Frontera proposes to sell its Columbia oil and gas business and distribute most of the cash proceed as a RoC distribution

Frontera, a TSX-listed corporation, is expected to sell, pursuant to a BC Plan of Arrangement, all of its Colombian oil and gas business to Parex Resources, an Alberta TSX-listed corporation. This would be accomplished through the sale of a Swiss holding company to an Alberta Buyco subsidiary of Parex. The consideration will consist of approximately US$500 million in cash, the assumption of unsecured notes in the amount of US$310 million, and a contingent payment of US$25 million if a Colombian authority agrees to extend a key agreement within one year of the completion of the Plan of Arrangement.

It is contemplated that, outside of the Plan of Arrangement, most of the US$500 million in cash will be distributed to Frontera shareholders as a return of capital. The US$25 million contingent payment, if received before the amount of the return of capital distribution is finalized by the Frontera Board of Directors, will also be included in the RoC distribution. Otherwise, that payment likely would be distributed as a dividend or through a share buyback. (S. 84(4.1)(b) requires that a sales proceeds PUC distribution must be made on a one-off basis.)

Following the above transactions, Frontera will continue to hold, through subsidiaries, significant infrastructure assets in Colombia.

Neal Armstrong. Summary of Circular of Frontera Energy Corporation ("Frontera") respecting an arrangement with Parex Resources Inc. ("Parex") and Parex AcquisitionCo Inc. (“Purchaser”) under Spin-offs and Distributions - Ss. 84(4.1)(a) and (b) distributions of proceeds.