Frontera names Cabrales CEO, sets Colombia-focused 2021 plan
Frontera Energy Corp. has appointed a new chief executive officer and set a 2021 plan focused on Colombia development, Colombia and Ecuador exploration, Guyana exploration, and Guyana infrastructure.
Orlando Cabrales Segovia has been named chief executive officer, effective, Mar. 15, replacing Richard Herbert who has served in the position for the last 3 years.
Cabrales joined the company’s board in November 2018 and has over 30 years of experience in the public and private energy sector in Colombia, including serving as vice minister of Energy of the Ministry of Mines and Energy between 2013 and 2014 and as the president of the ANH from 2011 to 2013. He will continue as a director.
Herbert will continue acting in an advisory capacity to ensure an orderly transition with a focus on Guyana, where the company expects to incur $90 million in exploration costs, principally to drill the offshore Kawa-1 well, with its share dependent upon whether or not it elects to pursue strategic options, and $15-25 million for Berbice Port (Guyana) construction.
Frontera anticipates spending $30-40 million for exploration in Colombia including drilling two exploration wells in VIM-1 and to complete seismic and preparatory work in Ecuador in advance of potential drilling in 2022.
The overall 2021 capital program is expected to be $200-295 million on a consolidated basis. The total includes $110-130 in development capital to maintain production volumes in Colombia. Development costs for the 2021 budget are expected to be 40-50% lower than 2019 due to cost efficiencies and process improvements.
The company’s 2021 plan anticipates a production exit rate of 43,000 boe/d and average annual production of 40,500-42,500 boe/d, all from Colombia.
Colombia
In the VIM-1 block, in the Lower Magdalena Valley, Frontera (50%) and Parex (operator, 50%), completed the permitting and approval process and progressed the development plan concept including gas commercialization and infrastructure requirements for the La Belleza-1 light oil and natural gas discovery.
Regulatory approval to extend the current VIM-1 block boundaries by 32,000 acres was received. The joint venture expects to drill two additional exploration wells in the block this year. In addition, preliminary work in the VIM-22 block ahead of drilling in 2022 is planned.
In 2021, Frontera plans to drill at least 19 wells in Quifa and 15 wells in CPE-6. At this activity level, development costs at Quifa, its largest field, have been lowered to $8/boe in 2021, down 60% from $20/boe in 2019. The company expects steady production volumes in the heavy oil business unit, backstopped by production from CPE-6 that is expected to increase by 40% this year due to further drilling and construction of additional water-handling facilities. In the company's light and medium oil business unit, plans are to drill two wells in Coralillo field as part of the continued development of the Guatiquia block.
Guyana
Frontera and CGX, joint venture partners, will continue to progress exploration in the Corentyne and Demerara blocks, offshore Guyana.
In the Corentyne block, plans are to spud Kawa-1 well in the year’s second half in water depth of 1,100 ft targeting the Campanian-Santonian zones.
In the Demerara block, the company is advancing preparatory work for the Makarapan-1 well (previously called Demerara-F), an Aptian stratigraphic prospect. Additional prospects and leads have been identified and are being matured.
An independent external qualified resource evaluation, prepared as of Aug. 31, identified 27 prospects in the Corentyne block and 5 prospects in the Demerara block. Frontera's consolidated interest (82.6%) is equivalent to a mean volume prospective resources of 6,089 MMboe unrisked and 1,090 MMboe risked. The fluid content considered for the prospects is mainly oil (64%), natural gas (28%) and the remainder condensate (8%).
Peru
On Feb. 5, the company's service contract for Block 192 expired. The company is no longer operating on the block. At yearend 2020, Frontera's produced oil inventory in Peru was 1 million bbl. In January, Frontera sold 400,000 bbl of the inventory. The company has begun remediation work in Block 192 and expects to pay for any required remediation through the sale of its oil inventory in Peru. On Block Z-1, Frontera has begun work to abandon its offshore platforms as it pursues its exit from Peru.
Ecuador
In Ecuador, Frontera is planning seismic acquisition and other preliminary activities in 2021 in advance of drilling in the Espejo block (Frontera 50%, GeoPark 50% and operator) and Perico block (Frontera 50% and operator and GeoPark 50% ) in second-half 2021 or early 2022.
