PRESS RELEASE

Frontera Announces $377 Million in Transportation Cost Savings

By
Friday, July 13, 2018

Press release from Frontera Energy

Frontera Energy Corporation (TSX:FEC) (the "Company" or "Frontera") today announced that it has reached the successful settlement of the Ocensa transportation arbitration concerning the P-135 Project and terminated its contractual commitment with Cenit Transporte y Logistica de Hidrocarburos S.A. ("CENIT") to transport oil through the Caño Limón pipeline ("CLC") and its contractual commitment with Oleoducto Bicentenario de Colombia S.A.S ("Bicentenario") to transport oil through the Bicentenario pipeline ("BIC").

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Ocensa P-135 Project Arbitration

Frontera Energy Colombia Corporation Sucursal Colombia ("FECC"), Frontera's Colombian operating branch, and Oleoducto Central S.A. ("Ocensa") have reached a successful settlement agreement in an arbitration on tariffs and monetary conditions relating to transportation contracts entered into with Ocensa concerning the P-135 Project (the "Settlement Agreement"). Under the terms of the Settlement Agreement which was approved by the arbitrators, FECC has committed to ship 30,000 barrels of oil per day at $6.3601 per barrel (adjusted at 2.57% inflation per year until 2023 and thereafter, pursuant to applicable regulation), on the Ocensa P-135 Project through June 2025. The original terms of the contract were for the shipment of 30,000 barrels of oil per day at $8.7729 per barrel, adjusted at 2.57% inflation per year. The estimated impact of the Settlement Agreement will reduce Frontera's future transportation commitments by approximately $178.3 million and reduce future monetary conditions relating to heavy crude oil quality by approximately $199.2 million over the life of the contract.

Termination of Transportation Contracts

The CLC pipeline, which connects the BIC pipeline to the Coveñas Export Terminal, has suspended transport rendered to FECC for more than 180 consecutive calendar days, which is a termination event under the Company's transportation agreement with CENIT (the "CLC Transportation Agreement"). Under the CLC Transportation Agreement, FECC had a commitment to ship 47,333 barrels of oil per day for which CENIT charges $3.09 per barrel, representing an annual disbursement of $53.4 million, between now and October 2028 through the CLC pipeline.

Also, the BIC pipeline, which operates between Araguaney and Banadia where it connects to the CLC pipeline, has not transported FECC's oil for more than six uninterrupted months due to a justifiable event, which is a termination event under FECC's transportation agreement with Bicentenario (the "BIC Transportation Agreement"). Under the BIC Transportation Agreement, FECC had a commitment to ship 47,333 barrels of oil per day at $7.56 per barrel, representing an annual disbursement of $130.6 million, between now and June 2024 through the BIC pipeline. During the term the two contracts have been in place, service has been suspended approximately 60% of the time.

The Company has transportation agreements in place to ensure sufficient capacity for the evacuation and sale of its oil production in Colombia.

The Company is evaluating the carrying value of its ownership interest in Bicentenario related to the termination of the BIC Transportation Agreement. The Company expects to provide updated financial guidance with its second quarter 2018 financial results.