Gran Tierra Energy, Inc. Gran Tierra Energy Inc. Announces Financial Update And 2021 Guidance

 
TIDMGTE 
 
   Credit Facility Borrowing Base Redetermined to $215 Million 
 
   2021 Capital of $130-150 Million, Production of 28,000-30,000 BOPD, Cash 
Flow(1) of $150-170 Million 
 
   Resumption of Development Drilling at Acordionero Oil Field 
 
   CALGARY, Alberta, Dec. 07, 2020 (GLOBE NEWSWIRE) -- Gran Tierra Energy 
Inc. ("Gran Tierra" or the "Company") (NYSE 
American:GTE)(TSX:GTE)(LSE:GTE) today announced a financial update and 
the Company's 2021 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: 
 
 
   -- Results of Semi-Annual Credit Facility Redetermination: The semi-annual 
      redetermination of Gran Tierra's bank-syndicated revolving credit 
      facility has been completed, and the syndicate of lenders party to the 
      facility have agreed to amend the facility as follows: 
 
          -- The committed borrowing base under the credit facility has been 
             redetermined to $215 million 
 
          -- $200 million will be readily available, with $15 million subject 
             to the consent of the majority of lenders 
 
          -- The credit facility matures in November 2022 
 
          -- The Company expects the credit facility's balance to be 
             approximately $185 million as of December 31, 2020 
 
   -- Hedges In Place Designed To Protect Cash Flows: The Company has the 
      following Brent oil price hedges in place: 
 
 
 
 
  Type of                                 Purchased 
Instrument &     Volume      Sold Put        Put       Sold Call     Premium 
   Period        (BOPD)       ($/bbl)      ($/bbl)      ($/bbl)      ($/bbl) 
------------  ------------  -----------  -----------  -----------  ----------- 
3-Ways: 
 October 
 1-December 
 31, 2020           11,000        27.05        35.68        43.43         0.54 
------------  ------------  -----------  -----------  -----------  ----------- 
3-Ways: 
 January 
 1-June 30, 
 2021               14,000        36.43        45.14        51.45         0.21 
------------  ------------  -----------  -----------  -----------  ----------- 
Collars: 
 January 
 1-June 30, 
 2021                1,000          n/a        45.00        50.40          n/a 
------------  ------------  -----------  -----------  -----------  ----------- 
 
 
   -- 2021 Guidance: 
 
          -- Gran Tierra is forecasting the following ranges for the Company's 
             2021 budget: 
 
 
 
 
2021 Budget                                                Low Case       Base Case      High Case 
-------------------------------------------------------  -------------  -------------  ------------- 
Annual Average Brent Oil Price ($/bbl)                           44.00          49.00          56.00 
-------------------------------------------------------  -------------  -------------  ------------- 
Total Company Production (bopd)                          27,500-29,500  28,000-30,000  28,000-30,000 
-------------------------------------------------------  -------------  -------------  ------------- 
Operating Netback(2) ($ million)                               180-200        220-240        270-290 
-------------------------------------------------------  -------------  -------------  ------------- 
EBITDA(2) ($ million)                                          165-185        200-220        240-260 
-------------------------------------------------------  -------------  -------------  ------------- 
Cash Flow(1) ($ million)                                       115-135        150-170        190-210 
-------------------------------------------------------  -------------  -------------  ------------- 
Total Capital ($ million)                                      120-140        130-150        130-150 
-------------------------------------------------------  -------------  -------------  ------------- 
Bank Credit Facility Balance @ December 31, 2021 ($ 
 million)                                                      155-175        125-145          75-95 
-------------------------------------------------------  -------------  -------------  ------------- 
2021 Year-End Net Debt(3) to Annualized Fourth Quarter 
 2021 EBITDA(2)                                                3.6-3.8        2.7-2.9        2.0-2.2 
-------------------------------------------------------  -------------  -------------  ------------- 
Number of Development Wells (gross)                              12-16          14-18          14-18 
-------------------------------------------------------  -------------  -------------  ------------- 
 
 
   deg  2021 Capital Program: Gran Tierra plans to direct approximately 60% 
of the 2021 capital program toward continued development of the 
Acordionero field in the Middle Magdalena Valley Basin, another 35% 
toward development activities in the Putumayo Basin and the remaining 5% 
toward exploration-related activities throughout the Company's portfolio, 
in both Colombia and Ecuador 
 
   deg  Fully Funded Capital Program: the Base Case 2021 capital budget of 
$130-150 million is expected to be fully funded from the Base Case 2021 
cash flow(1) forecast of $150-170 million 
 
   deg  Control of Capital Program: Gran Tierra has 100% working interest 
in and operatorship of the Company's major assets in Colombia and 
Ecuador; this full control gives the Company the flexibility to optimize 
its development and exploration programs with changes, either up or down, 
with oil prices 
 
   deg  Debt Reduction: with 2021 expected free cash flow(4) and changes in 
non-cash working capital (primarily related to the ongoing collection of 
tax receivables), Gran Tierra expects its credit facility to be paid 
down in the Base Case to a balance of $130-150 million by December 31, 
2021 
 
   deg  Gran Tierra expects approximate 2021 expenses and operating 
netback(2) per bbl(5) to be in the following ranges: 
 
 
 
 
2021 Budget                            Low Case     Base Case    High Case 
------------------------------------  -----------  -----------  ----------- 
Brent Oil Price ($/bbl)                     44.00        49.00        56.00 
------------------------------------  -----------  -----------  ----------- 
Expenses ($/bbl) 
------------------------------------  -----------  -----------  ----------- 
Transportation and Quality Discount    8.00-10.00   8.00-10.00   8.00-10.00 
------------------------------------  -----------  -----------  ----------- 
Royalties                               3.00-4.00    5.00-6.00    7.00-8.00 
------------------------------------  -----------  -----------  ----------- 
Oil and Gas Sales Price ($/bbl)       30.00-32.00  34.00-36.00  38.00-40.00 
------------------------------------  -----------  -----------  ----------- 
Operating Costs                       11.00-13.00  11.00-13.00  11.00-13.00 
------------------------------------  -----------  -----------  ----------- 
Transportation (Pipeline)               0.80-1.00    0.80-1.00    0.80-1.00 
------------------------------------  -----------  -----------  ----------- 
Operating Netback(2) ($/bbl)(5)       17.00-19.00  21.00-23.00  26.00-28.00 
------------------------------------  -----------  -----------  ----------- 
General and Administrative              1.50-2.50    1.50-2.50    1.50-2.50 
------------------------------------  -----------  -----------  ----------- 
Interest and Financing                  4.50-5.00    4.50-5.00    4.50-5.00 
------------------------------------  -----------  -----------  ----------- 
Taxes                                        0.00         0.00         0.00 
------------------------------------  -----------  -----------  ----------- 
 
 
   -- Acordionero Oil Field 
 
          -- Gran Tierra continues to workover offline oil wells to restore 
             them to production with two workover rigs 
 
          -- The Company has also restarted development drilling at Acordionero 
             by spudding the AC-64 oil well on November 30, 2020, from the 
             newly constructed southwest pad; the Company has drilled to the 
             planned total depth of AC-64, is currently running production 
             casing in the well and plans to complete this well during December 
             2020 
 
          -- The drilling rig is then expected to drill the AC-65 oil well and 
             the AC-66 water injection well in sequence during December 2020, 
             Gran Tierra plans to finish the drilling of AC-65 before 2020 
             year-end and of AC-66 in January 2021 
 
          -- The plan is to begin the completion of AC-65 before 2020 year-end 
             and to finish this work in January 2021, and to complete AC-66 in 
             January 2021 
 
          -- The planned AC-64 and AC-65 oil wells are forecast to be brought 
             on production during January 2021 
 
          -- The drilling rig is forecast to continue drilling new development 
             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 
 
          -- The planned new oil wells are each 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 during 2019 and first quarter 2020 
 
 
   Message to Shareholders 
 
   Gary Guidry, President and Chief Executive Officer of Gran Tierra, 
commented: "The safety of our staff, contractors and the local 
communities where we operate is always paramount. Our teams in Colombia, 
Canada and Ecuador have risen to meet the many challenges of 2020 
through their diligent management of COVID-19 safety protocols. As a 
result, Gran Tierra has resumed development activities throughout our 
portfolio, including the ongoing well workover operations and the 

restart of development drilling at Acordionero. 
 
   Our teams' excellent work throughout 2020 has strongly positioned the 
Company for the resumption of prudent growth in 2021. We would also like 
to thank our bank lending syndicate for their ongoing support during 
these volatile times. 
 
   Our forecast 2021 capital budget is a balanced, returns-focused program 
which prioritizes free cash flow(4) generation over the rate of 
development, exploration and production growth. With a keen focus of 
further strengthening our balance sheet, we plan to direct free cash 
flow(4) to further debt reduction in 2021. 
 
   We see material upside in our exploration portfolio located in highly 
prospective geological trends in Colombia and Ecuador. For 2021, we have 
budgeted a measured 5% of our capital program to ongoing 
exploration-related activities, mostly directed at our large 
landholdings in the Putumayo Basin of Colombia and Oriente Basin of 
Ecuador. 
 
   Our 2021 plans are fully aligned with Gran Tierra's "Beyond Compliance 
Policy" which focuses on our commitments to environmental, social and 
governance ("ESG") excellence. Gran Tierra looks for significant 
opportunities and benefits to the environment or communities and 
voluntarily goes beyond what is legally required to protect the 
environment and provide social benefits because it is the right thing to 
do. 
 
   Gran Tierra has benefited from the continued support of the oil and gas 
industry by the governments of Colombia and Ecuador. In particular, the 
Colombian government has been supportive through expedited tax refunds, 
extensions on the timing to perform contractual commitments and during 
our resumption of workover and drilling activities and the reopening of 
suspended oil fields. 
 
   We believe we are well-positioned to navigate 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." 
 
   (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) "Operating netback" and earnings before interest, taxes and 
depletion, depreciation and accretion ("EBITDA") are non-GAAP measures 
and do not have a standardized meaning under GAAP. Refer to "Non-GAAP 
Measures" in this press release. 
 
   (3) "Net debt" is a non-GAAP measure and does not have a standardized 
meaning under GAAP. Refer to "Non-GAAP Measures" in this press release. 
 
   (4) "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 capital spending. Refer to 
"Non-GAAP Measures" in this press release. 
 
   (5) "Operating netback per bbl" is a non-GAAP measure and does not have 
a standardized meaning under GAAP. Refer to "Non-GAAP Measures" in this 
press release. 
 
   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 its 
existing portfolio of assets in Colombia and Ecuador and will pursue new 
growth opportunities throughout Colombia and Latin America, leveraging 
our financial strength. 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 
does not constitute a part of this press release. Investor inquiries may 
be directed to [e-mail] or [phone]. 
 
   Gran Tierra's Securities and Exchange Commission filings are available 
on the SEC 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 
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"). All statements other 
than statements of historical facts included in this press release 
regarding our financial position, business strategy, plans and 
objectives for future operations, capital spending plans, leverage, 
results of operations and those statements preceded by, followed by or 
that otherwise include the words "believe", "expect", "intend", 
"anticipate", "forecast", "budget", "will", "estimate", "target", 
"project", "goal", "plan", "should", "guidance" or similar expressions 
are forward-looking statements. Such forward-looking statements include, 
but are not limited to, the Company's capital budget amount and uses, 
funds available under our credit facility, ability of hedges to protect 
cash flows, drilling and capital program, including the changes thereto, 
along with the allocation of the Company's capital budget to development, 
exploration and drilling activities, trends, infrastructure schedules 
and the expected timing and drilling sequence of certain projects; the 
Company's operations; expected future net cash provided by operating 
activities (described in this press release as "cash flow"), free cash 
flow, operating netback, EBITDA, net debt and certain associated 
metrics; our strategy regarding debt reduction; expected cost savings; 
anticipated capital expenditures, including the location and impact of 
capital expenditures; timing and ability to pay down the credit 
facility; our business strategies; our ability to grow in both the near 
and long term and the funding of our growth opportunities; the plans, 
objectives, expectations and intentions of the Company regarding 
production, exploration, development; ESG-related efforts and impacts; 
and the future development of the Company's business. 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, the 
accuracy of testing and production results and seismic data, pricing and 
cost estimates (including with respect to commodity pricing and exchange 
rates), rig availability, the extent and effect of delivery disruptions 
and the general continuance of current or, where applicable, assumed 
operational, regulatory and industry conditions including in areas of 
potential expansion, the receipt of approval from the government 
authorities and the ability of Gran Tierra to execute its current 
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: sustained or future declines in commodity prices 
and potential resulting future impairments; Gran Tierra's operations are 
located in South America, and unexpected problems can arise due to 
guerrilla activity; technical difficulties and operational difficulties 
may arise which impact the production, transport or sale of our 
products; global health (including the ongoing COVID-19 pandemic), 
geographic, political and weather conditions can impact the production, 
transport or sale of our products; the risk that current global economic 
and credit conditions may impact oil prices and oil consumption more 
than Gran Tierra currently predicts; the ability of Gran Tierra to 
execute its business plan; the risk that unexpected delays and 
difficulties in developing currently -owned properties may occur; the 
timely receipt of regulatory or other required approvals for our 
operating activities; unexpected delays due to the limited availability 
of drilling equipment and personnel; the risk that oil prices could 
continue to decline or be volatile, or current global economic and 
credit market conditions may impact current oil prices or expectations 
regarding future oil prices and oil consumption or limit access to 
capital, which could cause Gran Tierra to further modify its strategy 
and capital spending program; 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 Quarterly Report for the quarter ended 
September 30, 2020 and Annual Report on Form 10-K for the year ended 
December 31, 2019 and its other filings with the SEC. These filings are 
available on the SEC website at http://www.sec.gov and on SEDAR at 
http://www.sedar.com. Although the current guidance, capital spending 
program and long term strategy of Gran Tierra are 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. 
 
   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 the Company 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 securities laws. 
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, net debt, total capital and certain 
expenses or 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 2021 and development activity expectations for 
2022. These projections contain forward-looking statements and are based 
on a number of material assumptions and factors, including those 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 and operational 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. 
 
   Oil and Gas Disclaimer 
 
   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. These metrics are calculated as described in this 
press release and management believes that they are useful supplemental 
measures for investors. 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. 
 
   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. 
 
   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 and oil and 
gas sales, the GAAP measures most directly comparable to the non-GAAP 
measures EBITDA 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 2021 oil and gas 
sales less projected 2021 operating and transportation expenses. 
Operating netback per bbl as presented is defined as projected oil and 
gas sales price less 2021 forecasts of transportation and quality 
discount, royalties, operating costs and pipeline transportation from 
the 2021 budget Brent oil price forecast as outlined in the table above. 
The most directly comparable GAAP measures are oil and gas sales and oil 
and gas sales price, respectively. Management believes that operating 
netback and operating netback per bbl are 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 or operating netback per bbl 
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 2021 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 2021 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. 
 
   Net Debt as presented is defined as projected working capital at 
December 31, 2021, less $600 million in senior notes and borrowings 
under the credit facility. Management believes that net debt is a useful 
supplemental measure for management and investors to in order to 
evaluate the financial sustainability of the Company's business and 
leverage. The most directly comparable GAAP measure is total debt. Gran 
Tierra is unable to provide a quantitative reconciliation of 
forward-looking net debt 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. 
 
 
 
 

(END) Dow Jones Newswires

December 07, 2020 17:15 ET (22:15 GMT)

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