© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning. My name is Brent, and I will be your conference facilitator today. Welcome to the Frontera Energy's Second Quarter 2019 Results Conference Call. [Operator Instructions] I would like to remind you that this call is been recorded today and is also available through audio webcast on the company's website. After the speaker's remarks, there will be a question-and-answer session. Analysts and investors are reminded that any additional questions or concerns can be directed to the company at ir@fronteraenergy.ca. This call contains forward-looking statements, which reflect the current expectations or beliefs of the company based on information currently available. 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. Factors that could cause actual results or events to differ materially from current expectations are disclosed under the heading Risk Factors and elsewhere in the company's annual information form dated March 13, 2019. Any forward-looking statement speaks only as of the date on which it is made and the company disclaims any intent or obligation to update any forward-looking statements.I would now like to turn the call over to Mr. Gabriel de Alba, Chairman of the Board of Frontera Energy.
Thank you, operator, and thank you, everyone, for attending today's conference call to review Frontera's second quarter 2019 financial results, and provide an update on operational and shareholder return initiatives. I'm very happy to report that Frontera continues to deliver impressive financial and operational results. The company is delivering on production, developing growth assets, returning capital to shareholders, while preserving a healthy balance sheet. Second quarter production was up over 9% quarter-over-quarter, combined with the strong Brent oil prices and narrow Vasconia differential. Frontera delivered second quarter results of $181 million in operating EBITDA. It is record performance under the current Board and management team.Cash flow from operating activities was $176 million and this momentum has led us to increase guidance for the full year with operating EBITDA moving from $400 million to $450 million to now $525 million to $575 million. The strong and stable financial result so far in 2019 led the Board to declare a special dividend of $40 million in addition to a quarterly dividend of $15 million. To date, the company has paid dividends of $53 million and declared dividends of $55 million or a total of $108 million.The strong and stable financial results also allowed us to recognize a deferred tax asset of $177 million, which is only a small part of the substantial value inherent in some of the legacy Frontera assets. These assets also include our midstream investments. So far in 2019, the company has also resolved a number of onetime legacy items, including exercising the Transporte Incorporado put option for $48 million, paying the IFC put option with respect to the Bicentennial Pipeline for $34 million and funding the Puerto Bahia contribution agreement for $11 million.Recognition of the tax assets and resolution of legacy issues make the company easier to understand from an investment perspective. Reduces further liabilities while also highlighting the significant incremental latent value in the company beyond the producing upstream oil and gas assets. Further concessions in the first quarter, included -- sorry, it would be the first half, included new country entry into Ecuador and in Guyana, the increased ownership of CGX and approval of our farming agreement for 2 offshore blocks.The company also continued to enhance the medium and long-term opportunity set of the company by successfully adding 2 perspective blocks in Colombia's first Bid Round since 2014.The Frontera Board also continues to monitor management progress, implementing cost savings and operational-efficient improvements and initiatives throughout the organization. G&A savings from last year's program are impressive, with first half savings of 28% in 2019 compared to 2018. Management has highlighted some promising initiatives to the Board, which include the use of Artificial Intelligence, water management projects and the use of alternative energy for power generation to drive long-term cost savings and efficiency improvements. We improved the efficiency of the balance sheet during the quarter. A new credit facility for $11 million has reduced the amount of restricted cash needed to cover standby letters of credit. The company is also currently looking at reducing restricted cash by a further $30 million to $50 million during the remainder of 2019. Frontera's Board prioritizes shareholder returns, and these strong financial and operational results have helped the company deliver dividends of $0.070 since the start of the year with a further $0.025 declared for the third quarter and with a special dividend representing a yield of over 10% at the current share price. Combined with the repurchase of shares under the Company's Normal Course Issuer Bid, which represent 2.6% of the shares outstanding a year ago. Frontera has delivered enhanced returns to equity investors of more than 10% over the past 12 months while maintaining a very strong balance sheet.Finally, the inclusion of Frontera's [ index ], MSCI Small Cap Index in May and the S&P/TSX composite index in June, have been a big boost for the companies and the liquidity or our equity. The company increased its exposure to passive investors while enhancing the company's overall equity trading liquidity on a go-forward basis as we work towards increasing Frontera's exposure to additional index inclusion opportunities in the future.The Board wants to recognize management for their strong performance in the first half of 2019. I will now turn the call over to Richard Herbert, our CEO, for additional detail on our operating and financial results so far in 2019 as well as some additional detail on current operational initiatives.
Thank you, Gabriel, and good morning, everybody, and thank you for joining our call today. So far Frontera 2019 is going well, both from an operational and a financial perspective. We are delivering on our promise to hold production flat, develop our core and sustaining assets, and we have added a number of exciting new projects to our portfolio. While Brent oil prices in the first half of the year averaged just above our planned assumption of $65 per barrel, we have seen the benefit of improved oil price differentials and a weaker Colombian peso. This with strong production in Colombia has given our increase in EBITDA guidance that Gabriel referred to. At the same time, we remain focused on cost control and have underspent on capital, which has helped to keep a strong balance sheet, which David Dyck, our CFO, will speak to you later on. In this call, I will focus on 3 things. First, will be an operational overview, where we have had successes from both an exploration and development perspective. Next, I will provide an update on our strategic initiatives, including the recent ANH Bid Round results and our upcoming exploration plans. And lastly, I will talk about the ongoing cost control and efficiency improvement initiatives been undertaken throughout our operations.First, from an operational perspective, production was very strong in the second quarter, increasing 9% to 74,385 barrels of oil equivalent per day compared to the first quarter. Thanks to the resumption of production from Block 192 in Peru. Another force majeure event on the NorPeruano pipeline, halted production from the Block 192 on July 1. But as we have recently announced, production is now starting to ramp back up. Today, it is over 5,000 barrels a day and is expected to reach previous levels of over 9,000 barrels a day within the next few weeks.Total company production is over 69,000 barrels a day today. Meanwhile, Colombia production remains strong at around 64,000 barrels of oil equivalent per day, and we are ahead of our daily production target for the year despite the outages that we've suffered in Peru. Frontera's Colombian production has now been essentially flat for 7 consecutive quarters, demonstrating the sustainability of our asset base in the country. And Colombia production was flat or slightly up in the first half, with a capital spend in the country of $120 million. Our balanced mix of light and medium oil with heavy oil enables Frontera to produce a Vasconia blend, which currently receives a discount of less than $3 per barrel to Brent. During the second quarter, 97% of our production was Brent linked, helping to drive our strong financial performance. I'll now turn my attention to some highlights from our portfolio and our operations. Starting with our CPE-6 Block, where we have had very promising result in the second quarter, both in explorations and development drilling. The Amanecer-1 exploration well was drilled to the northwest of the Hamaca field and tested 70 barrels of oil of 11-degree API crude with an 80% water cut from 21 feet of net oil pay in the Carbonera formation. This well is 35 feet structurally lower than the previously defined oil column at Hamaca. This well has confirmed a significant new discovery, located 3.5 kilometers at 2.2 miles to the northwest of previously mapped oil, with reservoir characteristics, which are as good as or slightly better than the existing producing wells.We're now working to evaluate the reserve implications of the Amanecer-1 and are planning to drill further appraisal wells this year to confirm the scale of this new discovery. We have recently finished drilling the Coralillo-1 exploration well, located to the southeast of the Hamaca field. And this well has encountered an 8-foot oil pay section in the Carbonera C7, and is now being prepared for testing.Also in the CPE-6 Block, the company has drilled 3 horizontal development wells in the Hamaca field during the second quarter. These are some of the first horizontal wells drilled in the field with vertical pay sections of over 40 feet of thickness in the Basal sand of the Carbonera formation. These 3 wells have demonstrated production capacity of above 350 barrels of oil per day, per well, with water cuts of around 70%, and have more than doubled the production from the field over the past 3 months.The last well drilled Hamaca-36 has just started production at close to 500 barrels per day, with a 12% water cut. The success of our exploration and development drilling this year in CPE-6 has led the company to look at accelerating the expansion of the field oil processing and water disposal capacity, and we are evaluating a larger field development plan for the medium term. At the Copa field in Cubiro block, Frontera drilled 2 development wells during the second quarter, in line with expectations. The plan for 2019 is to drill a total of 6 development wells and 2 water injection wells. And we've now drilled 4 of the development wells and 1 injection well, which is ready for production from the block to 3,800 barrels per day. On the Mapache block, also in the Llanos Basin, we drilled Castaña-1 and the Castaña-1 sidetrack exploration wells in the second quarter. Castaña-1 was a dry hole, but the sidetrack well encountered 20 feet of oil pay in the Ubaque reservoir.We have submitted an application for a permit for a long-term test. And this well is expected to produce at rates of about 450 barrels per day.Also an exploration, the La Belleza-1 well on the VIM-1 block in the Lower Magdalen Valley in Northern Colombia, is expected to start drilling now at the end of August with results expected in early October. The primary target of the well is a basement liquids and gas play, but shallower natural gas prospectivity may be encountered as the well is drilled. The VIM-1 well, combined with the SI1 exploration prospect on the Guama Block nearby, will be the starting point for an increased focus on increasing production from the Lower Magdalen Valley, where we have a significant amount of underutilized gas processing infrastructure at La Creciente. And finally, from our operations team, we have just completed drilling 3 wells at Quifa, in which we have installed the AICD water diversion units, which were previously tested successfully on 3 wells at our Cajua field during 2018. These water diversion units divert water away from the wellbore, downhole, resulting in less water to treat and reinject to the surface, and therefore, increase oil production efficiency for the field and lower costs. I look forward to providing an update later this year once we have sufficient production history to confirm that success. I'll now turn my attention to our strategic initiatives, which will enhance Frontera's portfolio and deliver better risk-adjusted returns over the medium and long term.Of the 6 to 7 initiatives that we talked about in late 2018, we have now delivered on 4. New country entries in Guyana and Ecuador, our farming in Colombia and the award of 2 blocks in the first Colombia Bid Round since 2014.We continue to work on securing the new contract on Block 192 in Peru. We are evaluating additional opportunities for our offshore produce Z-1 Block or zee-one Block and we are looking for new opportunities in our core areas. As recently announced, we were awarded 2 blocks in the recent ANH Bid Round, VIM-22 and Llanos-99. The signing ceremony on the blocks to formalize the award took place at the ANH on July 18. We're moving quickly to start the permitting process so that we can drill on these blocks in 2020 and 2021.Meanwhile, in Guyana, we have agreed with our partner and the operator CGX Energy to conduct a bolt-on 3D seismic acquisition program in 2019 over the highly prospective northern part of the quarantine block. We continue to interpret the recently obtained 3D seismic data from our other offshore block in Guyana, Demerara. This activity will provide us with the best quality drilling plan for these highly prospective blocks. And finally, I'd like to address some of the cost savings and operational efficiency improvement initiatives that we are undertaking. Thus far, in 2019, we have delivered operating cost of $11.28 per barrel of oil equivalent, which is below our guidance range of $12.50 to $13.50 per barrel. And as such, we are reducing the midpoint of our operating cost guidance for the year by 6% to a range of $12 to $12.50 per barrel of oil equivalent. In addition to our cost savings initiatives, first half results benefited from lower-than-forecast pump failures, a weaker peso that I referred to earlier, and of course, that could reverse in the second half, and the downtime in our Peru operations.We're looking at implementing a number of additional initiatives, which will drive the overall cost structure of the company lower on a sustained basis.And we're now evaluating using Artificial Intelligence and big data analytics to help the company pick better or lower risk drilling locations, improve our field processes, reduce drilling times and enhance field production and reserves recovery. This is in addition to projects already underway that have been proven on the capital side, reducing drilling and completion time for our Quifa wells, for example, by 1.5 days, from 9 days to 7.5 days, and a recent record time of 5.6 days.And this has allowed us to reduce the number of rigs that are deployed in the Quifa field from 4 to 3. We are also evaluating ongoing reduction in our energy costs. In some of our operations, oil-burning generators are used to generate power. We are moving away from burning oil and implementing natural gas options where feasible. There are also a number of low-technology, higher-impact projects being worked on, one of which is the implementation of the AICD devices at Quifa and Jaspe, which I mentioned earlier. And one of the best ways to lower our operating costs will be to add new production to our exploration success. And we look forward to our higher-impact exploration wells, like La Belleza in the VIM-1 block, which will be starting very soon. And with that, I would now like to turn the call over to David Dyck, our CFO, who will take you through our financial results for the second quarter in more details.
Thank you, Richard, and thank you for everyone who has joined our call this morning. It was a very strong quarter from a financial perspective. We realized over $65 per barrel of oil equivalent relative to an average Brent price of $68.47 per barrel, reflecting strong Vasconia oil price differentials around $2 per barrel. Strong oil prices, combined with a good quarter on production led to the generation of $181 million of operating EBITDA, and cash flow provided by operating activities of $176 million.So far in 2019, we have delivered $326 million in operating EBITDA and $248 million in cash flow provided by operating activities, which has led us to increasing our guidance on operating EBITDA by 29% and lowering our operating cost guidance by between 2% and 10%, as Gabriel noted.We generated net income of $228 million or $2.32 per share, the highest level since the relisting of the company over 2 years ago following the restructuring. We benefited from the reduction -- sorry, we benefited from the recognition of a deferred tax asset of $177 million, which is a reflection of the future earnings potential of Frontera given the company has over $3 billion of available tax pools.Future tax assets are another one of the many hidden value options that sit within the company. Others include our midstream assets and improving the efficiency of our balance sheet with less restricted cash. On that front, as Gabriel noted, we signed a credit facility in the second quarter, which released $11 million of restricted cash and are in the process of signing a new facility for the release of another $50 million of restricted cash.During the first quarter call, I talked about how we were expecting cash balances to decrease in the first half of the year and build cash in the second half of the year as a result of the normalization of our cash management cycle and a number of one-off items. On that front, we are trending better than expected with the cash balance of $485.6 million at the end of the second quarter, only $1 million lower than the first quarter. Working capital improved to $176 million at the end of the second quarter, up from $160 million at the end of the first quarter.Richard touched on a few of the projects that are being worked on from a capital and operating cost perspective, and which are expected to drive down the overall cost structure of our business.On G&A, we continue to demonstrate the benefits of the cost savings programs that we initiated last year.G&A in the second quarter was $18 million, an increase of 10% compared to the first quarter of 2019, which reflected short-term incentive payments and planned annual salary increases. However, G&A costs were 30% lower compared to the second quarter of 2018. This is a clear demonstration of our ability to take a significant amount of cost under the business without impacting overall operations.Free cash flow in the second quarter of 2019 was $103 million and $105 million year-to-date. On capital expenditures, we have executed $143 million year-to-date on our capital program, which we have guided in the range of $325 million to $375 million.We are expecting to make up the underspend in the second half of the year driven primarily by water injection and facility spending at CPE-6, our exploration projects at VIM-1 as well on Guama. Continued development, drilling on Cubiro, Guatiquia and Canaguaro and an increase in abandonment and reclamation spending in Colombia and Peru, which reflects some catch up from the period of restructuring.I will now provide a quick update on our hedging strategy. As of now, 44% of expected second half 2019 production was hedged with floor prices between $55 and $60 per barrel Brent, and ceilings just about $75 per barrel Brent.For 2020, we have 33% of expected first half production hedged with floor prices between $55 and $58 per barrel Brent and ceiling prices of around $75 per barrel Brent.Finally, I would like to talk about our public debt and equity instruments, which highlight our operational and financial progress, as being reflected in the public markets. Our $350 million bond due 2023, has recently traded at all-time highs and now yields at around 7% -- 7.5% to maturity. As Gabriel mentioned, during the second quarter, our common shares were added to 2 major indexes, the MSCI Small Cap Index in May and the S&P/TSX index in June. These events have led to a threefold increase on liquidity in our stock, which makes our company more investable from an equity perspective.Building on these recent successes, we are committed to continue delivering operationally and financially in order to close the equity valuation gap between Frontera and our regional and global peers.I will now turn the call back over to Richard for some closing comments.
Thank you, David. At Frontera, we are successfully delivering on our promise of maintaining Colombian production between 60,000 and 65,000 barrels of oil equivalent per day, which is generating sufficient cash to maintain a healthy balance sheet, invest in our sustaining and growth capital expenditures and enhance shareholder returns through dividends and buybacks. We have delivered a number of initiatives, which are improving the medium to long-term outlook for the company, while taking costs out of the business and improving operational efficiencies. We continue to work on extracting value from our latent assets, like tax losses and midstream assets, as David mentioned. Our efforts are ongoing as we make substantial progress, transitioning Frontera into the premium value Latin American upstream oil and gas company. We look forward to meeting many of you soon to go over our plans in more detail.Thank you to all of you for attending our call. I will now turn the call back over to our operator, who will open up for any questions that you may have.
[Operator Instructions] Your first question comes from Anish Kapadia.
I had a few questions, if I may. First of all, starting on some of your noncore and infrastructure assets. I was wondering if you could give a little bit of an update on your plans for some of those assets -- pipeline assets put to be here, et cetera. Second question is on your G&A. Obviously, it's trended a lot lower in the first half of the year than maybe expected. Should we -- that's a tick-up a bit in the second half of the year? Or are you likely to undershoot the 10% reduction, I think you'd earlier talked about? And then the third question was on Guyana. Obviously, a pretty interesting well plan there coming up. Could you just talk a bit more about how you see the prospectivity, any size of chance success? And your plans over there?
Thank you for the questions. This is Gabriel de Alba. I will answer the first question in relation to the midstream assets, and then pass the call to Richard to answer the follow-up questions on operational and Guyana matters. On the midstream assets, we're focusing on locking that value. We believe that there is value that can even be recognized in our books but is not reflected in the share price. And we're looking to unlock it with the objective of allocating that value to the shareholders. But we are pursuing various initiatives on that direction and we will keep you appraised as those come to fruition.Richard, would you mind answering the follow-up questions?
Sure. Sure. Yes, Anish, thank you for the question. Just -- and David can sort of poke me on this if there's any more sort of detail required on G&A. I think -- I mean the first point I'd make is, the G&A hasn't really been lower than expected. If you recall, in the fourth quarter of 2018, we went through a major restructuring exercise largely in our Colombian head office, but also in our Peruvian business to reduce our G&A costs and make the company more streamlined. And so we are now seeing the benefits of that come through in the first half of this year. It's been helped, in addition, by the weaker Colombian peso, which has increased the savings in a dollar perspective. But it is pretty much trending where we expected it to. And these savings are sustainable and will be continued. We've had some increases in the second quarter, as David referred to, because that's the first quarter when the new salary increases are applied and also some of the bonus scheme is paid. But I think we -- you can predict that the second half will be close to what the first half of the year has been.And moving to Guyana. As I said in my brief words, we continue to evaluate the prospectivity of our 2 blocks, which looks extremely exciting. As I mentioned, we've got one area of the Corentyne block, which has never been properly imaged with modern high-quality 3D seismic data. So we are taking the opportunity while there are seismic boats in the country to fill that gap, so that we have a complete 3D seismic coverage of both of our offshore blocks. And we can use that then to enhance our view of the prospectivity. We already have a number of potential drilling locations identified but we want to make sure that we really target our drilling campaign at the best quality prospects that we've got. And yes, we recognize that a well has recently started drilling in an adjacent block, and obviously, we'll watch with interest the results of that well.Does that address your question? Do you have any follow up from that?
Yes. That was good. Actually I did have one further one, if I may. Interesting to see a large special dividend that's been paid. Could you just talk about how you're thinking about the excess cash that you're generating special dividends versus share buybacks?
Yes. This is again, Gabriel de Alba. From the context of the Board, we have, as you know, the quarterly dividend that we want to preserve on a regular basis, that is somehow connected to the Brent price. But as the company also continues to perform well and its cash origination is conducted as expected by the Board, we look for any excess cash to be able to be distributed to the shareholders, or in other words, allocated to shareholders via NCIB. All of this while also preserving a healthy balance sheet, and certainly, without jeopardizing the stability of the exploration program. So we're looking for that very right balance of continued exploration, strengthening our portfolio, but allocating excess cash to shareholders while still preserving a very healthy balance sheet.
[Operator Instructions] Your next question comes from Jenny Xenos.
Congratulations on another strong quarter. I have a few questions, please. Maybe I'll start by following up on the excess cash question. I noticed that you haven't renewed your NCIB. Could you share with us please, what was the reasoning behind that? And will dividends continue to be -- both regular and special dividends continue to be your preferred method of returning capital to shareholders? And are you still considering buying back some of your outstanding debt?
Jenny, it's again, Gabriel. From the context of the Board, we believe we have many opportunities and options to maximize the value for shareholders. One, as you know, is also a special dividend, but that does not eliminate future NCIBs. So we are looking at all those options and probably will be working in combinations of such, again, in order to support the value of the shareholders.
So Gabriel, was there a reason that the NCIB that expired on the 17th of July was not renewed at the latest Board meeting?
No specific reason. The Board, again, is evaluating that as well as other alternatives. So we will work with the right legal dynamics.
Okay. Next question is for David, please. David, with over a $3 billion in available tax pools. What do expect your effective tax rate to be this year and in 2020?
Our effective tax rate hasn't changed at all and we don't expect it to change.
Okay. So it will remain approximately the same.
Yes. Yes.
Okay. And I have a couple of operational questions, please. First is about Guatiquia. Are there any updates on permitting and lend access there? Are we still going to see an additional 2 to 4 wells drilled there by year-end?
Yes. On Guatiquia, the -- obviously, the area of interest was the Coralillo area, where we've established some strong production from the recent wells. We just started drilling the Coralillo-7 well, which has been drilled off one of our existing pads. And we are continuing the process of permitting a new pad, which is probably going to take now at least the next 4 to 5 months, we think, before we obtain that permit, which means that the earliest we can spud a well on that pad is probably towards the end of the year. So we won't see results from that well in 2019. But we will have results by early 2020. And that will be an exciting well because it's testing a new part of the Coralillo's trap, which we haven't been able to reach from our existing locations. So that's a quick update on where we are on that.
Fantastic. And on the CPE-6 Block, results are -- have been exceeding expectations. How does -- how do these results affect your interpretation of the size and the quality of the resource? And what could accelerated development there look like?
Well, you're asking the same question that I'm asking my teams, Jenny. I mean these results have really been significantly above our predrill estimates on the horizontal wells. And we're seeing very strong production performance from the -- we've actually now drilled 4 wells, 1 deviated and 3 horizontal wells, which are all delivering strongly, and the field production is now getting close to 2,500 barrels a day, which we were expecting this year to average something closer to 1,500 barrels a day. So we're seeing a very strong performance, so we still have a number of wells to drill in the program this year. We have our reservoir teams and our operations team now working to show us what is potentially possible with an accelerated development campaign on the Hamaca field, which is a combination of an increased drilling program, but also we need to then put in place the additional facilities to deal with water handling and so on. And we hope very shortly to be able to provide an update on our plans for the field, but we are actively looking at ways to accelerate this.
Okay. Understood. And finally on Guyana. What is the latest from the timing of cutting the Utakwaaka prospect there? And are there any updates on finding a partner? Or is that off the table?
So on the timing, we're still evaluating timing. We're actually, as I mentioned, we're working hard to make sure that we have the best possible prospect inventory that we can generate in both blocks. And we are still in that process until we're working with CGX and with the Guyanese government to just make sure that when we come to drill, we're actually ready to drill the best prospects in the best locations. So that's still an ongoing discussion. And when there's news on that, we'll obviously be able to share that.And in terms of partners, again, really that's a question for CGX, we have our position in the joint venture, which we're very comfortable with, and at this stage, we have to ask CGX for their plans now for their equity.
Okay. Great. But you're comfortable with your position?
We're very comfortable with our position, yes.
Okay. Perfect. And just going back to the first exploration well, Utakwaaka, the one that's supposed to be drilled by the end of November. Are you still hoping to spud it in kind of late August, September? Because I know the rig was supposed to come from Trinidad. What's the update on that?
Just in terms of timing, we're not going to be spudding a well in August or September at this stage, we're reviewing the options on exactly when we start the drilling. And as soon as we got an update on that, Jenny, we'll share it.
Just to add to what Richard is saying. Again, the context is, we want to have a robust portfolio of opportunities, instead of only narrowing to 1 at the moment. So what we understand, time is of the essence, we want to have multiple opportunities to what would be our first well.
Is there a possibility then perhaps not drilling this well by the end of November, delaying that commitment to drill the first well by that time, and perhaps shooting your seismic and then identifying your best prospect and drilling it then? Is there a possibility of that?
Yes. That could be a possibility, indeed.
We're exploring a number of opportunities and options at the moment, Jenny, to make sure, as Gabriel said, that we get the best possible impact from a drilling program here.
There are no further questions at this time. Should you have any further questions, please e-mail ir@fronteraenergy.ca. This concludes the call. Thank you all for participating. You may now disconnect.