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Frontera Energy Corporation (TSE:FEC)
TSX:FEC
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Frontera Energy (FEC) AI Stock Analysis

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TSE:FEC

Frontera Energy

(TSX:FEC)

Rating:73Outperform
Price Target:
C$7.00
▲(8.86%Upside)
Frontera Energy receives a solid overall score driven by its strong financial performance and strategic corporate actions. The company's initiatives to enhance shareholder value through buybacks and dividends are significant positives. However, a relatively high P/E ratio suggests caution regarding valuation, and mixed technical indicators reflect neutral market sentiment.

Frontera Energy (FEC) vs. iShares MSCI Canada ETF (EWC)

Frontera Energy Business Overview & Revenue Model

Company DescriptionFrontera Energy Corporation explores for, develops, and produces crude oil and natural gas in South America. The company has a portfolio of assets, which consists of interests in 35 exploration and production blocks in Colombia, Ecuador, Guyana, and Peru; and in pipeline and port facilities in Colombia. As of December 31, 2021, it had total proved plus probable reserves of 167 million barrels of oil equivalent. The company was formerly known as Pacific Exploration & Production Corporation and changed its name to Frontera Energy Corporation in June 2017. Frontera Energy Corporation was incorporated in 1985 and is headquartered in Calgary, Canada.
How the Company Makes MoneyFrontera Energy makes money primarily through the exploration, production, and sale of crude oil and natural gas. The company's revenue model is heavily reliant on the successful extraction and sale of these commodities in the international markets, with a significant portion of its revenue coming from its operations in Colombia. Frontera Energy also engages in partnerships and joint ventures to optimize its production capabilities and reserves, which further contributes to its earnings. Additionally, fluctuations in global oil prices, operational efficiencies, and cost management strategies are critical factors that influence the company's profitability.

Frontera Energy Earnings Call Summary

Earnings Call Date:May 09, 2025
(Q1-2025)
|
% Change Since: 37.48%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Neutral
Frontera Energy's Q1 2025 performance shows strong financial results and strategic initiatives to enhance shareholder value. However, challenges in production and exploration, as well as legal disputes in Guyana, present significant hurdles.
Q1-2025 Updates
Positive Updates
Strong Financial Metrics
Frontera Energy generated $83.5 million in operating EBITDA and recorded $27.5 million in net income for Q1 2025. The company also maintained a strong balance sheet with a total cash balance of $199.8 million.
ODL Pipeline Recapitalization
Frontera announced a $220 million non-recourse secured loan for the recapitalization of the LDL pipeline, delivering approximately $115 million in proceeds to Frontera while maintaining future potential from key transportation assets in Colombia.
Strategic Shareholder Returns
The company declared a quarterly dividend of $0.625 per share and plans to commence its NCIB program after the announced substantial issuer bid, having returned $190 million to stakeholders since 2024.
Operational Improvements in Q2
Despite challenges, Frontera's Q2 production has been strong with estimated average daily volumes of approximately 42,400 BOE per day in May.
Ethisphere Recognition
Frontera was recognized by Ethisphere as one of the world's most ethical companies for the fifth consecutive year.
Negative Updates
Production Challenges
Lower-than-expected production in Q1 due to delays in heavy oil drilling, lower water handling at SAARA, natural declines, and increased well interventions.
Exploration Challenges
The Greta Norte-1 well was deemed non-commercial and will be plugged and abandoned.
Guyana Dispute
Dispute with the government of Guyana over the termination of the petroleum agreement for the quarantine block, with Frontera alleging breaches of the UK-Guyana Bilateral Investment Treaty.
Company Guidance
During Frontera Energy's First Quarter 2025 conference call, the company reported generating $83.5 million in operating EBITDA and achieving a net income of $27.5 million. They produced $28.6 million of adjusted infrastructure EBITDA and maintained a total cash balance of $199.8 million. The company announced plans for a $220 million non-recourse secured loan related to its LDL pipeline investments, aiming to distribute approximately $115 million in proceeds. Additionally, Frontera launched a $65 million substantial issuer bid and declared a quarterly dividend of $0.625 per share, totaling $3.5 million. The company's 2025 production guidance was set at 41,000 to 43,000 BOE per day, with notable performance in its Colombian and Ecuadorian operations, despite facing challenges. Frontera's strategic initiatives focus on maximizing shareholder value, including potential infrastructure asset transactions and continued investor-focused measures such as dividends and buybacks, having returned $190 million to stakeholders since 2024.

Frontera Energy Financial Statement Overview

Summary
Frontera Energy shows strong financials with solid cash flow and a robust balance sheet. The company has improved its profitability and maintains a strong equity position. However, net margins and ROE are areas for growth.
Income Statement
72
Positive
The income statement shows moderate performance with a gross profit margin of 23.0% and a net profit margin of 1.0% for TTM. Revenue growth is slightly positive, with a 0.24% increase from the previous year, and EBIT and EBITDA margins are at 8.9% and 34.1% respectively. The company recovered from a net loss in 2024 to a net profit in TTM, indicating stabilization.
Balance Sheet
78
Positive
The balance sheet indicates a strong equity position with an equity ratio of 60.1% and a manageable debt-to-equity ratio of 0.29. Return on Equity (ROE) is modest at 0.7% for TTM, suggesting limited profitability on shareholder investment. The company maintains a stable asset base with total assets slightly decreasing over the periods.
Cash Flow
80
Positive
Cash flows are robust with a strong operating cash flow to net income ratio of 43.4. Free cash flow shows positive growth of 14.4% from the previous year, indicating effective cash management despite significant capital expenditures. The free cash flow to net income ratio is favorable at 15.4, highlighting good cash conversion.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.13B1.15B1.37B926.63M658.19M
Gross Profit212.78M516.50M506.77M350.97M-187.13M
EBITDA390.90M523.25M777.26M807.66M-142.70M
Net Income-24.16M193.50M286.62M628.13M-481.91M
Balance Sheet
Total Assets2.90B3.02B2.74B2.61B2.06B
Cash, Cash Equivalents and Short-Term Investments192.58M159.67M289.85M257.50M232.29M
Total Debt506.04M536.82M511.55M560.13M538.24M
Total Liabilities1.17B1.18B1.15B1.16B1.30B
Stockholders Equity1.72B1.82B1.58B1.40B703.85M
Cash Flow
Free Cash Flow159.38M-24.60M204.82M15.62M129.04M
Operating Cash Flow510.03M411.79M620.48M327.38M226.78M
Investing Cash Flow-339.25M-484.32M-383.27M-186.94M-178.53M
Financing Cash Flow-128.86M-62.66M-193.60M-108.38M-132.53M

Frontera Energy Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price6.43
Price Trends
50DMA
6.24
Positive
100DMA
5.97
Positive
200DMA
6.94
Negative
Market Momentum
MACD
0.01
Positive
RSI
49.06
Neutral
STOCH
53.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FEC, the sentiment is Neutral. The current price of 6.43 is below the 20-day moving average (MA) of 6.57, above the 50-day MA of 6.24, and below the 200-day MA of 6.94, indicating a neutral trend. The MACD of 0.01 indicates Positive momentum. The RSI at 49.06 is Neutral, neither overbought nor oversold. The STOCH value of 53.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:FEC.

Frontera Energy Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$448.25M28.440.67%0.58%-0.37%-92.83%
52
Neutral
C$2.96B-1.55-3.48%6.54%3.13%-49.39%
$410.25M5.39-12.88%
68
Neutral
C$300.96M10.5611.09%24.05%44.00%
65
Neutral
C$398.76M51.492.74%42.32%
56
Neutral
C$501.39M187.11-13.52%-3.50%-153.25%
48
Neutral
C$431.62M-6.69%41.39%-61.36%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:FEC
Frontera Energy
6.43
-1.14
-15.01%
OBE
Obsidian Energy
5.96
-1.36
-18.58%
TSE:TNZ
Tenaz Energy Corp
18.10
11.48
173.41%
TSE:KEI
Kolibri Global Energy
8.49
3.76
79.49%
TSE:CEI
Coelacanth Energy, Inc.
0.81
0.05
6.58%
TSE:LGN
Logan Energy Corp
0.69
-0.14
-16.87%

Frontera Energy Corporate Events

Financial Disclosures
Frontera Energy to Announce Q2 2025 Financial Results
Neutral
Jul 25, 2025

Frontera Energy Corporation announced it will release its second-quarter 2025 financial and operational results on August 13, 2025. A conference call for investors and analysts is scheduled for August 14, 2025, featuring key members of the company’s senior management team. This announcement is significant for stakeholders as it provides insights into the company’s performance and strategic direction, potentially impacting its market positioning and investor relations.

Stock BuybackBusiness Operations and Strategy
Frontera Energy Launches Share Buyback Program to Enhance Shareholder Value
Positive
Jul 16, 2025

Frontera Energy Corporation has announced the initiation of a normal course issuer bid (NCIB) approved by the Toronto Stock Exchange, allowing the company to repurchase up to 3,502,962 common shares, representing approximately 5% of its issued and outstanding shares. This move is part of Frontera’s strategy to enhance shareholder value by purchasing shares when their market price does not reflect the company’s underlying value and prospects. The NCIB will be facilitated through an automatic share purchase plan with BMO Nesbitt Burns Inc., enabling purchases even during blackout periods, and the shares acquired will be cancelled, thus potentially increasing the value of remaining shares.

Stock BuybackBusiness Operations and Strategy
Frontera Energy Completes $91 Million Share Repurchase
Positive
Jul 16, 2025

Frontera Energy Corporation has completed a substantial issuer bid, repurchasing 7,583,333 of its common shares at $12.00 per share, totaling approximately $91 million. This move is part of Frontera’s strategy to return value to shareholders, having returned over US$144 million in the past year through various capital distribution methods. The company plans to continue similar initiatives in 2025, indicating a strong commitment to shareholder value. The repurchase represents about 9.77% of the company’s outstanding shares, and the offer was oversubscribed, leading to a pro rata purchase of tendered shares.

Stock BuybackBusiness Operations and Strategy
Frontera Energy Announces Preliminary Results of Substantial Issuer Bid
Positive
Jul 11, 2025

Frontera Energy Corporation has announced the preliminary results of its substantial issuer bid, where it offered to purchase up to CAD$91 million of its outstanding common shares for cancellation at a price of CAD$12.00 per share. The offer was oversubscribed, with approximately 71.93 million shares tendered, and Frontera expects to purchase around 9.77% of its total issued shares. This move is part of Frontera’s strategy to manage its capital structure and enhance shareholder value, with plans to initiate a normal course issuer bid following the completion of this offer.

Private Placements and FinancingBusiness Operations and Strategy
Frontera Energy Successfully Concludes Tender Offer and Consent Solicitation
Positive
Jun 10, 2025

Frontera Energy Corporation announced the successful results of its cash tender offer and consent solicitation for its 7.875% Senior Notes due 2028. The company received requisite consents to amend the terms of the Notes and valid tenders exceeding the maximum tender amount, reducing its Notes by $80 million, which underscores its commitment to bondholders. This strategic move is part of Frontera’s broader focus on enhancing bondholder and investor value, ensuring long-term sustainability in a challenging macro-economic environment.

Stock BuybackBusiness Operations and Strategy
Frontera Energy Launches CAD$91 Million Share Buyback
Positive
Jun 2, 2025

Frontera Energy Corporation has announced the launch of a substantial issuer bid, offering to purchase up to 7,583,333 common shares for cancellation at a price of CAD$12.00 per share, totaling up to CAD$91 million. This move is part of Frontera’s strategy to return capital to shareholders, and it follows previous share repurchases and dividends, potentially yielding a 24.9% return on the company’s stock price. The board remains committed to exploring further strategic initiatives to enhance shareholder value, though no specific plans are guaranteed.

Private Placements and FinancingBusiness Operations and Strategy
Frontera Energy Enhances Tender Offer for Senior Notes
Neutral
Jun 2, 2025

Frontera Energy Corporation has announced an increase in the consideration and maximum tender amount for its outstanding 7.875% Senior Notes due 2028, as well as amendments to certain terms of the tender offer and consent solicitation. The maximum tender amount has been raised from $65 million to $80 million, and the consent payment has been increased, potentially impacting the company’s financial strategy and stakeholder engagement by offering more favorable terms to noteholders.

Private Placements and FinancingBusiness Operations and Strategy
Frontera Energy Extends Tender Offer Deadline for Senior Notes
Neutral
May 27, 2025

Frontera Energy Corporation has announced an extension of the early tender date and consent deadline for its outstanding 7.875% Senior Notes due 2028. The extension allows noteholders additional time until June 9, 2025, to tender their notes or provide consents, with settlement expected on June 11, 2025. This move aims to facilitate the company’s cash tender offer and consent solicitation, although the requisite consents for proposed amendments have not yet been received. The company has satisfied the financing condition but reserves the right to amend or terminate the offer based on other conditions.

Executive/Board ChangesShareholder Meetings
Frontera Energy Announces Successful Election of Directors at 2025 Annual Meeting
Neutral
May 23, 2025

Frontera Energy Corporation announced the results of its 2025 annual and special meeting of shareholders, where all management-nominated directors were elected with an average approval rate of 97.19%. The meeting saw participation from shareholders representing approximately 68.69% of the company’s issued and outstanding common shares. The election of directors and the composition of the company’s committees, including the Audit Committee, Compensation and Human Resources Committee, and Corporate Governance, Nominating, and Sustainability Committee, were confirmed, which may impact the company’s strategic direction and governance.

Stock BuybackBusiness Operations and Strategy
Frontera Energy Announces CAD$91 Million Share Buyback Initiative
Positive
May 22, 2025

Frontera Energy Corporation has announced a substantial issuer bid to purchase up to 7,583,333 common shares for CAD$12.00 per share, totaling CAD$91 million. This initiative is part of Frontera’s ongoing strategy to return capital to shareholders, having returned approximately US$144 million over the past year through various financial maneuvers. The offer reflects the company’s commitment to unlocking shareholder value and may lead to further strategic initiatives in the future.

Private Placements and FinancingStock BuybackBusiness Operations and Strategy
Frontera Energy Secures $220 Million Loan to Boost Investor Value and Strategic Growth
Positive
May 15, 2025

Frontera Energy Corporation has successfully closed and funded the recapitalization of its interest in the ODL pipeline through a new $220 million non-recourse, secured loan. This financial maneuver allows the company to distribute significant value to investors while preserving future growth potential for its key transportation asset in Colombia. The recapitalization provides Frontera with approximately $115 million in net proceeds, enabling it to offer a substantial issuer bid to repurchase common shares. Additionally, the exclusion of Puerto Bahía from the security package grants it greater flexibility for independent financing of strategic projects, enhancing Frontera’s operational and financial positioning.

Private Placements and FinancingBusiness Operations and Strategy
Frontera Energy Initiates Tender Offer for Senior Notes
Neutral
May 9, 2025

Frontera Energy Corporation has announced a cash tender offer and consent solicitation for up to $65 million of its outstanding 7.875% Senior Secured Notes due in 2028. This move is part of the company’s financial strategy to manage its debt obligations, potentially impacting its liquidity and financial flexibility. The offer includes an early tender and consent payment incentive for holders who respond by a specified deadline, indicating Frontera’s proactive approach to debt management and stakeholder engagement.

Private Placements and FinancingStock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Frontera Energy Reports Strong Q1 2025 Results and Strategic Initiatives
Positive
May 9, 2025

Frontera Energy Corporation reported a strong financial performance in the first quarter of 2025, with a net income of $27.5 million and an operating EBITDA of $83.5 million. The company is advancing its strategic objectives, including the recapitalization of its ODL pipeline investment through a $220 million non-recourse secured loan, which is expected to yield $115 million in net proceeds. This move is part of Frontera’s broader strategy to enhance shareholder value, which includes a $65 million substantial issuer bid and a quarterly dividend declaration. Despite facing challenges such as lower production levels, Frontera is optimistic about future growth, particularly in its infrastructure assets and potential new projects in Puerto Bahia.

Financial Disclosures
Frontera Energy to Announce Q1 2025 Financial Results
Neutral
Apr 25, 2025

Frontera Energy Corporation announced it will release its financial and operational results for the first quarter of 2025 on May 8, 2025, after market close. A conference call with key executives will follow on May 9, 2025, to discuss these results, providing stakeholders with insights into the company’s performance and strategic direction.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 24, 2025