Gran Tierra Energy Inc.
(“Gran Tierra” or the
“Company”)
(NYSE
American:GTE)(TSX:GTE)(LSE:GTE) today announced an
operations update regarding activities and results during second
quarter 2019 to date. All dollar amounts are in United States
(
“U.S.”) dollars unless otherwise indicated.
Production amounts are unaudited and on an average working interest
before royalties (
“WI”) basis unless otherwise
indicated.
Key Highlights
- The expansions of Acordionero’s central processing and water
injection facilities, as well as the installation of gas-to-power
turbines (“Acordionero Projects”), are
mechanically complete with commissioning expected during July 2019,
which represents a significant milestone for the Company and its
largest oil producing asset
- Record drilling results achieved in Acordionero: the AC-40 and
AC-41 wells were drilled in 9.5 and 7.4 days respectively, each a
consecutive record short drilling time for the field
- Received the Global Environmental License for Acordionero on
June 12, 2019 from the Autoridad Nacional de Licencias Ambientales,
the Colombian environmental regulator; this license is expected to
allow accelerated and optimized full field development of
Acordionero
- The Company believes the successful drilling and operations
activities at both Acordionero and Suroriente to date will support
increases in Proved (“1P”) and Probable (“2P”) reserves
- Surpassed over six million person-hours without a lost time
incident
- Gran Tierra has preliminarily won two blocks in the recent
Agencia Nacional de Hidrocarburos (“ANH”) bid
round in Colombia; the Company believes these blocks may be highly
prospective; as part of the bidding process, other companies can
offer more than Gran Tierra’s proposed work commitment until June
26, 2019 in an attempt to win the blocks, but Gran Tierra has a
right of first refusal in respect of such offers since the
Company’s initial bid was the highest
- Gran Tierra has officially signed contracts for our three
exploration blocks in Ecuador; the Company is making progress and
plans to drill its first exploration well in Ecuador in late 2019
or early 2020
- New personnel hired to improve operations: a new Vice President
of Asset Management and a new Director of Completions both recently
joined the Company
- Gran Tierra is currently addressing some temporary operational
issues which have impacted our production; the Company is taking
the necessary steps to get production back on track and believes
our oil reserves and values remain intact as these challenges
represent deferral of production; the Company does not believe
these issues are related to the underlying quality of the assets;
further information is provided below: ° From April 1,
2019 to May 23, 2019, Company production averaged 37,700 barrels of
oil per day equivalent (“BOEPD”), and was expected
to meet our previously published full year 2019 guidance
° Starting in late May 2019, production decreased as a
result of the following: •
Acordionero: the Company proactively shut-in two oil
producers with high gas-oil ratios (“GOR”); two
other oil producers went off-line due to electric submersible pump
(“ESP”) failures; total current, temporary impact
to production is approximately 4,500 BOEPD
• Suroriente and PUT-7: local farmers
have set up blockades in the southern Putumayo region to protest
against the Colombian national government; these protests are not
directed at the oil industry or Gran Tierra; as a result of these
blockades, Gran Tierra has had to shut in all production at both of
these blocks; total current, temporary impact to production is
approximately 4,500 BOEPD ° For second quarter to
June 17, 2019 Company production has averaged approximately 36,200
BOEPD; for the five days up to and including June 17, 2019, the
Company’s production was approximately 29,000 BOEPD
° As a result of these events, Gran Tierra will be
revisiting its guidance over the coming months and expects to
revise its guidance once the impact of the blockades and the
startup of the Acordionero Projects can be fully assessed
- Gran Tierra is taking the following mitigation actions to
address these temporary operational issues with production:
° Acordionero: the planned full
commissioning of the Acordionero Projects during July 2019 is
expected to allow a rapid increase in water injection from
approximately 16,000 barrels of water injected per day
(“bwipd”) to 40,000 bwipd and the release three
rental facilities which will reduce operating costs; this full
implementation of the Acordionero waterflood is forecasted to
repressure the reservoir over the next few months, which should
reduce the field’s GOR, which in turn would allow the Company to
increase oil production rates from several wells and to bring back
online those wells which were temporarily shut-in; start-up of the
20 megawatt gas-to-power project at the same time is expected to
significantly improve power reliability, improve ESP reliability
and significantly lower operating costs; all of these activities
are expected to restore Acordionero’s production back to levels
achieved in first quarter 2019 over the next few months and grow in
2020, despite the recent production decrease
° Suroriente and PUT-7: Colombian
government authorities are currently addressing farmers’ concerns
and expect to restore normal conditions within the next several
days; Gran Tierra is working closely with government officials to
safely resume operations and production on these two blocks as soon
as possible; the Company may continue to have short-term
interruptions in the area which are difficult to predict; the
Company expects to restore Suroriente’s and PUT-7’s oil production
back to normal levels once the blockades are resolved
° Costayaco: the Company is currently
drilling the CYC-39 infill oil well which is expected to be on
production in July 2019; in mid-July 2019, the Company expects to
spud the first of two horizontal water injectors (one each for the
T Sand and the Caballos Formation) to improve ultimate oil
recovery; these actions are expected to improve Costayaco’s oil
production performance
° Ayombero: the Company expects to
contract a snubbing unit (equipment capable of working with high
pressures) to retrieve parted coiled tubing in both the AY-2 and 3
wells in order to continue with completion operations; the AY-1
well was recently successfully cleaned out and re-perforated across
the entire Galembo formation and is expected to be placed on
long-term production test; we are very encouraged by the three
Ayombero wells drilled to date which have confirmed similar
lithologies, oil saturations and over-pressure in the Galembo
Member of the La Luna Carbonate reservoir, suggesting reservoir and
structural continuity; the Company’s estimates of oil in place and
prospective resources are unchanged by these short-term issues
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented, "With the receipt of the
Acordionero Global Environmental License and the planned
commissioning of the Acordionero Projects, as well as the lifting
of the blockades in the southern Putumayo, we believe we are
capable of restoring our production back up to over 40,000 BOEPD.
The timing of this forecasted production increase depends on the
water injection response at Acordionero and the impacts of
community blockades in the southern Putumayo. We believe the
current production decrease is a deferral, not a loss of reserves,
and that we are taking the necessary steps to get production back
on track. Overall, while the delay in the Acordionero Projects has
deferred production in the short term, we are very encouraged by
the continuity and quality of the sands in Acordionero and the
expected commissioning of these projects in July 2019 is a major
milestone. Based on the drilling to date in Acordionero and the
commissioning of the Acordionero Projects, we expect to increase
the original oil in place and recovery factor which will increase
both the 1P and 2P reserves in Acordionero.”
Exploration Update (All Projects 100%
WI)
Llanos Basin: Prosperidad-1 Well, El
Porton Block
- While sufficient oil shows and gas log response warranted
testing the lower Gacheta Formation, only formation water was
recovered; as a result Gran Tierra plans to abandon this well
- This exploration commitment well was part of the Petroamerica
acquisition in early 2016 and Gran Tierra was required to drill it
in under the terms of the ANH contract
- The one positive result is that Prosperidad-1 was successfully
drilled to a depth of approximately 17,000 feet, which was the
deepest well ever drilled by the Company and demonstrated the
technical skills of Gran Tierra’s drilling team
Putumayo Basin: Pomorroso, Almendrillo
and Pecari Wells, PUT-7 Block
- All three exploration wells have found producible oil in
multiple zones (U Sand, A-Limestone and N Sand), at rates ranging
from 100 to 300 BOEPD in each zone
- We are encouraged about encountering oil in multiple wells and
are currently determining the optimal completion and stimulation
design; a go-forward plan is expected to be determined during July
2019
- The Company is currently working to seek approval to commingle
several productive zones within a single wellbore (a production
method used at the Costayaco and Moqueta fields) to further improve
the ultimate recovery and enhance the economics of the wells
- Currently, activity is ceased as a result of the blockades
referenced above
Contact Information
For investor and media inquiries please
contact:
Gary Guidry, Chief Executive Officer
Ryan Ellson, Chief Financial Officer
Rodger Trimble, Vice President, Investor
Relations
+1-403-265-3221
info@grantierra.com
About Gran Tierra Energy
Inc.
Gran Tierra Energy Inc. together with its
subsidiaries is an independent international energy company focused
on oil and natural gas exploration and production in Colombia and
Ecuador. The Company is focused on its existing portfolio of assets
in Colombia and Ecuador and will pursue new growth opportunities
throughout Colombia and South America, leveraging our financial
strength. The Company’s common shares trade on the NYSE American,
Toronto Stock Exchange and London Stock Exchange under the ticker
symbol GTE. Additional information concerning Gran Tierra is
available at www.grantierra.com. Information on the Company's
website does not constitute a part of this press release. Investor
inquiries may be directed to info@grantierra.com or (403)
265-3221.
Gran Tierra's Securities and Exchange Commission
filings are available on the Securities and Exchange Commission
website at http://www.sec.gov and on SEDAR at http://www.sedar.com
and UK regulatory filings are available on the National Storage
Mechanism website at www.morningstar.co.uk/uk/nsm.
Forward Looking Statements and Legal
Advisories:
This press release contains opinions, forecasts,
projections, and other statements about future events or results
that constitute forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and
financial outlook and forward looking information within the
meaning of applicable Canadian securities laws (collectively,
“forward-looking statements”). The use of the words “expect”,
“plan”, “intend”, “will” “guidance,” and “believes”, derivations
thereof and similar terms identify forward-looking statements. In
particular, but without limiting the foregoing, this press release
contains forward-looking statements regarding: the Company’s
strategies, operations, including planned drilling and operation
activities, and developments, the commissioning and expected
benefits of the Acordionero Projects, the expected benefits of the
Global Environmental License, the anticipated benefits of the two
blocks in the ANH bid round and the Company’s success in the
bidding process, the Company’s drilling plans and expected results,
the expected production for second quarter 2019 and the Company’s
expectations as to future production amounts, the future impact of
adverse events on production, and the resolution and effect to the
Company of the strikes in Colombia and the timing of such
resolution. The forward-looking statements contained in this press
release reflect several material factors and expectations and
assumptions of Gran Tierra including, without limitation, that Gran
Tierra will continue to conduct its operations in a manner
consistent with its current expectations, the accuracy of testing
and production results and seismic data, pricing and cost estimates
(including with respect to commodity pricing and exchange rates),
rig availability, the effects of waterflood and the general
continuance of assumed operational, regulatory and industry
conditions in Colombia and Ecuador, and the ability of Gran Tierra
to execute its business and operational plans in the manner
currently planned.
Among the important factors that could cause
actual results to differ materially from those indicated by the
forward-looking statements in this press release are: sustained or
future declines in commodity prices and potential resulting future
impairments and reductions in proved reserve quantities and value;
Gran Tierra's operations are located in South America, and
unexpected problems can arise due to guerrilla activity; technical
difficulties and operational difficulties may arise which impact
the production, transport or sale of our products; geographic,
political and weather conditions can impact the production,
transport or sale of our products; the risk that current global
economic and credit conditions may impact oil prices and oil
consumption more than Gran Tierra currently predicts; the ability
of Gran Tierra to execute its business plan, including the
successful award of blocks in the ANH bid round in Colombia; the
risk that unexpected delays and difficulties in developing
properties may occur; the timely receipt of regulatory or other
required approvals for our activities; the failure of exploratory
drilling to result in commercial wells; unexpected delays due to
the limited availability of drilling equipment and personnel; the
risk that oil prices could continue to fall, or current global
economic and credit market conditions may impact oil prices and oil
consumption more than Gran Tierra currently predicts, which could
cause Gran Tierra to further modify its strategy and capital
spending program; and the risk factors detailed from time to time
in Gran Tierra's periodic reports filed with the Securities and
Exchange Commission, including, without limitation, under the
caption “Risk Factors” in Gran Tierra's Annual Report on Form 10-K
for the year ended December 31, 2018, as amended, and its other
filings with the Securities and Exchange Commission. These filings
are available on the Securities and Exchange Commission website at
http://www.sec.gov and on SEDAR at www.sedar.com.
The forward-looking statements contained in this
press release are based on certain assumptions made by Gran Tierra
based on management's experience and other factors believed to be
appropriate. Gran Tierra believes these assumptions to be
reasonable at this time, but the forward-looking statements are
subject to risk and uncertainties, many of which are beyond Gran
Tierra's control, which may cause actual results to differ
materially from those implied or expressed by the forward looking
statements. All forward-looking statements are made as of the date
of this press release and the fact that this press release remains
available does not constitute a representation by Gran Tierra that
Gran Tierra believes these forward-looking statements continue to
be true as of any subsequent date. Actual results may vary
materially from the expected results expressed in forward-looking
statements. Gran Tierra disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable law.
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