Gran Tierra Energy, Inc. Gran Tierra Energy Inc. Announces Operational Update Highlighted By Resumption Of Production At Seve...

 
TIDMGTE 
 
   CALGARY, Alberta, Sept. 22, 2020 (GLOBE NEWSWIRE) -- Gran Tierra Energy 
Inc. ("Gran Tierra" or the "Company") (NYSE American:GTE) (TSX:GTE) 
(LSE:GTE), today announced an operational update. All dollar amounts are 
in United States ("U.S.") dollars and production amounts are on an 
average working interest before royalties ("WI") basis unless otherwise 
indicated. Per barrel ("bbl") of oil equivalent ("BOE") amounts are 
based on WI sales before royalties. 
 
   Key Highlights: 
 
 
   -- Production Restarted: during third quarter 2020 to date (July 1-September 
      21, 2020), production has averaged approximately 18,700 BOE per day 
      ("BOEPD"); during September 1-21, 2020, production has increased to an 
      approximate average of 21,250 BOEPD (second quarter 2020 averaged 20,165 
      BOEPD); Gran Tierra's oil production volumes have been positively 
      impacted by the resumption of production at the Suroriente and PUT-7 
      Blocks in the southern Putumayo region, as well as at several minor 
      fields, and by the recommencement of workover activities at the 
      Acordionero oil field 
 
   -- Waterfloods Outperforming: waterflood response across all of Gran 
      Tierra's core assets has continued to outperform management's 
      expectations; in particular, Acordionero has continued to see material 
      increases in reservoir pressures during third quarter 2020 to date; the 
      continued focus on surveillance, analysis and optimization of 
      Acordionero's waterflood has led to a shallowing of the field's oil 
      production decline rate 
 
   -- Resumption of Operations: with the recent partial recovery in oil prices 
      and tightening of differentials, Gran Tierra's operations team has 
      seamlessly restarted several field activities throughout the Company's 
      Colombian portfolio, in strict accordance with COVID-19 safety protocols 
      for the Company's employees and local communities; Gran Tierra has 
      performed in excess of 2,500 COVID-19 tests and managed to safely move 
      more than 1,500 employees in and out of the Company's operations during 
      five separate crew-changes since the pandemic started; although the 
      evolving situation with the COVID-19 pandemic may impact the timing of 
      current and planned activities, Gran Tierra remains confident that its 
      COVID-19 protocols should allow ongoing progress in the resumption of 
      operations 
 
          -- Resumption of Acordionero Workover and Development Activities 
             (100% WI): 
 
                 -- Acordionero Workover Activity Underway: the first workover 
                    rig restarted operations on September 1, 2020 and is 
                    currently on its third workover, the AC-58 oil well; the 
                    AC-52 and AC-53 oil wells have already been returned to 
                    production on schedule and under budget; this first 
                    workover rig is forecast to continue operations in the 
                    field through the end of 2020 and into first quarter 2021; 
                    a second workover rig is expected to arrive at Acordionero 
                    in October 2020 to accelerate well workover activity; a 
                    total of 10 to 12 offline oil wells are expected to be 
                    worked over by 2020 year-end to restore production; the 
                    total combined productive capacity of the 10 highest 
                    priority wells for workover is estimated to be 
                    approximately 3,500 bbl of oil per day ("BOPD"), with 
                    weighted averages for water cut of 13%, gas-oil ratio of 
                    639 standard cubic feet per bbl and API oil gravity of 17 
                    degrees (based on 30-day averages prior to each well going 
                    offline earlier this year) 
 
                 -- Acordionero Development Drilling Expected To Commence 
                    Q4/2020: a drilling rig is expected to restart operations 
                    during fourth quarter 2020 to drill 1 to 2 new oil wells by 
                    2020 year-end; these new wells are expected to begin 
                    production during first quarter 2021; the drilling rig is 
                    forecast to continue drilling new development oil wells at 
                    Acordionero throughout 2021; the next 10 planned wells (8 
                    oil producers and 2 water injectors) are scheduled to be 
                    drilled from the new southwest pad currently under 
                    construction; each of these new wells is expected to have 
                    an initial oil production rate of approximately 550 BOPD 
                    (initial 30-day average rate), in line with the strong 
                    performance of wells drilled in the field over the last 
                    year 
 
          -- Costayaco/Vonu Workovers Expected to Resume in October 2020 (100% 
             WI): a workover rig is expected to start operations in October 
             2020 to workover 3 offline oil wells and recomplete 2 wells to add 
             U Sand water injection; the total combined productive capacity of 
             the offline oil wells is estimated to be approximately 1,000 BOPD 
             with weighted averages for water cut of 44%, gas-oil ratio of 811 
             standard cubic feet per bbl and API oil gravity of 29 degrees 
             (based on 30-day averages prior to each well going offline earlier 
             this year) 
 
          -- Suroriente Block (52% WI) Production Ramping Up: restart of the 
             Cohembi field, previously shut-in due to local farmer blockades, 
             commenced on August 28, 2020; Cohembi's average WI production 
             (September 1-21, 2020) is approximately 2,160 BOPD; volumes are 
             expected to continue to increase to the block's estimated WI 
             capacity of approximately 3,600 BOPD (based on the 30-day average 
             prior to the block being shut-in earlier this year) 
 
          -- Majority of Minor Oil Fields Production Back Online: the restart 
             of the majority of minor fields has commenced and the fields are 
             coming back online at rates higher than recorded just prior to the 
             shut-ins; current production from these restarted minor fields is 
             approximately 1,600 BOPD, with an additional 400 BOPD expected to 
             be added during fourth quarter 2020; the cost optimizations 
             achieved across the Company's assets are being realized in these 
             reactivations, both in processes and personnel, as well as 
             operating strategy going forward 
 
   -- Operating Cost Reductions: the Company's optimization programs have 
      reduced operating costs by approximately $3.00/bbl; these cost-saving 
      initiatives included personnel optimization, contract renegotiations and 
      increased utilization of associated gas in gas-to-power operations; 
      additional operational improvements have been identified and are 
      forecasted to provide a further operating cost reduction of approximately 
      $0.50/bbl in fourth quarter 2020 
 
   -- VAT & Income Tax Refunds Received: as of August 31, 2020, Gran Tierra has 
      collected total value-added tax ("VAT") and income tax receivables of 
      approximately $51 million; the Company expects to collect approximately 
      another $25 to $35 million before the end of 2020; therefore, Gran Tierra 
      forecasts a total collection of approximately $76 to $86 million in VAT 
      and income tax receivables during 2020 
 
   -- Oil Price Hedges In Place To Protect Cash Flows: Gran Tierra has entered 
      into a series of Brent oil price hedges; for second half 2020, these 
      hedges effectively give the Company a Brent floor price of $35.68/bbl on 
      11,000 BOPD if Brent falls as low as $27.05/bbl, below which Gran Tierra 
      would receive Brent plus $8.63/bbl; for first half 2021, the Company has 
      an effective Brent floor price of $45.29/bbl on 7,000 BOPD if Brent falls 
      as low as $35.00/bbl, below which Gran Tierra would receive Brent plus 
      $10.29/bbl; additional detail is provided in the following table: 
 
 
 
 
Type of 
Instrument &     Volume      Sold Put    Bought Put    Sold Call     Premium 
Period*          (BOPD)      ($/bbl)*     ($/bbl)*     ($/bbl)*      ($/bbl) 
Collars: 
 July 1, to 
 December 
 31, 2020           11,000        27.05        35.68        43.43         0.54 
Collars: 
 January 1, 
 to June 30, 
 2021                7,000        35.00        45.29        53.79          n/a 
Swaptions: 
 July 1, to 
 December 
 31, 2021            3,000          n/a          n/a        56.75          n/a 
 
 
 
   *Weighted Average ICE Brent 
 
 
   -- Gran Tierra Positioned to Thrive in 2021: The Company's initiatives 
      during the severe downturn of 2020 have been focused on portfolio 
      optimization and the preservation of liquidity and value; with the 
      recovery in oil prices, Gran Tierra is now pacing projects to allow the 
      safe resumption of operations while following strict COVID-19 safety 
      protocols; the Company is analyzing multiple scenarios focused on 
      providing strong returns and free cash flow in 2021 in order to reduce 
      debt, and to optimize the ultimate oil recovery, free cash flow and 
      long-term value from all assets; Gran Tierra believes its robust asset 
      base will resume average production in excess of 30,000 BOEPD in 2021, 
      based on current assumptions, including commodity prices remaining at 
      current levels and that the level of global economic disruption from the 
      COVID-19 pandemic does not increase next year 
 
 
   Message to Shareholders 
 
   Gary Guidry, President and Chief Executive Officer of Gran Tierra, 
commented: "We are very pleased we have safely and diligently 
recommenced operations throughout our extensive Colombian portfolio. The 

safety of our staff, contractors and the local communities where we 
operate is paramount. Gran Tierra's proper management of COVID-19 safety 
protocols has led to an earlier restart of activities than originally 
forecast and we commend our teams in Colombia and Canada for all of 
their excellent work during the many challenges of 2020. We are also 
greatly appreciate the support the Colombian government continues to 
provide the local oil industry, as evidenced by the ongoing payments of 
VAT and income tax refunds. One of our key objectives is to finish 2020 
strong to set up Gran Tierra for an exciting 2021. We believe we are 
well-positioned to withstand the current volatile environment with our 
low base decline, conventional oil asset base and the operational 
control for capital allocation and timing, while maintaining a low cost 
structure and the safety of our people." 
 
   Contact Information 
 
   For investor and media inquiries please contact: 
 
   Gary Guidry 
 
   President & Chief Executive Officer 
 
   Ryan Ellson 
 
   Executive Vice President & Chief Financial Officer 
 
   Rodger Trimble 
 
   Vice President, Investor Relations 
 
   [phone] 
 
   [e-mail] 
 
   About Gran Tierra Energy Inc. 
 
   Gran Tierra Energy Inc. together with its subsidiaries is an independent 
international energy company focused on oil and natural gas exploration 
and production in Colombia and Ecuador. The Company is focused on 
maximizing the value of its existing portfolio of assets. Gran Tierra's 
common shares trade on the NYSE American, Toronto Stock Exchange and 
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 does not constitute a part of this 
press release. Gran Tierra's Securities and Exchange Commission filings 
are available on the Securities and Exchange Commission website at 
http://www.sec.gov and on SEDAR at http://www.sedar.com and UK 
regulatory filings are available on the National Storage Mechanism 
website at www.morningstar.co.uk/uk/nsm. 
 
   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," "measures taken to" 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 strategies to adjust 
production volumes, capital investments and operating and general and 
administrative costs, including previously planned drilling and 
operation activities, the Company's anticipated procedures to restart 
production and waterflood operations and expectations as to resumption 
of production amounts, future well results (including initial oil 
production rates and productive capacity based on past performance), 
expected cost reductions, the impact of hedges, average production in 
2021, the impact and timing of the Company's COVID-19 protocols, the 
Company's expectations as to 2020 results and VAT and income tax 
receivables and its positioning for 2021. 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 ability to comply with covenants in our 
credit agreement; our ability to obtain amendments to the covenants in 
our credit agreement so as to avoid an event of default under our credit 
agreement and senior notes; a reduction in our borrowing base and our 
ability to repay any excess borrowings; sustained or future declines in 
commodity prices and the demand for oil; continued or future excess 
supply of oil and natural gas; potential future impairments and 
reductions in proved reserve quantities and value; problems in 
connection with production and waterflood restart; continued spread of 
the COVID-19 virus and extensions or previously announced lockdowns and 
possible future restrictions against oil and gas activities in Colombia 
and Ecuador; global economic disruption from the COVID-19 pandemic in 
2021; Gran Tierra's operations are located in South America, and 
unexpected problems can arise due to guerrilla activity, community 
protests or blockades and other local events that may impact our ability 
to access our locations or transport oil; technical difficulties and 
operational difficulties may arise which impact the production, 
transport or sale of our products; geographic, political, global health 
and weather conditions can impact the production, transport or sale of 
our products; Gran Tierra's ability to raise capital; Gran Tierra's 
ability to identify and complete successful acquisitions; Gran Tierra's 
ability to execute business plans; unexpected delays and difficulties in 
developing currently owned properties may occur; 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; current global economic and credit market 
conditions may impact oil prices and oil consumption differently than 
the Company currently predicts, which could cause it to further modify 
our strategy and capital spending program; volatility or declines in the 
trading price of Gran Tierra's common stock and the continued listing of 
its shares on a national stock exchange; 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, 2019 and Quarterly Reports on Form 10-Q 
for the three months ended March 31, 2020 and June 30, 2020, and its 
other filings with the Securities and Exchange Commission. These filings 
are available on the Securities and Exchange Commission 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. In particular, the unprecedented nature of 
the current economic downturn, pandemic 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. 
 
   The estimates of future production, tax collection figures and operating 
cost reductions set forth in this press release may be considered to be 
future-oriented financial information or a financial outlook for the 
purposes of applicable Canadian securities laws. Financial outlook and 
future-oriented financial information contained in this press release 
about prospective financial performance, financial position or cash 
flows are provided to give the reader a better understanding of the 
potential future performance of the Company in certain areas and are 
based on assumptions about future events, including economic conditions 
and proposed courses of action, based on management's assessment of the 
relevant information currently available, and to become available in the 
future. These projections may not be appropriate for other purposes. 
These projections contain forward-looking statements and are based on a 
number of material assumptions and factors set out above. Actual results 
may differ significantly from the projections presented herein. These 
projections may also be considered to contain future-oriented financial 
information or a financial outlook. The actual results of Gran Tierra's 
operations for any period will likely vary from the amounts set forth in 
these projections, and such variations may be material. See above for a 
discussion of the risks that could cause actual results to vary. The 

future-oriented financial information and financial outlooks contained 
in this press release have been approved by management as of the date of 
this press release. Readers are cautioned that any such financial 
outlook and future-oriented financial information contained herein 
should not be used for purposes other than those for which it is 
disclosed herein. The Company and its management believe that the 
prospective operational and financial information has been prepared on a 
reasonable basis, reflecting management's best estimates and judgments, 
and represent, to the best of management's knowledge and opinion, the 
Company's expected course of action. However, because this information 
is highly subjective, it should not be relied on as necessarily 
indicative of future results. 
 
   Presentation of Oil and Gas Information 
 
   BOEs have been converted on the basis of 6 thousand cubic feet ("Mcf") 
of natural gas to 1 bbl of oil. BOEs may be misleading, particularly if 
used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an 
energy equivalency conversion method primarily applicable at the burner 
tip and does not represent a value equivalency at the wellhead. In 
addition, given that the value ratio based on the current price of oil 
as compared with natural gas is significantly different from the energy 
equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 
bbl would be misleading as an indication of value. 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. 
 
 
 
 

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September 22, 2020 19:51 ET (23:51 GMT)

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