Frontera Energy Corp. (FEC.TO,FECCF) late Tuesday announced that it has entered into a definitive arrangement agreement to divest its upstream Colombian exploration and production business to Parex Resources Inc. (PXT.TO,PARXF) for an equity consideration of up to $525 million.
Parex will also assume all of Frontera's obligations under its $310 million 2028 Senior Unsecured Notes and $80 million Chevron prepayment facility, resulting in a firm value of approximately $750 million.
The equity deal price for the Frontera E&P Assets includes $500 million payable upon closing of the deal and a $25 million contingent payment.
Under the Parex Arrangement Agreement, Parex would acquire the same assets that Frontera had agreed to sell to GeoPark under the GeoPark Arrangement Agreement.
Parex's deal represents a 31 percent premium to the consideration contemplated under the arrangement agreement dated January 29, 2026 between Frontera, GeoPark Limited and Geopark Colombia SLU for the acquisition of Frontera E&P Assets by GeoPark.
Concurrent with entering into the Parex Arrangement Agreement, Frontera terminated the GeoPark Arrangement Agreement and paid the $25 million Purchaser Break Fee.
Following the deal closure, Frontera intends to distribute to shareholders approximately $470 million, or approximately C$9.18 per share, which includes the $25 million contingent payment, representing the net cash proceeds from the deal after the payment of the GeoPark break fee, and certain other expenses.
Following the divestment, Frontera aims to emerge as a newly focused infrastructure company, anchored by its standalone and growing portfolio of infrastructure assets.
In Canada, Frontera Energy shares closed Tuesday's regular trading at C$12.98, up 1.09 percent, and Parex Resources closed at C$23.34, up 1.08 percent.
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