Global Cross-Asset Energy Analyst, VAC Investments

Aaditya Chintalapati, CFA

Global Cross-Asset Energy Analyst

VAC Investments

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/25655" target="_blank" data-smartkarma-citation="entities:25655:1">Frontera Energy (FEC CN)</a>'s Acorazado exploration well (Llanos 25, Colombia) discovered significant oil &amp; gas pay, albeit achieving lower than expected flow rates and uncertain commerciality. A successful well was expected to help address investor concern around Frontera's resource upside and production growth potential. However, given the mixed results at the well, we believe management will now need to focus on building a robust hopper of exploration prospects for 2019, via licensing rounds and acquisitions. Crucially, with the company generating c.US$300m of FCF per year, we believe Frontera is well placed for accretive resource acquisitions in the region. We see c.50% upside to our C$27/share price target, which is based on our Base Case NAV.</p>

Frontera Energy (FEC CN)'s Acorazado exploration well (Llanos 25, Colombia) discovered significant oil &amp; gas pay, albeit achieving lower than expected flow rates and uncertain commerciality. A successful well was expected to help address investor concern around Frontera's resource upside and production growth potential. However, given the mixed results at the well, we believe management will now need to focus on building a robust hopper of exploration prospects for 2019, via licensing rounds and acquisitions. Crucially, with the company generating c.US$300m of FCF per year, we believe Frontera is well placed for accretive resource acquisitions in the region. We see c.50% upside to our C$27/share price target, which is based on our Base Case NAV.

Frontera Energy (FEC CN): Mixed Results at Acorazado Reiterate Investor Concerns

Canada

Frontera Energy Corporation provides oilfield services. The Company explores, develops, and produces crude oil and natural gas. Frontera Energy serves customers worldwide.

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Frontera Energy (FEC CN): Mixed Results at Acorazado Reiterate Investor Concerns

Frontera Energy (FEC CN)'s Acorazado exploration well (Llanos 25, Colombia) discovered significant oil & gas pay, albeit achieving lower than...

Aaditya Chintalapati, CFA