Management attributed the 2025 net loss of $193 million primarily to $136 million in ceiling test impairment losses and lower Brent oil prices affecting EBITDA and funds flow.
The company successfully executed a bond exchange for 88% of its 2029 notes, which management views as a pivot point from near-term refinancing to opportunistic debt reduction.
Operational growth was driven by a 32% increase in production following exploration success in Ecuador and the full-year integration of Canadian assets.
Management highlighted a structural reduction in operating expenses per barrel, achieved through the integration of i3 Energy and transitioning from diesel to gas-to-power in Ecuador.
Strategic entry into Azerbaijan via a partnership with SOCAR is intended to provide a capital-efficient, scaled entry into a stable jurisdiction supplying European markets.
The company maintained strong reserve replacement in South America, exceeding 100% on a 2P basis, despite reclassifying some Canadian gas reserves due to low pricing environments.
The 2026 capital program is fixed across price scenarios, with any excess free cash flow prioritized for cash accumulation or discounted bond repurchases.
Management is targeting a long-term net debt to EBITDA ratio of 1.0x by 2028, with current high oil prices potentially accelerating this timeline.
The hedging strategy for 2026 covers approximately 50% of production with a $60 floor and $74 ceiling to balance downside protection with upside participation.
Capital allocation for the new Azerbaijan entry will be detailed in 2027 guidance, following the expected ratification of the Production Sharing Contract.
The Suroriente capital carry commitment in Colombia is on track for completion by mid-2026, supported by the outperformance of the Rahoo-2 well.
The termination of the Colombia credit facility and amendment of the prepayment agreement provided $175 million in incremental capacity to support the debt exchange.
Pipeline disruptions in southern Colombia and Ecuador impacted 2025 production, though management has now established alternative export routing directly through Colombia.
The Simonette disposition in Canada is expected to close in early 2026, which will result in a minor downward revision to total production guidance.
Canadian natural gas reserves were reclassified as contingent resources due to low price standards, though management retains 0.3 Tcf of unrisked 3C resources for future development.
Story Continues
