In our infrastructure business, adjusted EBITDA for the quarter was $27.1 million, which compares to $28.6 million in the prior quarter.

The quarter-over-quarter decrease was primarily due to higher operations in SAARA. This happens as we continue to ramp up its operations with water processing volumes in SAARA up to over 50% on a quarter-over-quarter basis, which was offset by positive results in the ODL segment.

As of June 30, 2025, the company reported a total cash position of $197.5 million, including $184.9 million of unrestricted cash and cash equivalents. Subsequent to the quarter, the company did complete its SIB and the payment of approximately $66 million to shareholders, which we will see reflected in the next quarter.

We will touch on this further shortly. Turning now to risk management.

Our current risk management strategy supports our operations and planning. Frontera uses derivative instruments to manage exposure to oil prices volatility.

On the oil side, the company has entered into hedges, successfully securing up to 40% hedging ratio until December 2025 at prices between $65 and $70 Brent, protecting against a drop in oil prices. Year-to-date, we have realized approximately $6 million in gains from our hedging activities, excluding premium costs, enhancing financial stability on a month-to-month marketing fluctuations.

Frontera has also covered 40% of the company's expected peso exposure until the third quarter and 20% of its exposure to the fourth quarter with floors at over the MXN 4,200 level. This provides the company with cash flow visibility and help mitigate impact from future fluctuations while allowing the business to deliver on the 2025 targets.

Finally, I'd like to provide an update on our investor value initiatives. In the second quarter, the company repurchased $80 million of its 2028 notes through a cash tender and consensual solicitation.

Frontera has paid approximately $10.5 million in dividends year-to-date. And together with the second quarter results, the Board has declared a quarterly dividend of CAD 0.0625 per share to shareholders of record as of October 2, 2025, and to be paid on or around October 16.

Regarding the company's substantial issuer bid, SIB, Frontera repurchased CAD 91 million or USD 66 million of its common shares through SIB done in July, which is in addition to the company's CAD 42 million or USD 30 million of common shares repurchased through the SIB that closed in January of this year. The company is also currently repurchasing shares daily through automatic share purchase program, the NCIB, that we recently launched in July.

With that, I would like now to turn the call back to Orlando for some thoughts.

Thank you, Rene. Before I conclude today's call, I would like to highlight that the company continues to advance towards its 2028 sustainability goals as well as on the 2025 plan with progress made on almost every goal during the second quarter.

On the sustainability front, in Frontera, we are committed to following and promoting human rights within our operations, and we have launched the Business Network for Responsible Business Conduct to promote and share best practices in human rights, diligence and training. In the second quarter of 2025, local suppliers accounted for over 11% of total purchases, reflecting the ongoing commitment to support local economic development.

Additionally, we maintained a strong performance in health and safety indicators, achieving a total recordable incident rate of 0.71 and also attaining a water reuse rate of 37.6% within our operational activities. With that, I would like to conclude by saying thank you to Gabriel and Rene for their comments, and thank you to everyone for attending our call.

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

I have two questions. The first question is on Ecuador.

I wanted to find out regarding the purchase price. It seemed a little bit low.

It worked out to be $8,000 per flowing barrel. Could you maybe discuss how you achieved that price?

And then I guess the second question on the NCIB. It appears we purchased back around 80,000 shares.

I was curious why the NCIB has not been hit more aggressively given the stock is around $6. I was expecting to see double that.

We did a buyback at $12 a share. And I was hoping we'd be buying back the maximum we could to increase the value for all shareholders.

Sara, I apologize, we disconnected briefly. Can you repeat your first question?

And I can tackle the second question quickly. But could you please repeat your first question?

Yes. The first question was in terms of the Ecuador sale, I was a little bit surprised by the price because it worked out to be $8,000 per flowing barrel.

I was curious why it was sold for $8 million. Is there some additional reasoning for that?

Or is that the going rate for Ecuadorian assets because that seems kind of low if you compare it to U.S. market comps.

Got it. So I'll tackle the first question and then tackle the second question.

But on the first question on the NCIB, there are 2 rules associated with the NCIB as to how much we can buy. One is the one limited by our float and the second one is limited by our daily volume.

Our daily volume historically has been close to, I think, call it, 100,000, 150,000 shares, and we're limited to buying up to 20% of that volume on a daily basis. We've instructed BMO, our adviser, into the NCIB process to buy shares on a daily basis to try and hit that limit.

But in essence, we're somewhat limited as to how many shares we can buy by the nature of the NCIB program itself. And that's why we also do see -- and what we do, for the benefit of all our shareholders, we do the significant SIBs where we're not limited on size, but rather we just provide an offer for every shareholder to participate in a matter that is equivalent.

On the Ecuador sale, what I would say, look, I think this helps us focus on our core operations, our higher-impact operations, which is Colombia. Our goal entering on Ecuador was to make it a material operation.

The reality is that despite our best efforts, it never reached materiality. I mean, we're aiming to get this to be an operation of 5,000 barrels plus, but we were struggling to keep it over 2,000.

So as a result of that, we made the decision to move on and really focus on the assets that are delivering in our portfolio. I would like to highlight that if you exclude our Ecuadorian operations for the last 6 months compared to last year, our production is actually up in Colombia around 4%, 5%, excluding Ecuador, right?

So we continue to kind of drive home the economic value of our assets in Colombia, trying to get a lot more cost savings to really kind of drive that value.

And to be consistent with our management of value over volumes. So I think that is -- I mean, that disposal is consistent with that and, as Rene said, concentrated on the Colombian assets.

In the MD&A, you mentioned the company may be considering other strategic initiatives or transactions to enhance value. So in the context of after divesting Ecuador, could you share a bit more color on what kinds of initiatives or transactions you might be considering?

Is this like acquisitions, divestments, JVs? And would geographic focus continue to be mainly on Colombia?

Or would you be considering other geographies?

Thank you for the question. I would start by saying that our current portfolio provides some very, very important opportunities.

Just to take the Quifa block, we have been working on the SAARA project, which is going to increase the water handling of the field, which is currently being implemented, and that provides additional opportunities for growth in the Quifa block as well as with the CPE-6 block, where we have been increasing also the water handling capacity of the field up to 380,000 barrels of water per day, and that will allow us to keep further production in that block. Not to mention the Sabanero field, which is also a heavy oilfield in the same similar, I mean, location, close location to Quifa, our production there has been, I mean, higher than what we have expected.

So those are good opportunities in our heavy oilfields, which provides opportunities for growth. The other one is, as we mentioned, the Guapo well in the GU-1 block.

That is, I mean, very good opportunity. As we said, during the quarter, we start again selling, gas sales to the market, taking advantage of the window of opportunity we have in the gas market in Colombia where prices are going up in a very significant way.

We are working with our partner, Parex, to further development in that area. So that is another one, which I think provides an opportunity.

And as you said, I mean, regarding any other potential acquisitions or M&A opportunities, I mean we are always looking for those opportunities to enhance value for all our stakeholders and would consider any opportunities that make sense to our shareholders and stakeholders.

I have a couple of questions here. It looks like we've seen a buildup in receivables over the quarter, which have negatively impacted the working capital.

If you can elaborate on this a little bit. I think we would also appreciate if you can disclose the cash taxes for the first and the second quarter.

Given quite a large cash balance, what are your intentions in terms of keeping this cash balance, potentially buying back some bonds? And if you can tell us a little bit more how you think about the outstanding bond given that it's trading at pretty low levels.

In terms of cash prices, the refinancing of this bond seems highly unlikely today, at least.

All right. I think I have a couple of questions there.

On the receivables, I think we have a VAT receivable of about $20 million that we were expecting to receive this quarter. We do have other income taxes receivables that's related to our deferred tax asset values that we expect to receive later this year.

So that's why you see the working capital moving positive. I think the shift was roughly $50 million on a quarter-over-quarter basis.

And I think those 2 assets on their own somewhat reflect that. As to your question on our cash position, we sit with about $197 million of cash, of which $184 million is unrestricted.

You got to remember, of that $184 million, you subtract roughly $66 million because we just closed the SIB in July. So those numbers do not reflect the SIB program.

As to the bond and plans with the bond, look, we've had really great conversations over the last, I would say, 3, 4 months with our bondholders. We communicated our strategy.

I think Orlando just highlighted some of the opportunities that are available, not to include other opportunities that, of course, could emerge because of the current market environment. So right now, our focus is on delivering on the business.

We still have another 3 years left of our bond maturity. We will continue to be opportunistic regarding bond purchases.

But at this time, our focus is on delivering on the promise of the business, which is to maximize value for our stakeholders.

And I would add to that, of course, I mean, we will consider that. And any decision would be made based on the overall results of the business, the oil prices, the cash flow generation of the business.

But absolutely, as Rene said, I mean, as we have demonstrated and we have delivered on it, we will be very open to consider additional initiatives like that one.

That's great. And in terms of cash taxes for the first and the second quarter this year?

Well, you can take a look at our -- we have one particular line. So there's two ways that we pay taxes, Sergey.

So one way is kind of settle it at the end of the year and then monthly, we have the withholding taxes. So I think that the best way to explain it is we roughly pay 5%, 6% of our gross sales.

So I think if you add up the year, and I think our release is close to, call it, $400 million, $500 million, you can multiply that times that 5%, 6%, and that's how you get to that number. But it's within our cash flow statement.

So it should be anywhere from $30 million or something like that we paid. And that's gross before the returns.

Thank you. Thank you, everybody, for attending the call, and have a good day.

Thank you, operator.