Gran Tierra Energy Inc.
(“Gran Tierra” or the
“Company”) (NYSE American:GTE)(TSX:GTE)(LSE:GTE)
is pleased to announce a corporate update. All dollar amounts are
in United States (
“U.S.”) dollars and all
production volumes are on a working interest before royalties basis
and are expressed in barrels (
"bbl") of oil per
day (
"BOPD"), unless otherwise stated.
Highlights
- 2022 Production Year to
Date: Gran Tierra’s current average production1 is
approximately 30,000 BOPD.
- 2021 Production In-Line
with Guidance: Total Company 2021 average production was
approximately 26,500 BOPD, in-line with prior guidance.
- Significant Debt
Reduction: Gran Tierra’s credit facility has been reduced
to a remaining balance of $67.5 million as of December 31, 2021,
down $122.5 million or 64% from a balance of $190 million as of
December 31, 2020. With forecast 2022 free cash flow2 and recovery
of tax receivables, Gran Tierra expects to fully pay off the
remaining balance of its credit facility in the first half of
2022.
- Key Upcoming 2022
Catalysts: At a $70/bbl Brent price, Gran Tierra’s 2022
capital program of $220-240 million is expected to generate 2022
cash flow2 of $270-290 million and EBITDA2 of $360-380 million. At
an $80/bbl Brent price, the Company forecasts 2022 cash flow2 of
$330-350 million and EBITDA2 of $440-460 million. The Company’s
development program continues to focus on asset optimization,
maintaining a low operating cost structure and increasing oil
recovery factors across its extensive portfolio. Gran Tierra’s 2022
exploration campaign of up to 6-7 wells is expected to be
fully-funded from forecast internally generated cash flow2 and is
designed to focus on near-field prospects in proven basins with
access to infrastructure, providing short cycle times from
discovery to bringing production on-stream. Key upcoming catalysts
include:
- Acordionero: Gran Tierra has allocated capital
of $70 million towards 2022 development activities for the
Acordionero field (14-16 development wells) in the Middle Magdalena
Valley Basin. Drilling is expected to commence in the first quarter
of 2022 with one rig on the Southwest Pad. Gran Tierra plans to
continue to focus on quick-cycle times, thereby driving down
drilling and operating costs and increasing oil recovery factors
through its waterflood program. Since Gran Tierra acquired
Acordionero in 2016, this field has produced approximately 27
million bbl of oil and generated about $1.3 billion in oil and gas
sales and $353 million of free funds flow from operations3 (both
figures are estimates as of December 31, 2021).
- Costayaco and Moqueta: Gran Tierra has
allocated capital of $40 million and $30 million respectively to
the Costayaco (4-5 development wells) and Moqueta (3 development
wells) fields in the Putumayo Basin in 2022. The first Costayaco
well is scheduled to spud in the first quarter of 2022. The Moqueta
work program is expected to commence in the second half of 2022 and
is planned to continue into 2023.
- Ecuador: Gran Tierra expects to drill 2-3
exploration wells in 2022, targeting multi-zone prospects near
existing fields with access to infrastructure. Gran Tierra’s first
exploration well in Ecuador is scheduled to spud in the second
quarter of 2022 on the Chanangue Block.
- Additional 2022 Hedges
In-Place Designed To Protect Cash
Flows2: The Company
recently added to its 2022 hedging program and currently has the
following Brent oil price hedges in place:
|
|
|
Strike Prices ($/bbl, Weighted Average) |
|
Time Period |
Volume(BOPD) |
Swaps |
Sold Put |
PurchasedPut |
Sold Call |
Premium |
|
January 1-June 30, 2022 |
3,000 |
- |
60.00 |
70.00 |
87.71 |
- |
|
January 1-June 30, 2022 |
2,000 |
77.80 |
- |
- |
- |
- |
|
January 1-June 30, 2022 |
1,000 |
- |
- |
70.00 |
- |
4.00 |
|
|
|
|
|
|
|
|
|
The Company expects to hedge approximately 25-40% of forecast
production on a rolling basis. |
- SASB
Report Published: Gran Tierra has released its first
Sustainability Accounting Standards Board (“SASB”)
Report. The Company continues to enhance its Environmental, Social
and Governance (“ESG”) disclosure to drive a
stronger understanding of the ESG risks and opportunities that its
business faces and seeks to show how the Company is positioning
itself to mitigate key risks and capture opportunities. Gran
Tierra’s SASB report can be accessed here:
https://www.grantierra.com/investor-relations/sasb-report.
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented: "Gran Tierra is in a strong
position for the continued development and enhanced oil recovery
activities in 2022 to optimize value from each of our assets. In
addition, we plan to allocate modest capital to prioritized,
high-impact exploration drilling opportunities. Gran Tierra is
well-positioned to navigate the current volatile environment with
our low base decline, conventional oil asset base and our
operational control for capital allocation and timing. Our
waterflood programs across all of our assets continue to perform
well and we expect another strong year of free cash flow2 from
these high quality, low decline assets. "
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
1 Approximate average production over the 17-day
period during January 1-17, 2022.
2 “Cash flow” refers to line item “net cash
provided by operating activities” under generally accepted
accounting principles in the United States of America
(“GAAP”). “Free cash flow” is a non-GAAP measure
and does not have a standardized meaning under GAAP. Free cash flow
is defined as “net cash provided by operating activities” less
capital spending. Earnings before interest, taxes and depletion,
depreciation and accretion (“EBITDA”) is a
non-GAAP measure and does not have a standardized meaning under
GAAP. Refer to "Non-GAAP Measures" in this press release.
3 In the context of Acordionero, “free funds
flow from operations” is a non-GAAP measure and does not have a
standardized meaning under GAAP. Refer to "Non-GAAP Measures" in
this press release for a description of this non-GAAP measure and a
reconciliation to the most directly comparable measure (oil and
natural gas sales) calculated and presented in accordance with
GAAP.
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. Except to the extent expressly stated
otherwise, information on the Company's website or accessible from
our website or any other website is not incorporated by reference
into and should not be considered 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 expected future
production and free cash flow, the Company’s drilling program and
the Company's expectations as to debt repayment, the Company’s ESG
risks and opportunities and its positioning for 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: 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; other
disruptions to local operations; global health (including the
ongoing COVID-19 pandemic); global and regional changes in the
demand, supply, prices, differentials or other market conditions
affecting oil and gas, including changes resulting from a global
health crisis or from the imposition or lifting of crude oil
production quotas or other actions that might be imposed by OPEC
and other producing countries and the resulting company or
third-party actions in response to such changes; changes in
commodity prices, including a prolonged decline in these prices
relative to historical or future expected levels; the risk that
current global economic and credit 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; prices and markets for oil and natural gas are
unpredictable and volatile; the accuracy of productive capacity of
any particular field; 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; 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; 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 cash flow, net income,
free cash flow, recovery of taxes receivable, EBITDA, net cash
provided by operating activities (described in this press release
as "cash flow"), total capital, certain expenses and costs, debt
repayments and debt positions 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. In particular,
this press release contains projected financial information for
2022. 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. The actual results of Gran Tierra’s operations
for any period could 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 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. See
Gran Tierra's press release dated December 9, 2021 for additional
information regarding the 2022 guidance referred to herein.
Information provided in the Company’s SASB
report is for informational purposes only. Inclusion of information
in such report does not mean the information is material to an
investor in the Company’s securities or otherwise required to be
contained in the Company’s SEC reports.
Non-GAAP Measures:
Gran Tierra is unable to provide forward-looking
net income, the GAAP measure most directly comparable to the
non-GAAP measures EBITDA, due to the impracticality of quantifying
certain components required by GAAP as a result of the inherent
volatility in the value of certain financial instruments held by
the Company and the inability to quantify the effectiveness of
commodity price derivatives used to manage the variability in cash
flows associated with the forecasted sale of its oil production and
changes in commodity prices.
In the context of Acordionero, free funds flow
from operations is a non-GAAP measure which does not have a
standardized meaning prescribed under GAAP. Management views this
supplemental measure as a performance measure. Investors are
cautioned that this measure should not be construed as an
alternative to Acordionero’s oil and natural gas sales (GAAP), net
income or loss or other measures of financial performance as
determined in accordance with GAAP. Our method of calculating this
measure may differ from other companies and, accordingly, may not
be comparable to similar measures used by other companies.
Acordionero’s free funds flow from operations, as presented, is
defined as oil and natural gas sales, less operating expenses,
transportation expenses and capital. Management believes that
Acordionero’s free funds flow from operations is a useful
supplemental measure for management and investors to analyze
financial performance and provides an indication of the results
generated by our principal business activities prior to the
consideration of other income and expenses. A reconciliation from
Acordionero’s oil and natural gas sales (GAAP) to free funds flow
from operations is provided in the table below:
|
Acordionero Field - Acquisition Date untilDecember 31,
2021 |
|
(Thousands of U.S. Dollars) |
|
|
|
Oil and natural gas sales |
$ |
1,132,453 |
|
|
Operating expenses |
(193.391 |
) |
|
Transportation expenses |
(81,895 |
) |
|
Capital |
(504,604 |
) |
|
Free Funds Flow from Operations |
$ |
352,563 |
|
|
|
|
|
|
Presentation of Oil and Gas
Information
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. It
is likely that the actual remaining quantities recovered will
exceed the estimated proved reserves. 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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