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
quarter ended September 30, 2023 (“
the
Quarter”). All dollar amounts are in United States
dollars, and production amounts are on an average working interest
(“
WI”) before royalties basis unless otherwise
indicated. Per barrel (“
bbl”) and bbl per day
(“
BOPD”) amounts are based on WI sales before
royalties. For per bbl amounts based on net after royalty
(“
NAR”) production, see Gran Tierra’s Quarterly
Report on Form 10-Q filed October 31, 2023.
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented: “Gran Tierra had a solid
Quarter, our financial position remains robust, and we continue to
focus on maximizing operational efficiency and managing costs
effectively to ensure sustainable growth and profitability.
We are very pleased with the successful
completion of our bond exchanges subsequent to the Quarter which we
believe are highly beneficial for both Gran Tierra and our
stakeholders. The Company’s balance sheet is now stronger due to an
improved amortization schedule, less restrictive conditions, and
overall reduced leverage. The bond exchanges, in tandem with our
solid operating cash flow, provide additional financial flexibility
and a stronger platform, as we execute our strategy of delivering
profitable production growth, free cash flow generation and value
creation for stakeholders. We intend to continue to high-grade our
portfolio through our integrated strategy of acquiring, exploring,
developing, producing, and enhancing high-quality oil and gas
assets.
In terms of upcoming activity, following our
successful 2023 development campaigns at Acordionero and the
northern extension of the Costayaco field, we are accelerating our
development program and plan to commence drilling at both of these
fields in December 2023. The waterfloods across our four core
assets continue to be effective at increasing ultimate oil
recoveries and we are excited to resume drilling by the end of this
year. We are delighted that we closed the extension of the
Suroriente block agreement during the Quarter as we believe this
block will be a key growth area for the Company over the coming
years. As seen in our mid-year reserve update, the success in our
waterflood and the extension of the Suroriente block agreement
resulted in record highs in the Company’s Proved and Proven plus
Probable oil reserves. We added Proved reserves of 16 million bbl
and Proven plus Probable of 26 million bbl since the end of the
2022.”
Key Highlights of the
Quarter:
-
Production: Gran Tierra’s total average WI
production was 33,940 BOPD, an increase of 1% compared to second
quarter 2023 (“the Prior Quarter”) and up 12% from
third quarter 2022 (“one year ago”). Gran Tierra’s
production in the Quarter was the Company’s highest quarterly
average total production since second quarter 2019.
- Net
Income: Gran Tierra achieved net income of $7 million,
compared to a net loss of $11 million in the Prior Quarter and net
income of $39 million one year ago. The Company’s net income over
the last 12 months was $19 million.
- Basic
(Diluted) Earnings Per Share: Gran Tierra generated net
earnings of $0.20 per share basic and diluted, compared to a net
loss of $0.33 per share basic and diluted in the Prior Quarter and
net earnings of $1.05 per share basic and $1.04 per share diluted
one year ago.
- Adjusted
EBITDA(2): Adjusted EBITDA(2) was $119
million compared to $97 million in the Prior Quarter and $116
million one year ago. Twelve month trailing Net Debt(2) to Adjusted
EBITDA(2) was 1.2 times.
- Funds
Flow from Operations(2):
Funds flow from operations(2) was $79 million ($2.37 basic per
share), up 49% from the Prior Quarter and down 16% from one year
ago.
- Free
Cash Flow(2): During the
Quarter, the Company generated free cash flow of approximately $36
million. Given the Company’s front-end loaded 2023 development
program, the majority of the Company’s capital expenditures were
incurred in the first half of 2023.
- Return
on Average Capital
Employed(2): Achieved
return on average capital employed(2) of 25% during the Quarter and
18% over the last trailing twelve months.
- Cash and
Debt: As of September 30, 2023, the Company had a cash
balance of $123 million and net debt(2) of $499 million.
- Credit
Facility: Gran Tierra amended and restated the Company’s
credit facility with a market leader in the global commodities
industry. As part of the restatement, the initial commitment was
adjusted from $100 million to $50 million (maintaining the
potential option of up to an additional $50 million, subject to
approval by the lender). During the Quarter, the Company drew $50
million on the credit facility for settlement of the bond
exchanges. The Company expects to pay back this amount fully by
August 2024.
- Oil
Price Hedges: Subsequent to the end of the Quarter, the
Company entered into 15,000 BOPD put options from October 1, 2023
to March 31, 2024 with a floor price of $80.00 per bbl Brent and no
ceiling for a premium of $3.10 per BOPD.
-
Additional Key Financial Metrics:
- Capital
Expenditures: Capital expenditures of $43 million were
lower than the Prior Quarter’s level of $66 million and down from
$57 million compared to one year ago as a result of no wells being
drilled during the Quarter.
- Oil
Sales: Gran Tierra generated oil sales of $180 million, up
14% from the Prior Quarter and up 7% from one year ago. Compared to
one year ago, oil sales increased as a result of lower Castilla and
Vasconia differentials to the Brent oil price. Oil sales increased
compared to the Prior Quarter primarily due to an 11% increase in
the Brent oil price, partially offset by a 3% decrease in sales
volumes.
-
Operating
Netback(2)(3): The
Company’s operating netback(2)(3) was $40.87 per bbl, an increase
of 18% from the Prior Quarter and down 8% from one year ago.
Similar to oil sales, changes in operating netback relative to the
Prior Quarter were driven by an increase in the Brent oil price and
were partially offset by higher operating costs. Compared to one
year ago the change in operating netback was largely driven by a
12% decrease in Brent and higher operating expenses.
-
Operating Expenses: Gran Tierra’s operating
expenses remained consistent at $15.92 per bbl, compared to $15.86
per bbl in the Prior Quarter. Compared to one year ago, operating
expenses increased by 7% on a per bbl basis, due to higher lifting
costs associated with road and pipeline maintenance, power
generation due to increased compressed natural gas purchases and
higher diesel tariffs, and equipment rental associated with testing
exploratory wells. As a result of an El-Niño-induced drought, power
costs have increased across Colombia, which relies on
hydroelectricity for more than two-thirds of its installed power
capacity. In addition, operating costs increased due to the
appreciation of the Colombian peso versus the U.S. dollar.
- Quality
and Transportation Discounts: The Company’s quality and
transportation discount narrowed to $11.83 per bbl, down from
$14.10 per bbl in the Prior Quarter and down from $13.37 per bbl
one year ago. The Castilla oil differential narrowed to $6.64 per
bbl, down from $9.41 per bbl in the Prior Quarter and down from
$9.15 per bbl one year ago (Castilla is the benchmark for the
Company’s Middle Magdalena Valley Basin oil production). The
Vasconia differential narrowed to $3.59 per bbl, down from $5.53
per bbl in the Prior Quarter and down from $3.77 per bbl one year
ago (Vasconia is the benchmark for the Company’s Putumayo Basin oil
production). The current(1) Castilla differential is approximately
$7.11 per bbl and the Vasconia differential is approximately $3.45
per bbl.
- General
and Administrative (“G&A”) Expenses: G&A expenses
before stock-based compensation were $2.68 per bbl, down from $3.12
per bbl in the Prior Quarter and down from $2.95 when compared to
one year ago due to higher sales volumes in the Quarter.
- Cash
Netback(2): Cash netback per bbl was
$25.48, compared to $17.37 in the Prior Quarter as a result of an
increase in Brent price of $8.19 per bbl and a lower quality and
transportation discount. Compared to one year ago, cash netback per
bbl decreased by $7.94 from $33.42, despite a $11.78 per bbl
decrease in the Brent oil price over the same period.
Development Campaign:
- Following Gran
Tierra’s successful 2023 development drilling campaigns at
Acordionero and the northern extension of the Costayaco field, the
Company plans to accelerate its development program and expects to
commence drilling at both fields in December 2023. Upon completion
of the development drilling program in Costayaco (expected in March
2024), the Company plans to move the drilling rig to Ecuador to
begin the exploration drilling program.
Financial and Operational Highlights
(all amounts in $000s, except per share and bbl
amounts)
|
Three Months EndedSeptember 30, |
|
ThreeMonthsEndedJune 30, |
|
Nine Months EndedSeptember 30, |
|
2023 |
2022 |
|
2023 |
|
2023 |
2022 |
|
|
|
|
|
|
|
|
Net Income (Loss) |
$6,527 |
$38,663 |
|
$(10,825) |
|
$(13,998) |
$105,754 |
Per Share - Basic(4) |
$0.20 |
$1.05 |
|
$(0.33) |
|
$(0.42) |
$2.88 |
Per Share - Diluted(4) |
$0.20 |
$1.04 |
|
$(0.33) |
|
$(0.42) |
$2.84 |
|
|
|
|
|
|
|
|
Oil Sales |
$179,921 |
$168,397 |
|
$157,902 |
|
$482,013 |
$548,751 |
Operating Expenses |
(49,367) |
(41,837) |
|
(48,491) |
|
(139,227) |
(116,266) |
Transportation Expenses |
(3,842) |
(2,417) |
|
(3,691) |
|
(10,599) |
(7,764) |
Operating Netback(2)(3) |
$126,712 |
$124,143 |
|
$105,720 |
|
$332,187 |
$424,721 |
|
|
|
|
|
|
|
|
G&A Expenses Before Stock-Based
Compensation |
$8,307 |
$8,284 |
|
$9,549 |
|
$29,052 |
$23,910 |
G&A Stock-Based Compensation Expense
(Recovery) |
1,931 |
(170) |
|
317 |
|
3,748 |
6,376 |
G&A Expenses, Including Stock Based
Compensation |
$10,238 |
$8,114 |
|
$9,866 |
|
$32,800 |
$30,286 |
|
|
|
|
|
|
|
|
Adjusted EBITDA(2) |
$119,235 |
$116,089 |
|
$97,291 |
|
$306,391 |
$375,075 |
|
|
|
|
|
|
|
|
EBITDA(2) |
$115,382 |
$117,138 |
|
$91,794 |
|
$293,916 |
$369,936 |
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
$70,381 |
$108,824 |
|
$37,877 |
|
$157,511 |
$355,846 |
|
|
|
|
|
|
|
|
Funds Flow from
Operations(2) |
$79,000 |
$93,746 |
|
$53,106 |
|
$192,122 |
$284,681 |
|
|
|
|
|
|
|
|
Capital Expenditures |
$43,080 |
$57,035 |
|
$65,565 |
|
$179,707 |
$163,717 |
|
|
|
|
|
|
|
|
Free Cash Flow(2) |
$35,920 |
$36,711 |
|
$(12,459) |
|
$12,415 |
$120,964 |
|
|
|
|
|
|
|
|
Average Daily Volumes (BOPD) |
|
|
|
|
|
|
|
WI Production Before Royalties |
33,940 |
30,391 |
|
33,719 |
|
33,098 |
30,123 |
Royalties |
(7,164) |
(6,919) |
|
(6,515) |
|
(6,592) |
(6,948) |
Production NAR |
26,776 |
23,472 |
|
27,204 |
|
26,506 |
23,175 |
(Increase) Decrease in Inventory |
(380) |
44 |
|
67 |
|
(222) |
(141) |
Sales |
26,396 |
23,516 |
|
27,271 |
|
26,284 |
23,034 |
Royalties, % of WI Production Before
Royalties |
21% |
23% |
|
19% |
|
20% |
23% |
|
|
|
|
|
|
|
|
Per bbl |
|
|
|
|
|
|
|
Brent |
$85.92 |
$97.70 |
|
$77.73 |
|
$81.94 |
$102.48 |
One Month Forward Brent (“M+1”) Adjustment |
— |
(6.49) |
|
— |
|
— |
(2.23) |
Quality and Transportation Discount |
(11.83) |
(13.37) |
|
(14.10) |
|
(14.76) |
(12.98) |
Royalties |
(16.06) |
(17.81) |
|
(11.98) |
|
(13.58) |
(20.11) |
Average Realized Price |
58.03 |
60.03 |
|
51.65 |
|
53.60 |
67.16 |
Transportation Expenses |
(1.24) |
(0.86) |
|
(1.21) |
|
(1.18) |
(0.95) |
Average Realized Price Net of Transportation
Expenses |
56.79 |
59.17 |
|
50.44 |
|
52.42 |
66.21 |
Operating Expenses |
(15.92) |
(14.91) |
|
(15.86) |
|
(15.48) |
(14.23) |
Operating Netback(2)(3) |
40.87 |
44.26 |
|
34.58 |
|
36.94 |
51.98 |
G&A Expenses Before Stock-Based
Compensation |
(2.68) |
(2.95) |
|
(3.12) |
|
(3.23) |
(2.93) |
Realized Foreign Exchange (Loss) / Gain |
(0.64) |
1.83 |
|
(4.18) |
|
(1.77) |
0.69 |
Cash Settlements on Derivative Instruments |
— |
(0.08) |
|
— |
|
— |
(3.26) |
Interest Expense, Excluding Amortization of Debt Issuance
Costs |
(3.84) |
(3.80) |
|
(3.81) |
|
(3.85) |
(4.04) |
Interest Income |
0.09 |
— |
|
0.21 |
|
0.19 |
— |
Net Lease Payments |
0.18 |
0.16 |
|
0.15 |
|
0.17 |
0.11 |
Current Income Tax Expense |
(8.50) |
(6.00) |
|
(6.46) |
|
(7.08) |
(7.72) |
Cash Netback(2) |
$25.48 |
$33.42 |
|
$17.37 |
|
$21.37 |
$34.83 |
|
|
|
|
|
|
|
|
Share Information (000s) |
|
|
|
|
|
|
|
Common Stock Outstanding, End of
Period(4) |
33,288 |
35,815 |
|
33,287 |
|
33,288 |
35,815 |
Weighted Average Number of Shares of Common Stock
Outstanding - Basic(4) |
33,287 |
36,731 |
|
33,300 |
|
33,675 |
36,775 |
Weighted Average Number of Shares of Common Stock
Outstanding - Diluted(4) |
33,350 |
37,131 |
|
33,300 |
|
33,675 |
37,239 |
(1) Gran Tierra’s fourth quarter-to-date 2023
total average differentials are for the time period from October 1
to October 30, 2023.(2) Funds flow from operations, operating
netback, net debt, cash netback, return on average capital
employed, earnings before interest, taxes and depletion,
depreciation and accretion (“DD&A”)
(“EBITDA”) and
EBITDA adjusted for non-cash lease expense, lease payments, foreign
exchange gains or losses, stock-based compensation expense,
unrealized derivative instruments gains or losses, and other
financial instruments gains or losses (“Adjusted
EBITDA”), cash flow, free cash flow and net debt are
non-GAAP measures and do not have standardized meanings under
generally accepted accounting principles in the United States of
America (“GAAP”). Cash flow refers to funds flow
from operations. Free cash flow refers to funds flow from
operations less capital expenditures. Refer to “Non-GAAP Measures”
in this press release for descriptions of these non-GAAP measures
and, where applicable, reconciliations to the most directly
comparable measures calculated and presented in accordance with
GAAP.(3) Operating netback as presented is defined as oil sales
less operating and transportation expenses. See the table titled
Financial and Operational Highlights above for the components of
consolidated operating netback and corresponding reconciliation.(4)
Reflects our 1-for-10 reverse stock split that became effective
May 5, 2023.
Conference Call Information:Gran
Tierra will host its third quarter 2023 results conference call on
Wednesday, November 1, 2023, at 9:00 a.m. Mountain Time, 11:00 a.m.
Eastern Time. Interested parties may access the conference call by
registering at the following link:
https://register.vevent.com/register/BI3d4b404745c040cca3def3c065f9605a.
The call will also be available via webcast at
www.grantierra.com.
Corporate Presentation:Gran
Tierra’s Corporate Presentation has been updated and is available
on the Company website at www.grantierra.com.
Contact InformationFor 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
+1-403-265-3221
info@grantierra.com
About Gran Tierra Energy
Inc.Gran Tierra Energy Inc. together with its subsidiaries
is an independent international energy company currently focused on
oil and natural gas exploration and production in Colombia and
Ecuador. The Company is currently developing its existing portfolio
of assets in Colombia and Ecuador and will continue to pursue
additional new growth opportunities that would further strengthen
the Company’s portfolio. The Company’s common stock trades on the
NYSE American, the Toronto Stock Exchange and the London Stock
Exchange under the ticker symbol GTE. Additional information
concerning Gran Tierra is available at www.grantierra.com. 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.
Forward Looking Statements and Legal
Advisories:This press release contains opinions,
forecasts, projections, and other statements about future events or
results that constitute forward-looking statements within the
meaning of the United States Private Securities Litigation Reform
Act of 1995, Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and financial outlook and forward looking information within the
meaning of applicable Canadian securities laws (collectively,
“forward-looking statements”). The use of the words “expect,”
“plan,” “can,” “will,” “should,” “guidance,” “forecast,” “signal,”
“progress” and “believes,” derivations thereof and similar terms
identify forward-looking statements. In particular, but without
limiting the foregoing, this press release contains forward-looking
statements regarding: the Company’s expected future production,
capital expenditures and free cash flow, the Company’s targeted
cash balance and uses of excess free cash flow, including the
repayment of borrowings under its credit facility, the Company’s
plans regarding strategic investments, acquisitions and growth, the
Company’s drilling program and the Company’s expectations of
commodity prices and its positioning for the remainder of 2023 and
in to 2024. The forward-looking statements contained in this press
release reflect several material factors and expectations and
assumptions of Gran Tierra including, without limitation, that Gran
Tierra will continue to conduct its operations in a manner
consistent with its current expectations, pricing and cost
estimates (including with respect to commodity pricing and exchange
rates), and the general continuance of assumed operational,
regulatory and industry conditions in Colombia and Ecuador, and the
ability of Gran Tierra to execute its business and operational
plans in the manner currently planned.
Among the important factors that could cause
actual results to differ materially from those indicated by the
forward-looking statements in this press release are: our
operations are located in South America and unexpected problems can
arise due to guerilla activity, strikes, local blockades or
protests; technical difficulties and operational difficulties may
arise which impact the production, transport or sale of our
products; other disruptions to local operations; global health
events; global and regional changes in the demand, supply, prices,
differentials or other market conditions affecting oil and gas,
including inflation and changes resulting from a global health
crisis, geopolitical events, including the ongoing conflicts in
Ukraine and the Gaza region, or from the imposition or lifting of
crude oil production quotas or other actions that might be imposed
by OPEC, such as its recent decision to cut production and other
producing countries and resulting company or third-party actions in
response to such changes; changes in commodity prices, including
volatility or a prolonged decline in these prices relative to
historical or future expected levels; the risk that current global
economic and credit conditions may impact oil prices and oil
consumption more than we currently predict. which could cause
further modification of our strategy and capital spending program;
prices and markets for oil and natural gas are unpredictable and
volatile; the effect of hedges; the accuracy of productive capacity
of any particular field; geographic, political and weather
conditions can impact the production, transport or sale of our
products; our ability to execute its business plan and realize
expected benefits from current initiatives; the risk that
unexpected delays and difficulties in developing currently owned
properties may occur; the ability to replace reserves and
production and develop and manage reserves on an economically
viable basis; the accuracy of testing and production results and
seismic data, pricing and cost estimates (including with respect to
commodity pricing and exchange rates); the risk profile of planned
exploration activities; the effects of drilling down-dip; the
effects of waterflood and multi-stage fracture stimulation
operations; the extent and effect of delivery disruptions,
equipment performance and costs; actions by third parties; the
timely receipt of regulatory or other required approvals for our
operating activities; the failure of exploratory drilling to result
in commercial wells; unexpected delays due to the limited
availability of drilling equipment and personnel; volatility or
declines in the trading price of our common stock or bonds; the
risk that we do not receive the anticipated benefits of government
programs, including government tax refunds; our ability to comply
with financial covenants in its credit agreement and indentures and
make borrowings under any credit agreement; and the risk factors
detailed from time to time in Gran Tierra’s periodic reports filed
with the Securities and Exchange Commission, including, without
limitation, under the caption “Risk Factors” in Gran Tierra’s
Annual Report on Form 10-K for the year ended December 31, 2022
filed February 21, 2023 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.
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 2023 outlook
are based prove incorrect may increase the later the period to
which the outlook relates. In particular, the unprecedented nature
of 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. In addition, historical, current and
forward-looking sustainability-related statements may be based on
standards for measuring progress that are still developing,
internal controls and processes that continue to evolve, and
assumptions that are subject to change in the future.
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
income or loss, cash flow from operating activities 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 to not imply that more emphasis should be placed on
the non-GAAP measure.
Operating netback as presented is defined as oil
sales less operating and transportation expenses. See the table
entitled Financial and Operational Highlights above for the
components of consolidated operating netback and corresponding
reconciliation.
Return on average capital employed as presented
is defined as earnings before interest and taxes
("EBIT"; annualized, if the period is other than
one year) divided by average capital employed (total assets minus
cash and current liabilities; average of the opening and closing
balances for the period).
|
|
Three MonthsEndedSeptember 30, |
|
Twelve MonthTrailingSeptember
30, |
|
As atSeptember 30, |
Return on Average Capital Employed - (Non-GAAP) Measure
($000s) |
|
2023 |
|
2023 |
|
2023 |
Net Income |
|
$ |
6,527 |
|
|
$ |
19,277 |
|
|
|
|
|
Adjustments to
reconcile net income to EBIT: |
|
|
|
|
|
|
|
|
Interest Expense |
|
|
13,503 |
|
|
|
48,767 |
|
|
|
|
|
Income Tax Expense |
|
|
40,333 |
|
|
|
112,914 |
|
|
|
|
|
Earnings before
interest and income tax |
|
$ |
60,363 |
|
|
$ |
180,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
|
|
|
$ |
1,386,035 |
|
Less Current Liabilities |
|
|
|
|
|
|
279,748 |
|
Less Cash and Cash Equivalents |
|
|
|
|
|
|
123,216 |
|
Capital
Employed |
|
|
|
|
|
$ |
983,071 |
|
|
|
|
|
|
|
|
|
|
Annualized EBIT* |
|
$ |
241,452 |
|
|
|
|
|
|
|
Divided by Average Capital Employed |
|
|
983,071 |
|
|
|
983,071 |
|
|
|
|
|
Return on Average
Capital Employed |
|
|
25 |
% |
|
|
18 |
% |
|
|
|
|
*Annualized EBIT was calculated for the three
months ended September 30, 2023, by multiplying the quarter-to-date
EBIT by 4.
Cash netback as presented is defined as net
income or loss adjusted for depletion, depreciation and accretion
(“DD&A”) expenses, deferred tax expense or recovery,
stock-based compensation expense or recovery, amortization of debt
issuance costs, non-cash lease expense, lease payments, unrealized
foreign exchange gain or loss, unrealized derivative instruments
gain or loss and other gain or loss. 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. A reconciliation from net income or loss to cash netback
is as follows:
|
Three Months EndedSeptember 30, |
|
ThreeMonthsEndedJune 30, |
|
Nine Months EndedSeptember 30, |
Cash Netback - (Non-GAAP) Measure ($000s) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
2022 |
|
Net income
(loss) |
$ |
6,527 |
|
$ |
38,663 |
|
|
$ |
(10,825 |
) |
|
$ |
(13,998 |
) |
$ |
105,754 |
|
Adjustments to
reconcile net income (loss) to cash netback |
|
|
|
|
|
|
|
DD&A expenses |
|
55,019 |
|
|
45,320 |
|
|
|
56,209 |
|
|
|
162,949 |
|
|
128,499 |
|
Deferred tax expense |
|
13,990 |
|
|
4,914 |
|
|
|
13,975 |
|
|
|
43,242 |
|
|
36,868 |
|
Stock-based compensation expense (recovery) |
|
1,931 |
|
|
(170 |
) |
|
|
317 |
|
|
|
3,748 |
|
|
6,376 |
|
Amortization of debt issuance costs |
|
1,594 |
|
|
751 |
|
|
|
1,019 |
|
|
|
3,394 |
|
|
2,769 |
|
Non-cash lease expense |
|
1,235 |
|
|
851 |
|
|
|
1,109 |
|
|
|
3,488 |
|
|
2,009 |
|
Lease payments |
|
(676 |
) |
|
(402 |
) |
|
|
(636 |
) |
|
|
(1,918 |
) |
|
(1,134 |
) |
Unrealized foreign exchange (gain) loss |
|
(266 |
) |
|
6,636 |
|
|
|
(8,062 |
) |
|
|
(7,814 |
) |
|
6,138 |
|
Unrealized derivative instruments gain |
|
— |
|
|
(219 |
) |
|
|
— |
|
|
|
— |
|
|
— |
|
Other gain |
|
(354 |
) |
|
(2,598 |
) |
|
|
— |
|
|
|
(969 |
) |
|
(2,598 |
) |
Cash
netback |
$ |
79,000 |
|
$ |
93,746 |
|
|
$ |
53,106 |
|
|
$ |
192,122 |
|
$ |
284,681 |
|
EBITDA, as presented, is defined as net income
or loss adjusted for DD&A expenses, interest expense and income
tax expense or recovery. Adjusted EBITDA, as presented, is defined
as EBITDA adjusted for non-cash lease expense, lease payments,
foreign exchange gain or loss, stock-based compensation expense or
recovery, unrealized derivative instruments gain or loss, other
gain or loss, and other financial instruments gain or loss.
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:
|
Three Months EndedSeptember 30, |
|
ThreeMonthsEndedJune 30, |
|
Nine Months EndedSeptember 30, |
|
TwelveMonthTrailingSeptember
30, |
EBITDA - (Non-GAAP) Measure ($000s) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
Net income
(loss) |
$ |
6,527 |
|
$ |
38,663 |
|
|
$ |
(10,825 |
) |
|
$ |
(13,998 |
) |
$ |
105,754 |
|
|
$ |
19,277 |
|
Adjustments to
reconcile net income (loss) to EBITDA and Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
55,019 |
|
|
45,320 |
|
|
|
56,209 |
|
|
|
162,949 |
|
|
128,499 |
|
|
|
214,730 |
|
Interest expense |
|
13,503 |
|
|
11,421 |
|
|
|
12,678 |
|
|
|
38,017 |
|
|
35,743 |
|
|
|
48,767 |
|
Income tax expense |
|
40,333 |
|
|
21,734 |
|
|
|
33,732 |
|
|
|
106,948 |
|
|
99,940 |
|
|
|
112,914 |
|
EBITDA |
$ |
115,382 |
|
$ |
117,138 |
|
|
$ |
91,794 |
|
|
$ |
293,916 |
|
$ |
369,936 |
|
|
$ |
395,688 |
|
Non-cash lease expense |
|
1,235 |
|
|
851 |
|
|
|
1,109 |
|
|
|
3,488 |
|
|
2,009 |
|
|
|
4,297 |
|
Lease payments |
|
(676 |
) |
|
(402 |
) |
|
|
(636 |
) |
|
|
(1,918 |
) |
|
(1,134 |
) |
|
|
(2,450 |
) |
Foreign exchange loss |
|
1,717 |
|
|
1,489 |
|
|
|
4,707 |
|
|
|
8,126 |
|
|
486 |
|
|
|
10,218 |
|
Stock-based compensation expense (recovery) |
|
1,931 |
|
|
(170 |
) |
|
|
317 |
|
|
|
3,748 |
|
|
6,376 |
|
|
|
6,421 |
|
Unrealized derivative instruments gain |
|
— |
|
|
(219 |
) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Other gain |
|
(354 |
) |
|
(2,598 |
) |
|
|
— |
|
|
|
(969 |
) |
|
(2,598 |
) |
|
|
(969 |
) |
Other financial instruments gain |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(7 |
) |
Adjusted
EBITDA |
$ |
119,235 |
|
$ |
116,089 |
|
|
$ |
97,291 |
|
|
$ |
306,391 |
|
$ |
375,075 |
|
|
$ |
413,198 |
|
Funds flow from operations, as presented, is
defined as net income or loss adjusted for DD&A expenses,
deferred tax expense or recovery, stock-based compensation expense
or recovery, amortization of debt issuance costs, non-cash lease
expense, lease payments, unrealized foreign exchange gain or loss,
unrealized derivative instruments gain or loss, other gain or loss
and other financial instruments gain or loss. Management uses this
financial measure to analyze performance and income or loss
generated by our principal business activities prior to the
consideration of how non-cash items affect that income or loss, 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:
|
Three Months EndedSeptember 30, |
|
ThreeMonthsEndedJune 30, |
|
Nine Months EndedSeptember 30, |
|
TwelveMonthTrailingSeptember 30, |
Funds Flow From Operations - (Non-GAAP)
Measure ($000s) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
Net income
(loss) |
$ |
6,527 |
|
$ |
38,663 |
|
|
$ |
(10,825 |
) |
|
$ |
(13,998 |
) |
$ |
105,754 |
|
|
$ |
19,277 |
|
Adjustments to
reconcile net income (loss) to funds flow from
operations |
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
55,019 |
|
|
45,320 |
|
|
|
56,209 |
|
|
|
162,949 |
|
|
128,499 |
|
|
|
214,730 |
|
Deferred tax expense |
|
13,990 |
|
|
4,914 |
|
|
|
13,975 |
|
|
|
43,242 |
|
|
36,868 |
|
|
|
31,714 |
|
Stock-based compensation expense (recovery) |
|
1,931 |
|
|
(170 |
) |
|
|
317 |
|
|
|
3,748 |
|
|
6,376 |
|
|
|
6,421 |
|
Amortization of debt issuance costs |
|
1,594 |
|
|
751 |
|
|
|
1,019 |
|
|
|
3,394 |
|
|
2,769 |
|
|
|
4,153 |
|
Non-cash lease expense |
|
1,235 |
|
|
851 |
|
|
|
1,109 |
|
|
|
3,488 |
|
|
2,009 |
|
|
|
4,297 |
|
Lease payments |
|
(676 |
) |
|
(402 |
) |
|
|
(636 |
) |
|
|
(1,918 |
) |
|
(1,134 |
) |
|
|
(2,450 |
) |
Unrealized foreign exchange (gain) loss |
|
(266 |
) |
|
6,636 |
|
|
|
(8,062 |
) |
|
|
(7,814 |
) |
|
6,138 |
|
|
|
(3,701 |
) |
Unrealized derivative instruments gain |
|
— |
|
|
(219 |
) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Other gain |
|
(354 |
) |
|
(2,598 |
) |
|
|
— |
|
|
|
(969 |
) |
|
(2,598 |
) |
|
|
(969 |
) |
Other financial instruments gain |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(7 |
) |
Funds flow from
operations |
$ |
79,000 |
|
$ |
93,746 |
|
|
$ |
53,106 |
|
|
$ |
192,122 |
|
$ |
284,681 |
|
|
$ |
273,465 |
|
Capital expenditures |
$ |
43,080 |
|
$ |
57,035 |
|
|
$ |
65,565 |
|
|
$ |
179,707 |
|
$ |
163,717 |
|
|
$ |
252,594 |
|
Free cash
flow |
$ |
35,920 |
|
$ |
36,711 |
|
|
$ |
(12,459 |
) |
|
$ |
12,415 |
|
$ |
120,964 |
|
|
$ |
20,871 |
|
Net debt as of September 30, 2023, was $499
million, calculated using the sum of 6.25% Senior Notes, 7.75%
Senior Notes, and the Credit Facility excluding deferred financing
fees totaling $622 million, less cash and cash equivalents of $123
million.
Presentation of Oil and Gas
Information
All reserves values and ancillary information
contained in this press release have been prepared by the Company’s
independent qualified reserves evaluator McDaniel & Associates
Consultants Ltd. (“McDaniel”) in a report with an effective date of
June 30, 2023 (the “GTE McDaniel Reserves Report”) and 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”), unless
otherwise expressly stated.
Estimates of net present value and future net
revenue contained herein do not necessarily represent fair market
value. 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 will be attained and variances
could be material. All reserves assigned in the GTE McDaniel
Reserves Report are located in Colombia and Ecuador and presented
on a consolidated basis by foreign geographic area. There are
numerous uncertainties inherent in estimating quantities of crude
oil reserves. The reserve 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.
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.
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.
This press release contains certain oil and gas
metrics, including operating netback and cash netback, 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.
These metrics are calculated as described in this press release and
management believes that they are useful supplemental measures for
the reasons described in this press release.
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.
Gran Tierra Energy (TSX:GTE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Gran Tierra Energy (TSX:GTE)
Historical Stock Chart
From Sep 2023 to Sep 2024