Fitch rates Frontera Energy bond B+/RR4

Fitch Ratings said it assigned a B+(EXP)/RR4 rating to Frontera Energy Corp.’s proposed $500 million senior unsecured bond issuance.

Proceeds are expected to be used to repay the company's existing $250 million debtor-in-possession (DIP) financing. The balance will be used to fund Frontera's capital-intensive investment program.

“Frontera's production and reserves are concentrated in a few blocks, most of which are in Colombia, and its reserve life is short, with 1P reserves of 4.5 years and 2P reserves of six years,” Fitch said in a news release.

“The company's reduced investment capacity due to the low price environment has forced it to curtail its investments international assets, Fitch expects that Frontera's concentration in Colombia could increase.

“The company's most important properties are in Colombia, and the country accounted for approximately 95% of its proved reserves. This limited diversification exposes it to operational as well as economical risks associated with small scale operations.

“As of December 2017, it had net 1P and net proved and probable (2P) reserves of approximately 115 million and 154 million bbls,” the agency added in the release.

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