Frontera Energy announced it has entered into a definitive agreement with Parex Resources Inc. for the sale of its Colombian exploration and production (E&P) assets. The transaction carries a firm value of approximately $750 million, including up to $525 million in equity consideration.
Under the agreement, Parex will pay $500 million in cash at closing, with an additional $25 million contingent payment tied to extending the term of the Quifa Association Contract within 12 months. Parex will also assume Frontera’s financial obligations tied to $310 million in 2028 senior unsecured notes and an $80 million prepayment facility with Chevron.
The Parex agreement replaces a previously announced transaction with GeoPark. Parex’s proposal added $125 million in equity consideration, representing a 31% premium over the earlier GeoPark arrangement. Frontera terminated the GeoPark agreement and paid a $25 million break fee.
The $525 million equity consideration, combined with existing cash resources and an estimated $150 million valuation for Frontera’s infrastructure business, implies a stock price of CAD$13.18. This represents a premium of more than 112% compared with the company’s 90-day volume-weighted average share price prior to the initial transaction announcement.
Following completion of the deal, Frontera plans to distribute approximately $470 million to shareholders through a return of capital, which is expected to equate to roughly CAD$9.18 per share based on shares outstanding as of December 31, 2025.
After divesting the Colombian E&P portfolio, Frontera will reposition itself as an infrastructure-focused company. Its infrastructure assets include a 35% stake in the Oleoducto de los Llanos Orientales crude oil pipeline and a 99.97% interest in Sociedad Portuaria Puerto Bahia, along with additional non-Colombian assets, including interests in Guyana.
The infrastructure business generated approximately $77 million in distributable cash flow in 2025 and is expected to serve as the core of Frontera’s future operations. The company anticipates retaining roughly $50 million in cash after the transaction closes to support growth initiatives, including a potential LNG regasification project with Ecopetrol.
The transaction is expected to close in the second quarter of 2026, subject to shareholder approval, regulatory approvals, and approval of the arrangement by the British Columbia Supreme Court. Parex plans to fund the acquisition using existing cash, credit facilities, and an underwritten financing commitment from Scotiabank.
KEY QUOTES:
“From the outset, the Board’s mandate has been clear: to maximize value for Frontera’s shareholders. Following a disciplined and constructive sales process, conducted with rigorous adherence to our fiduciary duties, the Board worked closely with management and engaged constructively with all parties to deliver the best possible outcome – representing a $125 million increase in equity consideration for our shareholders. This outcome underscores the strength of our management team, the quality of Frontera’s assets and the Board’s commitment to positioning the Company for its next chapter as a focused infrastructure platform.”
Gabriel de Alba, Chairman Of The Board Of Directors, Frontera Energy Corporation
“We are pleased to partner with Parex on this important transaction, which represents a significant milestone for Colombia and a meaningful step in the consolidation of the country’s E&P sector. As the largest independent operator in Colombia with a strong relationship with key Colombian stakeholders and direct knowledge of our assets though our VIM-1 partnership, Parex brings strong operational and financial capabilities and continuity for our employees, partners and communities. For Frontera, this transaction marks the beginning of our next chapter as a pure-play infrastructure company with approximately $77 million in distributable cash flows, multiple near-term growth catalysts at Puerto Bahia, including the LPG import facilities, the potential LNG regasification project, and containerized cargo expansion, and a strong path to returning capital to our shareholders.”
Orlando Cabrales, Chief Executive Officer, Frontera Energy Corporation
