Image source: Company update

Highlights

  • Frontera’s Q2 2024 saw net sales price rise to USD 72.85/boe, driven by higher Brent prices
  • Despite higher prices, revenue fell 3.6% year-over-year due to reduced production
  • Net income dropped to a loss of USD 3.1 million, primarily due to increased taxes
  • Frontera plans to boost production to 40,000-42,000 boe/d and achieve EBITDA of USD 400-450 million

Frontera Energy Corporation (TSX: FEC), based in Canada, specializes in the business of crude oil and natural gas production and exploration in South America.

In the second quarter of 2024 (Q2FY24), the company's net realised sales price improved to USD 72.85/boe, up from USD 70.80/boe in the previous quarter and significantly higher than USD 64.09/boe in the same period last year. This positive shift was largely driven by an increase in the Brent benchmark oil price and more favourable oil price differentials.

Despite the higher net sales realised price, the company faced a 3.6% decline in revenue year-over-year, largely due to reduced consolidated production. The lower revenue resulted in a decrease in income from operations to USD 45.2 million, coupled with a sharp decline in net income before tax to USD 29.5 million from USD 82.4 million in the prior year.

The significant drop in bottomline to a loss of USD 3.1 million, compared to a profit of USD 79.8 million in the previous period, was mainly attributed to increased income tax expenses.

Recent Business Update

On August 7, 2024, Frontera's Board of Directors declared a dividend of CAD 0.0625 per Common Share, payable on or around October 16, 2024. Shareholders of the company who are on record as of October 2, 2024, are eligible for the dividend.

Company Outlook

Frontera aims to increase production to approximately 40,000 - 42,000 boe/d by the end of 2024. Additionally, with oil priced at USD 80 per barrel, the company anticipates achieving an operating EBITDA between USD 400 million and USD 450 million.

Top 10 Shareholders

The top 10 shareholders of Frontera collectively hold approximately 57.67% of the company's shares. Among them, Catalyst Capital Group Inc. and Gramercy Advisors, L.L.C. are the largest shareholders, with stakes of about 41.36% and 13.44%, respectively.

Stock Information

Over the last week, the stock price of Frontera has witnessed a downfall of ~3.67%. However, it has surged by around 4.68% over the last one month. Additionally, the stock is currently trading below the average of its 52-week high of CAD 12.41 and 52-week low of CAD 7.13.

 Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 02, 2024. The reference data in this report has been partly sourced from EODHD/Others.