Gran Tierra Energy Inc.
(“Gran Tierra” or
the “Company”) (NYSE American:GTE) (TSX:GTE) (LSE:
GTE) today announced its 2024 capital budget and
production guidance. All dollar amounts are in United States
dollars and all production volumes are on a working interest before
royalties basis and are expressed in barrels
(
“bbl”) of oil per day (
“BOPD”),
unless otherwise stated.
Key Highlights:
- 2024
Guidance:
- Gran Tierra is
forecasting the following ranges for the Company’s 2024
budget:
2024 Budget |
Low Case |
Base Case |
High Case |
Average Brent Oil Price ($/bbl) |
70.00 |
80.00 |
90.00 |
Total Company Production (BOPD) |
32,000-35,000 |
32,000-35,000 |
32,000-35,000 |
Operating Netback4 ($ million) |
380-420 |
450-490 |
530-570 |
EBITDA3 ($ million) |
335-395 |
400-460 |
480-540 |
Cash Flow1 ($ million) |
240-280 |
280-320 |
330-370 |
Total Capital ($ million) |
190-220 |
210-240 |
210-240 |
Free Cash Flow2 ($ million) |
20-90 |
40-110 |
90-160 |
Number of Development Wells (gross) |
13-17 |
13-17 |
13-17 |
Number of Exploration Wells (gross) |
4-7 |
6-9 |
6-9 |
- 2024
Base Capital Program – Profitable Production Growth and High Impact
Near-Field Exploration:
- Building on a
successful development campaign in 2023, Gran Tierra plans to
continue to grow production, while also seeking to add new reserves
and future growth through exploration. A key area of focus for the
Company, that is underpinned by the 2023 announcement of the
Suroriente Continuation Agreement, is the South Putumayo and
Ecuador development and exploration corridor which includes the
Suroriente, Alea-1848A, Put-7, Charapa and Chanangue Blocks. This
corridor offers material growth potential through development and
exploration. This core growth area for the Company is expected to
provide years of drilling opportunities and profitable production
growth.
-
Development: Gran Tierra expects to allocate
approximately 55-60% of its 2024 capital program towards
development activities in its core assets in Colombia, including:
-
Acordionero: the Company plans to drill 6 to 8
development wells in the Acordionero oil field in the Middle
Magdalena Valley Basin. Acordionero’s 2024 plans also include
drilling pad extensions and ongoing waterflood optimization.
-
Costayaco: in this oil field, located in the
northern Putumayo Basin, Gran Tierra plans to drill 3 to 5
development wells.
-
Suroriente: in the southern Putumayo Basin, Gran
Tierra plans to commence development drilling later in second half
2024 in the Cohembi oil field located in the Suroriente Block,
which would be the first wells drilled by the Company in this block
since 2018. In addition to development drilling, the Company is
also planning facility expansion, an increase in gas to power
generation, new development well pads and social investment in the
area. With the planned investments in 2024, production is expected
to materially increase in 2025 and 2026.
-
Exploration: Approximately 40-45% of the Company’s
2024 capital program is expected to be allocated to high impact
near-field exploration activities and the drilling of 6 to 9
exploration wells in Colombia and Ecuador in the Base Case and High
Case. Gran Tierra’s 2024 exploration drilling is planned to follow
up on the encouraging results from the Company’s 2022 exploration
program. The Company focuses its exploration program on short-cycle
time, near-field prospects in proven basins with access to
transportation infrastructure. In addition to drilling exploration
wells, the Company plans to commence a 238 km2 3D seismic program
over the Charapa Block in Ecuador and pre-invest in advancing
drilling licenses and building pads for the 2025 exploration
program in Colombia and Ecuador.
- Fully
Funded Capital Program Generating Free Cash
Flow2: Gran Tierra’s
mid-point Base Case 2024 capital budget of $225 million is expected
to be fully funded from the Base Case 2024 mid-point Cash Flow1
forecast of $300 million, based on an assumed average $80.00/bbl
Brent oil price. Gran Tierra remains focused on generating strong
Free Cash Flow2, ongoing net debt5 reduction and shareholder
returns via share buybacks.
- Share
Buybacks: During 2024, Gran Tierra plans to allocate up to
approximately 50% of its Free Cash Flow to share buybacks in the
Base Case. During 2023, the Company repurchased approximately 7.1%
of its outstanding shares.
- Control
of Capital Program: Gran Tierra holds a 100% working
interest in and operatorship of the Company’s major assets in
Colombia and Ecuador. This full control provides the Company with
the flexibility to swiftly optimize its development and exploration
programs in response to fluctuations, whether positive or negative,
in oil prices.
Gran Tierra’s Commitment to Go “Beyond
Compliance” in Environmental, Social and Governance
- 2023 was the
Company’s safest year on record, with a total of 16.3 million
person-hours without a Lost Time Injury (LTI), and a Total
Recordable Case Frequency (TRCF) of 0.02, which places Gran Tierra
within the region`s top quartile in safety performance.
- Gran Tierra is
pleased to announce that the Company has been accepted by the
Voluntary Principles Initiative (VPI) as an official member of the
Voluntary Principles for Security and Human Rights world-wide
initiative. This appointment strengthens the Company’s commitment
to the responsible implementation of Human Rights policies and
practices in all our operations.
- In 2023, Gran
Tierra signed a four-year extension with the prominent
environmental NGO Conservation International to continue and expand
upon the Company’s highly successful NaturAmazonas program, the
largest reforestation program of its nature in Colombia. This
extension continues to harmonize economic development and
conservation in the Piedmont region of the Putumayo department in
southern Colombia.
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented: “Gran Tierra Energy is looking
forward to a successful and profitable 2024 and we are committed to
delivering value to all our stakeholders by focusing on safety,
sustainable growth, and robust return of capital to shareholders.
Our 2024 budget, expected to be fully funded by Cash Flow1, takes a
balanced, returns-focused approach to capital allocation. We plan
to focus on four key areas: profitably growing reserves and
production in our existing assets, prudently pursuing high impact
exploration in our portfolio, fortifying our balance sheet through
net debt5 reduction, and executing share buybacks. During 2024, we
are targeting a net debt5 to EBITDA3 ratio of 0.8 to 1.2 times.
We are excited to restart drilling in our
high-impact exploration portfolio in 2024 which may present us with
opportunities for substantial growth in both Ecuador and Colombia.
Having meticulously high-graded our exploration portfolio, we are
dedicated to pursuing transformative opportunities that could
enhance our growth trajectory and bring significant value to our
stakeholders.
We believe Gran Tierra is well-positioned to
navigate the current volatile environment with our low base
decline, conventional oil asset base and our full operational
control of capital allocation and timing. As we profitably pursue
our operational and financial objectives, we remain steadfast in
our commitment to the well-being of our employees and the
communities in which we operate, recognizing their vital importance
to our success.”
Operations Update:
-
Production:
- Gran Tierra
achieved total company average production in 2023 of approximately
32,650 BOPD, an increase of 6% from 2022 and 23% from 2021, and was
within the Company’s prescribed 2023 guidance.
- Colombia
Development:
- Following Gran
Tierra’s successful 2023 development drilling campaigns at the
Acordionero and Costayaco fields, the Company has accelerated its
2024 development program and, in mid-December 2023, commenced
ongoing multi-well drilling campaign in both fields.
-
Costayaco Development Campaign (Putumayo Basin):
- Since December
2023, Gran Tierra has so far drilled 2 oil wells.
- The first well
in the current drilling campaign, the CYC-56, was spud on December
16, 2023. The well has been completed and is now on production and
yielding encouraging results. The Company is completing the second
well, the CYC-57, with production testing planned during January
2024.
- During January
8-15, 2024, the CYC-56 produced on jet pump at a stable average
rate of 2,118 BOPD (30-degree API gravity) with a watercut of 1.4%
and a gas-oil ratio of 141 standard cubic feet per stock tank
bbl.
- The CYC-56
provides further evidence that multiple additional drilling
opportunities may exist in the northern region of Costayaco where
the Company plans to target un-swept portions of oil with future
wells.
- During all of
2024, the Company plans to drill a total of 3 to 5 development
wells in Costayaco.
-
Acordionero Development Campaign (Middle Magdalena Valley
Basin):
- Since December
2023, Gran Tierra has drilled 4 wells so far (3 oil producers and 1
water injector) in Acordionero, with results meeting
expectations.
- During all of
2024, the Company plans to drill a total of 6 to 8 development
wells in Acordionero.
Corporate Presentation:
- Gran Tierra’s Corporate
Presentation has been updated and is available at
www.grantierra.com.
1 “Cash Flow” refers to line item “net cash
provided by operating activities” under generally accepted
accounting principles in the United States of America (“GAAP”).2
“Free Cash Flow” is a non-GAAP measure and does not have a
standardized meaning under GAAP. Free cash flow is defined as “net
cash provided by operating activities” less capitalexpenditures.
Refer to "Non-GAAP Measures" in this press release. Forecast 2024
free cash flow of $175 million “before exploration” is equal to the
Base Case midpoint cash flow of $300 million less the Base Case
midpoint total capital of $225 million, with Base Case midpoint
exploration -only capital of approximately $100 million added back.
Forecast 2024 Free Cash Flow of $75 million “after exploration” is
equal to the Base Case midpoint cash flow of $300 million less the
Base Case midpoint total capital of $225 million. Free Cash Flows
in the table above are the midpoints of the ranges of cash flows
less the midpoints of the ranges of total capital expenditures for
each oil price scenario.3 Earnings before interest, taxes and
depletion, depreciation and accretion (“EBITDA”)
is a non-GAAP measure and does not have a standardized meaning
under GAAP. Refer to "Non-GAAP Measures" in this press release.4
“Operating netback” is a non-GAAP measures and does not have
standardized meaning under GAAP. Refer to “Non-GAAP Measures” in
this press release.5 Net debt is defined as GAAP total debt before
deferred financing fees less cash.
Contact Information
For investor and media inquiries please contact:
Gary GuidryPresident & Chief Executive Officer
Ryan EllsonExecutive Vice President & Chief Financial
Officer
Rodger TrimbleVice President, Investor Relations
+1-403-265-3221
info@grantierra.com
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 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. Information on the Company's website (including
the Corporate Presentation referenced above) does not constitute a
part of this press release. Investor inquiries may be directed to
info@grantierra.com or (403) 265-3221.
Gran Tierra's Securities and Exchange Commission
filings are available on the SEC website at http://www.sec.gov. The
Company’s Canadian securities regulatory filings are available on
SEDAR at http://www.sedar.com and UK regulatory filings are
available on the National Storage Mechanism website at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Forward Looking Statements and Legal
Advisories:
This press release contains opinions, forecasts,
projections, and other statements about future events or results
that constitute forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and
financial outlook and forward looking information within the
meaning of applicable Canadian securities laws (collectively,
“forward-looking statements,” which can be identified by such terms
as “expect”, “plan”, “can,” “will,” “should,” “guidance,”
“forecast,” “signal,” “measures taken to” and “believes”,
derivations thereof and similar terms identify forward-looking
statements. Such forward-looking statements include, but are not
limited to, the Company’s capital budget amount and uses; ability
of hedges to protect cash flows, the Company’s strategies related
to drilling and operation activities; expectations regarding
reservoir prospects and production amounts; future well results
(including initial oil production rates and productive capacity
based on past performance); expected future net cash provided by
operating activities (described in this press release as “cash
flow”), free cash flow, operating netback, EBITDA and certain
associated metrics; anticipated capital expenditures, including the
location and impact of capital expenditures; operating and general
and administrative costs; production guidance for 2024; and the
Company’s expectations as to debt repayment, share repurchases and
its positioning for 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 current
or, where applicable, assumed operational, regulatory and industry
conditions in Colombia and Ecuador and areas of potential
expansion, and the ability of Gran Tierra to execute its 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: Gran Tierra’s
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 Gran
Tierra’s 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, 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 Gran Tierra currently
predicts. Which could cause Gran Tierra to further modify its
strategy and capital spending program; prices and markets for oil
and natural gas are unpredictable and volatile; the 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 Gran Tierra’s products; the
ability of Gran Tierra to execute its business plan and realize
expected benefits from current initiatives; the risk that
unexpected delays and difficulties in developing currently owned
properties may occur; the ability to replace reserves and
production and develop and manage reserves on an economically
viable basis; the accuracy of testing and production results and
seismic data, pricing and cost estimates (including with respect to
commodity pricing and exchange rates); the risk profile of planned
exploration activities; the effects of drilling down-dip; the
effects of waterflood and multi-stage fracture stimulation
operations; the extent and effect of delivery disruptions,
equipment performance and costs; actions by third parties; the
timely receipt of regulatory or other required approvals for Gran
Tierra’s 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 Gran Tierra’s common stock or
bonds; the risk that Gran Tierra does not receive the anticipated
benefits of government programs, including government tax refunds;
Gran Tierra’s ability to comply with financial covenants in its
credit agreement and indentures and make borrowings under its
credit agreement; and the risk factors detailed from time to time
in Gran Tierra's periodic reports filed with the Securities and
Exchange Commission, including, without limitation, under the
caption "Risk Factors" in Gran Tierra's Annual Report on Form 10-K
for the year ended December 31, 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.
Guidance is uncertain, particularly when given over extended
periods of time, and results may be materially different. Although
the current capital spending program and long term strategy of Gran
Tierra is 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 financing position. In particular, the
unprecedented nature of the current economic downturn, and industry
decline may make it particularly difficult to identify risks or
predict the degree to which identified risks will impact Gran
Tierra’s business and financial condition. All forward-looking
statements are made as of the date of this press release and the
fact that this press release remains available does not constitute
a representation by Gran Tierra that Gran Tierra believes these
forward-looking statements continue to be true as of any subsequent
date. Actual results may vary materially from the expected results
expressed in forward-looking statements. Gran Tierra disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law. Gran
Tierra's forward-looking statements are expressly qualified in
their entirety by this cautionary statement.
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, taxes and certain expenses and costs 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 2024. These projections contain forward-looking
statements and are based on a number of material assumptions and
factors set out above. Actual results may differ significantly from
the projections presented herein. The actual results of Gran
Tierra’s operations for any period could vary from the amounts set
forth in these projections, and such variations may be material.
See above for a discussion of the risks that could cause actual
results to vary. The future-oriented financial information and
financial outlooks contained in this press release have been
approved by management as of the date of this press release.
Readers are cautioned that any such financial outlook and
future-oriented financial information contained herein should not
be used for purposes other than those for which it is disclosed
herein. The Company and its management believe that the prospective
financial information has been prepared on a reasonable basis,
reflecting management’s best estimates and judgments, and
represent, to the best of management’s knowledge and opinion, the
Company’s expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results.
Presentation of Oil and Gas
Information
This press release contains certain oil and gas
metrics, including operating 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.
Such metrics are calculated as described in this press release and
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.
References to a formation where evidence of
hydrocarbons has been encountered is not necessarily an indicator
that hydrocarbons will be recoverable in commercial quantities or
in any estimated volume. Gran Tierra’s reported production is a mix
of light crude oil and medium and heavy crude oil for which there
is no precise breakdown since the Company’s oil sales volumes
typically represent blends of more than one type of crude oil. 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.
Non-GAAP Measures
This press release includes forward-looking
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 an alternative to net income or 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, it may not be comparable to similar
measures used by other companies. These non-GAAP financial measures
are presented along with the corresponding GAAP measure so as to
not imply that more emphasis should be placed on the non-GAAP
measure.
Gran Tierra is unable to provide forward-looking
net income, net cash provided by operating activities, and oil and
gas sales, the GAAP measures most directly comparable to the
non-GAAP measures EBITDA, free cash flow and operating netback,
respectively, due to the impracticality of quantifying certain
components required by GAAP as a result of the inherent volatility
in the value of certain financial instruments held by the Company
and the inability to quantify the effectiveness of commodity price
derivatives used to manage the variability in cash flows associated
with the forecasted sale of its oil production and changes in
commodity prices.
Operating netback as presented is defined as
projected 2024 oil and gas sales less projected 2024 operating and
transportation expenses. The most directly comparable GAAP measures
are oil and gas sales and oil and gas sales price, respectively.
Management believes that operating netback is useful supplemental
measures for management and investors to analyze financial
performance and provides an indication of the results generated by
our principal business activities prior to the consideration of
other income and expenses. Gran Tierra is unable to provide a
quantitative reconciliation of either forward-looking operating
netback to its most directly comparable forward-looking GAAP
measure because management cannot reliably predict certain of the
necessary components of such forward-looking GAAP measures.
EBITDA as presented is defined as projected 2024
net income adjusted for DD&A expenses, interest expense and
income tax expense or recovery. The most directly comparable GAAP
measure is net income. 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, and believes that this financial measure
is also useful supplemental information for investors to analyze
performance and our financial results. Gran Tierra is unable to
provide a quantitative reconciliation of forward-looking EBITDA 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.
Free cash flow as presented is defined as GAAP
projected “net cash provided by operating activities” less
projected 2024 capital spending. The most directly comparable GAAP
measure is net cash provided by operating activities. Management
believes that free cash flow is a useful supplemental measure for
management and investors to in order to evaluate the financial
sustainability of the Company’s business. Gran Tierra is unable to
provide a quantitative reconciliation of forward-looking free cash
flow 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.
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