...Fitch Ratings affirmed Frontera Energy Corporation's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at `B+', and maintained the Negative Outlook on Nov. 13, 2019. Fitch also affirmed Frontera's senior unsecured notes at `B+'/`RR4'. The affirmation of Frontera's ratings reflects the company's strong credit metrics and liquidity. Fitch estimates gross leverage, defined as total debt to EBITDA, will be 0.5x at YE 2019, and EBITDA to interest expense will be 18.9x. The company has strong liquidity, with cash on hand covering interest expense for the life of the outstanding bond. The Negative Outlook reflects Fitch's expectation that Frontera will not renew its service contract in Peru after 1Q20, accounting for nearly 10% of total production in 2019, coupled with its weak reserve life of 4.5 years of 1P reserve. Fitch believes the company has a weak financial policy, which prioritizes shareholder distributions over cash retention and investment. Fitch will monitor the company's...
