Frontera Energy Colombia secured a $120 million crude prepayment agreement with Chevron Products Co. on Tuesday, replacing a deal set to expire in 2026 to strengthen liquidity, support working capital, and secure offtake for its Colombian production.
Frontera Energy Colombia said the agreement, signed through its local subsidiary, provides an immediate $80 million advance along with access to an additional $40 million for up to six months on a fully committed basis. The two-year deal allocates a portion of the company’s Colombian crude output to Chevron.
Deal Replaces Expiring Agreement, Adds Flexibility
The new prepayment replaces an existing commercial arrangement scheduled to expire in early 2026. Frontera said moving early to renew the structure improves balance sheet flexibility without issuing equity or adding conventional bank debt.
“The proceeds will be used to manage working capital flows and strengthen liquidity,” the company said in a statement. Repayment begins after a six-month grace period.
The financing cost is tied to the Secured Overnight Financing Rate plus 4.25 percent per year, according to the company. Such pricing reflects higher risk premiums common in emerging markets, particularly for upstream producers.
Crude prepayment deals have become a key financing tool for mid-sized oil producers in Latin America, where access to low-cost capital can be limited by political risk, regulatory uncertainty and volatile commodity prices.
Chevron Secures Supply as Competition Intensifies
For Chevron, the agreement with Frontera Energy Colombia secures a steady supply of Colombian crude at a time when competition for medium and heavy barrels remains strong, particularly in Atlantic Basin markets. The deal also builds on a commercial relationship that has already been established between the two companies.
The replacement of the agreement ahead of its January 2026 expiry signals continued confidence in Frontera’s production profile and operational stability in Colombia, analysts said. The country’s hydrocarbons sector continues to face policy debates under a left-leaning government that has signaled a shift away from new oil and gas exploration.
Frontera said the prepayment structure provides near-term cash flow support while preserving operational control. “It allows us to maintain stability in our operations while navigating market volatility,” the company said.
Similar structures are widely used by national oil companies and independent producers across Colombia, Brazil and Ecuador to smooth cash flows and fund ongoing operations without diluting shareholders.
Company Operations Focus on Colombia, Guyana
Frontera Energy Colombia manages a diversified portfolio across Colombia and Guyana, holding interests in 20 exploration and production blocks along with pipeline and port infrastructure. Colombia continues to serve as its core producing region.
The company has focused on preserving liquidity and operational resilience amid fluctuating oil prices and evolving fiscal and environmental frameworks. Management has emphasized disciplined capital allocation and alternative financing to manage risk.
Chevron Products Co. did not disclose additional details of the agreement. The companies did not comment on volumes committed under the offtake arrangement.
Frontera’s shares were modestly higher in early trading following the announcement, reflecting investor support for liquidity-enhancing measures as energy markets remain volatile.
