Gran Tierra Energy Inc.
(“Gran Tierra” or
the “Company”) (NYSE American:GTE)(TSX:GTE) (LSE:GTE)
today announced an operations and financial update. All dollar
amounts are in United States dollars and all production volumes are
on a working interest before royalties (
“WI”)
basis and are expressed in barrels (
“bbl”) of oil
per day (
“bopd”), unless otherwise stated.
Key Highlights:
-
Production: Gran Tierra’s average production for
various time periods is outlined in the table below:
Average Production |
Acordionero (BOPD) |
Costayaco (BOPD) |
Moqueta (BOPD) |
Other (BOPD) |
Total Company (BOPD) |
Second Quarter 2020 |
10,744 |
6,021 |
2,468 |
932 |
20,165 |
Third Quarter 2020 |
9,696 |
4,949 |
2,051 |
2,248 |
18,944 |
Fourth Quarter 2020 |
9,732 |
4,363 |
2,530 |
5,282 |
21,907 |
First Quarter 2021 |
12,681 |
4,190 |
2,304 |
5,288 |
24,463 |
Current Average Production1 |
16,400 |
4,700 |
2,400 |
5,430 |
28,930 |
1 Approximate average production over the period
from March 28, 2021 to April 10, 2021
- 2021
Production Guidance: Based on the Company’s significant
progress in increasing production during and subsequent to the
first quarter of 2021, Gran Tierra reaffirms its 2021 full-year
production guidance of 28,000-30,000 bopd
- Credit
Facility and Cash Balances: As of March 31, 2021, the
Company had paid down its credit facility balance by $10 million to
$180 million and had increased its cash and cash equivalents
balance to $20 million, compared to a credit facility balance of
$190 million and cash and cash equivalents balance of $14 million
as of December 31, 2020
-
Acordionero Oil Field (100% WI)
- Utilizing 2
workover rigs, Gran Tierra continues to workover wells that went
offline in 2020, which the Company decided not to workover at that
time due to low oil prices; during the current workover campaign,
the average workover cost has decreased 28% from 2019
- The development
drilling rig has also remained active since starting on November
30, 2020, drilling both producers and injectors; the average cost
per well has decreased 36% since 2019; the AC-75 well achieved a
new record cycle time from spud to on-production of 10.6 days, at a
total cost of $1.9 million
- The combination
of the workover and drilling programs has resulted in Acordionero's
current average production2 of 16,400 bopd, with approximately 700
bopd of additional production to be added from existing wells; Gran
Tierra also plans to drill and complete an additional 3 to 5 wells
and bring them on production during the second quarter of 2021
- Acordionero’s
current average production2 is the highest level achieved since
September 2019; Gran Tierra believes its prudent reservoir
management of Acordionero’s waterflood has allowed the Company to
restore this field’s production to a level last achieved more than
18 months ago, which strongly demonstrates the effectiveness of the
waterflood
-
Costayaco Oil Field (100% WI)
- In March 2021,
Gran Tierra commenced its infill development drilling campaign to
drill 3 oil producers; this drilling program is the first in
Costayaco since November 2019
- The CYC-42
infill oil well was drilled during the first quarter of 2021 with
indications of high quality reservoir in the U, T, and Caballos
Sands based on well logs, with potential prospectivity in the M2
Carbonate; the CYC-42 well was drilled in 12.1 days at a cost of
$1.9 million, a 30% decrease from the last 4 wells drilled in
Costayaco
- Currently, the
CYC-43 infill well is being drilled and is expected be cased and
cemented on or around April 12, 2021
- The CYC-44
infill well is expected to spud on or around May 15, 2021
- All 3 wells are
expected to be on production by the end of the second quarter of
2021
- Workovers on 6
producing wells were completed during the first quarter of 2021,
with oil production restored and ramping back up
- Moqueta
Oil Field (100% WI)
- During the
second quarter of 2021, Gran Tierra plans a 5-well workover
program, which is expected to consist of 1 workover and 1
stimulation to restore production, and also 3 injector conversions
to further optimize the waterflood and increase production in the
second half of 2021
-
Suroriente Block (52% WI and Operator)
- At the Cohembi
oil field in the Suroriente Block, a facility expansion program is
progressing as planned, which is expected to allow additional
production to be brought online in the second half of 2021
- A workover rig
is expected to move to the Suroriente Block in mid-April 2021,
where it is expected to accelerate the running of larger pumps in 2
oil wells and to restore production in 3 additional oil wells which
are currently offline
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented: "At the beginning of the fourth
quarter of 2020, we decided to hedge 15,000 bopd of first half 2021
production and to resume development operations across all of our
major assets. Throughout the first quarter of 2021, we have
significantly and profitably restored Gran Tierra’s total
production. Our ability to ramp up Gran Tierra’s production to the
highest level in over a year clearly demonstrates our team’s
success at optimizing our core oil fields under waterflood, while
preserving and maximizing the long-term value of all of our assets.
Based on our significant progress in increasing production during
the first quarter of 2021, we reaffirm Gran Tierra’s 2021 full-year
production guidance of 28,000-30,000 bopd.
Our 2021 capital budget of $130-150 million
remains a balanced, returns-focused program which prioritizes free
cash flow generation and debt reduction. If Brent oil prices
continue to be well above our original 2021 budget forecast of $49
per bbl, we plan to further accelerate debt reduction through the
remainder of 2021. We also continue to advance exploration-related
activities for our prioritized, high impact exploration program and
we expect to increase activity in 2022.
Our teams in Colombia, Canada and Ecuador have
done an excellent job by safely and effectively executing our
development program during the many challenges faced by Gran Tierra
and our industry in 2020 and 2021. The health and safety of our
people and all of our stakeholders where we operate will continue
to be a focus in 2021 through our industry-leading COVID-19 safety
practices and protocols. In addition, our 'Beyond Compliance
Philosophy and Policy' continues. Where Gran Tierra identifies
significant opportunities and benefits to the environment and
communities, we voluntarily strive to go beyond what is legally
required to protect the environment and provide social benefits,
because it is the right thing to do."
2 Approximate average production over the period
from March 28, 2021 to April 10, 2021
Contact Information
For investor and media inquiries please contact:
Gary GuidryPresident & Chief Executive Officer
Ryan EllsonExecutive Vice President & Chief Financial
Officer
Rodger TrimbleVice 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
currently focused on oil and natural gas exploration and production
in Colombia and Ecuador. The Company is currently developing its
existing portfolio of assets in Colombia and Ecuador and will
continue to pursue additional new growth opportunities that would
further strengthen the Company’s portfolio. The Company’s common
stock trades on the NYSE American, the Toronto Stock Exchange and
the 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 SEC 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
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
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”, “can,” “will,” “should,” “guidance,” “forecast,” “signal,”
“measures taken to” 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
related to drilling and operation activities, expectations
regarding reservoir prospects and production amounts, future well
results (including initial oil production rates and productive
capacity based on past performance) and operating and general and
administrative costs, production guidance for 2021, the impact of
the Company’s COVID-19 protocols, the Company’s expectations as to
debt repayment and its positioning for 2021. 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,
pricing and cost estimates (including with respect to commodity
pricing and exchange rates), 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: he
unprecedented impact of the COVID-19 pandemic and the actions of
OPEC and non-OPEC countries and the procedures imposed by
governments in response thereto; disruptions to local operations;
the decline and volatility in oil and gas industry conditions and
commodity prices; the severe imbalance in supply and demand for oil
and natural gas; prices and markets for oil and natural gas are
unpredictable and volatile; the accuracy of productive capacity of
any particular field; the timing and impact of any resumption of
operations; Gran Tierra’s operations are located in South America
and unexpected problems can arise due to guerilla activity or local
blockades or protests; 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
ability of Gran Tierra to execute its business plan and realize
expected benefits from current initiatives (including a reduction
of the capital program); the risk that unexpected delays and
difficulties in developing currently owned properties may occur;
the ability to replace reserves and production and develop and
manage reserves on an economically viable basis; the accuracy of
testing and production results and seismic data, pricing and cost
estimates (including with respect to commodity pricing and exchange
rates); the risk profile of planned exploration activities; the
effects of drilling down-dip; the effects of waterflood and
multi-stage fracture stimulation operations; the extent and effect
of delivery disruptions, equipment performance and costs; actions
by third parties; the timely receipt of regulatory or other
required approvals for our operating 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 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; volatility or
declines in the trading price of our common stock or bonds; the
risk that Gran Tierra does not receive the anticipated benefits of
government programs, including government tax refunds; Gran
Tierra’s ability to comply with financial covenants in its credit
agreement and indentures and make borrowings under its credit
agreement; 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, 2020 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. In particular, the unprecedented nature of the current
economic downturn, pandemic and industry decline may make it
particularly difficult to identify risks or predict the degree to
which identified risks will impact Gran Tierra’s business and
financial condition. 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.
The estimates of future production set forth in
this press release may be considered to be future-oriented
financial information or a financial outlook for the purposes of
applicable Canadian securities laws. Financial outlook and
future-oriented financial information contained in this press
release about prospective financial performance, financial position
or cash flows are provided to give the reader a better
understanding of the potential future performance of the Company in
certain areas and are based on assumptions about future events,
including economic conditions and proposed courses of action, based
on management's assessment of the relevant information currently
available, and to become available in the future. These projections
may not be appropriate for other purposes. These projections
contain forward-looking statements and are based on a number of
material assumptions and factors set out above. Actual results may
differ significantly from the projections presented herein. These
projections may also be considered to contain future-oriented
financial information or a financial outlook. The actual results of
Gran Tierra's operations for any period will likely vary from the
amounts set forth in these projections, and such variations may be
material. See above for a discussion of the risks that could cause
actual results to vary. The future-oriented financial information
and financial outlooks contained in this press release have been
approved by management as of the date of this press release.
Readers are cautioned that any such financial outlook and
future-oriented financial information contained herein should not
be used for purposes other than those for which it is disclosed
herein. The Company and its management believe that the prospective
operational and financial information has been prepared on a
reasonable basis, reflecting management's best estimates and
judgments, and represent, to the best of management's knowledge and
opinion, the Company's expected course of action. However, because
this information is highly subjective, it should not be relied on
as necessarily indicative of future results.
Presentation of Oil and Gas
Information
BOEs have been converted on the basis of 6
thousand cubic feet ("Mcf") of natural gas to 1 bbl of oil. BOEs
may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. In addition,
given that the value ratio based on the current price of oil as
compared with natural gas is significantly different from the
energy equivalent of six to one, utilizing a BOE conversion ratio
of 6 Mcf: 1 bbl would be misleading as an indication of value.
References to a formation where evidence of
hydrocarbons has been encountered is not necessarily an indicator
that hydrocarbons will be recoverable in commercial quantities or
in any estimated volume. Gran Tierra's reported production is a mix
of light crude oil and medium and heavy crude oil for which there
is no precise breakdown since the Company's oil sales volumes
typically represent blends of more than one type of crude oil. Well
test results should be considered as preliminary and not
necessarily indicative of long-term performance or of ultimate
recovery. Well log interpretations indicating oil and gas
accumulations are not necessarily indicative of future production
or ultimate recovery. If it is indicated that a pressure transient
analysis or well-test interpretation has not been carried out, any
data disclosed in that respect should be considered preliminary
until such analysis has been completed. References to thickness of
"oil pay" or of a formation where evidence of hydrocarbons has been
encountered is not necessarily an indicator that hydrocarbons will
be recoverable in commercial quantities or in any estimated
volume.
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