Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”)
(NYSE American:GTE)(TSX:GTE)(LSE:GTE) today announced the
Company’s financial and operating results for the fourth quarter
(
“the Quarter”) and year ended December 31,
2021.(3) These oil reserves categories are discussed in this
press release: Proved Developed Producing (
“PDP”),
Proved (
“1P”), 1P plus Probable
(
“2P”), and 2P plus Possible
(
“3P”).
FOURTH QUARTER AND FULL-YEAR 2021
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Operational:
-
Production:
- Despite impacts
on production due to national protests in the second quarter of
2021 and localized blockades in South Putumayo during the Quarter,
which deferred oil production of 620,376 barrels
(“bbl”) (annualized impact of 1,700 bbl of oil per
day [“BOPD”]), Gran Tierra achieved 2021 average
working interest (“WI”) production of 26,507 BOPD
(100% oil), a 17% increase from 2020.
- The increase in
production was the direct result of successful drilling and
workover campaigns in the Acordionero and Costayaco oil fields,
combined with ongoing waterflood optimization throughout the
Company’s portfolio.
- The Company’s
total current average production1 is approximately 30,000 BOPD. The
current production level demonstrates the effectiveness of the
Company’s waterflooding operations.
- Building on the
successful development drilling and workover campaigns in 2021,
Gran Tierra forecasts 2022 production of 30,500-32,500 BOPD, a
15-23% increase from 2021. This projected 2022 production increase
would result from the Company’s forecast 2022 development drilling
program of 14-16 wells in Acordionero, 4-5 wells in Costayaco, and
three wells in Moqueta. While Gran Tierra also plans to drill 6-7
exploration wells in 2022, the Company’s production forecast does
not include any assumed volumes from exploration discoveries.
- 2021 Year-End Reserves and
Values4:
Before Tax (as of December 31, 2021) |
Units |
1P |
2P |
3P |
Reserves |
MMBOE |
81 |
|
125 |
|
162 |
|
Net Present Value at 10% Discount (“NPV10”) |
$ million |
1,625 |
|
2,401 |
|
3,082 |
|
Debt4 |
$ million |
668 |
|
668 |
|
668 |
|
Net Asset Value (NPV10 less Debt) (“NAV”) |
$ million |
957 |
|
1,733 |
|
2,414 |
|
Outstanding Shares |
million |
367 |
|
367 |
|
367 |
|
NAV per Share |
$/share |
2.61 |
|
4.72 |
|
6.58 |
|
NAV per Share Change from December 31, 2020 |
% |
127 |
% |
45 |
% |
31 |
% |
After Tax (as of December 31, 2021) |
Units |
1P |
2P |
3P |
Reserves |
MMBOE |
81 |
|
125 |
|
162 |
|
NPV10 |
$ million |
1,250 |
|
1,739 |
|
2,169 |
|
Debt4 |
$ million |
668 |
|
668 |
|
668 |
|
NAV |
$ million |
582 |
|
1,071 |
|
1,501 |
|
Outstanding Shares |
million |
367 |
|
367 |
|
367 |
|
NAV per Share |
$/share |
1.59 |
|
2.92 |
|
4.09 |
|
NAV per Share Change from December 31, 2020 |
% |
124 |
% |
31 |
% |
18 |
% |
-
Gran Tierra achieved material Proved reserves additions,
particularly in the Company’s core assets, as a result of the
continued positive reservoir responses from waterflooding, and
successful 2021 development drilling and workover campaigns.
- The PDP reserves
replacement ratio was 148%, with PDP reserves additions of 14.3
million bbl of oil equivalent (“MMBOE”), while the
1P reserves replacement ratio was 123%, with 1P reserves additions
of 11.9 MMBOE.
- The Company’s
strong 1P reserves replacement resulted in 1P reserves of 81 MMBOE
(100% oil) as of year-end 2021.
- At
December 31, 2021, Gran Tierra’s 1P NPV10 was $1.6 billion
before tax ($1.3 billion after-tax) and 1P NAV was $2.61 per share
before tax ($1.59 per share after-tax). The Company’s 2021 year-end
1P NAV per share after tax was up 124% from 2020 year-end. The
5-year (2022-2026) average Brent oil price forecast used by
McDaniel & Associates Consultants Ltd.
(“McDaniel”) is $70.37/bbl.
- At
December 31, 2021, Gran Tierra’s 2P NPV10 was $2.4 billion
before tax ($1.7 billion after-tax) and 2P NAV was $4.72 per share
before tax ($2.92 per share after-tax). The Company’s 2021 year-end
2P NAV per share after-tax was up 31% from the 2020 year-end.
- Gran Tierra also
achieved economic 2021 PDP and 1P Finding and Development
(“F&D”) Costs of $9.51 and $18.44/BOE,
respectively.
-
Safety: Gran Tierra achieved 20 million
person-hours with zero Lost Time Incidents (“LTI”)
during August 2019 to August 2021, a record for the Company.
Financial:
-
2021 Net Income: Gran Tierra
generated net income of $42.5 million or $0.12 per share (basic and
diluted), compared to a net loss of $778.0 million, or $(2.12) per
share basic and diluted in 2020. The Company’s 2021 net income was
the highest achieved since 2018.
- 2021
Adjusted EBITDA2: The
Company realized Adjusted EBITDA of $241.5 million, the highest
since 2019, and an increase of 150% from $96.5 million in
2020.
- 2021 Net
Cash Provided by Operating Activities: The Company
generated net cash provided by operating activities of $244.8
million, an increase of 202% from $81.1 million in 2020.
-
2021 Funds Flow from
Operations2: Gran Tierra
realized funds flow from operations of $186.5 million, the highest
since 2019, and an increase of 312% from $45.2 million in
2020.
- 2021
Capital Expenditures and Free Cash
Flow2: Gran Tierra’s
capital expenditures of $149.9 million were on-budget, within
guidance and more than fully funded by the Company’s 2021 funds
flow from operations2 of $186.5 million, which allowed Gran Tierra
to generate free cash flow2 of $36.6 million, the highest level
achieved since 2012.
- Key
Metrics During the Quarter: The Company realized net
income of $62.5 million, Adjusted EBITDA2 of $81.5 million, and
funds flow from operations2 of $65.1 million, compared with $35.0
million, $81.8 million, and $69.1 million, respectively, in third
quarter 2021 (“the Prior Quarter”).
-
Collection of VAT and Income Tax Receivables:
During 2021, through direct tax refunds and value-added tax
(“VAT”) on our oil sales, Gran Tierra collected
total VAT and income tax receivables of $120.7 million and paid
$100.1 million in VAT and income tax, for a net cash inflow of
$20.5 million in 2021, compared to $55.4 million net collections in
2020.
- Credit
Facility Paid Down and Cash Balance: In 2021, Gran Tierra
repaid $122.5 million on our revolving credit facility, reducing
the balance to $67.5 million, and had $26.1 million in cash and
cash equivalents as at December 31, 2021. 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.
- 2021
Operating Costs:
- Operating
expenses per bbl were $13.69, only 2% higher than 2020. This small
increase in 2021 was primarily due to a higher number of workovers
related to electric submersible pump replacements in the
Acordionero, Costayaco, and Cohembi fields.
- In 2020, the
Company shut-in minor fields and deferred workovers due to the low
oil price environment caused by COVID-19 and other factors
contributing to limited demand.
- Total operating
expenses were $132.3 million, compared to $111.9 million in 2020,
representing an 18% increase. The vast majority of this increase
was due to Gran Tierra’s 17% increase in production in 2021,
relative to 2020.
-
2021 Cash General and Administrative
Costs: The Company’s gross cash general and administrative
(“G&A”) costs decreased to $2.88 per bbl from
$2.90 per bbl in 2020. Total cash G&A costs were $27.9 million,
an increase of 15% from $24.1 million in 2020, which was more than
offset by the Company’s 17% increase in production in 2021,
relative to 2020.
- Oil
Sales:
-
2021: Gran Tierra’s oil sales increased 99% to
$473.7 million, compared to $237.8 million in 2020. This increase
was primarily driven by the 64% increase in the Brent oil price and
the Company’s 17% increase in production, both relative to 2020.
Oil sales were $48.99 on a per bbl basis, a 71% increase from
2020.
- The Quarter: Gran
Tierra generated oil sales of $146.3 million, up 8% or $11.0
million from the Prior Quarter, primarily driven by a 2% increase
in production and a 9% increase in the Brent oil price. Oil sales
were $53.26 per bbl, a 7% increase from the Prior Quarter.
-
Operating
Netback2:
-
2021: Gran Tierra’s operating netback of $34.13
per bbl was up 146% from $13.86 in 2020.
- The
Quarter: The Company’s operating netback of $37.76 per bbl
was up 114% from the fourth quarter 2020 value of $17.67 per bbl
and up 8% from the Prior Quarter’s level of $34.95 per bbl.
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented: “After the many challenges in
2020 that the world faced, 2021 was a year of strong recovery for
the energy industry and Gran Tierra. Our top tier, low-decline,
onshore, conventional asset base continued to prove its high
quality as the Company returned to strong growth in 2021 in
production, reserves, funds flow from operations2, free cash flow2,
and after tax NAV per share. We achieved strong reserve replacement
ratios on both a PDP and 1P basis, driven by our successful,
on-budget development programs and waterflood initiatives.
Looking to 2022, we are very excited for our
planned development drilling programs in the Middle Magdalena
Valley and Putumayo Basins in Colombia and the restart of our
exploration drilling program, in which we expect to include our
first exploration wells in Ecuador. In the Company’s high oil case
for 2022 guidance, which assumes a Brent oil price of $80/bbl, we
forecast that Gran Tierra could generate $100-120 million of 2022
free cash flow2, which would allow us to completely pay down our
bank credit facility before the end of the first half of 2022.
In addition, our “Beyond Compliance 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.
Gran Tierra’s Commitment to Go “Beyond
Compliance” in Environmental, Social and Governance
2021 Safety:
- Gran Tierra
recorded one LTI, achieving an LTI Frequency
(“LTIF”) of 0.02.
- The Company’s
LTIF of 0.02 was well below the 2020 industry averages of 0.08 for
Latin America and 0.04 for North American exploration and
production companies, as reported by the International Association
of Oil and Gas Producers, and was in the top quartile in any region
globally6.
- In 2021, Gran
Tierra continued with the stringent implementation of COVID-19
protocols by conducting approximately 65,000 PCR and antigen tests
and ended the year with a very low positivity rate of 0.7% among
the Company’s Colombia-based employees. Gran Tierra acquired and
donated COVID-19 vaccines for all its employees in Colombia.
Environment:
- Through the
NaturAmazonas project in the Putumayo Basin, in partnership with
the international non-governmental organization Conservation
International, Gran Tierra has committed to reforesting 1,000
hectares of land and securing and maintaining 18,000 hectares of
forest in the Andes-Amazon rainforest corridor. For more
information, please visit
https://www.grantierra.com/sustainability/naturamazonas.
- Gran Tierra has
planted a total of 1,193,241 trees and has conserved, preserved, or
reforested 2,805 hectares of land through all of the Company’s
environmental efforts since 2018.
Reducing GHG Emissions:
- For the last five years, Gran
Tierra has voluntarily released an assessment of its GHG
emissions.
- Gran Tierra is reducing GHG
emissions at its facilities through gas-to-power projects that
conserve excess natural gas that would otherwise be flared and use
the gas instead for power generation.
- In 2021, for the
first time, GTE reported Scope 2 emissions (indirect operations
from external power sources), in addition to Scope 1 (direct
emissions from owned or controlled sources) emissions, in the
Company’s yearly GHG emissions report. The 2020 results saw an
overall GHG emissions reduction in excess of 60% relative to 2019
and was achieved via the Company’s gas-to-power projects and
additional operational efficiencies.
- The NaturAmazonas project alone is
expected to sequester approximately 8.7 million tonnes of carbon
dioxide over its lifetime, equivalent to 215 billion passenger
miles driven or the energy use of 10 million homes for one
year7.
Social:
- Over 255,000
people participated in and benefited from Gran Tierra’s social
investment programs over the past four years.
- Gran Tierra is
committed to working with the Colombian national and local
governments and local communities to further their peace-building
efforts. In 2021, the Company invested $2.9 million locally in
projects identified by communities to meet their needs. The
projects included the installation of sanitary units for rural
families and infrastructure improvements to local schools and rural
roads.
Economic Opportunities:
- Gran Tierra maintains its
commitment to contribute to the social and economic development of
the regions where it operates by maximizing local hiring and
contracting local goods and services. Through this commitment, the
Company awarded over $53 million to local companies during
2021.
Human Rights:
- Over the past two years, 3,750
people benefited from Gran Tierra’s human rights initiatives in
adherence to the UN Guiding Principles for Business and Human
Rights policy.
- In 2021, Gran Tierra Energy was
proud to announce with local communities that the Puerto
Vega-Teteyé corridor in the Putumayo region was investigated and
declared free of land mine contamination. In addition, nearly 3,000
residents of nearby towns have attended mine-risk education
workshops. This project was developed in alliance with the
Colombian national government and the Colombian Campaign Against
Mines.
- Gran Tierra, in
partnership with the Colombia Institute of Anthropology and History
(ICANH), the Colombian Ministry of Culture and Corpoamazonia,
opened the Suruma Museum, which is a permanent archaeological
collection dedicated to the people of the Putumayo region.
Operational Update
Acordionero Oil Field:
- During the
Quarter, Gran Tierra drilled five new wells and executed a combined
total of 16 completion and workover operations, all on-time and
under-budget.
- During the first
quarter of 2022-to-date, Acordionero has had average production of
15,673 BOPD, the highest quarterly rate since the second quarter of
2019.
- The field’s 2022
development drilling program (14-16 wells) is expected to commence
in the first quarter of 2022 with one rig on the Southwest Pad. It
is designed to focus on quick-cycle times to maintain low drilling
and completion costs, while increasing oil recovery factors through
the Company’s waterflood program.
Costayaco and Moqueta Oil
Fields:
- The first 2022
Costayaco development well (out of 4-5 wells) is scheduled to spud
in the first quarter of 2022.
- The Moqueta
development drilling program of three wells is expected to commence
in the second half of 2022 and is planned to continue into
2023.
Exploration:
- Gran Tierra is
in the process of obtaining all final approvals and licensing in
preparation to drill its first exploration well in Ecuador during
the second quarter of 2022. The Company is also progressing its
2022 exploration campaign in Colombia.
2022 Guidance:
- Gran Tierra is reiterating the Company’s forecasted ranges for
the 2022 budget:
|
Base Case |
High Case |
Annual Average Brent Oil Price ($/bbl) |
70.00 |
80.00 |
Total Company Production (BOPD) |
30,500-32,500 |
30,500-32,500 |
Operating Netback2 ($ million) |
390-510 |
470-490 |
EBITDA2 ($ million) |
360-380 |
440-460 |
Cash Flow2 ($ million) |
270-290 |
330-350 |
Total Capital ($ million) |
220-240 |
220-240 |
Free Cash Flow2 ($ million) |
40-60 |
100-120 |
Bank Credit Facility Balance @ December 31, 2022 ($ million) |
— |
— |
Number of Development Wells (gross) |
20-25 |
20-25 |
Number of Exploration Wells (gross) |
6-7 |
6-7 |
-
At an $80 per bbl Brent oil price, Gran Tierra is forecasting year
end 2022 net debt2 to EBITDA2 of approximately 1 times, free cash
flow2 of $170-190 million before exploration, and $100-120 million
after exploration. The Company’s 2022 year end net debt2 is also
expected to be less than $500 million.
-
Hedging: Gran Tierra has entered into Brent oil
price hedges on 9,000 BOPD of WI production during the first half
of 2022, with a weighted average floor of $75.42/bbl and ceiling of
$87.17/bbl, to provide downside price protection.
Corporate Presentation:
- Gran Tierra’s Corporate
Presentation has been updated and is available at
www.grantierra.com.
Financial and Operational Highlights
(all amounts in $000s, except per share and bbl
amounts)
|
Year Ended |
|
Three Months Ended |
|
December 31, |
December 31, |
|
December 31, |
December 31, |
September 30, |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
Net (Loss)
Income |
$ |
42,482 |
|
$ |
(777,967 |
) |
|
$ |
62,524 |
|
$ |
(47,871 |
) |
$ |
35,007 |
|
Net (Loss) Income Per
Share - Basic & Diluted |
$ |
0.12 |
|
$ |
(2.12 |
) |
|
$ |
0.17 |
|
$ |
(0.13 |
) |
$ |
0.10 |
|
|
|
|
|
|
|
|
Oil
Sales |
$ |
473,722 |
|
$ |
237,838 |
|
|
$ |
146,287 |
|
$ |
64,793 |
|
$ |
135,319 |
|
Operating
Expenses |
|
(132,331 |
) |
|
(111,888 |
) |
|
|
(39,708 |
) |
|
(27,215 |
) |
|
(37,567 |
) |
Transportation
Expenses |
|
(11,315 |
) |
|
(10,543 |
) |
|
|
(2,867 |
) |
|
(1,994 |
) |
|
(3,021 |
) |
Operating
Netback(2) |
$ |
330,076 |
|
$ |
115,407 |
|
|
$ |
103,712 |
|
$ |
35,584 |
|
$ |
94,731 |
|
|
|
|
|
|
|
|
G&A Expenses
Before Stock-based Compensation |
$ |
27,867 |
|
$ |
24,134 |
|
|
$ |
8,473 |
|
$ |
5,482 |
|
$ |
5,444 |
|
G&A Expenses
Stock-Based Compensation |
|
8,396 |
|
|
1,216 |
|
|
|
1,799 |
|
|
1,923 |
|
|
1,053 |
|
G&A Expenses,
Including Stock-Based Compensation |
$ |
36,263 |
|
$ |
25,350 |
|
|
$ |
10,272 |
|
$ |
7,405 |
|
$ |
6,497 |
|
|
|
|
|
|
|
|
EBITDA(2) |
$ |
217,391 |
|
$ |
(634,988 |
) |
|
$ |
70,983 |
|
$ |
(13,978 |
) |
$ |
95,625 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2) |
$ |
241,536 |
|
$ |
96,482 |
|
|
$ |
81,529 |
|
$ |
22,235 |
|
$ |
81,804 |
|
|
|
|
|
|
|
|
Net Cash Provided by
Operating Activities |
$ |
244,834 |
|
$ |
81,074 |
|
|
$ |
106,013 |
|
$ |
21,728 |
|
$ |
59,667 |
|
Funds Flow from
Operations(2) |
$ |
186,485 |
|
$ |
45,213 |
|
|
$ |
65,137 |
|
$ |
8,956 |
|
$ |
69,103 |
|
Funds Flow from
Operations(2) Per Share - Basic
& Diluted |
$ |
0.51 |
|
$ |
0.12 |
|
|
$ |
0.18 |
|
$ |
0.02 |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
Capital
Expenditures |
$ |
149,879 |
|
$ |
96,281 |
|
|
$ |
40,229 |
|
$ |
39,903 |
|
$ |
34,839 |
|
|
|
|
|
|
|
|
Average Daily Volumes (BOPD) |
|
|
|
|
|
|
Working Interest Production Before Royalties |
|
26,507 |
|
|
22,624 |
|
|
|
29,493 |
|
|
21,907 |
|
|
28,957 |
|
Royalties |
|
(4,919 |
) |
|
(2,552 |
) |
|
|
(6,070 |
) |
|
(2,411 |
) |
|
(5,585 |
) |
Production
NAR |
|
21,588 |
|
|
20,072 |
|
|
|
23,423 |
|
|
19,496 |
|
|
23,372 |
|
Decrease in
Inventory |
|
10 |
|
|
91 |
|
|
|
354 |
|
|
15 |
|
|
461 |
|
Sales |
|
21,598 |
|
|
20,163 |
|
|
|
23,777 |
|
|
19,511 |
|
|
23,833 |
|
Royalties, % of WI
Production Before Royalties |
|
19 |
% |
|
11 |
% |
|
|
21 |
% |
|
11 |
% |
|
19 |
% |
|
|
|
|
|
|
|
Per bbl (5) |
|
|
|
|
|
|
Brent |
$ |
70.95 |
|
$ |
43.21 |
|
|
$ |
79.66 |
|
$ |
45.26 |
|
$ |
73.23 |
|
Quality and
Transportation Discount |
|
(10.86 |
) |
|
(10.98 |
) |
|
|
(12.79 |
) |
|
(9.17 |
) |
|
(11.51 |
) |
Royalties |
|
(11.10 |
) |
|
(3.66 |
) |
|
|
(13.61 |
) |
|
(3.92 |
) |
|
(11.80 |
) |
Average Realized
Price |
$ |
48.99 |
|
$ |
28.57 |
|
|
$ |
53.26 |
|
$ |
32.17 |
|
$ |
49.92 |
|
Transportation
Expenses |
|
(1.17 |
) |
|
(1.27 |
) |
|
|
(1.04 |
) |
|
(0.99 |
) |
|
(1.11 |
) |
Average Realized Price
Net of Transportation Expenses |
$ |
47.82 |
|
$ |
27.30 |
|
|
$ |
52.22 |
|
$ |
31.18 |
|
$ |
48.81 |
|
Operating
Expenses |
|
(13.69 |
) |
|
(13.44 |
) |
|
|
(14.46 |
) |
|
(13.51 |
) |
|
(13.86 |
) |
Operating
Netback(2) |
$ |
34.13 |
|
$ |
13.86 |
|
|
$ |
37.76 |
|
$ |
17.67 |
|
$ |
34.95 |
|
COVID-19 Related
Costs |
|
(0.38 |
) |
|
(0.32 |
) |
|
|
(0.24 |
) |
|
(0.57 |
) |
|
(0.37 |
) |
Cash G&A
Expenses |
|
(2.88 |
) |
|
(2.90 |
) |
|
|
(3.08 |
) |
|
(2.72 |
) |
|
(2.01 |
) |
Realized Foreign
Exchange Gain (Loss) |
|
0.14 |
|
|
0.13 |
|
|
|
0.10 |
|
|
(0.57 |
) |
|
0.30 |
|
Cash Settlement on
Derivative Instruments |
|
(6.04 |
) |
|
0.59 |
|
|
|
(4.87 |
) |
|
(2.53 |
) |
|
(2.70 |
) |
Interest Expense,
Excluding Amortization of Debt Issuance Costs |
|
(5.23 |
) |
|
(6.07 |
) |
|
|
(4.33 |
) |
|
(6.50 |
) |
|
(4.69 |
) |
Interest
Income |
|
— |
|
|
0.04 |
|
|
|
— |
|
|
— |
|
|
— |
|
Other Gain
(Loss) |
|
— |
|
|
0.19 |
|
|
|
— |
|
|
(0.20 |
) |
|
— |
|
Net Lease
Payments |
|
— |
|
|
— |
|
|
|
0.02 |
|
|
(0.03 |
) |
|
0.01 |
|
Current Income Tax
Expense |
|
(0.46 |
) |
|
(0.09 |
) |
|
|
(1.64 |
) |
|
(0.10 |
) |
|
— |
|
Cash
Netback(2) |
$ |
19.28 |
|
$ |
5.43 |
|
|
$ |
23.72 |
|
$ |
4.45 |
|
$ |
25.49 |
|
|
|
|
|
|
|
|
Share Information (000s) |
|
|
|
|
|
|
Common Stock Outstanding, End of Period |
|
367,145 |
|
|
366,982 |
|
|
|
367,145 |
|
|
366,982 |
|
|
367,038 |
|
Weighted Average
Number of Common - Basic |
|
367,023 |
|
|
366,982 |
|
|
|
367,133 |
|
|
366,982 |
|
|
366,993 |
|
Weighted Average
Number of Common - Diluted |
|
367,873 |
|
|
366,982 |
|
|
|
368,396 |
|
|
366,982 |
|
|
367,741 |
|
|
As at December 31 |
|
|
2021 |
|
2020 |
% Change |
Cash and cash equivalents and current restricted cash and cash
equivalents |
$ |
26,501 |
$ |
14,114 |
88 |
|
|
|
|
|
Revolving credit facility |
$ |
67,500 |
$ |
190,000 |
(64 |
) |
|
|
|
|
Senior Notes |
$ |
600,000 |
$ |
600,000 |
— |
|
Additional information on 2021 expenses:
- Quality and
Transportation Discount: decreased in 2021 to $10.86 per bbl
compared to $10.98 per bbl in 2020; the decrease was due to lower
Castilla and Vasconia differentials in 2021 compared to 2020.
- Transportation
Expenses: decreased by 8% to $1.17 per bbl in 2021 from $1.27 per
bbl in 2020.
- Royalties:
increased to $11.10 per bbl in 2021, up from $3.66 per bbl in 2020.
This increase was driven by the 64% increase in the Brent oil price
in 2021 relative to 2020.
(1) Gran Tierra’s total current average
production is for the period of January 1, 2022 to February 18,
2022
(2) Operating netback, EBITDA, Adjusted EBITDA,
funds flow from operations, net debt, funds flow from operations
per share (basic and diluted), free cash flow, and cash netback,
are non-GAAP measures and do not have a standardized meaning under
GAAP. Cash flow refers to the GAAP line item “net cash provided by
operating activities”. Refer to “Non-GAAP Measures” in this press
release for descriptions of these non-GAAP measures and
reconciliations to the most directly comparable measures calculated
and presented in accordance with GAAP.
(3) All dollar amounts are in United States
dollars and production and reserves amounts are on an average WI
before royalties basis, unless otherwise indicated. Per bbl of oil
equivalent (“BOE”) amounts are based on WI sales before royalties.
Production is expressed in BOPD, while reserves are expressed in
bbl, BOE or MMBOE, unless otherwise indicated. For per BOE amounts
based on net after royalty (“NAR”) production, see Gran Tierra’s
Annual Report on Form 10-K filed February 22, 2022
(4) All reserves values, future net revenue and
ancillary information contained in this press release have been
calculated in compliance with Canadian National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities (“NI 51-101”)
and the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and are
derived from the Company's 2021 year-end estimated reserves as
evaluated by the Company's independent qualified reserve evaluator
McDaniel in a report with an effective date of December 31,
2021 (the “GTE McDaniel Reserves Report”). Based on
December 31, 2021 before tax NPV10 of $1.6 billion for 1P
reserves and $2.4 billion for 2P reserves, minus year-end 2021 debt
of $668 million, comprised of Senior Notes of $600 million (gross)
and $68 million under our credit facility, prepared in accordance
with GAAP divided by the number of shares of Gran Tierra's common
stock issued and outstanding at December 31, 2021 of 367.1
million.
(5) Per bbl amounts are based on WI sales before
royalties. For per bbl amounts based on NAR production, see Gran
Tierra’s Annual Report on Form 10-K filed on February 22,
2022.
(6)
https://www.iogp.org/bookstore/product/safety-performance-indicators-2020-data/.
LTIF: Lost Time Incident Frequency. LTIF = ((Fatalities Cases +
Lost Time Incident Cases) / Man Hours) x 200000 MH.
(7)
https://www.epa.gov/energy/greenhouse-gases-equivalencies-calculator-calculations-and-references
Conference Call
Information:
Gran Tierra will host its fourth quarter and
full year 2021 results conference call on Wednesday,
February 23, 2022, at 9:00 a.m. Mountain Time, 11:00 a.m.
Eastern Time. Interested parties may access the conference call by
dialing 1-844-348-3792 or 1-614-999-9309 (North America),
0800-028-8438 or 020-3107-0289 (United Kingdom) or 01-800-518-5094
(Colombia). The call will also be available via webcast at
www.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. 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
(the “SEC”) 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.
Contact Information
For investor and media inquiries please
contact:
Gary Guidry, President & Chief Executive
Officer
Ryan Ellson, Executive Vice President &
Chief Financial Officer
Rodger Trimble, Vice President, Investor
Relations
Tel: +1.403.265.3221
For more information on Gran Tierra please go
to: www.grantierra.com.
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”). All statements
other than statements of historical facts included in this press
release regarding our financial position, estimated quantities and
net present value of reserves, business strategy, plans and
objectives for future operations, capital spending plans and those
statements preceded by, followed by or that otherwise include the
words “believe,” “expect,” “anticipate,” “forecast,” “budget,”
“will,” “estimate,” “target,” “project,” “plan,” “should,”
“guidance”, “strives” or similar expressions are forward-looking
statements. Such forward-looking statements include, but are not
limited to, the Company’s expectations, capital program, cost
saving initiatives, future sources of funding for capital
expenditures and guidance, including for certain future production
estimates, forecast prices, five-year expected free cash flow,
expected future net cash provided by operating activities, net
debt, capital expenditures and certain associated metrics, the
Company’s strategies, the Company’s plans to benefit the
environment or communities in which it operates and the Company's
operations including planned operations and oil production.
Statements relating to “reserves” are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, including that the
reserves described can be profitably produced in the future.
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 risk profile of planned exploration
activities, the effects of drilling down-dip, the 5-year
weighted-average Brent forecast, the effects of waterflood and
multi-stage fracture stimulation operations, the extent and effect
of delivery disruptions, and the general continuance of current or,
where applicable, assumed operational, regulatory and industry
conditions including in areas of potential expansion, and the
ability of Gran Tierra to execute its current business and
operational plans in the manner currently planned. Gran Tierra
believes the material factors, expectations and assumptions
reflected in the forward-looking statements are reasonable at this
time but no assurance can be given that these factors, expectations
and assumptions will prove to be correct.
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 or find other capital at economic costs to fund our
operating expenses; 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, 2021 filed February 22,
2022 and its other filings with the SEC. These filings are
available on the SEC website at http://www.sec.gov and on SEDAR at
www.sedar.com. Although the current guidance, capital spending
program and long term strategy of Gran Tierra are based upon the
current expectations of the management of Gran Tierra, should any
one of a number of issues arise, Gran Tierra may find it necessary
to alter its business strategy and/or capital spending program and
there can be no assurance as at the date of this press release as
to how those funds may be reallocated or strategy changed and how
that would impact Gran Tierra’s results of operations and financial
position. Forecasts and expectations that cover multi-year time
horizons or are associated with 2P reserves inherently involve
increased risks and actual results may differ materially.
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. The risk that the assumptions on which the 2022 outlook
are based prove incorrect may increase the later the period to
which the outlook relates. In particular, the unprecedented nature
of the pandemic and industry volatility 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, EBITDA, net
cash provided by operating activities (described in this press
release as “cash flow”), free cash flow, operating netback, total
capital, net debt and certain expenses or costs 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. In particular, this press release
contains projected operational and financial information for 2022
and the next five years. 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.
Non-GAAP Measures
This press release includes non-GAAP financial
measures as further described herein. These non-GAAP measures do
not have a standardized meaning under GAAP. Investors are cautioned
that these measures should not be construed as alternatives to net
loss or other measures of financial performance as determined in
accordance with GAAP. Gran Tierra’s method of calculating these
measures may differ from other companies and, accordingly, they may
not be comparable to similar measures used by other companies. Each
non-GAAP financial measure is presented along with the
corresponding GAAP measure so as not to imply that more emphasis
should be placed on the non-GAAP measure.
Before tax and after-tax free cash flow are
non-GAAP terms and are called before tax and after-tax net revenue
in the GTE McDaniel Reserves Report, respectively. The non-GAAP
term of before tax free cash flow, and free cash flow after
development expenditures and taxes over the next five years,
reconciles to the nearest GAAP term of oil sales, which is called
sales revenue in the GTE McDaniel Reserves Report. Before tax net
revenue is calculated by McDaniel by subtracting total royalties,
operating costs, future development capital and abandonment and
reclamation costs from sales revenue. After-tax free cash flow is
calculated by McDaniel by subtracting future taxes from before tax
net revenue. Refer to “Future Net Revenue” in this press release
for the applicable reconciliation. Gran Tierra is unable to provide
a quantitative reconciliation of free cash flow after development
expenditures, taxes, interest and G&A costs over the next five
years to its most directly comparable forward-looking GAAP measure
because management cannot reliably predict certain of the necessary
components of such forward-looking GAAP measure. Gran Tierra is
unable to provide forward-looking net income, the GAAP measure most
directly comparable to forward-looking EBITDA, or a quantitative
reconciliation of forward-looking EBITDA because management cannot
reliably predict certain of the necessary components of the
forward-looking GAAP measure. Gran Tierra is also unable to provide
forward-looking oil sales, the GAAP measure most directly
comparable to such measures of free cash flow and operating
netback, 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 forecast sale of its oil production and changes in
commodity prices. Refer to “Oil and Gas Metrics” in this press
release for a description of how this non-GAAP measure is
calculated. Management uses free cash flow as a measure of the
Company’s ability to fund its exploration program.
Net Debt as presented is defined as projected
senior notes and borrowings under the credit facility less
projected cash. Management believes that net debt is a useful
supplemental measure for management and investors to in order to
evaluate the financial sustainability of the Company’s business and
leverage. The most directly comparable GAAP measure is total debt.
Gran Tierra is unable to provide a quantitative reconciliation of
forward-looking net debt to its most directly comparable
forward-looking GAAP measure because management cannot reliably
predict certain of the necessary components of such forward-looking
GAAP measure.
Operating netback as presented is defined as oil
sales less operating and transportation expenses. Operating netback
per bbl as presented is defined as average realized price per bbl
less operating and transportation expenses per bbl. Cash netback,
as presented is defined as net income or loss adjusted for
depletion, depreciation and accretion (“DD&A”) expenses, asset
and goodwill impairment, deferred tax expense or recovery,
stock-based compensation expense, amortization of debt
issuance costs, non-cash lease expense, lease payments, unrealized
foreign exchange gains or losses, other non-cash losses, unrealized
derivative instruments gains or losses, and cash settlement of
financial instruments. Cash netback per bbl, as presented is
defined as cash netback over WI sales volumes. Management believes
that operating netback and cash netback are useful supplemental
measures for investors to analyze financial performance and provide
an indication of the results generated by Gran Tierra’s principal
business activities prior to the consideration of other income and
expenses. See the table entitled Financial and Operational
Highlights, above for the components of operating netback and
operating netback per bbl. A reconciliation from net income or loss
to cash netback is as follows:
|
|
Year Ended |
|
Three Months Ended |
|
|
December 31, |
|
December 31, |
|
September 30, |
Cash Netback - Non-GAAP Measure ($000s) |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
Net income
(loss) |
|
$ |
42,482 |
|
|
$ |
(777,967 |
) |
|
$ |
62,524 |
|
|
$ |
(47,871 |
) |
|
$ |
35,007 |
|
Adjustments to reconcile net
income (loss) to cash netback |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
|
139,874 |
|
|
|
164,233 |
|
|
|
41,574 |
|
|
|
33,115 |
|
|
|
38,055 |
|
Asset impairment |
|
|
— |
|
|
|
564,495 |
|
|
|
— |
|
|
|
57,402 |
|
|
|
— |
|
Goodwill impairment |
|
|
— |
|
|
|
102,581 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deferred tax (recovery) expense |
|
|
(23,825 |
) |
|
|
(76,148 |
) |
|
|
(50,634 |
) |
|
|
(13,352 |
) |
|
|
8,955 |
|
Stock-based compensation expense |
|
|
8,396 |
|
|
|
1,216 |
|
|
|
1,799 |
|
|
|
1,923 |
|
|
|
1,053 |
|
Amortization of debt issuance costs |
|
|
3,809 |
|
|
|
3,625 |
|
|
|
1,127 |
|
|
|
851 |
|
|
|
907 |
|
Non-cash lease expense |
|
|
1,667 |
|
|
|
1,951 |
|
|
|
445 |
|
|
|
457 |
|
|
|
408 |
|
Lease payments |
|
|
(1,621 |
) |
|
|
(1,926 |
) |
|
|
(382 |
) |
|
|
(522 |
) |
|
|
(384 |
) |
Unrealized foreign exchange loss (gain) |
|
|
21,879 |
|
|
|
5,271 |
|
|
|
4,934 |
|
|
|
(17,064 |
) |
|
|
3,465 |
|
Other non-cash loss |
|
|
44 |
|
|
|
2,026 |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
Unrealized derivative instruments (gain) loss |
|
|
(9,589 |
) |
|
|
8,974 |
|
|
|
(12,088 |
) |
|
|
8,421 |
|
|
|
(4,729 |
) |
Other financial instruments loss (gain) |
|
|
3,369 |
|
|
|
46,882 |
|
|
|
15,794 |
|
|
|
(14,404 |
) |
|
|
(13,634 |
) |
Cash netback
(non-GAAP) |
|
$ |
186,485 |
|
|
$ |
45,213 |
|
|
$ |
65,137 |
|
|
$ |
8,956 |
|
|
$ |
69,103 |
|
EBITDA, as presented, is defined as net income
or loss adjusted for DD&A expenses, interest expense and income
tax expense. Adjusted EBITDA, as presented, is defined as EBITDA
adjusted for asset and goodwill impairment, non-cash lease expense,
lease payments, unrealized foreign exchange gains or losses,
unrealized derivative instruments gains or losses, other financial
instruments gains or losses, other non-cash losses and stock based
compensation expense. Management uses this supplemental measure to
analyze performance and income generated by our principal business
activities prior to the consideration of how non-cash items affect
that income, and believes that this financial measure is useful
supplemental information for investors to analyze our performance
and our financial results. A reconciliation from net income or loss
to EBITDA and adjusted EBITDA is as follows:
|
|
Year Ended |
|
Three Months Ended |
|
|
December 31, |
|
December 31, |
|
September 30, |
EBITDA - Non-GAAP Measure ($000s) |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
Net income
(loss) |
|
$ |
42,482 |
|
|
$ |
(777,967 |
) |
|
$ |
62,524 |
|
|
$ |
(47,871 |
) |
|
$ |
35,007 |
|
Adjustments to reconcile net
income (loss) to EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
|
139,874 |
|
|
|
164,233 |
|
|
|
41,574 |
|
|
|
33,115 |
|
|
|
38,055 |
|
Interest expense |
|
|
54,381 |
|
|
|
54,140 |
|
|
|
13,026 |
|
|
|
13,936 |
|
|
|
13,608 |
|
Income tax expense |
|
|
(19,346 |
) |
|
|
(75,394 |
) |
|
|
(46,141 |
) |
|
|
(13,158 |
) |
|
|
8,955 |
|
EBITDA
(non-GAAP) |
|
$ |
217,391 |
|
|
$ |
(634,988 |
) |
|
$ |
70,983 |
|
|
$ |
(13,978 |
) |
|
$ |
95,625 |
|
Asset impairment |
|
|
— |
|
|
|
564,495 |
|
|
|
— |
|
|
|
57,402 |
|
|
|
— |
|
Goodwill impairment |
|
|
— |
|
|
|
102,581 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-cash lease expense |
|
|
1,667 |
|
|
|
1,951 |
|
|
|
445 |
|
|
|
457 |
|
|
|
408 |
|
Lease payments |
|
|
(1,621 |
) |
|
|
(1,926 |
) |
|
|
(382 |
) |
|
|
(522 |
) |
|
|
(384 |
) |
Unrealized foreign exchange loss (gain) |
|
|
21,879 |
|
|
|
5,271 |
|
|
|
4,934 |
|
|
|
(17,064 |
) |
|
|
3,465 |
|
Unrealized derivative instruments (gain) loss |
|
|
(9,589 |
) |
|
|
8,974 |
|
|
|
(12,088 |
) |
|
|
8,421 |
|
|
|
(4,729 |
) |
Other financial instruments loss (gain) |
|
|
3,369 |
|
|
|
46,882 |
|
|
|
15,794 |
|
|
|
(14,404 |
) |
|
|
(13,634 |
) |
Other non-cash loss |
|
|
44 |
|
|
|
2,026 |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation expense |
|
|
8,396 |
|
|
|
1,216 |
|
|
|
1,799 |
|
|
|
1,923 |
|
|
|
1,053 |
|
Adjusted EBITDA
(non-GAAP) |
|
$ |
241,536 |
|
|
$ |
96,482 |
|
|
$ |
81,529 |
|
|
$ |
22,235 |
|
|
$ |
81,804 |
|
Funds flow from operations, as presented, is
defined as net income or loss adjusted for DD&A expenses, asset
and goodwill impairment, deferred tax expense or recovery,
stock-based compensation expense, amortization of debt
issuance costs, non-cash lease expense, lease payments, unrealized
foreign exchange gains or losses, other non-cash losses, unrealized
derivative instruments gains or losses, and cash settlement of
financial instruments. Management uses this financial measure to
analyze performance and income generated by our principal business
activities prior to the consideration of how non-cash items affect
that income, and believes that this financial measure is also
useful supplemental information for investors to analyze
performance and our financial results. Free cash flow, as
presented, is defined as funds flow from operations adjusted for
capital expenditures. Management uses this financial measure to
analyze cash flow generated by our principal business activities
after capital requirements and believes that this financial measure
is also useful supplemental information for investors to analyze
performance and our financial results. A reconciliation from net
income or loss to both funds flow from operations and free cash
flow is as follows:
|
|
Year Ended |
Three Months Ended |
|
|
December 31, |
|
December 31, |
|
September 30, |
Funds Flow From Operations - Non-GAAP Measure
($000s) |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
Net income
(loss) |
|
$ |
42,482 |
|
|
$ |
(777,967 |
) |
|
$ |
62,524 |
|
|
$ |
(47,871 |
) |
|
$ |
35,007 |
|
Adjustments to reconcile net
income (loss) to funds flow from operations |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
|
139,874 |
|
|
|
164,233 |
|
|
|
41,574 |
|
|
|
33,115 |
|
|
|
38,055 |
|
Asset impairment |
|
|
— |
|
|
|
564,495 |
|
|
|
— |
|
|
|
57,402 |
|
|
|
— |
|
Goodwill impairment |
|
|
— |
|
|
|
102,581 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deferred tax (recovery) expense |
|
|
(23,825 |
) |
|
|
(76,148 |
) |
|
|
(50,634 |
) |
|
|
(13,352 |
) |
|
|
8,955 |
|
Stock-based compensation expense |
|
|
8,396 |
|
|
|
1,216 |
|
|
|
1,799 |
|
|
|
1,923 |
|
|
|
1,053 |
|
Amortization of debt issuance costs |
|
|
3,809 |
|
|
|
3,625 |
|
|
|
1,127 |
|
|
|
851 |
|
|
|
907 |
|
Non-cash lease expense |
|
|
1,667 |
|
|
|
1,951 |
|
|
|
445 |
|
|
|
457 |
|
|
|
408 |
|
Lease payments |
|
|
(1,621 |
) |
|
|
(1,926 |
) |
|
|
(382 |
) |
|
|
(522 |
) |
|
|
(384 |
) |
Unrealized foreign exchange loss (gain) |
|
|
21,879 |
|
|
|
5,271 |
|
|
|
4,934 |
|
|
|
(17,064 |
) |
|
|
3,465 |
|
Other non-cash loss |
|
|
44 |
|
|
|
2,026 |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
Unrealized derivative instruments (gain) loss |
|
|
(9,589 |
) |
|
|
8,974 |
|
|
|
(12,088 |
) |
|
|
8,421 |
|
|
|
(4,729 |
) |
Other financial instruments loss (gain) |
|
|
3,369 |
|
|
|
46,882 |
|
|
|
15,794 |
|
|
|
(14,404 |
) |
|
|
(13,634 |
) |
Funds flow from
operations (non-GAAP) |
|
$ |
186,485 |
|
|
$ |
45,213 |
|
|
$ |
65,137 |
|
|
$ |
8,956 |
|
|
$ |
69,103 |
|
Capital expenditures |
|
$ |
149,879 |
|
|
$ |
96,281 |
|
|
$ |
40,229 |
|
|
$ |
39,903 |
|
|
$ |
34,839 |
|
Free cash flow
(non-GAAP) |
|
$ |
36,606 |
|
|
$ |
(51,068 |
) |
|
$ |
24,908 |
|
|
$ |
(30,947 |
) |
|
$ |
34,264 |
|
DISCLOSURE OF OIL AND GAS
INFORMATION
Gran Tierra’s Statement of Reserves Data and
Other Oil and Gas Information on Form 51-101F1 dated effective as
at December 31, 2021, which includes disclosure of its oil and gas
reserves and other oil and gas information in accordance with NI
51-101 and COGEH forming the basis of this press release, is
available on SEDAR at www.sedar.com.
Estimates of net present value and future net
revenue contained herein do not necessarily represent fair market
value of reserves. Estimates of reserves, and future net revenue
for individual properties may not reflect the same level of
confidence as estimates of reserves and future net revenue for all
properties, due to the effect of aggregation. There is no assurance
that the forecast price and cost assumptions applied by McDaniel in
evaluating Gran Tierra’s reserves and future net revenue will be
attained and variances could be material. See Gran Tierra’s press
release dated January 25, 2022 for a summary of the price forecasts
employed by McDaniel in the GTE McDaniel Reserves Report and other
information regarding the disclosed future net revenue.
All evaluations of future net revenue contained
in the GTE McDaniel Reserves Report are after the deduction of
royalties, operating costs, development costs, production costs and
abandonment and reclamation costs but before consideration of
indirect costs such as administrative, overhead and other
miscellaneous expenses. It should not be assumed that the estimates
of future net revenue presented in this press release represent the
fair market value of the reserves. There are numerous uncertainties
inherent in estimating quantities of crude oil and natural gas
reserves and the future cash flows attributed to such reserves. The
reserve and associated cash flow information set forth in the GTE
McDaniel Reserves Report are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates provided
therein. All reserves assigned in the GTE McDaniel Reserves Report
are located in Colombia and Ecuador and presented on a consolidated
basis.
BOEs have been converted on the basis of six
thousand cubic feet (“Mcf”) 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 not a 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.
Future Net Revenue
Future net revenue reflects McDaniel’s forecast
of revenue estimated using forecast prices and costs, arising from
the anticipated development and production of resources, after the
deduction of royalties, operating costs, development costs and
abandonment and reclamation costs but before consideration of
indirect costs such as administrative, overhead and other
miscellaneous expenses. The estimate of future net revenue below
does not necessarily represent fair market value.
Consolidated Properties at December 31, 2021 |
Proved (1P) Total Future Net Revenue ($
million) |
Forecast Prices and Costs |
Years |
Sales Revenue |
Total Royalties |
Operating Costs |
Future Development Capital |
Abandonment and Reclamation Costs |
Future Net Revenue Before Future Taxes |
Future Taxes |
Future Net Revenue After Future Taxes* |
2022-2026 (5 Years) |
3,288 |
(607 |
) |
(706 |
) |
(382 |
) |
(2 |
) |
1,591 |
(330 |
) |
1,261 |
Remainder |
1,684 |
(296 |
) |
(651 |
) |
— |
|
(59 |
) |
678 |
(207 |
) |
471 |
Total (Undiscounted) |
4,972 |
(903 |
) |
(1,357 |
) |
(382 |
) |
(61 |
) |
2,269 |
(537 |
) |
1,732 |
Total (Discounted @ 10%) |
3,483 |
(638 |
) |
(867 |
) |
(335 |
) |
(18 |
) |
1,625 |
(375 |
) |
1,250 |
Consolidated Properties at December 31, 2021 |
Proved Plus Probable (2P) Total Future Net Revenue ($
million) |
Forecast Prices and Costs |
Years |
Sales Revenue |
Total Royalties |
Operating Costs |
Future Development Capital |
Abandonment and Reclamation Costs |
Future Net Revenue Before Future Taxes |
Future Taxes |
Future Net Revenue After Future Taxes* |
2022-2026 (5 Years) |
4,101 |
(755 |
) |
(805 |
) |
(578 |
) |
(2 |
) |
1,961 |
(484 |
) |
1,477 |
Remainder |
3,724 |
(669 |
) |
(1,115 |
) |
— |
|
(73 |
) |
1,867 |
(616 |
) |
1,251 |
Total (Undiscounted) |
7,825 |
(1,424 |
) |
(1,920 |
) |
(578 |
) |
(75 |
) |
3,828 |
(1,100 |
) |
2,728 |
Total (Discounted @ 10%) |
4,902 |
(898 |
) |
(1,101 |
) |
(484 |
) |
(18 |
) |
2,401 |
(662 |
) |
1,739 |
Consolidated Properties at December 31, 2021 |
Proved Plus Probable Plus Possible (3P) Total Future Net
Revenue ($ million) |
Forecast Prices and Costs |
Years |
Sales Revenue |
Total Royalties |
Operating Costs |
Future Development Capital |
Abandonment and Reclamation Costs |
Future Net Revenue Before Future Taxes |
Future Taxes |
Future Net Revenue After Future Taxes* |
2022-2026 (5 Years) |
4,749 |
(875 |
) |
(879 |
) |
(707 |
) |
(1 |
) |
2,287 |
(631 |
) |
1,656 |
Remainder |
5,559 |
(1,068 |
) |
(1,494 |
) |
— |
|
(83 |
) |
2,914 |
(969 |
) |
1,945 |
Total (Undiscounted) |
10,308 |
(1,943 |
) |
(2,373 |
) |
(707 |
) |
(84 |
) |
5,201 |
(1,600 |
) |
3,601 |
Total (Discounted @ 10%) |
6,087 |
(1,136 |
) |
(1,275 |
) |
(577 |
) |
(17 |
) |
3,082 |
(913 |
) |
2,169 |
*The after-tax net present value of the
Company’s oil and gas properties reflects the tax burden on the
properties on a stand-alone basis. It does not consider the
corporate tax situation, or tax planning. It does not provide an
estimate of the value at the Company level which may be
significantly different. The Company’s financial statements should
be consulted for information at the Company level.
Definitions
Proved reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves.
Probable reserves are those additional reserves
that are less certain to be recovered than proved reserves. It is
equally likely that the actual remaining quantities recovered will
be greater or less than the sum of the estimated proved plus
probable reserves.
Possible reserves are those additional reserves
that are less certain to be recovered than Probable reserves. There
is a 10% probability that the quantities actually recovered will
equal or exceed the sum of Proved plus Probable plus Possible
reserves.
Proved developed producing reserves are those
reserves that are expected to be recovered from completion
intervals open at the time of the estimate. These reserves may be
currently producing or, if shut-in, they must have previously been
on production, and the date of resumption of production must be
known with reasonable certainty.
Undeveloped reserves are those reserves expected
to be recovered from known accumulations where a significant
expenditure (e.g., when compared to the cost of drilling a well) is
required to render them capable of production. They must fully meet
the requirements of the reserves category (proved, probable,
possible) to which they are assigned.
Certain terms used in this press release but not
defined are defined in NI 51-101, CSA Staff Notice 51-324 - Revised
Glossary to NI 51-101 Standards of Disclosure for Oil and Gas
Activities (“CSA Staff Notice 51-324”) and/or the
COGEH and, unless the context otherwise requires, shall have the
same meanings herein as in NI 51-101, CSA Staff Notice 51-324 and
the COGEH, as the case may be.
Oil and Gas Metrics
This press release contains a number of oil and
gas metrics, including free cash flow, NAV per share, F&D
costs, operating netback, cash netback, and reserves replacement
which do not have standardized meanings or standard methods of
calculation and therefore such measures may not be comparable to
similar measures used by other companies and should not be used to
make comparisons. Such metrics have been included herein to provide
readers with additional measures to evaluate the Company’s
performance; however, such measures are not reliable indicators of
the future performance of the Company and future performance may
not compare to the performance in previous periods.
- Before tax and
after-tax free cash flow are non-GAAP terms and are called before
tax and after-tax net revenue in the GTE McDaniel Reserves Report,
respectively. The non-GAAP term of before tax free cash flow
reconciles to the nearest GAAP term of oil sales, which is called
sales revenue in the GTE McDaniel Reserves Report. Before tax net
revenue is calculated by McDaniel by subtracting total royalties,
operating costs, future development capital, abandonment and
reclamation costs from sales revenue. After-tax free cash flow is
calculated by McDaniel by subtracting future taxes from before tax
net revenue. Refer to “Future Net Revenue” in this press release
for the applicable reconciliation. Management uses free cash flow
as a measure of the Company’s ability to fund its exploration
program.
- NAV per share is
calculated as the applicable NPV10 (before or after-tax, as
applicable) minus estimated net debt, divided by the number of
shares of Gran Tierra’s common stock issued and outstanding.
Management uses NAV per share as a measure of the relative change
of Gran Tierra’s net asset value over its outstanding common stock
over a period of time.
- F&D costs
are calculated as estimated exploration and development capital
expenditures, excluding acquisitions and dispositions, divided by
the applicable reserves additions both before and after changes in
future development costs. The calculation of F&D costs
incorporates the change in future development costs required to
bring proved undeveloped and developed reserves into production.
The aggregate of the exploration and development costs incurred in
the financial year and the changes during that year in estimated
future development costs may not reflect the total F&D costs
related to reserves additions for that year. Management uses
F&D costs per BOE as a measure of its ability to execute its
capital program and of its asset quality.
- Operating
netback and cash netback are calculated as described in this press
release. Management believes that operating netback and cash
netback are useful supplemental measures for the reasons described
in this press release.
- Reserves
replacement is calculated as reserves in the referenced category
divided by estimated referenced production. Management uses this
measure to determine the relative change of its reserves base over
a period of time.
Disclosure of Reserve Information and
Cautionary Note to U.S. Investors
Unless expressly stated otherwise, all estimates
of proved developed producing, proved, probable and possible
reserves and related future net revenue disclosed in this press
release have been prepared in accordance with NI 51-101. Estimates
of reserves and future net revenue made in accordance with NI
51-101 will differ from corresponding GAAP standardized measure
prepared in accordance with applicable SEC rules and disclosure
requirements of the U.S. Financial Accounting Standards Board
(“FASB”), and those differences may be material. NI 51-101, for
example, requires disclosure of reserves and related future net
revenue estimates based on forecast prices and costs, whereas SEC
and FASB standards require that reserves and related future net
revenue be estimated using average prices for the previous 12
months and that the standardized measure reflect discounted future
net income taxes related to the Company’s operations. In addition,
NI 51-101 permits the presentation of reserves estimates on a
“company gross” basis, representing Gran Tierra’s working interest
share before deduction of royalties, whereas SEC and FASB standards
require the presentation of net reserve estimates after the
deduction of royalties and similar payments. There are also
differences in the technical reserves estimation standards
applicable under NI 51-101 and, pursuant thereto, the COGEH, and
those applicable under SEC and FASB requirements.
In addition to being a reporting issuer in
certain Canadian jurisdictions, Gran Tierra is a registrant with
the SEC and subject to domestic issuer reporting requirements under
U.S. federal securities law, including with respect to the
disclosure of reserves and other oil and gas information in
accordance with U.S. federal securities law and applicable SEC
rules and regulations (collectively, “SEC requirements”).
Disclosure of such information in accordance with SEC requirements
is included in the Company’s Annual Report on Form 10-K and in
other reports and materials filed with or furnished to the SEC and,
as applicable, Canadian securities regulatory authorities. The SEC
permits oil and gas companies that are subject to domestic issuer
reporting requirements under U.S. federal securities law, in their
filings with the SEC, to disclose only estimated proved, probable
and possible reserves that meet the SEC’s definitions of such
terms. Gran Tierra has disclosed estimated proved, probable and
possible reserves in its filings with the SEC. In addition, Gran
Tierra prepares its financial statements in accordance with United
States generally accepted accounting principles, which require that
the notes to its annual financial statements include supplementary
disclosure in respect of the Company’s oil and gas activities,
including estimates of its proved oil and gas reserves and a
standardized measure of discounted future net cash flows relating
to proved oil and gas reserve quantities. This supplementary
financial statement disclosure is presented in accordance with FASB
requirements, which align with corresponding SEC requirements
concerning reserves estimation and reporting.
The Company believes that the presentation of
NPV10 is useful to investors because it presents (i) relative
monetary significance of its oil and natural gas properties
regardless of tax structure and (ii) relative size and value of its
reserves to other companies. The Company also uses this measure
when assessing the potential return on investment related to its
oil and natural gas properties. NPV10 and the standardized measure
of discounted future net cash flows do not purport to present the
fair value of the Company’s oil and gas reserves. The Company has
not provided a reconciliation of NPV10 to the standardized measure
of discounted future net cash flows because it is impracticable to
do so.
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