gran Tierra Energy Inc. Announces Operations Update
19 June 2019 - 3:00PM
UK Regulatory
TIDMGTE
CALGARY, Alberta, June 19, 2019 (GLOBE NEWSWIRE) -- 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:
deg 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 deg 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 deg 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 deg 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: deg 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 deg 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 deg 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 deg 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.
(END) Dow Jones Newswires
June 19, 2019 01:00 ET (05:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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