Operational Focus and Discipline Drive Financial Outperformance

Increased Operating EBITDA Guidance and Returns Focused Portfolio Optimization

TORONTO, Aug. 9, 2017 /PRNewswire/ - Frontera Energy Corporation (TSX: FEC) ("Frontera" or the "Company") announced today the release of its interim condensed consolidated financial statements for the second quarter of 2017, together with its management discussion and analysis ("MD&A"). These documents will be posted on the Company's website at www.fronteraenergy.ca and SEDAR at www.sedar.com. The financial information contained herein is reported in United States dollars and is in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, unless otherwise noted.

Barry Larson, Chief Executive Officer of the Company, commented:

"Our new progressive and disciplined approach is focused on generating and delivering value. Recent reservoir optimization of the Company's producing assets has strengthened the Company's focus on value creation to ensure that capital expenditures are deployed efficiently to produce the highest netback barrels. Importantly, as a result of our strong first half results driven by successful cost control and portfolio optimization, Frontera is increasing its 2017 Operating EBITDA guidance (in a flat $50/bbl Brent oil environment) by 10% to $275 to $300 million (from $250 to $275 million EBITDA on a consolidated basis). We have kept production flat on a quarterly basis as we focus on costs and on delivering exceptional financial performance. The results of the asset review, combined with our focus on returns and cash flow generation, means we are reducing our 2017 capex guidance by 21% to $250 to $300 million (from $325 to $375 million), and our 2017 production exit guidance by 12% to 70,000 to 75,000 boe/d (from 80,000 to 85,000 boe/d). The Company generated operating cash flow in excess of capital expenditures in the first half of 2017 and our revised guidance places Frontera's capital spending within the Operating EBITDA metric for 2017.

"The remainder of 2017 will focus on continued Operating EBITDA expansion, cash flow generation, portfolio optimization, and balance sheet protection. Potential positive catalysts to unlock shareholder value include contract renegotiations, non-core asset dispositions, exploration drilling success, continued cost control, and improved financial and covenant flexibility via debt refinancing or amendments. We are also excited to implement exploration and strategic activities designed to drive growth in 2018. Our balance sheet remains extremely strong with over $450 million of cash on hand and only $250 million of long term debt. We also have a strong oil hedge book with over 50% of our 2017 production hedged at a floor of approximately $50 per barrel."

Second Quarter 2017 Results

Operational Highlights:


    --  Net production after royalties and internal consumption for the second
        quarter of 2017 totalled 72,370 boe/d, in line with that achieved in the
        first quarter of 2017 of 72,524 boe/d. The trucking operation that the
        Company developed in Peru to move production from Block 192 while the
        Norperuano pipeline was under repair was successful, with an average of
        2,506 bbl/d transported in the quarter.
    --  During the six months ended June 30, 2017, the Company completed 43
        development wells (of which 34 were drilled in 2017), serviced 29 wells,
        and completed five workovers, mainly in Colombian Blocks. The wells were
        focused on maintenance to keep production flat during the first half of
        2017 with modest capex investment.

Financial Highlights:


    --  During the second quarter of 2017, revenue totalled $299.5 million
        compared with $316.6 million in the prior quarter, due to the lower
        volumes sold. Revenue decreased by $76.9 million in comparison with the
        second quarter of 2016 mainly due to the expiry of the Rubialies-Piriri
        contract in June 2016.
    --  Although Brent prices decreased by $3.78/bbl to $50.79/bbl in the second
        quarter from the first quarter, Frontera offset this with a positive
        hedge effect and commercial differential of $2.97/bbl. The Company's
        average sales price per barrel of crude oil and natural gas was
        $46.28/boe, up from $45.95/boe in the first quarter of 2017.
    --  Total operating costs, including production, transportation, and diluent
        costs, were within the range of the Company's guidance, increasing from
        $25.91/boe in the first quarter of 2017 to $26.53/boe in the second
        quarter of 2017. The increase was mainly attributable to the
        reactivation of Block 192 in Peru.
    --  Combined oil and gas Operating Netback for the second quarter of 2017
        was $19.75/boe, 1.4% lower than the $20.04/boe in the first quarter of
        2017, mainly attributable to higher operating costs related to the
        ramp-up of operations at Block 192.
    --  Consolidated Netback in the second quarter of 2017 was $18.55/boe,
        higher than $17.89/boe in the first quarter of 2017 and $17.01/boe in
        the second quarter of 2016, mainly due to cost reimbursement from the
        Bicentenario pipeline when third parties use the bidirectional pipeline.
        When the Bicentenario system is not operational the pipeline can be
        reversed for third party use, and the Company obtains a benefit by
        crediting its take-or-pay commitments.
    --  Operating EBITDA was $86.9 million for the second quarter of 2017, lower
        by 6% compared with the $92.4 million achieved in the first quarter of
        2017, mainly due to lower volumes sold. In comparison with the second
        quarter of 2016, Operating EBITDA was lower by $33.6 million, primarily
        due to the expiry of the Rubiales-Piriri contract in June 2016.
    --  G&A costs decreased to $26.1 million in the second quarter of 2017 from
        $27.7 million in the first quarter of 2017, and from $35.6 million in
        the second quarter of 2016. The Company continues to reduce G&A costs
        and all non-essential spending activities. The Company will continue to
        look for additional opportunities to eliminate unnecessary costs.
    --  During the second quarter of 2017, net loss attributable to equity
        holders of the parent was $51.5 million, compared with a net income of
        $8.5 million in the first quarter of 2017, mainly due to a $23 million
        impairment charge, lower sales, lower unrealized risk management gain,
        lower gain from the equity accounted investees, and a loss on foreign
        exchange.
    --  Balance sheet remains strong as per the first quarter of 2017,
        underpinned by positive working capital, high liquidity and stable cash
        position at $541.0 million (total cash including short and long term
        restricted cash).
    --  Total capital expenditures decreased to $35.9 million in the second
        quarter of 2017, compared with $37.6 million in the first quarter of
        2017.

Restructuring and Cost Saving Initiatives:


    --  The Company continues to execute a hedging program designed to protect
        against downward oil price movements and mitigate volatility in cash
        flow. As of August 8, 2017, the Company has hedges in place for 1.44
        MMbbl per month for the remainder of 2017 with average floor and ceiling
        prices of $50.65/bbl and $58.80/bbl Brent. In addition, the Company has
        hedged a total of 1.6 MMbbl of production in the first quarter of 2018
        with average floor and ceiling prices ranging from $48.73/bbl and
        $55.73/bbl Brent.
    --  During the quarter, the Company prevented an estimated diluent cost
        increase of $1.3 million through collaborative agreements with third
        parties. Additionally, through a processing deal with a local refinery,
        the Company prevented a fuel cost increase of approximately $3.7
        million.
    --  On April 3, 2017, the Company requested that the Agencia Nacional de
        Hidrocarburos ("ANH") approved the transfer of $6.0 million in
        commitment investment from the CPO-12 Block to two exploratory wells in
        the CPE-6 Block ($3.0 million for each well); the transfer is subject to
        approval by the ANH. The Company continues to renegotiate field
        commitments to focus on high-impact development drilling.
    --  On April 25, 2017, the Company and CNE Oil & Gas S.A.S., a subsidiary of
        Canacol Energy Ltd. ("CNE Oil"), entered into a farm-out agreement
        whereby CNE Oil agreed to acquire the Company's participating interest
        in the San Jacinto 7 Block, in consideration for assuming all
        contractual exploration obligations of the Company totalling $7.8
        million. The agreement is subject to approval by the ANH.
    --  On June 1, 2017, the Company executed an assignment agreement with
        Petrosouth Energy Corporation pursuant to which the Company agreed to
        transfer its participating interest and the operatorship under the
        Cerrito Association Contract for $0.1 million. The Company holds an
        undivided 70% participating interest in the Cerrito Contract and
        Ecopetrol S.A. holds 30%; the assignment is subject to approval by the
        ANH.
    --  On June 2, 2017, the Agencia Nacional do Petróleo Gás Natural e
        Biocombustíveis ("ANP") approved the transfer of the Company's interest
        in the Queiroz Blocks in Brazil to Queiroz Galvão Exploração e
        Produção S.A. ("QGEP"). However, the transfer is subject to the
        replacement of standby letters of credit that the Company issued to ANP
        with guarantees from QGEP. Once finalized, the Company will release the
        outstanding $10 million owed to QGEP.

Asset Sales (Executed/Closing) Summary:

During the second quarter of 2017, the Company continued to monetize non-core assets and received $17.1 million on closing of the Block 131 transaction. During the first half of 2017, the Company received a total of $38.7 million from assets held for sale or sold in Peru (Blocks 126 and 131), Brazil (Karoon) and Colombia (Putumayo and Casanare Este). In addition to assets held for sale, the Company finalized an agreement with Interoil Corporation (now ExxonMobil Canada Holdings ULC) on the transfer of operating rights in Papua New Guinea for total cash consideration of $57.0 million, net of outstanding liabilities. The Company expects to receive this amount in the second half of 2017 upon receipt of regulatory approval. Below is a summary of all the non-core asset sales of exploration and production blocks executed to date; many are pending final government approvals:



    Block         Country    Buyer          Cash proceeds       Exploratory Commitments(1)       SBLC(2) / Collateral
    -----         -------    -----          -------------       -------------------------        --------------------

    ($ millions)

    Santos Basin  Brazil     Karoon Gas                    15.5                             50.8                      0.0
    ------------  ------     ----------                    ----                             ----                      ---

    North Basins  Brazil     Queiroz Galvao              (10.0)                            25.6                     42.5
    ------------  ------     --------------               -----                             ----                     ----

    Lote 131      Peru       CEPSA                         17.1                              8.8                      0.0
    --------      ----       -----                         ----                              ---                      ---

    PUT-9         Colombia   Amerisur                       0.7                              9.1                      0.9
    -----         --------   --------                       ---                              ---                      ---

    Mecaya        Colombia   Amerisur                       0.6                              5.2                      0.8
    ------        --------   --------                       ---                              ---                      ---

    Terecay       Colombia   Amerisur                       0.1                              8.1                      0.8
    -------       --------   --------                       ---                              ---                      ---

    Tacacho       Colombia   Amerisur                       3.5                              4.1                      0.4
    -------       --------   --------                       ---                              ---                      ---

    Casanare Este Colombia   Gold Oil                       2.0                             12.0                      0.8
    ------------- --------   --------                       ---                             ----                      ---

    SSJN-7        Colombia   Canacol                        0.0                              7.8                      2.5
    ------        --------   -------                        ---                              ---                      ---

    Lote 126      Peru       Maple Gas                      0.2                             13.9                      2.8
    --------      ----       ---------                      ---                             ----                      ---

    Cerrito       Colombia   PetroSouth                     0.1                              0.9                      0.0
    -------       --------   ----------                     ---                              ---                      ---

    PNG Blocks    Papua - NG Exxon Mobil                   57.0                              0.0                      0.0
    ----------    ---------- -----------                   ----                              ---                      ---

    Total                                                  86.8                            146.3                     51.5
    -----                                                  ----                            -----                     ----


         (1)   IncludesAbandonment/Environmental Costs

         (2)   Standby Letter of Credit

Financial Results:




    Financial Summary
    =================

                                                                      2017       2016
                                                                      ----       ----

                                                                 Q2         Q1         Q2
                                                                ---        ---        ---

    Total Sales ($ millions)                                         299.4      316.6            376.4
    -----------------------                                          -----      -----            -----

    Operating EBITDA ($ millions)(1)                                  86.9       92.4            120.5
    -------------------------------                                   ----       ----            -----

    Operating EBITDA Margin (Operating EBITDA/Revenues) 1              29%       29%             32%
    -----------------------------------------------------              ---        ---              ---

    Consolidated EBITDA ($ millions)(1)                               87.4      115.1            126.1
    ----------------------------------                                ----      -----            -----

    Consolidated EBITDA Margin (Consolidated EBITDA/Revenues) 1        29%       36%             33%
    -----------------------------------------------------------        ---        ---              ---

    Net (loss) income(2)                                            (51.5)       8.5          (118.7)
    -------------------                                              -----        ---           ------

    Per share - basic ($)(3)                                        (1.03)      0.17      (37,665.40)
    -----------------------                                          -----       ----       ----------

    Net Production (boe/d)                                          72,370     72,524          127,951
    ----------------------                                          ------     ------          -------

    Net Production (boe/d) (excluding Rubiales Field)               72,370     72,524           81,468
    -------------------------------------------------               ------     ------           ------

    Sales Volumes (boe/d)                                           71,232     76,256          110,024
    ---------------------                                           ------     ------          -------

    Average Shares Outstanding - basic (thousands)                  50,006     50,026                3
    =============================================                   ======     ======              ===


         (1)    These metrics are Non-IFRS
                 financial measures. See
                 Advisories - "Non-IFRS
                 Financial Measures" - below
                 and "Non-IFRS Measures" on
                 page 16 of the MD&A.

         (2)    Net (loss) income attributable
                 to equity holders of the
                 parent.

         (3)    The basic and diluted weighted
                 average numbers of common
                 shares for the three months
                 ended June 30, 2017 and 2016
                 were 50,005,832 and 3,150,
                 respectively.

Production:




    Net Production Summary
    ======================

                                              2017       2016
                                              ----       ----

                                        Q2         Q1         Q2
                                        ---        ---        ---

    Oil and Liquids (bbl/d)
    -----------------------

    Colombia                                61,535     62,180     116,425
    --------                                ------     ------     -------

    Peru                                     4,913      3,855       2,101
    ----                                     -----      -----       -----

    Total Oil and Liquids (bbl/d)           66,448     66,035     118,526
    -----------------------------           ------     ------     -------


    Natural Gas (boe/d)(1)
    ----------------------

    Colombia                                 5,922      6,489       9,425
    --------                                 -----      -----       -----

    Total Natural Gas (boe/d)                5,922      6,489       9,425
    -------------------------                -----      -----       -----


    Total Equivalent Production (boe/d)     72,370     72,524     127,951
    ===================================     ======     ======     =======


         (1)    Colombian standard natural
                 gas conversion ratio of 5.7
                 Mcf/bbl.

                 Additional production details
                 are available in the MD&A.

During the second quarter of 2017, net production after royalties, PAP, and internal consumption was 72,370 boe/d, in line with that of the previous quarter. Total production for the first half 2017 was 72,446 boe/d from 135,144 boe/d in the same period of 2017, mainly due to the expiry of the Rubiales-Piriri contract. During the six months ended June 30, 2017, the Company completed 43 development wells (of which 34 were drilled in 2017), executed 29 well services and five workovers, mainly in our Colombian blocks. The wells were focused on maintenance to keep production flat during the first half of 2017 with discrete capex investment.

Light and medium net oil production in Colombia was 34,174 bbl/d, compared with 34,177 bbl/d in the previous quarter despite only one development well being drilled in each of the Guatiquia and Mapache Blocks.

Heavy oil production from Quifa SW field and other fields maintained production levels, in comparison with the previous quarter. During the second quarter of 2017, 15 development wells were drilled in the Quifa SW field, while no wells were drilled in the other heavy oil fields.

Natural gas production declined in the second quarter compared to the previous quarter reflecting the lack of capital investment as the Company evaluates future activity on the Block.

In Peru, second quarter net production after royalties was 4,913 bbl/d (8,385 bbl/d average gross production), a 27% increase from 3,855 bbl/d (7,805 bbl/d average gross production), in the first quarter of 2017, due to Block 192's production ramp-up after the reactivation of the Norperuano pipeline on January 31, 2017.

2017 Operational Update:

During the second quarter of 2017, consistent with the new progressive and disciplined approach, the Company made the strategic decision to slow down production volumes at certain blocks and focus its resources on conducting reservoir studies to facilitate optimization of certain blocks over the long term. The following producing blocks were impacted:


    --  Quifa SW and Cajua - Reservoir studies were commenced to facilitate
        optimization and the placement of future development wells and evaluate
        the potential for more efficient well designs (multi-laterals). Now that
        these studies are near completion the Company will be accelerating the
        development program in the third quarter of 2017;
    --  Guatiquia - Development drilling was reduced due to reservoir studies
        that are required to ensure prudent reservoir management and
        preparations for the drilling of injector wells for reservoir pressure
        maintenance. The first injector well in the Ardilla Field will be
        drilled in the fourth quarter of 2017 in conjunction with the
        acceleration of the development drilling;
    --  CPI Blocks (Orito and Neiva) - The Company has also been re-evaluating
        the forward development program and is currently awaiting the results
        from a pilot water injection program in Neiva to enhance recovery and
        the completion of reservoir studies to assess the production potential
        of the "A" Limestone in the Orito Field. The Company expects to
        accelerate the development of these fields as a result of these studies;
        and
    --  Copa Field - Reservoir injectivity tests have been successfully
        completed, indicating that future injector wells will be able to
        effectively provide reservoir pressure maintenance support and
        immediately facilitate increased production from the Copa Field.

As a result of this comprehensive asset review, the Company is reducing its 2017 Capex guidance by 21% to $250 to $300 million (from $325 to $375 million), and our 2017 production exit guidance by 12% to 70,000 to 75,000 boe/d (from 80,000 to 85,000 boe/d). Importantly, despite the revised flat production profile, due to successful cost control and portfolio optimization, Frontera is increasing its 2017 operating EBITDA guidance by 10% to $275 to $300 million (from $250 to $275 million EBITDA on a consolidated basis). Our revised guidance includes placing Frontera's capital spending within the Operating EBITDA metric for 2017. Recent reservoir optimization of the Company's producing assets has strengthened the Company's focus on value creation to ensure that capital expenditures are not only deployed efficiently to produce the highest netback barrels, but also position the Company for cost efficient, sustainable future growth.

The Company's assumptions described above are dependent on a base case average Brent oil price assumption for 2017 of $50/bbl and benchmark combined price differential in the range of $7.00/bbl to $7.50/bbl.

Third Quarter 2017 Outlook

During the third quarter, from an operations perspective, the Company plans to drill between 25 and 30 development wells and continue with an active workover and recompletion program. The bulk of the development drilling activity is expected to take place at Quifa while additional development wells will target light and medium oil locations. The Company will also drill its first exploration well in 2017. The Alligator 1x well is expected to spud in September and take 35-40 days to drill, targeting management's estimate of five million barrels of resources.

From a financial perspective, the Company's strong balance sheet provides financial flexibility to unlock value for shareholders as we continue to focus on Operating EBITDA expansion. Some of the initiatives being considered include: contract renegotiations, non-core asset dispositions, continued cost control, and improved financial and covenant flexibility via debt refinancing or amendments.

Second Quarter 2017 Conference Call Details:

As previously disclosed, a conference call for investors and analysts is scheduled for Thursday, August 10, 2017 at 10:30 a.m. (Toronto time), 9:30 a.m. (Bogotá time), and 8:30 a.m. (Calgary time). Participants will include Gabriel de Alba, Chairman of the Board of Directors, Barry Larson, Chief Executive Officer, Camilo McAllister, Chief Financial Officer and select members of the senior management team.

A presentation will be available on the Company's website prior to the call, which can be accessed at www.fronteraenergy.ca.

Analysts and investors are invited to participate using the following dial-in numbers:



    Participant Number (International/Local):     (647) 427-7450

    Participant Number (Toll free Colombia):      01-800-518-0661

    Participant Number (Toll free North America): (888) 231-8191

    Conference ID:                                                60148223

Webcast: www.fronteraenergy.ca

A replay of the conference call will be available until 10:59 p.m. (Bogotá time) and 11:59 p.m. (Toronto time), Thursday, August 24, 2017 and can be accessed using the following dial-in numbers:




    Encore Toll Free Dial-
     in Number:                1-855-859-2056

    Local Dial-in-Number:      (416)-849-0833

    Encore ID:                                    60148223

About Frontera:

Frontera is a Canadian public company and a leading explorer and producer of crude oil and natural gas, with operations focused in Latin America. The Company has a diversified portfolio of assets with interests in more than 25 exploration and production blocks in Colombia and Peru. The Company's strategy is focused on sustainable growth in production and reserves and cash generation. Frontera is committed to conducting business safely, in a socially and environmentally responsible manner.

The Company's common shares trade on the Toronto Stock Exchange under the ticker symbol "FEC".

If you would like to receive News Releases via e-mail as soon as they are published, please subscribe here: http://fronteraenergy.mediaroom.com/subscribe

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, statements regarding estimates and/or assumptions in respect of production, revenue, cash flow and costs, reserve and resource estimates, potential resources and reserves and the Company's exploration and development plans and objectives) 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: uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; uncertainties associated with estimating oil and natural gas reserves; failure to establish estimated resources or reserves; volatility in market prices for oil and natural gas; fluctuation in currency exchange rates; inflation; changes in equity markets; perceptions of the Company's prospects and the prospects of the oil and gas industry in Colombia and the other countries where the Company operates or has investments as the result of the completion of the Company's comprehensive restructuring transaction or otherwise; uncertainties relating to the availability and costs of financing needed in the future; the uncertainties involved in interpreting drilling results and other geological data; and the other risks disclosed under the heading "Risk Factors" and elsewhere in the Company's annual information form dated March 14, 2017 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.

This news release contains future oriented financial information and financial outlook information (collectively, "FOFI") (including, without limitation, statements regarding expected capital expenditures, G&A, and operating and consolidated EBITDA for the Company in 2017), and are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraph. The FOFI has been prepared by management to provide an outlook of the Company's activities and results, and such information may not be appropriate for other purposes. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments, however, actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein. Any FOFI 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 FOFI, whether as a result of new information, future events or results or otherwise.

In addition, reported production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this news release due to, among other factors, difficulties or interruptions encountered during the production of hydrocarbons.

Non-IFRS Financial Measures

This news release contains financial terms that are not considered in IFRS. These non-IFRS measures do not have any standardized meaning, and therefore are unlikely to be comparable to similar measures presented by other companies. These non-IFRS measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These financial measures are included because management uses this information to analyze operating performance and liquidity. They are different from those measures disclosed in prior periods, reflecting the Company's new strategic focus on operational efficiency and capital discipline.

Management believes that Netback is a useful measure to assess the net profit after all the costs associated with bringing one barrel of oil to the market. It is also commonly used by the oil and gas industry to analyze financial and operating performances expressed as profit per barrel.


    --  Operating Netback represents realized price per barrel plus realized
        gain or loss on financial derivatives, less production costs,
        transportation cost and diluent cost, and shows how efficient the
        Company is at extracting and selling its product.
    --  Consolidated Netback represents Operating Netback plus the results from
        corporate investments such as our pipeline investments that are in
        addition to oil and gas production and the take-or-pay tariffs paid on
        disrupted pipelines.

Management believes that EBITDA is a common measure used to assess profitability before the impact of different financing methods, income taxes, depreciation and impairment of capital assets and amortization of intangible assets.


    --  Operating EBITDA represents the operating results of the Company's
        primary business, excluding the effects of capital structure, other
        investments (infrastructure assets), non-cash items that depend on
        accounting policy choices, and one-time items that are not expected to
        recur.
    --  Consolidated EBITDA excludes items of a non-recurring nature (one-time
        items), or that could make the period-over-period comparison of results
        from operations less meaningful, but includes results from the Company's
        other investments (infrastructure assets).

A reconciliation of Operating and Consolidated EBITDA to net earnings is as follows:



                                  Three Months Ended         Six Months Ended
                                       June 30                    June 30
                                       =======                    =======

    (in thousands of US$ )           2017         2016          2017          2016
    ---------------------            ----         ----          ----          ----


    Net (loss) income (1)                   $(51,542)                $(118,654)             $(43,044)            $(1,019,603)


    Adjustments

                               Income tax expense                                3,535     8,624        13,569      18,572

                               Depletion, depreciation and amortization         97,588   145,891       199,382     376,483

                               Impairment and exploration expenses              23,159    22,788        12,712     689,686

                               Finance costs                                     6,586    32,891        11,483     101,805

                               Restructuring and severance costs                 1,842    49,978         7,788      67,719

                               Equity tax                                            -        -       11,694      26,901

                               Other income                                    (5,350)  (2,210)      (7,848)   (44,420)

                               Foreign exchange unrealized loss (gain)          11,571  (13,225)      (3,289)        754

    Consolidated EBITDA            87,389      126,083       202,447       217,897
    -------------------            ------      -------       -------       -------

                                (Gain) loss valuation of unrealized hedge
                                contracts                                     (12,434)  (6,073)     (52,579)    107,472

                                Share of gain in equity-accounted
                                investees                                      (9,937) (29,526)     (33,925)   (56,373)

                                Gain attributable to non-controlling
                                interest                                         1,469    12,500         9,314      12,507

                               Share based compensation loss (gain)                233   (5,297)          253     (8,503)

                               Foreign exchange realized loss (gain)               838     4,707         4,453     (5,933)

                               Fees paid on suspended pipeline capacity         22,237    18,058        49,337      43,449

    Operating EBITDA                          $86,857                   $120,452               $179,300                 $310,516
    ----------------                          -------                   --------               --------                 --------

                           (1) Net income (loss) attributable to equity holders of the
                                parent.



                        2017        2016

    (in
     thousands
     of
     US$
     )             Q2        Q1          Q4          Q3          Q2           Q1
    ----------    ---        ---         ---         ---         ---          ---


     Financial
     and
     Operational
     results:


     Operating
     EBITDA           86,857      92,442      44,275      89,846      120,452     190,064


     Consolidated
     EBITDA           87,389     115,057     (1,967)     37,689      126,083      91,814
     ------------     ------     -------      ------      ------      -------      ------

Please see the Company's most recent Management's Discussion and Analysis, which is available at www.sedar.com for additional information about these financial measures.

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 5.7 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Definitions



                             Bcf                 Billion cubic feet.
                             ---                 -------------------

                            Bcfe       Billion cubic feet of natural
                                                     gas equivalent.
                            ----      ------------------------------

                             bbl                      Barrel of oil.
                             ---                      --------------

                           bbl/d              Barrel of oil per day.
                           -----              ----------------------

                             boe     Barrel of oil equivalent. Boe's
                                                  may be misleading,
                                             particularly if used in
                                            isolation. The Colombian
                                        standard is a boe conversion
                                       ratio of 5.7 Mcf:1 bbl and is
                                      based on an energy equivalency
                                         conversion method primarily
                                        applicable at the burner tip
                                      and does not represent a value
                                        equivalency at the wellhead.
                             ---     -------------------------------

                           boe/d        Barrel of oil equivalent per
                                                                day.
                           -----       -----------------------------

                            Mbbl                   Thousand barrels.
                            ----                   -----------------

                            Mboe             Thousand barrels of oil
                                                         equivalent.
                            ----            ------------------------

                           MMbbl                    Million barrels.
                           -----                    ----------------

                           MMboe              Million barrels of oil
                                                         equivalent.
                           -----             -----------------------

                             Mcf                Thousand cubic feet.
                             ---                --------------------

                Million Tons LNG             One million tons of LNG
                                          (Liquefied Natural Gas) is
                                        equivalent to 48 Bcf or 1.36
                                          billion m3 of natural gas.
                ----------------       -----------------------------

                  Net Production            Company working interest
                                       production after deduction of
                                                          royalties.
                  --------------      ------------------------------

          Total Field Production      100% of total field production
                                       before accounting for working
                                                interest and royalty
                                                         deductions.
          ----------------------     -------------------------------

                Gross Production            Company working interest
                                      production before deduction of
                                                          royalties.
                ----------------     -------------------------------

SOURCE Frontera Energy Corporation