This article first appeared on GuruFocus.
Frontera (FECCF) Energy picked up a timely cash boost after striking a new financing deal with Chevron (NYSE:CVX) that ties funding directly to future oil deliveries. The Canadian producer said its Colombian unit secured an agreement worth up to $120 million, starting with an $80 million upfront payment.
In return, Frontera will supply a portion of its oil output to Chevron over the next 2 years. The deal also gives Frontera the option to draw another $40 million for up to 6 months if needed. It replaces an older prepayment arrangement that was set to expire in early 2026.
The timing matters for Frontera. The company operates mainly in Colombia and Ecuador and has faced setbacks this year, including the loss of an offshore joint venture license in Guyana. Partnering with a major oil company like Chevron helps stabilize cash flow and reduces near-term financial pressure. Frontera gets liquidity and certainty, while Chevron locks in future oil supply.
