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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gran Tierra Energy Inc. | LSE:GTE | London | Ordinary Share | COM STK USD0.001 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 5.00 | 0.81% | 620.00 | 590.00 | 650.00 | 620.00 | 620.00 | 620.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Crude Petroleum & Natural Gs | 636.96M | -6.29M | -0.1950 | -42.82 | 269.26M |
Hot Features
Premium
TIDMGTE
-- Realized 100% 1P and 133% PDP Reserves Replacement, with $2.65 and
$5.06/BOE F&D Costs
-- Achieved 2020 Production of 22,624 bopd
-- Forecast 2021 Production of 28,000-30,000 bopd for Annual Growth of
24-33%
-- Reduced Annual Operating and G&A Costs by $92 Million
-- Achieved Company's Best Safety Year in 2020: Zero Lost Time Incident
Frequency
CALGARY, Alberta, Feb. 24, 2021 (GLOBE NEWSWIRE) -- 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 fourth quarter ("the Fourth Quarter") and year ended December
31, 2020.(1)
FOURTH QUARTER AND FULL-YEAR 2020 OPERATIONAL AND FINANCIAL HIGHLIGHTS
Operational:
-- Production:
-- With the unprecedented impact of the COVID-19 pandemic and the
related crash in world oil prices, Gran Tierra took decisive
action during the first half of 2020 to shut-in minor fields,
curtail drilling activity and defer workovers in order to protect
the Company's balance sheet and liquidity, while still achieving
2020 average working interest ("WI") production of 22,624 barrels
("bbl") of oil per day ("bopd") (100% oil)
-- In the low oil price environment, Gran Tierra made the prudent
decision not to maximize production and to defer growth until oil
prices rebounded in the second half of 2020
-- Gran Tierra took these actions while maintaining proper reservoir
management and protecting the long term value of the Company's
assets as demonstrated by the strong 2020 reserves replacement
ratios
-- The Company forecasts 2021 WI production of 28,000 to 30,000 bopd,
for annual growth of 24% to 33%
-- Reserves (2):
-- Achieved material Proved reserves additions, in particular in the
Company's core assets as a result of the continued positive
reservoir responses from waterflooding; the Proved Developed
Producing ("PDP") reserves replacement ratio was 133% with PDP
reserves additions of 11.0 million bbl of oil equivalent ("MMBOE"),
while the Total Proved ("1P") reserves replacement ratio was 100%
with 1P reserves additions of 8.3 MMBOE
-- The Company's strong 1P reserves replacement resulted in 1P
reserves of 79 MMBOE (100% oil) as of year-end 2020; at December
31, 2020, 1P net present value discounted at 10% ("NPV10") was
$1.2 billion before tax and 1P net asset value ("NAV") was $1.15
per share before tax(2); Total Proved plus Probable ("2P") NPV10
was $2.0 billion before tax and 2P NAV was $3.25 per share before
tax(2)
-- Realized PDP and 1P Finding and Development ("F&D") Costs of $5.06
and $2.65/BOE, respectively
-- Safety: Gran Tierra achieved its first year with a Lost Time Incident
("LTI") Frequency of zero, during which the Company logged 15 million
LTI-free person-hours
-- Beyond Compliance:
-- The ANH, Colombia's oil and gas industry regulator, recognized
Gran Tierra with an award on gender equality and diversity in
operations, in recognition of the Company's best practices in the
Colombian oil and gas industry
-- Gran Tierra's NaturAmazonas program received the award in the
fauna category at the Seventh Latin American Green Awards for its
"Honey from the Amazon" project, which is aimed at preserving and
commercializing honey from the local bee population; the "Honey
from the Amazon" project was selected from 30 finalists out of
more than 2,000 environmental projects from all across Latin
America
Financial:
-- Significant Reductions in Operating and G&A Costs: The Company's gross
cash general and administrative ("G&A") costs were $23 million for the
year ended 2020, down 32% from $33 million for the year ended 2019; on an
aggregate basis, total operating, G&A and transportation costs decreased
to $145 million for the year ended 2020; down $92 million, a 39%
reduction, from $237 million for the year ended 2019; the majority of the
cost reductions represent structural improvements in the Company's
operations, which are expected to be maintained as oil prices recover
further
-- Collection of VAT and Income Tax Receivables: Through both direct tax
refunds and value-added tax ("VAT") on the Company's oil sales, Gran
Tierra collected total VAT and income tax receivables of $114 million
during 2020
-- Credit Facility Paid Down and Cash Balance: By the end of fourth quarter
2020 ("the Quarter"), the Company paid down its credit facility balance
to $190 million and had $14 million in cash and cash equivalents,
compared to a balance on the credit facility of $200 million and cash and
cash equivalents of $21 million at the end of third quarter 2020 ("the
Prior Quarter")
-- Drilling and Completion Capital Cost Reductions: During the Quarter, as a
result of ongoing cost saving initiatives, the Company successfully
reduced per well drilling and completion capital costs at Acordionero by
approximately 18% and 52%, respectively, compared to 2019 averages; the
Company also expects future per well drilling and completion capital
costs to be reduced by approximately 18% at Costayaco compared to 2019;
the 2021 Costayaco drilling campaign is scheduled to begin in early
second quarter 2021
-- Net Loss and EBITDA: Gran Tierra realized a net loss of $778 million or
$(2.12) per share (basic and diluted), and EBITDA(5) of $(635) million
for the year ended 2020, both of which included a non-cash ceiling test
and inventory impairment of $564 million and a non-cash goodwill
impairment of $103 million
-- Adjusted EBITDA and Funds Flow: During the Quarter, the Company realized
a net loss of $48 million, Adjusted EBITDA(5) of $22 million, and funds
flow from operations(5) of $9 million or $0.02 per share (basic and
diluted), compared with $108 million, $22 million and $8 million,
respectively, in the Prior Quarter
-- Oil Sales, and Operating Netback: During the Quarter, Gran Tierra
generated Fourth Quarter oil sales of $65 million, up 22% or $12 million
from the Prior Quarter, largely driven by a 16% increase in WI production
and a 4% increase in Brent oil price; the Quarter's operating netback(5)
of $17.67 per bbl was only $6.78 per bbl lower than fourth quarter 2019's
operating netback of $24.45 per bbl, despite a $17.16 per bbl drop in
Brent oil price, as a result of lower operating expenses and royalties;
the Brent oil price averaged $45.26 per bbl during the Quarter
-- Capital Expenditures: As expected, the Quarter's expenditures of
approximately $40 million increased significantly from the Prior
Quarter's level of $7 million, reflecting the restart of development
drilling operations at the Acordionero field; the Company also
accelerated certain budgeted first half 2021 capital expenditures into
the Quarter to maximize operational efficiencies
Message to Shareholders
"I would like to thank our teams in Colombia, Canada and Ecuador for
their excellent work and dedication in the face of a most challenging
year for Gran Tierra and our industry," commented Gary Guidry, President
and Chief Executive Officer of Gran Tierra. "The diligent management of
COVID-19 safety protocols kept our people and the communities in which
we operate safe, and allowed us to continue operating through the
significant downturn our industry experienced in 2020. Throughout the
course of the first half of 2020, we took quick decisive action to
protect our balance sheet by deferring our capital program, reducing our
well workover activities, implementing cost saving initiatives, and
shutting in higher-cost, lower-production minor fields, all while
preserving the long-term value of our asset base. The Colombian
government was very proactive in supporting the industry during this
time, implementing measures to help companies with commitment management
and tax reimbursements.
During the second half of 2020, we realized and solidified our many cost
saving initiatives, while cautiously planning a restart of our workovers
and minor fields, as well as our development drilling program which
commenced during the Quarter. Our key objective during the second half
of 2020 was restarting our workover and drilling operations to
economically rebuild production to achieve strong 2020 reserves
replacement. With our workover and drilling campaigns charging ahead,
production growing, and a new lower cost structure in place, we believe
we have successfully positioned the Company to thrive in 2021 and
beyond.
Our 2021 capital budget is a balanced, returns-focused program which
prioritizes free cash flow(3) generation and debt reduction. We have
allocated a modest amount to advance exploration-related activities for
our high-impact exploration portfolio, which we plan to accelerate in
2022. Our 2021 program is designed to continue focusing on optimizing
our four core assets under waterflood and maximizing the long-term value
from all of our assets."
Mr. Guidry continued, "As difficult as 2020 was, Gran Tierra never
faltered in its commitment to the health and safety of our people and
all of our stakeholders. As a result, we achieved our best safety year
on record with an LTI frequency of zero during 2020. Suspending and
restarting oil fields, drilling and workover operations and construction
projects are the highest risk activities that we face in the industry
and our team did an excellent job. Health and safety will continue to be
a focus in 2021 through our industry-leading COVID-19 safety practices
and protocols. In addition, our 'Beyond Compliance Policy' continues.
Where Gran Tierra identifies significant opportunities and benefits to
the environment and communities, we voluntarily strive to go beyond what
is legally required to protect the environment and provide social
benefits, because it is the right thing to do."
Gran Tierra's Commitment to Go "Beyond Compliance" in Environmental,
Social and Governance
Safety:
-- In 2020, Gran Tierra had its best safety record, achieving an LTI
frequency of 0.00
-- A perfect LTI frequency of 0.00 is a remarkable achievement in any year
and particularly in 2020, with multiple activities including field
suspensions, startups, and the implementation of new safety protocols to
deal with the COVID-19 pandemic
-- The Company's LTI frequency of 0.00 was well below both the 2019 industry
averages of 0.42 for Latin America and 0.30 for North American
exploration and production companies, as reported by the International
Association of Oil and Gas Producers and was in the top percentile in any
region globally(9)
-- Early in 2020, we implemented several enhanced COVID-19 preventative
measures, with a focus on reducing the spread of COVID-19 to protect our
employees, contractors and communities living near our operations
Environment:
-- Through the NaturAmazonas project in the Putumayo Basin, in partnership
with the international non-governmental organization Conservation
International, Gran Tierra has committed to reforesting 1,000 hectares of
land and securing and maintaining 18,000 hectares of forest in the
Andes-Amazon rainforest corridor
-- Gran Tierra has planted a total of 838,740 trees and has conserved,
preserved or reforested 1,624 hectares of land through all of the
Company's environmental efforts
Reducing Green House Gas Emissions:
-- For the last 5 years, Gran Tierra has voluntarily released an assessment
of its greenhouse gas ("GHG") emissions
-- Gran Tierra is reducing GHG emissions at its facilities through
gas-to-power projects that conserve excess natural gas that would
otherwise be flared, and uses the gas instead for power generation
-- In 2019, Gran Tierra completed a $25 million gas-to-power project at the
Acordionero field, the Company's single biggest producing asset, which
has in turn decreased diesel fuel consumption by 85%; previously,
gas-to-power projects were completed at the Moqueta field in 2018 and the
Costayaco field in 2017
-- The NaturAmazonas project alone is expected to sequester approximately
8.7 million tonnes of CO2 over its lifetime, which is equivalent to 215
billion passenger miles driven or the energy use of 10 million homes for
one year(10)
Economic Opportunities:
-- Over 20,000 local labor opportunities have been created by Gran Tierra
over the past five years
-- Gran Tierra maintains its commitment to contribute to the social and
economic development of the regions where it operates by maximizing local
hiring, as well as contracting local goods and services; through this
commitment, Gran Tierra has awarded over $39 million to local companies
during 2020 alone
Human Rights:
-- In 2020, over 1,500 people benefited from Gran Tierra's human rights
initiatives
-- In 2020, Gran Tierra and the Colombian Anti Mines Campaign de-mined over
7,700 hectares of land, and through these efforts, 871 community members
from the Southern Putumayo region have directly benefited from this
humanitarian de-mining initiative
2021 Operational Update
Acordionero Oil Field
-- Utilizing 2 workover rigs, Gran Tierra continues to workover Acordionero
oil wells that went offline during the decline in oil prices during 2020,
in order to restore them to production; in connection with the improving
oil price environment in second half 2020, this workover program started
at the beginning of the Quarter
-- The Company also restarted development drilling at Acordionero on
November 30, 2020 and has since drilled 8 wells (6 producers and 2
injectors) of the 10-well program at the new South West pad; all 6
producers are currently on production
-- All 10 wells South West pad wells are scheduled to be drilled by the end
of the first quarter of 2021; once complete, the rig is scheduled to move
to Pad-6 in the field to drill an additional five producers
-- The AC-69 drill achieved a record cycle time, from spud to on-production,
of 11.5 days, at a total drill and complete capital cost of $1.9 million
-- The combination of the workover and drilling programs has resulted in
Acordionero's total WI production averaging approximately 13,000 bopd
during February 2021 month-to-date, with approximately 2,500 bopd of
additional production to be added from existing wells over the next few
months
-- Acordionero's WI production dipped below 10,000 bopd in the early part of
the second half of 2020 due to last year's temporary suspension of
workover and development drilling activities; Acordionero's production is
expected to return to the production levels realized in February 2020
with minimal capital spend over the next few months
Costayaco Oil Field
-- Efforts are underway to restart development drilling during early second
quarter 2021, with a 3-well program; the rig is currently stacked on
location over the planned CYC-42 infill oil well location
Closing of Sale of PetroTal Shares
-- As previously announced, Gran Tierra Resources Limited ("GTRL"), a wholly
owned subsidiary of Gran Tierra, sold an aggregate of 109,006,250 common
shares of PetroTal Corp. ("PetroTal") for an aggregate purchase price of
approximately $15 million
-- As of market close on February 23, 2021, the remaining 137,093,750 shares
of PetroTal owned by GTRL had a market value of approximately $37
million.
2021 Guidance
-- Gran Tierra is reiterating the Company's forecasted ranges for the 2021
budget:
Low Case Base Case High Case
------------------------------------------------------- ------------- ------------- -------------
Annual Average Brent Oil Price ($/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(5) ($ million) 180-200 220-240 270-290
------------------------------------------------------- ------------- ------------- -------------
EBITDA(5) ($ million) 165-185 200-220 240-260
------------------------------------------------------- ------------- ------------- -------------
Cash Flow(6) ($ 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(8) to Annualized Fourth Quarter
2021 EBITDA(5) 3.6-3.8 2.7-2.9 2.0-2.2
------------------------------------------------------- ------------- ------------- -------------
Number of Development Wells (gross) 12-16 14-18 14-18
------------------------------------------------------- ------------- ------------- -------------
-- Brent has averaged $58.15 per bbl from January 1 to February 23, 2021;
based on the current Brent forward price curve, and with all other
assumptions the same as in the guidance table above, the Company would
anticipate its annualized fourth quarter 2021 EBITDA to be approximately
$290 to $310 million
-- Hedging: Gran Tierra has entered into Brent oil hedges on 15,000 bopd of
WI production during the first half of 2021, with a weighted average
floor of $45.13/bbl and ceiling of $51.38/bbl, to provide downside price
protection since 70-80% of the Company's budgeted 2021 capital investment
is projected to occur during the first half of 2021; Gran Tierra has
7,000 bopd hedged(11) for the second half of 2021 with a weighted average
floor of $55.75/bbl and ceiling of $63.18/bbl
Corporate Presentation:
-- Gran Tierra's Corporate Presentation has been updated and is available at
www.grantierra.com.
Financial and Operational Highlights (all amounts in $000s, except per
share and bbl amounts)
Year Ended Three Months Ended
-----------------------------------------
December 31, December 31, December 31, December 31, September 30,
------------- ------------ ------------ ------------ -------------
2020 2019 2020 2019 2020
------------- ------------ ------------ ------------ -------------
Net (Loss) Income $(777,967) $ 38,690 $(47,871) $ 27,004 $(107,821)
Net (Loss) Income Per Share - Basic & Diluted $ (2.12) $ 0.10 $ (0.13) $ 0.07 $ (0.29)
Oil Sales $ 237,838 $570,983 $ 64,793 $127,934 $ 53,142
Operating Expenses (111,888) (183,204) (27,215) (49,060) (20,721)
Transportation Expenses (10,543) (20,400) (1,994) (4,233) (1,286)
--------- -------- -------- -------- ---------
Operating Netback(5) $ 115,407 $367,379 $ 35,584 $ 74,641 $ 31,135
G&A Expenses Before Stock-based Compensation $ 22,506 $ 33,300 $ 5,323 $ 8,518 $ 4,506
G&A Expenses Stock-Based Compensation 1,216 1,430 1,923 338 56
--------- -------- -------- -------- ---------
G&A Expenses, Including Stock-Based Compensation $ 23,722 $ 34,730 $ 7,246 $ 8,856 $ 4,562
EBITDA(5) $(634,988) $364,276 $(13,978) $111,830 $ (83,017)
Adjusted EBITDA(5) $ 96,482 $329,359 $ 22,235 $ 64,811 $ 21,884
Funds Flow from Operations(5) $ 45,213 $272,409 $ 8,956 $ 49,669 $ 8,056
Funds Flow from Operations(5) Per Share - Basic &
Diluted $ 0.12 $ 0.72 $ 0.02 $ 0.14 $ 0.02
Capital Expenditures $ 96,281 $379,314 $ 39,903 $ 68,735 $ 7,354
Average Daily Volumes (bopd)
----------------------------------------------------------
Working Interest Production Before Royalties 22,624 34,817 21,907 32,924 18,944
Royalties (2,552) (5,802) (2,411) (5,428) (1,893)
--------- -------- -------- -------- ---------
Production NAR 20,072 29,015 19,496 27,496 17,051
Decrease in Inventory 91 125 15 306 15
--------- -------- -------- -------- ---------
Sales 20,163 29,140 19,511 27,802 17,066
Royalties, % of WI Production Before Royalties 11% 17% 11% 16% 10%
Per bbl (7)
----------------------------------------------------------
Brent $ 43.21 $ 64.16 $ 45.26 $ 62.42 $ 43.34
Quality and Transportation Discount (10.98) (10.48) (9.17) (12.40) (9.49)
Royalties (3.66) (8.91) (3.92) (8.11) (3.35)
--------- -------- -------- -------- ---------
Average Realized Price $ 28.57 $ 44.77 $ 32.17 $ 41.91 $ 30.50
Transportation Expenses (1.27) (1.60) (0.99) (1.39) (0.74)
--------- -------- -------- -------- ---------
Average Realized Price Net of Transportation Expenses $ 27.30 $ 43.17 $ 31.18 $ 40.52 $ 29.76
Operating Expenses (13.44) (14.36) (13.51) (16.07) (11.89)
Operating Netback(5) $ 13.86 $ 28.81 $ 17.67 $ 24.45 $ 17.87
COVID-19 related costs (0.32) -- (0.57) -- (0.64)
Cash G&A Expenses (2.70) (2.61) (2.64) (2.79) (2.59)
Severance Expenses (0.20) (0.14) (0.08) (0.23) (0.07)
Realized Foreign Exchange Gain (Loss) 0.13 0.09 (0.57) 0.48 (0.69)
Realized Financial Instruments Gain (Loss) 0.59 (0.26) (2.53) (0.33) (2.51)
Interest Expense, Excluding Amortization of Debt Issuance
Costs (6.07) (3.13) (6.50) (3.87) (7.57)
Interest Income 0.04 0.05 -- 0.01 --
Other Gain (Loss) 0.19 (0.11) (0.20) (0.45) 1.12
Net Lease Payments -- (0.01) (0.03) 0.02 0.05
Current Income Tax Expense (0.09) (1.34) (0.10) (1.03) (0.37)
--------- -------- -------- -------- ---------
Cash Netback(5) $ 5.43 $ 21.35 $ 4.45 $ 16.26 $ 4.60
======== ======= ======= ======= ========
Share Information (000s)
----------------------------------------------------------
Common Stock Outstanding, End of Period 366,982 366,982 366,982 366,982 366,982
Weighted Average Number of Common and Exchangeable
Shares Outstanding - Basic 366,982 376,495 366,982 366,982 366,982
Weighted Average Number of Common and Exchangeable
Shares Outstanding - Diluted 366,982 376,508 366,982 366,982 366,982
As at December 31
------------------------------
2020 2019 % Change
-------- -------- ----------
Cash and cash equivalents and current restricted cash
and cash equivalents $ 14,114 $ 8,817 60
Working capital surplus, including cash and cash
equivalents $ 20,226 $ 91,347 (78)
Revolving credit facility $190,000 $118,000 61
Senior Notes $600,000 $600,000 --
Additional information on 2020 expenses:
-- Quality and Transportation Discount: increased in 2020 to $10.98 per bbl
compared to $10.48 per bbl in 2019; the increase was due to higher
Castilla and Vasconia differentials in 2020 compared to 2019
-- Operating Expenses: decreased to $13.44 per bbl compared with $14.36 per
bbl in 2019, primarily as a result of lower power generation and
equipment rental costs resulting from successful completion of power
generation and expansion facilities in the Acordionero field and cost
savings attributed to the shut-in of higher cost minor fields for a
portion of 2020
-- Transportation Expenses: decreased by 21% to $1.27 per bbl in 2020 from
$1.60 per bbl in 2019 primarily as a result of utilization of alternative
transportation routes during 2020 which had lower cost per bbl
-- Cash G&A Expenses: only increased to $2.70 per bbl in 2020 from $2.61 per
bbl in 2019 despite a 35% decrease in WI production
(1) All dollar amounts are in United States dollars and production and
reserves 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.
Production is expressed in bbl of oil per day ("bopd") or BOE per day
("boepd"), while reserves are expressed in bbl, BOE or million BOE
("MMBOE"), unless otherwise indicated. For per BOE amounts based on net
after royalty ("NAR") production, see Gran Tierra's Annual Report on
Form 10-K filed February 24, 2021. The following reserves categories are
discussed in this press release: Proved Developed Producing ("PDP"),
Proved ("1P") and 1P plus Probable ("2P").
(2) All reserves values, future net revenue and ancillary information
contained in this press release have been 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") and are derived from the Company's 2020 year-end
estimated reserves as evaluated by the Company's independent qualified
reserve evaluator McDaniel & Associates Consultants Ltd. ("McDaniel") in
a report with an effective date of December 31, 2020 (the "GTE McDaniel
Reserves Report"). Based on December 31, 2020 before tax NPV10 of $1.2
billion for 1P reserves and $2.0 billion for 2P reserves, minus year-end
2020 net debt of $770 million, comprised of gross amount of senior notes
of $600 million, gross amount of reserves-based credit facility of $190
million and working capital surplus of $20 million, divided by the
number of shares of Gran Tierra's common stock issued and outstanding at
December 31, 2020 of 367.0 million. Net working capital and debt at
December 31, 2020, prepared in accordance with GAAP.
(3) Free cash flow in this context is not a defined term under GAAP and
is called future net revenue in the GTE McDaniel Reserves Report. The
non-GAAP term of free cash flow, after development expenditures and
taxes over the next five years, reconciles to the nearest GAAP term of
oil sales, which is called sales revenue in the GTE McDaniel Reserves
Report. Refer to "Future Net Revenue" in this press release for the
reconciliations between sales revenue and future net revenue. Gran
Tierra is unable to provide a quantitative reconciliation of free cash
flow after development expenditures, taxes, interest and G&A costs over
the next five years 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. Refer to
"Non-GAAP Measures" in this press release.
(4) Internally forecast G&A costs of $99.3 million and interest of
$200.7 million in each case
(5) Operating netback, EBITDA, Adjusted EBITDA, funds flow from
operations and cash netback, are non-GAAP measures and do not have a
standardized meaning under GAAP. Refer to "Non-GAAP Measures" in this
press release for descriptions of these non-GAAP measures and
reconciliations to the most directly comparable measures calculated and
presented in accordance with GAAP.
(6) Cash flow refers to the GAAP line item "net cash provided by
operating activities". Free cash flow is a non-GAAP measure and does not
have a standardized meaning under GAAP and is defined as cash flow less
projected 2021 capital spending. Refer to "Non-GAAP Measures" in this
press release.
(7) Per bbl amounts are based on WI sales before royalties. For per bbl
amounts based on NAR production, see Gran Tierra's Annual Report on Form
10-K filed on February 24, 2021.
(8) Net Debt as presented in the context of 2021 guidance 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.
(9)
https://www.iogp.org/bookstore/product/iogp-safety-performance-indicators-2019-data/
(10)
https://www.epa.gov/energy/greenhouse-gases-equivalencies-calculator-calculations-and-references
(11) Assuming all second half 2021 3,000 bopd call swaptions are
exercised.
Conference Call Information:
Gran Tierra will host its fourth quarter and full year 2020 results
conference call on Thursday, February 25, 2021, at 9:00 a.m. Mountain
Time, 11:00 a.m. Eastern Time. Interested parties may access the
conference call by dialing 1-844-348-3792 or 1-614-999-9309 (North
America), 0800-028-8438 or 020-3107-0289 (United Kingdom) or
01-800-518-5094 (Colombia). The call will also be available via webcast
at www.grantierra.com.
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and
production company, headquartered in Calgary, Canada, incorporated in
the United States, trading on the NYSE American (GTE), the Toronto Stock
Exchange (GTE) and the London Stock Exchange (GTE), and operating in
South America. Gran Tierra holds interests in producing and prospective
properties in Colombia and prospective properties in Ecuador. Gran
Tierra has a strategy that focuses on establishing a portfolio of
producing properties, plus production enhancement and exploration
opportunities to provide a base for future growth.
Gran Tierra's Securities and Exchange Commission filings are available
on the Securities and Exchange Commission website at http://www.sec.gov,
and Gran Tierra's reports filed with the Canadian Securities
Administrators are available on SEDAR at http://www.sedar.com.
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
Tel: +1.403.265.3221
For more information on Gran Tierra please go to: www.grantierra.com.
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, estimated quantities and net present
value of reserves, business strategy, plans and objectives for future
operations, capital spending plans and those statements preceded by,
followed by or that otherwise include the words "believe," "expect,"
"anticipate," "forecast," "budget," "will," "estimate," "target,"
"project," "plan," "should," "guidance", "strives" or similar
expressions are forward-looking statements. Such forward-looking
statements include, but are not limited to, the Company's expectations,
capital program, cost saving initiatives, future sources of funding for
capital expenditures and guidance, including for certain future
production estimates, forecast prices, five-year expected free cash flow,
expected future net cash provided by operating activities, net debt,
capital expenditures and certain associated metrics, the Company's
strategies, the Company's plans to benefit the environment or
communities in which it operates and the Company's operations including
planned operations and oil production. Statements relating to "reserves"
are also deemed to be forward-looking statements, as they involve the
implied assessment, based on certain estimates and assumptions,
including that the reserves described can be profitably produced in the
future.
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 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, and the general continuance of current or,
where applicable, assumed operational, regulatory and industry
conditions including in areas of potential expansion, 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: the unprecedented impact of the COVID-19
pandemic and the actions of OPEC and non-OPEC countries and the
procedures imposed by governments in response thereto; disruptions to
local operations; the decline and volatility in oil and gas industry
conditions and commodity prices; the severe imbalance in supply and
demand for oil and natural gas; prices and markets for oil and natural
gas are unpredictable and volatile; the accuracy of productive capacity
of any particular field; the timing and impact of any resumption of
operations; Gran Tierra's operations are located in South America and
unexpected problems can arise due to guerilla activity or local
blockades or protests; technical difficulties and operational
difficulties may arise which impact the production, transport or sale of
our products; geographic, political and weather conditions can impact
the production, transport or sale of our products; the ability of Gran
Tierra to execute its business plan and realize expected benefits from
current initiatives (including a reduction of the capital program); 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; the risk that current
global economic and credit market 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; volatility or declines in the trading price of our 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, 2020
filed February 24, 2021 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. 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 financial position. Forecasts and
expectations that cover multi-year time horizons or are associated with
2P reserves inherently involve increased risks and actual results may
differ materially.
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
2020 and 2021 outlook are based prove incorrect may increase the later
the period to which the outlook relates. 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, EBITDA, net cash provided by
operating activities (described in this press release as "cash flow"),
operating netback, net debt, total capital and certain expenses or costs
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. In particular, this press release contains projected operational
and financial information for 2021 and the next five years. 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.
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 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, 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 not to imply
that more emphasis should be placed on the non-GAAP measure.
Before tax and after tax free cash flow are non-GAAP terms and are
called before tax and after tax net revenue in the GTE McDaniel Reserves
Report, respectively. The non-GAAP term of before tax free cash flow,
and free cash flow after development expenditures and taxes over the
next five years, reconciles to the nearest GAAP term of oil sales, which
is called sales revenue in the GTE McDaniel Reserves Report. Before tax
net revenue is calculated by McDaniel by subtracting total royalties,
operating costs, future development capital and abandonment and
reclamation costs from sales revenue. After tax free cash flow is
calculated by McDaniel by subtracting future taxes from before tax net
revenue. Refer to "Future Net Revenue" in this press release for the
applicable reconciliation. Gran Tierra is unable to provide a
quantitative reconciliation of free cash flow after development
expenditures, taxes, interest and G&A costs over the next five years 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. Gran Tierra is also unable to
provide forward-looking oil sales, the GAAP measures most directly
comparable to such measures of free cash flow, 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 forecast sale of its oil production and changes in
commodity prices. Refer to "Oil and Gas Metrics" in this press release
for a description of how this non-GAAP measure is calculated. Management
uses free cash flow as a measure of the Company's ability to fund its
exploration program.
Operating netback as presented is defined as oil sales less operating
and transportation expenses. Operating netback per bbl as presented is
defined as average realized price per bbl less operating and
transportation expenses per bbl. Cash netback, as presented is defined
as net income or loss adjusted for depletion, depreciation and accretion
("DD&A") expenses, asset and goodwill impairment, deferred income tax
expense or recovery, stock-based compensation expense, amortization of
debt issuance costs, non-cash lease expense, lease payments, unrealized
foreign exchange loss or gain, other non-cash loss, financial
instruments gains or losses, cash settlement of financial instruments
and loss on redemption of Convertible Notes. Cash netback per bbl, as
presented is defined as cash netback over WI sales volumes. 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. See
the table entitled Financial and Operational Highlights, above for the
components of operating netback and operating netback per bbl. A
reconciliation from net income or loss to cash netback is as follows:
Year Ended Three Months Ended
September
December 31, December 31, 30,
------------
Cash Netback - Non-GAAP Measure ($000s) 2020 2019 2020 2019 2020
---------- --------- --------- -------- ------------
Net (loss) income $(777,967) $ 38,690 $(47,871) $27,004 $(107,821)
Adjustments to reconcile net income (loss) to cash
netback
DD&A expenses 164,233 225,033 33,115 60,603 31,340
Asset impairment 564,495 -- 57,402 -- 104,731
Goodwill impairment 102,581 -- -- -- --
Deferred tax (recovery) expense (76,148) 40,227 (13,352) 8,475 (21,202)
Stock-based compensation expense 1,216 1,430 1,923 338 56
Amortization of debt issuance costs 3,625 3,376 851 802 838
Non-cash lease expense 1,951 1,806 457 440 523
Lease payments (1,926) (1,969) (522) (366) (429)
Unrealized foreign exchange loss (gain) 5,271 1,803 (17,064) (3,500) 3,080
Other non-cash loss 2,026 -- -- -- 2,026
Financial instruments loss (gain) 50,982 (46,215) (887) (43,325) (713)
Cash settlement of financial instruments 4,874 (3,273) (5,096) (998) (4,373)
Loss on redemption of Convertible Notes -- 11,501 -- 196 --
--------- -------- -------- ------- ---------
Cash netback $ 45,213 $272,409 $ 8,956 $49,669 $ 8,056
======== ======= ======= ====== ========
EBITDA, as presented, is defined as net income or loss adjusted for DD&A
expenses, interest expense and income tax expense. Adjusted EBITDA, as
presented, is defined as EBITDA adjusted for asset and goodwill
impairment, non-cash lease expense, lease payments, unrealized foreign
exchange gains or losses, loss on redemption of Convertible Notes,
unrealized gains or losses on financial instruments, other non-cash loss
and stock based compensation expense. 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:
Year Ended Three Months Ended
September
December 31, December 31, 30,
--------------------- -------------------- ------------
EBITDA - Non-GAAP Measure ($000s) 2020 2019 2020 2019 2020
---------- --------- --------- --------- ------------
Net (loss) income $(777,967) $ 38,690 $(47,871) $ 27,004 $(107,821)
Adjustments to reconcile net income (loss) to EBITDA
and Adjusted EBITDA
DD&A expenses 164,233 225,033 33,115 60,603 31,340
Interest expense 54,140 43,268 13,936 12,613 14,029
Income tax expense (75,394) 57,285 (13,158) 11,610 (20,565)
--------- -------- -------- -------- ---------
EBITDA (non-GAAP) $(634,988) $364,276 $(13,978) $111,830 $ (83,017)
Asset impairment 564,495 -- 57,402 196 104,731
Goodwill impairment 102,581 -- -- -- --
Non-cash lease expense 1,951 1,806 457 440 523
Lease payments (1,926) (1,969) (522) (366) (429)
Unrealized foreign exchange loss (gain) 5,271 1,803 (17,064) (3,500) 3,080
Loss on redemption of Convertible Notes -- 11,501 -- 196 --
Unrealized loss (gain) on financial instruments 55,856 (49,488) (5,983) (44,323) (5,086)
Other non-cash loss 2,026 -- -- -- 2,026
Stock-based compensation expense 1,216 1,430 1,923 338 56
--------- -------- -------- -------- ---------
Adjusted EBITDA (non-GAAP) $ 96,482 $329,359 $ 22,235 $ 64,811 $ 21,884
======== ======= ======= ======= ========
Funds flow from operations, as presented, is defined as net income or
loss adjusted for DD&A expenses, asset and goodwill impairment, deferred
tax expense or recovery, stock-based compensation expense, amortization
of debt issuance costs, non-cash lease expense, lease payments,
unrealized foreign exchange gains or losses, other non-cash loss,
financial instruments gains or losses, cash settlement of financial
instruments and loss on redemption of Convertible Notes. 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. A reconciliation from net income or loss to funds flow from
operations is as follows:
Year Ended Three Months Ended
September
December 31, December 31, 30,
------------
Funds Flow From Operations - Non-GAAP Measure
($000s) 2020 2019 2020 2019 2020
---------- --------- --------- -------- ------------
Net (loss) income $(777,967) $ 38,690 $(47,871) $27,004 $(107,821)
Adjustments to reconcile net (loss) income to funds
flow from operations
DD&A expenses 164,233 225,033 33,115 60,603 31,340
Asset impairment 564,495 -- 57,402 -- 104,731
Goodwill impairment 102,581 -- -- -- --
Deferred tax (recovery) expense (76,148) 40,227 (13,352) 8,475 (21,202)
Stock-based compensation expense 1,216 1,430 1,923 338 56
Amortization of debt issuance costs 3,625 3,376 851 802 838
Non-cash lease expense 1,951 1,806 457 440 523
Lease payments (1,926) (1,969) (522) (366) (429)
Unrealized foreign exchange loss (gain) 5,271 1,803 (17,064) (3,500) 3,080
Other non-cash loss 2,026 -- -- -- 2,026
Financial instruments loss (gain) 50,982 (46,215) (887) (43,325) (713)
Cash settlement of financial instruments 4,874 (3,273) (5,096) (998) (4,373)
Loss on redemption of Convertible Notes -- 11,501 -- 196 --
--------- -------- -------- ------- ---------
Funds flow from operations $ 45,213 $272,409 $ 8,956 $49,669 $ 8,056
======== ======= ======= ====== ========
DISCLOSURE OF OIL AND GAS INFORMATION
Gran Tierra's Statement of Reserves Data and Other Oil and Gas
Information on Form 51-101F1 dated effective as at December 31, 2020,
which includes disclosure of its oil and gas reserves and other oil and
gas information in accordance with NI 51-101 forming the basis of this
press release, is available on SEDAR at www.sedar.com.
Estimates of net present value and future net revenue contained herein
do not necessarily represent fair market value of reserves. 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 and future net revenue
will be attained and variances could be material. See Gran Tierra's
press release dated January 28, 2021 for a summary of the price
forecasts employed by McDaniel in the GTE McDaniel Reserves Report and
other information regarding the disclosed future net revenue.
All evaluations of future net revenue contained in the GTE McDaniel
Reserves Report are after the deduction of royalties, operating costs,
development costs, production costs and abandonment and reclamation
costs but before consideration of indirect costs such as administrative,
overhead and other miscellaneous expenses. It should not be assumed that
the estimates of future net revenue presented in this press release
represent the fair market value of the reserves. There are numerous
uncertainties inherent in estimating quantities of crude oil and natural
gas reserves and the future cash flows attributed to such reserves. The
reserve and associated cash flow 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.
BOEs have been converted on the basis of six thousand cubic feet ("Mcf")
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.
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.
Future Net Revenue
Future net revenue reflects McDaniel's forecast of revenue estimated
using forecast prices and costs, arising from the anticipated
development and production of resources, after the deduction of
royalties, operating costs, development costs and abandonment and
reclamation costs but before consideration of indirect costs such as
administrative, overhead and other miscellaneous expenses. The estimate
of future net revenue below does not necessarily represent fair market
value.
Consolidated Properties at December 31, 2020
Proved (1P) Total Future Net Revenue ($ million)
Forecast Prices and Costs
Future
Abandonment Future Net Revenue Net Revenue
Future and Before After
Sales Total Operating Development Reclamation Future Future Future
Years Revenue Royalties Costs Capital Costs Taxes Taxes Taxes*
--------------- -------- ------------ ----------- -------------- -------------- ------------------ ------ --------------
2021-2025
(5 Years) 2,362 (328) (587) (311) (1) 1,135 (102) 1,033
Remainder 1,452 (196) (591) (1) (60) 604 (174) 430
--------------- -------- ------ --- ------- ------- ---- ------- ---- ------------------ ----- ------------
Total
(Undiscounted) 3,814 (524) (1,178) (312) (61) 1,739 (276) 1,463
--------------- -------- ------ --- ------- ------- ---- ------- ---- ------------------ ----- ------------
Total
(Discounted @
10%) 2,569 (354) (730) (276) (18) 1,191 (162) 1,029
--------------- -------- ------ --- ------- ------- ---- ------- ---- ------------------ ----- ------------
Consolidated Properties at December 31, 2020
Proved Plus Probable (2P) Total Future Net Revenue
($ million)
Forecast Prices and Costs
Future
Net
Abandonment Future Net Revenue Revenue
Future and Before After
Sales Total Operating Development Reclamation Future Future Future
Years Revenue Royalties Costs Capital Costs Taxes Taxes Taxes*
--------------- -------- ------------ ----------- -------------- -------------- ------------------ ------ ----------
2021-2025
(5 Years) 3,245 (459) (693) (564) -- 1,529 (217) 1,312
Remainder 3,407 (480) (1,012) (1) (75) 1,839 (506) 1,333
--------------- -------- ------ --- ------- ------- ---- ------- ---- ------------------ ----- --------
Total
(Undiscounted) 6,652 (939) (1,705) (565) (75) 3,368 (723) 2,645
--------------- -------- ------ --- ------- ------- ---- ------- ---- ------------------ ----- --------
Total
(Discounted @
10%) 3,978 (564) (954) (481) (17) 1,962 (372) 1,590
--------------- -------- ------ --- ------- ------- ---- ------- ---- ------------------ ----- --------
*The after-tax net present value of the Company's oil and gas properties
reflects the tax burden on the properties on a stand-alone basis. It
does not consider the corporate tax situation, or tax planning. It does
not provide an estimate of the value at the Company level which may be
significantly different. The Company's financial statements should be
consulted for information at the Company level.
Definitions
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.
Proved developed producing reserves are those reserves that are expected
to be recovered from completion intervals open at the time of the
estimate. These reserves may be currently producing or, if shut-in, they
must have previously been on production, and the date of resumption of
production must be known with reasonable certainty.
Certain terms used in this press release but not defined are defined in
NI 51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101
Standards of Disclosure for Oil and Gas Activities ("CSA Staff Notice
51-324") and/or the COGEH and, unless the context otherwise requires,
shall have the same meanings herein as in NI 51-101, CSA Staff Notice
51-324 and the COGEH, as the case may be.
Oil and Gas Metrics
This press release contains a number of oil and gas metrics, including
free cash flow, NAV per share, F&D costs, operating netback, cash
netback, reserves per share and reserves replacement 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 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.
-- Before tax and after tax free cash flow are non-GAAP terms and are called
before tax and after tax net revenue in the GTE McDaniel Reserves Report,
respectively. The non-GAAP term of before tax free cash flow reconciles
to the nearest GAAP term of oil sales, which is called sales revenue in
the GTE McDaniel Reserves Report. Before tax net revenue is calculated by
McDaniel by subtracting total royalties, operating costs, future
development capital, abandonment and reclamation costs from sales
revenue. After tax free cash flow is calculated by McDaniel by
subtracting future taxes from before tax net revenue. Refer to "Future
Net Revenue" in this press release for the applicable reconciliation.
Management uses free cash flow as a measure of the Company's ability to
fund its exploration program.
-- NAV per share is calculated as NPV10 (before or after tax, as applicable)
minus estimated net debt, divided by the number of shares of Gran
Tierra's common stock issued and outstanding. Management uses NAV per
share as a measure of the relative change of Gran Tierra's net asset
value over its outstanding common stock over a period of time.
-- F&D costs are calculated as estimated exploration and development capital
expenditures, excluding acquisitions and dispositions, divided by the
applicable reserves additions both before and after changes in future
development costs. The calculation of F&D costs incorporates the change
in future development costs required to bring proved undeveloped and
developed reserves into production. The aggregate of the exploration and
development costs incurred in the financial year and the changes during
that year in estimated future development costs may not reflect the total
F&D costs related to reserves additions for that year. Management uses
F&D costs per BOE as a measure of its ability to execute its capital
program and of its asset quality.
-- Operating netback and cash netback are calculated as described in this
press release. Management believes that operating netback and cash
netback are useful supplemental measures for the reasons described in
this press release.
-- Reserves per share is calculated as reserves in the referenced category
divided by the number of shares of Gran Tierra's common stock issued and
outstanding as at December 31,2020. Management uses this measure to
determine the relative change of its reserve base over its outstanding
common stock over a period of time.
-- Reserves replacement is calculated as reserves in the referenced category
divided by estimated referenced production. Management uses this measure
to determine the relative change of its reserves base over a period of
time.
Disclosure of Reserve Information and Cautionary Note to U.S. Investors
Unless expressly stated otherwise, all estimates of proved developed
producing, proved, probable and possible reserves and related future net
revenue disclosed in this press release have been prepared in accordance
with NI 51-101. Estimates of reserves and future net revenue made in
accordance with NI 51-101 will differ from corresponding estimates
prepared in accordance with applicable U.S. Securities and Exchange
Commission ("SEC") rules and disclosure requirements of the U.S.
Financial Accounting Standards Board ("FASB"), and those differences may
be material. NI 51-101, for example, requires disclosure of reserves and
related future net revenue estimates based on forecast prices and costs,
whereas SEC and FASB standards require that reserves and related future
net revenue be estimated using average prices for the previous 12
months. In addition, NI 51-101 permits the presentation of reserves
estimates on a "company gross" basis, representing Gran Tierra's working
interest share before deduction of royalties, whereas SEC and FASB
standards require the presentation of net reserve estimates after the
deduction of royalties and similar payments. There are also differences
in the technical reserves estimation standards applicable under NI
51-101 and, pursuant thereto, the COGEH, and those applicable under SEC
and FASB requirements.
In addition to being a reporting issuer in certain Canadian
jurisdictions, Gran Tierra is a registrant with the SEC and subject to
domestic issuer reporting requirements under U.S. federal securities law,
including with respect to the disclosure of reserves and other oil and
gas information in accordance with U.S. federal securities law and
applicable SEC rules and regulations (collectively, "SEC requirements").
Disclosure of such information in accordance with SEC requirements is
included in the Company's Annual Report on Form 10-K and in other
reports and materials filed with or furnished to the SEC and, as
applicable, Canadian securities regulatory authorities. The SEC permits
oil and gas companies that are subject to domestic issuer reporting
requirements under U.S. federal securities law, in their filings with
the SEC, to disclose only estimated proved, probable and possible
reserves that meet the SEC's definitions of such terms. Gran Tierra has
disclosed estimated proved, probable and possible reserves in its
filings with the SEC. In addition, Gran Tierra prepares its financial
statements in accordance with United States generally accepted
accounting principles, which require that the notes to its annual
financial statements include supplementary disclosure in respect of the
Company's oil and gas activities, including estimates of its proved oil
and gas reserves and a standardized measure of discounted future net
cash flows relating to proved oil and gas reserve quantities. This
supplementary financial statement disclosure is presented in accordance
with FASB requirements, which align with corresponding SEC requirements
concerning reserves estimation and reporting.
(END) Dow Jones Newswires
February 24, 2021 21:22 ET (02:22 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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