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 (BOPD) |
Acordionero |
Costayaco |
Moqueta |
Suroriente |
Other |
Total Company |
Third Quarter 2020 |
9,696 |
4,949 |
2,051 |
805 |
1,443 |
18,944 |
Fourth Quarter 2020 |
9,732 |
4,363 |
2,530 |
2,851 |
2,431 |
21,907 |
First Quarter 2021 |
12,681 |
4,190 |
2,304 |
2,752 |
2,536 |
24,463 |
Second Quarter 2021 |
14,793 |
3,206 |
1,774 |
1,058 |
2,204 |
23,035 |
Third Quarter 2021 |
14,427 |
6,292 |
2,321 |
3,513 |
2,404 |
28,957 |
Current Average Production1 |
14,849 |
7,144 |
2,277 |
4,189 |
2,120 |
30,579 |
1 Approximate average production over the period
from October 1, 2021 to October 11, 2021.
- As announced on
May 17, 2021, a number of blockades across Colombia impacted
several key transportation routes, resulting in the temporary
shut-in of some of Gran Tierra’s wells and oil fields during the
second quarter of 2021.
- The blockades
were not directed at Gran Tierra, but caused the Company to
temporarily curtail production during May and June 2021. As a
result, approximately 597,000 bbl of oil production were deferred
during the second quarter of 2021. Gran Tierra does not expect any
negative impact on the Company's oil reserves due to this
deferral.
- As announced on
July 12, 2021, the Colombian government successfully negotiated the
end of blockades affecting Gran Tierra’s operations, which allowed
the Company to restore its oil production throughout its entire
Colombian portfolio. During the third quarter of 2021, Gran Tierra
achieved an average production rate of approximately 29,000 BOPD,
the Company’s highest average rate since the first quarter of 2020.
The Company’s current average production2 is even higher at
approximately 30,600 BOPD.
- Gran’s Tierra’s
average production during the third quarter of 2021 was up 26% from
the second quarter of 2021 and up 53% from the third quarter of
2020.
- Credit
Facility Balance:
- As of September
30, 2021, the Company had paid down its credit facility balance by
$25 million to $150 million, compared to balance of $175 million as
of June 30, 2021 and $190 million as of December 31, 2020.
- As of October 8,
2021, the Company paid down its credit facility balance by an
additional $10 million to $140 million.
-
Financial Covenants
- As of October 1,
2021, Gran Tierra has exited the financial covenant relief period,
which provided relief from compliance with the ratio of Total Debt3
to EBITDAX3 from June 1, 2020, to October 1, 2021, pursuant to an
amendment to the Company’s credit facility between the Company and
the syndicate of lenders party thereto which had gone into effect
on June 1, 2020.
- Gran Tierra
expects to be in full compliance with all financial covenants under
its credit facility on December 31, 2021.
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented: “After the challenges with
blockades during the second quarter of 2021, we are very proud of
how our teams safely and diligently ramped operations back up
throughout our Colombia portfolio. During the third quarter of
2021, with production back up to an average level of approximately
29,000 BOPD and an average Brent oil price of $73.23/bbl, Gran
Tierra was able to further strengthen its balance sheet. The fourth
quarter of 2021 is off to an even stronger start with the Company’s
average current production2 at approximately 30,600 BOPD and Brent2
averaging $81.74/bbl, which has allowed us to pay down Gran
Tierra’s credit facility balance to $140 million as of October 8,
2021, down $50 million from a balance of $190 million as of
December 31, 2020.
With production restored, a successful 2021
drilling program, strong world oil prices and a strengthened
balance sheet, we are very excited about the fourth quarter of 2021
and all of 2022.”
Operations Update
-
Acordionero Oil Field (100% WI)
- When necessary,
a workover rig was deployed during the third quarter of 2021 to
restore existing wells to production if they went offline.
- Gran Tierra
believes its prudent reservoir management of Acordionero’s
waterflood has allowed the Company to restore this field’s
production to an average level of 14,427 BOPD in the third quarter
of 2021, up 49% from one year ago, and the highest quarterly
average production since the fourth quarter of 2019.
- Acordionero’s
current average production2 is 14,849 BOPD.
-
Costayaco Oil Field (100% WI)
- In March 2021,
Gran Tierra commenced its infill development drilling campaign to
drill 3 oil producers; this drilling program was the first in
Costayaco since November 2019.
- The CYC-42 and
CYC-43 infill oil wells were drilled during March and April of 2021
and the CYC-44 infill oil well was drilled in late April 2021.
- All three of
these successful new oil wells started production during the third
quarter of 2021 and drove a significant increase in Costayaco’s
average production to 6,292 BOPD during the third quarter of 2021,
up 50% from 4,190 BOPD in the first quarter of 2021.
- Costayaco’s
current average production2 is even higher at 7,144 BOPD.
- Moqueta
Oil Field (100% WI)
- During the third
quarter of 2021, Gran Tierra completed a budgeted workover program
that was designed to optimize Moqueta’s waterflood, which may
potentially increase the field’s ultimate oil recovery.
-
Suroriente Block (52% WI and Operator)
- At the Cohembi
oil field in the Suroriente Block, a facility expansion program is
progressing, which is expected to allow additional production to be
brought online in the fourth quarter of 2021.
- During the third
quarter of 2021, a workover rig was deployed to run larger pumps in
some oil wells.
- The Suroriente
Block’s average WI production during the third quarter of 2021 was
3,513 BOPD, the highest average WI quarterly rate since the fourth
quarter of 2019.
- Suroriente’s
current average production2 is even higher at 4,189 BOPD.
2 Approximate average production and Brent oil
price over the period from October 1, 2021 to October 11, 2021.3
These non-GAAP measures are defined in the Credit Agreement, dated
as of September 18, 2015, by and among Gran Tierra Energy Inc.,
Gran Tierra Energy International Holdings Ltd., the Bank of Nova
Scotia, Societe Generale and the lenders party thereto, as amended
(the “Credit Agreement”). The Credit Agreement and
all amendments thereto are available as exhibits to Gran Tierra’s
SEC filings. Total Debt means all debt of Gran Tierra and its
subsidiaries party to the credit facility on a consolidated basis.
EBITDAX means the sum of consolidated net income plus the following
expenses or charges to the extent deducted from consolidated net
income: interest, income taxes, depreciation, depletion,
amortization, exploration expenses and other similar noncash
charges, minus all noncash income added to consolidated net
income.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. The
Company’s Canadian securities regulatory filings are available 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, financial covenant compliance and its positioning
for 2021 and 2022. 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: the
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.
Presentation of Oil and Gas
Information
Barrels of oil equivalent (“BOE”) 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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