Company Reports Record Increase in Year over Year Reserves,
Production Volumes, and Revenues - Cash Balance Grows to $177
Million CALGARY, Alberta, Feb. 26 /PRNewswire-FirstCall/ -- Gran
Tierra Energy Inc. (NYSE Alternext: GTE, TSX: GTE), a company
focused on oil exploration and production in South America, today
announced financial and operating results for the quarter and year
ended December 31, 2008. Highlights for the year include: * 145%
increase in average daily oil production over the prior year with a
current production rate of approximately 12,000 barrels of oil per
day (BOPD), net after royalty. * Record revenue and other income
for the year of $114.0 million, an increase of 253% from $32.3
million for 2007. * Net income of $23.5 million or $0.19 per share
basic and $0.16 per share diluted, compared to a net loss of $8.5
million or ($0.09) per share basic and diluted in 2007. * Cash and
cash equivalents of $176.8 million compared to $57.8 million at
September 30, 2008 and $18.2 million at December 31, 2007. Gran
Tierra Energy continues to be debt free. Full Year 2008 Financial
Highlights: The company recognized revenue and other income of
$114.0 million, an increase of 253% from $32.3 million for 2007.
Net income for 2008 was $23.5 million or $0.19 per share basic and
$0.16 per share diluted, compared to a net loss of $8.5 million or
($0.09) per share in 2007 basic and diluted. The 2008 results
reflect increased production from the successful exploration and
development programs in both Colombia and Argentina, higher oil
prices based on a higher average West Texas Intermediate (WTI) oil
price and the results of Solana Resources Limited from the November
14, 2008 acquisition date. The average price received per barrel of
oil in 2008 increased 44% to $84.89 per barrel from $58.79 per
barrel in 2007. Cash provided by operations for 2008 was $109.7
million compared to $8.8 million in 2007. Fourth Quarter 2008
Financial Highlights: Revenue and other income for the fourth
quarter ended December 31, 2008 was $19.7 million, a 24% increase
from $16.0 million for the same period of 2007. The company
reported a net loss for the quarter of $12.7 million or $(0.07) per
share diluted as compared to net income of $2.2 million, or $0.02
per share for the same period in 2007. Included in the 2008 fourth
quarter results are non-cash expenses resulting from the inclusion
of Solana, comprised of a $7.3 million unrealized foreign exchange
loss related to translation of a deferred tax liability, and
additional depletion expense of $6.9 million. A general strike in
Colombia, which caused the suspension of production operations in
southern Colombia from November 20, 2008 through to year end, also
impacted the results of the quarter. Operating expenses during this
period remained relatively unchanged from the third quarter as the
company retained its employees and continued to maintain its
facilities. Realized prices in the fourth quarter of 2008 averaged
$50.38 per barrel compared to $72.95 per barrel for the fourth
quarter of 2007, reflecting the recent decline in WTI price.
Balance Sheet Highlights: The company reported cash and equivalents
of $176.8 million at 2008 year end as compared to $57.8 million at
September 30, 2008 and $18.2 million at December 31, 2007. Working
capital was $132.8 million at 2008 year end, as compared to $43.5
million at September 30, 2008 and $8.1 million at the end of 2007.
Shareholders' equity increased to $791.9 million at December 31,
2008 from $76.8 million at December 31, 2007, and the company had
no outstanding long-term debt as of year end. The increase in
equity is primarily a result of the issuance of shares to acquire
Solana. Cash included in the assets acquired from Solana was $81.9
million, net of acquisition costs. Production Highlights: Average
oil production for the year ended December 31, 2008, net of
royalties, increased 145% to 3,629 BOPD from 1,482 BOPD in 2007.
The increase in production is due primarily to increased production
from the continued development of the Costayaco field in the Chaza
Block in Colombia and the successful drilling of the Proa -1 well
in the Surubi Block in Argentina. Average oil production for the
fourth quarter of 2008, net after royalties, was 4,074 BOPD.
Production was impacted by the strike at the Ecopetrol operated
Orito facilities which resulted in a suspension of crude oil
transportation in southern Colombia from November 20, 2008 through
year end 2008. Crude oil transportation resumed on January 12,
2009. Current production is approximately 12,000 BOPD, net after
royalty, and the company anticipates that production will be 15,000
BOPD, net after royalty, at the end of the first quarter of 2009.
2008 Reserve Review: Externally audited proved oil reserves (as per
SEC Reserves Definitions) net after royalty to Gran Tierra Energy
as of December 31, 2008 tripled to 19.2 million barrels of oil (BO)
proved compared to 6.4 million BO proved as of December 31, 2007.
As per Canadian NI 51-101 and the Reserves definitions in the COGE
Handbook, reserves net after royalty to Gran Tierra Energy as of
December 31, 2008 increased significantly from 2007 to 18.8 million
BO proved, 8.7 million BO probable, and 18.6 million BO possible.
This compares to reserves as of December 31, 2007 of 6.4 million BO
proved, 5.0 million BO probable and 4.9 million BO possible.
Commenting on the results, Dana Coffield, President and Chief
Executive Officer of Gran Tierra Energy Inc., stated, "2008 was a
milestone year for Gran Tierra Energy. Associated with the
acquisition of Solana Resources, the high-point was the
consolidation of a 100% working interest in the Costayaco field,
one of the largest oil discoveries in Colombia in recent years.
With this and with additional drilling success, Gran Tierra Energy
was able to triple proved reserves during the year. In parallel,
our net after royalty production volumes have increased
dramatically and we are on track to reach 20,000 barrels of oil per
day, net to the company, in the second half of this year." Coffield
continued, "The fourth quarter of the year proved to be challenging
as a result of falling oil prices and a significant deferral of
production in Colombia in December. In spite of this, our balance
sheet is stronger than it has ever been. Our capital program for
2009 will be fully funded from cash flow and cash on hand. This
includes a development drilling program to grow production, an
exploration drilling program to continue exploring for new
reserves, and diverse seismic programs in Colombia, Peru, and
Argentina to prepare for continued exploration drilling in 2010."
"The successful execution of our strategy to date has positioned
Gran Tierra Energy to not only survive in the current business
environment, but to thrive. Our 2008 results and strong balance
sheet should allow Gran Tierra Energy to continue pursuing its long
term goal of becoming a significant player in the international oil
and gas exploration and production arena by prudently executing our
growth strategy," Coffield concluded. Related News - Costayaco 6
and 7 Update: The company reported the recent completion of
production testing at Costayaco-6 in Colombia. Only water was
recovered in this testing. Additional testing will be undertaken to
optimize the use of this wellbore for water disposal or for
reservoir pressure support. In addition, the drilling of
Costayaco-7 has been initiated. This development well is being
drilled in the north central portion of the Costayaco field and
will take approximately 45 days to drill and complete. Conference
Call Information: Gran Tierra Energy Inc. will hold a conference
call to review its fourth quarter and full year 2008 results on
Thursday, February 26, 2009 at 11:00 a.m. Eastern Time. The call
will be hosted by Dana Coffield, President and Chief Executive
Officer. Interested parties may access the conference call by
dialing (888) 713-4218 (domestic) or (617) 213-4870
(international), pass code # 43836235. The call will also be
available via web cast at http://www.grantierra.com/, or
http://www.streetevents.com/, http://www.fulldisclosure.com/. The
web cast will be available on Gran Tierra Energy's website until
the next earnings 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 February 26, 2009,
by dialing (888) 286-8010 (domestic) or (617) 801-6888
(international) using confirmation pass code 72426646. 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
NYSE Alternext exchange (GTE) and the Toronto 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 (866) 973-4873 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. Estimates of total net proved oil
reserves at December 31, 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). Forward Looking
Statements: The statements in this news release regarding Gran
Tierra Energy's belief that the company's production will be 15,000
BOPD, net after royalty at the end of the first quarter of 2009,
that it is on track for achieving 20,000 BOPD this year, that its
2009 capital program will be fully funded from cash flow and cash
on hand, that it is positioned to thrive in the current business
environment, and its 2009 testing and drilling plans for Costayaco
6 and 7, 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 can impact
the production, transport or sale of its products; and the risk
that the current global economic and credit crisis may impact oil
prices and oil consumption more than Gran Tierra Energy currently
predicts. 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 November 6, 2008. These filings are available on a Web site
maintained by the Securities and Exchange Commission at
http://www.sec.gov/ and on SEDAR at http://www.sedar.com/ 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. Contacts: Dana Coffield Al Palombo Gran Tierra
Energy, Inc. Cameron Associates President & Chief Executive
Officer Investor Relations (866) 973-4873 (212) 554-5488 Financial
Tables to Follow Gran Tierra Energy Inc. Consolidated Statements of
Operations and Retained Earnings (Accumulated Deficit) For the
Years and Quarters ended December 31, 2008, 2007 Prepared in
accordance with generally accepted accounting principles in the
United States (Thousands of U.S. Dollars, Except Share and Per
Share Amounts) Year Ended December 31, Quarter Ended December 31,
REVENUE AND OTHER 2008 2007 2008 2007 INCOME (Unaudited)
(Unaudited) Oil and natural gas sales $112,805 $31,853 $18,932
$15,925 Interest 1,224 425 795 48 114,029 32,278 19,727 15,973
EXPENSES Operating 19,218 10,474 8,452 3,755 Depletion,
depreciation and accretion 25,737 9,415 10,516 2,865 General and
administrative 18,593 10,232 5,783 2,648 Liquidated damages - 7,367
- - Derivative financial instruments (gain) loss (193) 3,040
(3,180) 2,247 Foreign exchange (gain) loss 6,235 (78) 7,969 15
69,590 40,450 29,540 11,530 INCOME (LOSS) BEFORE INCOME TAXES
44,439 (8,172) (9,813) 4,443 Income tax expense (recovery) (20,944)
(295) 2,881 2,280 NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
$23,495 $(8,467) $(12,694) $2,163 ACCUMULATED DEFICIT, BEGINNING OF
PERIOD (16,511) (8,044) 19,678 (18,674) RETAINED EARNINGS
(ACCUMULATED DEFICIT), END OF PERIOD $6,984 $(16,511) $6,984
$(16,511) NET INCOME (LOSS) PER SHARE - BASIC 0.19 (0.09) (0.07)
0.02 NET INCOME (LOSS) PER SHARE -DILUTED 0.16 (0.09) (0.07) 0.02
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 123,421,898 95,096,311
176,768,596 95,049,083 WEIGHTED AVERAGE SHARES OUTSTANDING -
DILUTED 143,194,590 95,096,311 185,847,980 110,577,835 Gran Tierra
Energy Inc. Consolidated Balance Sheets As at December 31, 2008,
2007 Prepared in accordance with generally accepted accounting
principles in the United States (Thousands of U.S. Dollars, Except
Share and Per Share Amounts) As at December 31, 2008 2007 ASSETS
Current Assets Cash and cash equivalents $176,754 $18,189 Accounts
receivable 7,905 10,695 Inventory 999 787 Taxes receivable 5,789
1,177 Prepaids 1,103 442 Derivative financial instruments 233 -
Deferred tax asset 2,262 220 Total Current Assets 195,045 31,510
Oil and Gas Properties (using the full cost method of accounting)
Proved 380,855 44,292 Unproved 384,195 18,910 Total Oil and Gas
Properties 765,050 63,202 Other Assets 2,502 716 Total Property,
Plant and Equipment 767,552 63,918 Long Term Assets Deferred tax
asset 10,131 1,839 Taxes receivable - 525 Other long-term assets
1,315 - Goodwill 98,582 15,005 Total Long Term Assets 110,028
17,369 Total Assets $1,072,625 $112,797 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $21,134
$11,327 Accrued liabilities 12,841 6,139 Derivative financial
instruments - 1,594 Current taxes payable 28,163 3,284 Deferred tax
liability 100 1,108 Total Current Liabilities 62,238 23,452 Long
term liabilities 40 132 Deferred tax liability 213,093 9,235
Deferred remittance tax 1,077 1,332 Derivative financial
instruments - 1,055 Asset retirement obligation 4,251 799 Total
Long Term Liabilities 218,461 12,553 Shareholders' Equity Common
shares 226 95 (190,248,384 and 80,389,676 common shares and
48,238,269 and 14,787,303 exchangeable shares, par value $0.001 per
share, issued and outstanding as at December 31, 2008 and 2007,
respectively) Additional paid in capital 753,236 72,458 Warrants
31,480 20,750 Retained earnings (accumulated deficit) 6,984
(16,511) Total Shareholders' Equity 791,926 76,792 Total
Liabilities and Shareholders' Equity $1,072,625 $112,797 Gran
Tierra Energy Inc. Consolidated Statements of Cash Flow For the
Years ended December 31, 2008, 2007 Prepared in accordance with
generally accepted accounting principles in the United States
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Year Ended December 31, 2008 2007 Operating Activities Net income
(loss) $23,495 $(8,467) Adjustments to reconcile net income (loss)
to net cash provided by operating activities: Depletion,
depreciation and accretion 25,737 9,415 Deferred taxes (6,418) 185
Stock based compensation 2,520 810 Liquidated damages - 5,839
Unrealized foreign exchange loss 6,985 - Unrealized (gain) loss on
financial instruments (2,882) 2,648 Net changes in non-cash working
capital Accounts receivable 34,943 (5,604) Inventory (107) 25
Prepaids 261 234 Accounts payable and accrued liabilities 10,697
2,808 Taxes receivable and payable 14,840 869 Settlement of asset
retirement obligations (334) - Net cash provided by operating
activities 109,737 8,762 Investing Activities Restricted cash -
1,010 Oil and gas property expenditures (55,217) (15,976) Cash
acquired on acquisition net of acquisition costs 81,912 - Long term
assets and liabilities 446 (427) Net cash provided by (used in)
investing activities 27,141 (15,393) Financing Activities
Restricted cash - - Proceeds from issuance of common stock 21,687
719 Net cash provided by financing activities 21,687 719 Net
(decrease) increase in cash and cash equivalents 158,565 (5,912)
Cash and cash equivalents, beginning of year 18,189 24,101 Cash and
cash equivalents, end of year $176,754 $18,189 Cash 110,688 18,189
Term deposits 66,066 - Cash and cash equivalents, end of year
$176,754 $18,189 Supplemental cash flow disclosures: Cash paid for
interest $- $80 Cash paid for taxes $11,587 $116 Non-cash investing
activities: Non-cash working capital related to capital additions
$11,096 $8,259 DATASOURCE: Gran Tierra Energy Inc. CONTACT: Dana
Coffield, President & Chief Executive Officer of Gran Tierra
Energy Inc., 1-866-973-4873, ; or Investor Relations, Al Palombo of
Cameron Associates, +1-212-554-5488, , for Gran Tierra Energy Inc.
Web site: http://www.grantierra.com/
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