Revenues Grow to $40.3 Million and Net Income to $23.0 Million
CALGARY, Alberta, Nov. 6 /PRNewswire-FirstCall/ -- Gran Tierra
Energy Inc. (Amex: GTE; TSX: GTE), a company focused on oil
exploration and production in South America, today announced
financial and operating results for the third quarter ended
September 30, 2008. Total revenue for the third quarter of 2008 was
$40.3 million compared to $8.0 million for the same quarter of
2007, and $33.1 million for the second quarter of 2008. Net income
for the quarter was $23.0 million, or $0.20 per share basic ($0.18
per share diluted), compared to net income of $1.1 million or $0.01
per share basic and diluted for the corresponding quarter of 2007,
and net income of $8.5 million or $0.08 per share basic ($0.07 per
share diluted) for the second quarter of 2008. Revenue for the nine
month period ended September 30, 2008 was $94.3 million compared to
$16.3 million for same period of 2007. Net income for the period
was $36.2 million, or $0.34 per share basic ($0.30 per share
diluted), compared to a net loss of $10.6 million or $0.11 per
share basic and diluted for the same period of 2007. Cash and cash
equivalents were $57.8 million at September 30, 2008 compared to
$18.2 million at December 31, 2007, and $35.3 million at the end of
the second quarter of 2008. Total working capital was $43.5 million
at September 30, 2008 compared to $8.1 million at December 31,
2007. Shareholders' equity was $136.4 million at September 30, 2008
compared to $76.8 million at December 31, 2007. The company has no
long-term debt. Average oil production for the third quarter of
2008 was 4,194 barrels per day (BOPD), net after royalty, compared
to 1,491 BOPD for the same quarter of 2007, and 3,399 BOPD for the
second quarter of 2008. Third quarter oil production in Colombia
grew to 3,613 BOPD, net after royalty, from 2,842 BOPD for the
second quarter of 2008, and third quarter oil production in
Argentina grew to 581 BOPD, net after royalty, from 557 BOPD for
the second quarter of 2008. Current production is averaging
approximately 5,700 BOPD, net after royalty, as a result of
continued production growth in both Colombia and Argentina. Average
oil production for the nine month period ended September 30, 2008
was 3,482 BOPD, net after royalty, compared to 1,187 BOPD, net
after royalty, for the comparable period of 2007. Average realized
oil sales prices, net after royalty, were $103.88 per barrel for
the third quarter of 2008 and $98.40 per barrel for the nine months
ended September 30, 2008 The company attained several operational
milestones in the third quarter of 2008 that it believes should
lead to continued growth for the balance of 2008 and beyond. In
Colombia, development activities at the Costayaco Field continued.
The company drilled and tested Costayaco-4 and -5 and initiated
drilling Costayaco-6. Truck loading and unloading facilities for
crude transportation were constructed, and pipeline construction
for a line to connect the Costayaco Field to the existing pipeline
system was initiated. This line has since been completed and is
operational. Upon removal of downstream constraints, this line will
have 50,000 BOPD capacity. Planning continues for a new 100 km
pipeline expansion downstream to handle a minimum of 35,000 BOPD
from Costayaco in early 2010. A mid-year independent reserve
engineering report for the Costayaco field was completed. It
reported that effective July 1, 2008, the Costayaco field had gross
proved reserves of 20.5 million barrels of oil, gross proved plus
probable reserves of 34.9 million barrels of oil and gross proved
plus probable plus possible reserves of 61.4 million barrels of
oil. In addition, the company drilled an exploration well in the
Rio Magdalena Block, Popa-2, which resulted in a gas-condensate
discovery. Testing resulted in 8.5 million cubic feet of gas and
236 barrels of oil and condensate per day. Planning continues for a
long-term test program in 2009. In Argentina, the company completed
drilling the Proa.x-1 exploration well in the Surubi Block. This
resulted in an oil discovery that tested 2,324 BOPD. The well is
currently producing approximately 500 BOPD on long-term test. In
Peru, results of a new 20,000 linear kilometer aeromagnetic and
gravity data program over Blocks 122 and 128 are being evaluated. A
500 km 2- D seismic acquisition program has been designed and an
environmental impact assessment has been initiated in preparation
for data acquisition in late 2009. A business combination between
Gran Tierra Energy and Solana Resources Limited announced during
the quarter is scheduled to close November 14, 2008, subject to
shareholder approval. This combination will provide Gran Tierra
Energy with a 100% working interest in the Costayaco field, one of
the largest oil field discoveries in Colombia in recent years.
Commenting on the results of the quarter, Dana Coffield, President
and Chief Executive Officer of Gran Tierra, stated, "The
outstanding third quarter 2008 results represent the fifth
consecutive quarterly increase in revenues and profitability. This
continuous quarter over quarter growth is the direct result of our
focus on developing the full breadth of our exploration and
development portfolio as efficiently as possible, with the success
of the Costayaco field remaining the focus of our capital program.
The balance of 2008 and preliminary 2009 work program and budget is
fully funded from existing cash and cash flow from operations at
current oil prices. With the pending business combination with
Solana Resources, Gran Tierra Energy will be financially and
operationally positioned to continue its growth as a premier
international oil and gas company." Conference Call Information:
The company reports that due to the Special Meeting of Shareholders
taking place on Friday November 14, 2008, it will consolidate its
customary discussion and commentary regarding its financial results
into a conference call that will also review the results of the
Special Meeting. Gran Tierra Energy Inc. will therefore hold a
conference call to review its third quarter results and results
from the Special Meeting of Shareholders on Tuesday, November 18,
2008 at 10:00 a.m. Eastern. The call will be hosted by Dana
Coffield, President and Chief Executive Officer. Interested parties
may access the conference call by dialing (888) 680-0865 (domestic)
or (617) 213-4853 (international), pass code # 26298891.
Participants may pre-register for the call at:
https://www.theconferencingservice.com/prereg/key.process?key=PWJJU8BAE.
Pre-registrants will be issued a pin number to use when dialing
into the live call which will provide quick access to the
conference by bypassing the operator upon connection. The call will
also be available via web cast at http://www.grantierra.com/,
http://www.streetevents.com/, http://www.fulldisclosure.com/ and
will be available on the Gran Tierra Energy website until the next
earnings conference call. If you are unable to participate, an
audio replay of the call will be available beginning two hours
after the call and will be available until 11:59 p.m. on November
24, 2008, by dialing (888) 286-8010 (domestic) or (617) 801- 6888
(international) using confirmation pass code 77687249. An audio
replay of the call will also be available on Gran Tierra Energy's
web site, http://www.grantierra.com/, until the next earnings call.
About Gran Tierra Energy Inc.: Gran Tierra Energy Inc. is an
international oil and gas exploration and production company,
headquartered in Calgary, Canada, incorporated in the United
States, trading on the Toronto Stock Exchange (GTE) and the
American Stock Exchange (GTE), and operating in South America. The
company holds interests in producing and prospective properties in
Argentina, Colombia and Peru. The company has a strategy that
focuses on establishing a portfolio of producing properties, plus
production enhancement and exploration opportunities to provide a
base for future growth. Additional information concerning Gran
Tierra Energy is available at http://www.grantierra.com/. Investor
inquiries may be directed to or 1-800-916-4873. Cautionary
Statement: 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. The
estimate of reserves for individual properties may not reflect the
same confidence level as estimates of reserves for all properties,
due to the effects of aggregation. Forward Looking Statements:
Estimates of total net proved oil reserves for the Costayaco field
at June 30, 2008 have been prepared in accordance with the
definitions for proved reserves set out in Rule 4-10 of Regulation
S-X of the U.S. Securities and Exchange Commission. Reserves were
estimated for proved, proved plus probable and proved plus probable
plus possible cases under the reserve definitions of National
Instrument 51-101 (NI 51-101) of Canada and for the proved case
under the definitions of the Securities Exchange Commission (SEC)
of the United States. The evaluation was conducted in accordance
with standard industry practice and reserves definitions,
procedures and guidance contained in the Canadian Oil and Gas
Evaluation Handbook (COGE Handbook). The statements in this news
release regarding Gran Tierra Energy's belief that the company's
attainment of several operational milestones in the third quarter
of 2008 should lead to continued growth for the balance of 2008 and
beyond, the statement regarding the anticipated capacity of the 100
km pipeline expansion and the closing of the business combination
with Solana are forward looking statements or financial outlook
(collectively, "forward- looking statements") under the meaning of
applicable securities laws, including Canadian Securities
Administrators' National Instrument 51-102 Continuous Disclosure
Obligations and the United States Private Securities Litigation
Reform Act of 1995. These statements are subject to risks,
uncertainties and other factors that could cause actual results or
outcomes to differ materially from those contemplated by the
forward-looking statements. There are a number of important factors
that could cause the results or outcomes discussed herein to differ
materially from that indicated by the forward-looking statements,
including, among others: Gran Tierra Energy's operations are
located in South America, and unexpected problems can arise due to
guerilla activity, technical difficulties and operational
difficulties which impact the production, transport or sale of its
products; geographic, political and weather conditions; and the
risk that the closing conditions to the business combination with
Solana are not met or waived. Further information on potential
factors that could affect Gran Tierra Energy are included in risks
detailed from time to time in Gran Tierra Energy's Securities and
Exchange Commission filings, including, without limitation, under
the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report
on Form 10-Q filed August 11, 2008. These filings are available on
a Web site maintained by the Securities and Exchange Commission at
http://www.sec.gov/. Gran Tierra Energy does not undertake an
obligation to update forward-looking or other statements in this
release. Basis of Presentation of Financial Results: Gran Tierra
Energy's financial results are reported in United States dollars
and prepared in accordance with generally accepted accounting
principles in the United States. Financial Tables to Follow Gran
Tierra Energy Inc. Condensed Consolidated Statements of Operations
and Accumulated Deficit (Unaudited) (Thousands of US Dollars,
Except Per Share Amounts) Three Months Ended Nine Months Ended
September 30, September 30, 2008 2007 2008 2007 REVENUE AND OTHER
INCOME Oil and natural gas sales 40,082 7,993 93,873 15,928
Interest 257 45 429 377 40,339 8,038 94,302 16,305 EXPENSES
Operating 4,513 2,613 10,766 6,719 Depletion, depreciation and
accretion 6,757 1,849 15,221 6,550 General and administrative 4,036
2,965 12,810 7,584 Liquidated damages - - - 7,367 Derivative
financial instruments (4,475) 117 2,987 793 Foreign exchange gain
(1,351) (85) (1,734) (91) 9,480 7,459 40,050 28,922 INCOME (LOSS)
BEFORE INCOME TAXES 30,859 579 54,252 (12,617) INCOME TAX EXPENSES
(RECOVERIES) 7,872 (512) 18,063 (1,986) NET INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS) 22,987 1,091 36,189 (10,631)
ACCUMULATED DEFICIT, BEGINNING OF PERIOD (3,309) (19,766) (16,511)
(8,044) RETAINED EARNINGS (ACCUMULATED DEFICIT), END OF PERIOD
$19,678 $(18,675) $19,678 $(18,675) NET INCOME (LOSS) PER COMMON
SHARE - BASIC $0.20 $0.01 $0.34 $(0.11) NET INCOME (LOSS) PER
COMMON SHARE - DILUTED $0.18 $0.01 $0.30 $(0.11) WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING - BASIC 114,324,583 94,683,878
105,509,871 95,112,226 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
DILUTED 128,303,724 107,597,185 119,733,940 95,112,226 Gran Tierra
Energy Inc. Condensed Consolidated Balance Sheets (Unaudited)
(Thousands of U.S. dollars) September 30, December 31, 2008 2007
ASSETS Current Assets Cash and cash equivalents $57,760 $18,189
Accounts receivable 37,279 10,695 Inventory 570 787 Taxes
receivable 2,543 1,177 Prepaids 490 442 Deferred tax asset 934 220
Total Current Assets 99,576 31,510 Oil and Gas Properties (using
the full cost method of accounting) Proved 65,707 44,292 Unproved
13,964 18,910 Total Oil and Gas Properties 79,671 63,202 Other
Assets 1,684 716 Total Property, Plant and Equipment 81,355 63,918
Long Term Assets Deferred tax asset 6,387 1,839 Taxes receivable
541 525 Goodwill 15,005 15,005 Total Long Term Assets 21,933 17,369
Total Assets $202,864 $112,797 LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities Accounts payable $17,576 $11,327 Accrued
liabilities 12,172 6,139 Derivative financial instruments 2,018
1,594 Current taxes payable 23,355 3,284 Deferred tax liability 967
1,108 Total Current Liabilities 56,088 23,452 Long term liabilities
118 132 Deferred tax liability 7,128 9,235 Deferred remittance tax
1,113 1,332 Derivative financial instruments 873 1,055 Asset
retirement obligation 1,136 799 Total Long Term Liabilities 10,368
12,553 Shareholders' Equity Common shares 225 95 (104,611,399 and
80,389,676 common shares and 10,984,126 and 14,787,303 exchangeable
shares, par value $0.001 per share, issued and outstanding as at
September 30, 2008 and December 31, 2007, respectively) Additional
paid-in capital 108,510 72,458 Warrants 7,995 20,750 Retained
earnings (accumulated deficit) 19,678 (16,511) Total Shareholders'
Equity 136,408 76,792 Total Liabilities and Shareholders' Equity
$202,864 $112,797 Contacts: Dana Coffield Al Palombo Gran Tierra
Energy Inc. Cameron Associates President & Chief Executive
Officer Investor Relations (800) 916-4873 (212) 245-8800 Ext. 209
DATASOURCE: Gran Tierra Energy Inc. CONTACT: Dana Coffield,
President & Chief Executive Officer of Gran Tierra Energy Inc.,
1-800-916-4873, ; or Investor Relations, Al Palombo of Cameron
Associates, +1-212-245-8800 Ext. 209, , for Gran Tierra Energy Inc.
Web site: http://www.grantierra.com/
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