Frontera Announces 2020 Year End Reserves

Achieved 191% Net 2P Reserves Replacement Ratio in Colombia

Extended Net 2P Reserves Life Index to 10.6 years in Colombia

2P Reserves Net Present Value (10% discount) of $1.888 billion Before Tax

Added 18.9 MMboe Net 2P reserves from Colombia fields

TORONTO, March 3, 2021 /PRNewswire/ - Frontera Energy Corporation (TSX: FEC) ("Frontera" or the "Company") today announced the results of its annual independent reserves assessment conducted by DeGolyer and MacNaughton ("D&M"). All dollar amounts in this news release and the Company's financial disclosures are in United States dollars, unless otherwise noted.

Richard Herbert, Chief Executive Officer, commented:

"In 2020, Frontera safely and efficiently added 30.6 MMboe Proved plus Probable ("2P") reserves including 6.4 MMboe from the exciting La Belleza discovery in the VIM-1 block. These strong reserves additions combined with reduced production resulted in 2P reserves replacement of 154% and extended Frontera's Reserve Life Index to 10.3 years based on 2020 production. These results are a credit to the perseverance of our entire team given the difficult backdrop of COVID-19 induced restrictions and challenges, decreased capital spending that focused on our highest return production, limited exploration and development drilling and a significant decrease in oil prices during the year."

Frontera's 2020 year-end 2P reserves additions of 30.6 MMboe were significantly driven by the La Belleza discovery in the VIM-1 block, reduction of in-kind royalty payments and reduction in high price participation (PAP) royalties related to the Quifa block and technical revisions. These additions were offset by 16.1 MMboe of 2020 production and the de-booking of 5.7 MMboe of reserves in Blocks 192 and Z-1 in Peru, and the Orito field in Colombia as Frontera pursues its exit from these areas. All of the Company's booked reserves for the year ended December 31, 2020 are located in Colombia.

2020 Reserves Report Highlights:

For the year ended December 31, 2020 the Company:

• Added 18.9 MMboe of 2P reserves from its Colombia fields including Coralillo, Quifa SW, Hamaca, Jaspe, Ceibo and Copa.
  
  
• Added 6.4 MMBoe of 2P reserves and 17.5 MMBoe of Proved plus Probable plus Possible ("3P") reserves from the exciting La Belleza gas condensate discovery.
  
  
• Added 24.8 MMboe of 2P reserves on a net basis, increasing the Company's 2P net reserves to 166.4 MMboe, compared to 157.7 MMboe at December 31, 2019, an increase of 5.5%.
  
  
• Achieved a net 2P Reserve Replacement Ratio of 154% compared to 112% at December 31, 2019.
  
  
• Extended 2P reserves life index to 10.3 years compared to 6.7 years at December 31, 2019.
  
  
• Increased net 3P reserves by 14.6 MMboe to 221.8 MMboe, an increase of 7%, compared to 207.2 MMboe at December 31, 2019.
  
  
• Achieved a finding and development ("F&D") cost of $3.38/boe in 2020 on a 2P basis ($11.53/boe in 2019) in Colombia with upstream reserves based capital expenditures of $101 million ($289 million in 2019) not including changes in future development costs ("FDC"). 1P F&D cost was $7.38/boe ($11.32/boe in 2019). F&D reductions in 2020 are due to reductions associated with future development cost, operating expenses and development plan optimizations.
  
  
• 2P reserves are comprised of 66% heavy oil, 30% light and medium oil and 4% natural gas.
  
  
• Increased 2P reserves on a gross working interest basis before royalties, by 2% to 174.0 MMboe compared to 171.2 MMboe at December 31, 2019. Increased 3P reserves on a gross working interest basis before royalties, by 3% in 2020 to 230.4 MMboe compared to 222.7 MMboe at December 31, 2019.
  
  
• The Net Present Value ("NPV") for the net 2P reserves, discounted at 10% before tax, is $1.888 billion at December 31, 2020, compared to $2.514 billion at December 31, 2019. The decrease in NPV for the 2P reserves is primarily due to lower commodity prices at December 31, 2020. See the Net Present Value After Tax summary table below for more information.

Colombia Reserves Update

In Colombia, the Company added 30.6 MMBoe of net 2P reserves significantly driven by 6.4 MMboe from the La Belleza discovery in the VIM-1 block, reduction of in-kind royalty payments, and reduction in high price participation (PAP) royalties related to the Quifa block and technical revisions of 18.9 MMboe from its Colombian fields including the Coralillo, Quifa SW, Hamaca, Jaspe, Ceibo and Copa fields. These additions were offset by 15.7 MMboe of 2020 production and the de-booking of the Orito field in Colombia. The Company achieved a 191% net 2P Reserves Replacement Ratio in Colombia.

In the VIM-1 block (Frontera 50% W.I. and Parex (Operator), 50% W.I.), the Company added 6.4 MMBoe of 2P reserves and 17.5 MMBoe of "3P" reserves from the exciting La Belleza gas condensate discovery. Based on the Company's 3P estimates, Frontera believes there is significant upside potential in the reserves, which may be unlocked as the field is developed.

Frontera's reserves evaluation is based upon the Company's assessment of the reservoir and fluid data obtained from the La Belleza-1 well, combined with the Company's mapping of the 3D seismic data over the field. This volumetric method of reserves estimation is one commonly used in the industry at this stage of evaluation. The joint venture expects to execute additional testing in 2021 to appraise the potential upside of the discovery and to gather more information to guide development plans for the field. The joint venture also plans to drill two exploration wells on the VIM-1 block in 2021 near La Belleza, on the Basilea and Planadas prospects. Frontera is excited about the upside potential of the La Belleza discovery and additional VIM-1 block exploration potential.

For the year ended December 31, 2020, the Company's reserves were independently evaluated by D&M, in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook maintained by the Society of Petroleum Evaluation Engineers (Calgary Chapter) ("COGEH") and National Instrument 51-101 Standards for Disclosure of Oil and Gas Activities ("NI 51-101") and are based on the Company's 2020 year-end estimated reserves as evaluated by D&M in their reserves report dated February 18, 2021 with an effective date of December 31, 2020 (the "Reserves Report"). Additional reserve information as required under NI 51-101 will be included in the Company's NI 51-101F1 Form which is expected to be filed on SEDAR on March 3, 2021. See "Advisory Note Regarding Oil and Gas Information" section in the "Advisories", at the end of this news release. Numbers in tables may not add due to rounding differences.

2020 Year-End D&M Certified Gross Reserves Volumes⁽¹⁾

2020 Year-End D&M Certified Net Reserves Volumes⁽¹⁾

The following tables provide a summary of the Company's oil and natural gas reserves based on forecast prices and costs effective December 31, 2020 as applied in the Reserves Report. The Company's net reserves after royalties at December 31, 2020 incorporate all applicable royalties under Colombia fiscal legislation based on forecast pricing and production rates evaluated in the Reserves Report, including any additional participation interest related to the price of oil applicable to certain Colombian blocks, as at year-end 2020.

2020 Year-End D&M Certified Reserves Volumes by Product Type and Country⁽⁶⁾

2020 2P Reserves Reconciliation

Five Year Crude Oil Price Forecast - D&M Reserves Reports ⁽¹⁾

Colombia Reserve Life Index ("RLI")⁽¹⁾

Net Present Value Before Tax Summary - D&M Reserves Report (2021 Brent Forecast)⁽¹⁾⁽²⁾

Net Present Value After Tax Summary - D&M Reserves Report (2021 Brent Forecast)⁽¹⁾⁽²⁾

Calculation of 2020 Reserve Metrics - Colombia Net

Future Development Costs (FDC) - Using D&M Forecast Prices and Costs ⁽¹⁾

About Frontera:

Frontera Energy Corporation is a Canadian public company involved in the exploration, development, production, transportation, storage and sale of oil and natural gas in South America, including related investments in both upstream and midstream facilities. The Company has a diversified portfolio of assets with interests in 40 exploration and production blocks in Colombia, Ecuador and Guyana, and pipeline and port facilities in Colombia. Frontera is committed to conducting business safely and in a socially, environmentally and ethically responsible manner. Frontera's common shares trade on the Toronto Stock Exchange under the ticker symbol "FEC".

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Advisories:

Cautionary Note Concerning Forward-Looking Statements

This news release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, the impact of the COVID-19 pandemic on the Company's operations, the effectiveness or adequacy of the measures that the Company's has to manage the COVID-19 pandemic and oil price environment and the effectiveness thereof, estimates and/or assumptions in respect of the Company's capital expenditures and the future impact thereof including, without limitation, statements regarding estimates and/or assumptions in respect of production, costs and revenue, reserve and resource estimates, potential resources and reserves) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: volatility in market prices for oil and natural gas (including as a result of a sustained low oil price environment due to the COVID-19 pandemic and the procedures imposed by governments in response thereto and the actions of OPEC and non-OPEC countries);  the duration and spread of the COVID-19 pandemic and its severity, the success of the Company's program to manage COVID-19; uncertainties associated with estimating and establishing oil and natural gas reserves and resources; liabilities inherent with the exploration, development, exploitation and reclamation of oil and natural gas; uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; increases or changes to transportation costs; expectations regarding the Company's ability to raise capital and to continually add reserves through acquisition and development; the Company's ability to access additional financing; the ability of the Company to maintain its credit ratings; the ability of the Company to: meet its financial obligations and minimum commitments,  fund capital expenditures and comply with covenants contained in the agreements that govern indebtedness; political developments in the countries where the Company operates; the uncertainties involved in interpreting drilling results and other geological data; geological, technical, drilling and processing problems; timing on receipt of government approvals; fluctuations in foreign exchange or interest rates and stock market volatility and the other risks disclosed under the heading "Risk Factors" and elsewhere in the Company's annual information form dated  March 3, 2021 filed on SEDAR at www.sedar.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

Non-Standardized Measures

This news release includes non-standardized measures. Readers are cautioned that these measures, such as reserve life index, reserves replacement ratio, NPV per share and F&D costs, should not be construed as alternative measures of financial performance. Such measures have been included to provide readers with additional means to evaluate the Company's performance but these non-standardized measures are not reliable indicators of the Company's future performance and therefore must not be relied upon unduly. The Company's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies. Readers are cautioned that the information provided or derived by these measures should not be relied upon for investment purposes.

Advisory Note Regarding Oil and Gas Information

The reserves information contained in this press release has been prepared in accordance with NI 51-101 but only present a portion of the disclosure required thereunder. Complete reserves disclosure required in accordance with NI 51-101 will be available on SEDAR at www.sedar.com on or around March 3, 2021.  Actual oil and natural gas reserves and future production may be greater than or less than the estimates provided in this news release. There is no assurance that forecast prices and costs assumed in the Reserves Report, and presented in this news release, will be attained and variances from such forecast prices and costs could be material. The estimated future net revenue from the production of the disclosed oil and natural gas reserves in this news release does not represent the fair market value of these reserves.

The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.

There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary.

The Company's actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material. All evaluations and reviews of future net revenue are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. The tax calculations used in the preparation of the Reserves Report are done at the field level in accordance with standard practice, and do not reflect the actual tax position at the corporate level which may be significantly different.

Boe Conversion

The term "boe" is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of cubic feet to barrels is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this news release, boe has been expressed using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy. In addition, as the value ratio between oil and natural gas based on current market values is significantly different from the energy equivalency of 5.7:1, utilizing a conversion of 5.7:1 may be misleading as an indication of value.

Definitions:

• "Proved Developed Producing Reserves" are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
• "Proved Developed Non-Producing Reserves" are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is unknown.
• "Proved Undeveloped Reserves" are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.
• "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
• "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
• "Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.
• "Reserves Life Index" (RLI) is calculated as the net reserves in the referenced category divided by the net production of the last year. It is a measure of how will last the booked reserves if the production rate is maintained and no additional reserves are added.
• "Reserves Replacement Ratio" is calculated as the net reserves added in the referenced category divided by the net production of the last year. It is a measure of the capacity to replace the production.
• "Finding and Development Cost" F&D costs are calculated as capital expenditures divided by reserve additions for F&D Costs ($/boe). F&D costs does not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.

SOURCE Frontera Energy Corporation

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