TIDMGTE
-- Highest Year-End Total Company Reserves in Company History - 90 MMBOE 1P,
147 MMBOE 2P and 207 MMBOE 3P
-- Added Total Company Reserves of 18 MMBOE 1P, 29 MMBOE 2P and 36 MMBOE 3P
-- Achieved 154% 1P, 242% 2P and 303% 3P Reserves Replacement
-- Fifth Consecutive Year of 1P Total Company Reserves Growth
-- Incurred F&D Costs, Excluding Change in FDC, of $11.96 (1P), $7.58 (2P)
and $6.06 (3P) per boe
-- Net Present Value Before Tax Discounted at 10% of $1.9 Billion (1P), $3.1
Billion (2P), and $4.3 Billion (3P)
-- Net Asset Value per Share of $18.79 Before Tax and $10.46 After Tax (PDP),
$44.48 Before Tax and $24.06 After Tax (1P), and $79.13 Before Tax and
$42.71 After Tax (2P)
CALGARY, Alberta, Jan. 23, 2024 (GLOBE NEWSWIRE) -- Gran Tierra
Energy Inc. ("Gran Tierra" or the "Company") (NYSE
American:GTE)(TSX:GTE)(LSE:GTE), a company focused on international
oil exploration and production with assets currently in Colombia
and Ecuador, today announced the Company's 2023 year-end reserves
as evaluated by the Company's independent qualified reserves
evaluator McDaniel & Associates Consultants Ltd. ("McDaniel")
in a report with an effective date of December 31, 2023 (the "GTE
McDaniel Reserves Report").
All dollar amounts are in United States ("U.S.") dollars and all
reserves and production volumes are on a working interest before
royalties ("WI") basis. Production is expressed in barrels ("bbl")
of oil per day ("bopd"), while reserves are expressed in bbl, bbl
of oil equivalent ("boe") or million boe ("MMBOE"), unless
otherwise indicated. The following reserves categories are
discussed in this press release: Proved Developed Producing
("PDP"), Proved ("1P"), 1P plus Probable ("2P") and 2P plus
Possible ("3P").
Gary Guidry, President and Chief Executive Officer of Gran
Tierra, commented: "During 2023, a combination of our strong
reserves growth, ongoing reductions in debt and share buybacks
allowed Gran Tierra to achieve net asset values per share(**)
before tax of $44.48 (1P), up 288% from 2020, and $79.13 (2P), up
144% from 2020. With this significant growth in our net asset
values per share(**) over the last three years, we believe Gran
Tierra is well positioned to offer exceptional long-term
stakeholder value.
Gran Tierra achieved strong 154% (1P), 242% (2P) and 303% (3P)
reserves replacement through our successful results from our
development drilling, waterflooding programs, field performance and
the Suroriente Block Continuation Agreement(*) . This multi-faceted
success resulted in record highs for the Company's year-end 1P, 2P
and 3P oil reserves.
We completed our 2023 development plan on-budget including
waterflooding efforts and development drilling in the Acordionero,
Costayaco and Moqueta oil fields. We also continued to evaluate our
successful ongoing production from key 2022 exploration discoveries
in Colombia and Ecuador to plan for 2024 follow-up exploration
drilling. We believe our success on multiple fronts during 2023
demonstrates Gran Tierra's ability to be a full-cycle oil and gas
exploration, development and production company focused on value
creation for all our stakeholders.
The success the Company achieved in 2023 also reflects our
ongoing conversion of reserves from the Probable to the Proved
category. With 147 booked Proved plus Probable Undeveloped future
drilling locations, Gran Tierra is well positioned to continue to
grow the Company's production and reserves in 2024 and beyond.
We have started 2024 strong with two rigs currently drilling our
planned series of development wells in Acordionero and Costayaco.
Both rigs began their development campaigns in December 2023. Later
in 2024, we look forward to our planned resumption of exploration
drilling in Colombia and Ecuador to build upon our successful
exploration results in 2022, and the first development drilling in
the Suroriente Block since 2018. Through our ongoing focus on the
development of our existing assets, appraisal of our 2022
discoveries and exploration drilling, we plan to continue to
strengthen our balance sheet, profitably increase production, grow
our reserve base and return capital to shareholders through share
buybacks."
*See the section below titled "Suroriente Continuation
Agreement".
**See the below tables for the definitions of net asset values
per share.
Highlights
2023 Year-End Reserves and Values
Before Tax (as of December 31, 2023) Units 1P 2P 3P
-------------------------------------------- ---------- ----- ----- ------
Reserves MMBOE 90 147 207
Net Present Value at 10% Discount ("NPV10") $ million 1,945 3,063 4,269
Net Debt(1) $ million (511) (511) (511)
----- ----- ------
Net Asset Value (NPV10 less Net Debt)
("NAV") $ million 1,434 2,552 3,759
----- ----- ------
Outstanding Shares(2) million 32.25 32.25 32.25
NAV per Share $/share 44.48 79.13 116.56
After Tax (as of December 31, 2023) Units 1P 2P 3P
------------------------------------ ---------- ----- ----- -----
Reserves MMBOE 90 147 207
NPV10 $ million 1,287 1,888 2,552
Net Debt(1) $ million (511) (511) (511)
----- ----- -----
NAV $ million 776 1,377 2,041
----- ----- -----
Outstanding Shares(2) million 32.25 32.25 32.25
NAV per Share $/share 24.06 42.71 63.29
(1) Based on estimated 2023 year-end net debt of $511 million
comprised of Senior Notes of $537 million (gross) plus the Credit
Facility of $36 million (gross) less cash and cash equivalents of
$62 million, prepared in accordance with GAAP.
(2) Outstanding Shares. Reflects Gran Tierra's 1-for-10 reverse
stock split that became effective May 5, 2023.
-- As of December 31, 2023, Gran Tierra achieved:
-- Before Tax NAV of $1.4 billion (1P), $2.6 billion (2P), and $3.8
billion (3P)
-- After Tax NAV of $0.8 billion (1P), $1.4 billion (2P), and $2.0
billion (3P)
-- Strong reserves replacement ratios of:
-- 154% 1P, with 1P reserves additions of 18 MMBOE.
-- 242% 2P, with 2P reserves additions of 29 MMBOE.
-- 303% 3P, with 3P reserves additions of 36 MMBOE.
-- Meaningful 1P, 2P and 3P reserves additions largely driven by
success with development drilling and waterflooding results in the
Chaza Block (which contains Costayaco and Moqueta fields) and the
Suroriente Continuation Agreement*.
-- Finding and development costs ("F&D"), including change in future
development costs ("FDC"), on a per boe basis of $20.58 (1P),
$16.09 (2P) and $14.67 (3P).
-- F&D costs excluding change in FDC, on a per boe basis of $11.96
(1P), $7.58 (2P) and $6.06 (3P).
-- F&D recycle ratios**, including change in FDC, of 1.8 times (1P),
2.2 times (2P) and 2.5 times (3P).
-- Gran Tierra's four major oil assets, Acordionero, Costayaco, Moqueta and
Suroriente (all on waterflood) represent 83% of the Company's 1P reserves
and 73% of its 2P reserves.
-- The Company's PDP reserves account for 48% of 1P reserves and 1P reserves
account for 61% of 2P reserves, which demonstrate the strength of Gran
Tierra's reserves base via the potential future conversion of Probable
reserves into 1P reserves and Proved Undeveloped reserves into PDP
reserves.
-- FDC are forecast to be $561 million for 1P reserves and $923 million for
2P reserves. Gran Tierra's 2024 base case mid-point guidance for cash
flow*** of $300 million is equivalent to 54% of 1P FDC and 33% of 2P FDC,
which highlights the Company's potential ability to fund future
development capital. Increases in FDC relative to 2022 year-end reflect
that the GTE McDaniel Reserves Report now assigns Gran Tierra 95 Proved
Undeveloped future drilling locations (up from 78 at 2022 year-end) and
147 Proved plus Probable Undeveloped future drilling locations (up from
115 at 2022 year-end).
*See the section below titled "Suroriente Continuation
Agreement".
**F&D recycle ratio is defined as fourth quarter 2023
operating netback per WI sales volume boe divided by the
appropriate F&D costs on a per boe basis. Operating netback
does not have a standardized meaning under generally accepted
accounting principles in the United States of America ("GAAP") and
is a non-GAAP measure. Operating netback is defined as oil sales
less operating and transportation expenses. See "Non-GAAP Measures"
in this press release.
*** "Cash flow" refers to GAAP line item "net cash provided by
operating activities". Gran Tierra's 2024 base case guidance is
based on a forecast 2024 average Brent oil price of $80/bbl. This
forecast price used in Gran Tierra's forecast is higher than the
2024 McDaniel Brent price forecast.
GTE McDaniel Reserves Report
All reserves values, future net revenue and ancillary
information contained in this press release have been prepared by
McDaniel and calculated in compliance with Canadian National
Instrument 51-101 -- Standards of Disclosure for Oil and Gas
Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation
Handbook ("COGEH") and derived from the GTE McDaniel Reserves
Report, unless otherwise expressly stated.
Future Net Revenue
Future net revenue reflects McDaniel's forecast of revenue
estimated using forecast prices and costs, arising from the
anticipated development and production of reserves, after the
deduction of royalties, operating costs, development costs and
abandonment and reclamation costs but before consideration of
indirect costs such as administrative, overhead and other
miscellaneous expenses. The estimate of future net revenue below
does not necessarily represent fair market value.
Consolidated Properties at December 31, 2023
Proved (1P) Total Future Net Revenue ($ million)
Forecast Prices and Costs
Future
Net
Abandonment Revenue Future Net
Future and Before Revenue
Sales Total Operating Development Reclamation Future Future After Future
Revenue Royalties Costs Capital Costs Taxes Taxes Taxes*
--------------- ------- ----------- ----------- ------------- ------------- ------- -------- ------------
2024-2028
(5 Years) 4,334 (858) (939) (561) (7) 1,969 (629) 1,340
Remainder 2,013 (334) (845) -- (97) 737 (287) 450
--------------- ------- ------- ------- ----- ------ ----- ----- ------- ---- ------------
Total
(Undiscounted) 6,347 (1,192) (1,784) (561) (104) 2,706 (916) 1,790
--------------- ------- ------- ------- ----- ----- ----- ----- ------- ---- ------------
Total
(Discounted @
10%) 4,453 (854) (1,138) (475) (39) 1,947 (658) 1,289
--------------- ------- ------- ------- ----- ----- ----- ----- ------- ---- ------------
Consolidated Properties at December 31, 2023
Proved Plus Probable (2P) Total Future Net Revenue
($ million)
Forecast Prices and Costs
Future
Net
Abandonment Revenue Future Net
Future and Before Revenue
Sales Total Operating Development Reclamation Future Future After Future
Years Revenue Royalties Costs Capital Costs Taxes Taxes Taxes*
--------------- ------- ----------- ----------- ------------- ------------- ------- ------- ------------
2024-2028
(5 Years) 5,654 (1,159) (1,080) (865) (3) 2,547 (946) 1,601
Remainder 4,935 (870) (1,664) (57) (122) 2,222 (890) 1,332
--------------- ------- ------- ------- ----- ----- ----- ----- ------- ------ ------------
Total
(Undiscounted) 10,589 (2,029) (2,744) (922) (125) 4,769 (1,836) 2,933
--------------- ------- ------- ------- ----- ----- ----- ----- ------- ------ ------------
Total
(Discounted @
10%) 6,695 (1,316) (1,541) (736) (40) 3,062 (1,175) 1,887
--------------- ------- ------- ------- ----- ----- ----- ----- ------- ------ ------------
Consolidated Properties at December 31, 2023
Proved Plus Probable Plus Possible (3P) Total Future
Net Revenue ($ million)
Forecast Prices and Costs
Future
Net
Abandonment Revenue Future Net
Future and Before Revenue
Sales Total Operating Development Reclamation Future Future After Future
Years Revenue Royalties Costs Capital Costs Taxes Taxes Taxes*
--------------- ------- ----------- ----------- ------------- ------------- ------- ------- ------------
2024-2028
(5 Years) 6,580 (1,369) (1,150) (979) (3) 3,079 (1,213) 1,866
Remainder 8,621 (1,654) (2,443) (186) (137) 4,201 (1,723) 2,478
--------------- ------- ------- ------- ------- --- ----- ----- ------- ------ ------------
Total
(Undiscounted) 15,201 (3,023) (3,593) (1,165) (140) 7,280 (2,936) 4,344
--------------- ------- ------- ------- ------- --- ----- ----- ------- ------ ------------
Total
(Discounted @
10%) 8,799 (1,774) (1,834) (884) (38) 4,269 (1,718) 2,551
--------------- ------- ------- ------- ------- --- ----- ----- ------- ------ ------------
*The after-tax future net revenue 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, when available for the year
ended December 31, 2023, should be consulted for information at the
Company level.
Total Company WI Reserves
The following table summarizes Gran Tierra's NI 51-101 and COGEH
compliant reserves in Colombia and Ecuador derived from the GTE
McDaniel Reserves Report calculated using forecast oil and gas
prices and costs. Gran Tierra has determined that Ecuador reserves,
included in the Total Proved, Total Probable and Total Possible
reserve categories for Light and Medium Crude Oil, are not material
enough to present separately on a country basis. Therefore all
amounts are presented on a consolidated basis by foreign geographic
area.
Light and
Medium Crude Conventional
Oil Heavy Crude Oil Natural Gas 2023Year-End
Reserves
Category Mbbl* Mbbl* MMcf** Mboe***
--------------- -------------- --------------- -------------- ------------
Proved
Developed
Producing 21,308 22,372 -- 43,680
Proved
Developed
Non-Producing 3,130 453 -- 3,583
Proved
Undeveloped 20,150 22,691 -- 42,841
-------------- --------------- -------------- ------------
Total Proved 44,588 45,516 -- 90,104
Total Probable 26,271 30,731 -- 57,002
-------------- --------------- -------------- ------------
Total Proved
plus Probable 70,859 76,247 -- 147,106
Total Possible 24,108 35,642 -- 59,750
-------------- --------------- -------------- ------------
Total Proved
plus Probable
plus Possible 94,967 111,889 -- 206,856
--------------- -------------- --------------- -------------- ------------
*Mbbl (thousand bbl of oil).
**MMcf (million cubic feet).
***Mboe (thousand boe).
Net Present Value Summary
Gran Tierra's reserves were evaluated using the average of 3
independent qualified reserves evaluators' commodity price
forecasts at January 1, 2024 (McDaniel, Sproule and GLJ). See
"Forecast Prices" for more information. It should not be assumed
that the net present value of cash flow estimated by McDaniel
represents the fair market value of Gran Tierra's reserves.
Total Company Discount Rate
--------------------------------- -----------------------------------
($ millions) 0% 5% 10% 15% 20%
--------------------------------- ----- ----- ----- -----
Before Tax
Proved Developed Producing 1,362 1,228 1,117 1,025 948
Proved Developed Non-Producing 135 115 99 87 77
Proved Undeveloped 1,209 932 730 579 465
----- ----- ----- ----- -----
Total Proved 2,706 2,275 1,946 1,691 1,490
Total Probable 2,062 1,493 1,117 861 680
----- ----- ----- ----- -----
Total Proved plus Probable 4,768 3,768 3,063 2,552 2,170
Total Possible 2,513 1,698 1,207 895 688
----- ----- ----- ----- -----
Total Proved plus Probable plus
Possible 7,281 5,466 4,270 3,447 2,858
--------------------------------- ----- ----- ----- ----- -----
After Tax
Proved Developed Producing 1,025 930 848 779 721
Proved Developed Non-Producing 73 63 54 48 42
Proved Undeveloped 691 514 384 288 216
----- ----- ----- ----- -----
Total Proved 1,789 1,507 1,286 1,115 979
Total Probable 1,142 816 601 455 353
----- ----- ----- ----- -----
Total Proved plus Probable 2,931 2,323 1,887 1,570 1,332
Total Possible 1,413 945 664 486 370
----- ----- ----- ----- -----
Total Proved plus Probable plus
Possible 4,344 3,268 2,551 2,056 1,702
--------------------------------- ----- ----- ----- ----- -----
Reserve Life Index (Years)
December 31, 2023*
Total Proved 8
Total Proved plus Probable 13
Total Proved plus Probable plus Possible 18
----------------------------------------- ------------------
* Calculated using Gran Tierra's average fourth quarter 2023 WI
production of 31,309 bopd.
Future Development Costs
FDC reflects McDaniel's best estimate of what it will cost to
bring the Proved Undeveloped and Probable Undeveloped reserves on
production. Changes in forecast FDC occur annually as a result of
development activities, acquisition and disposition activities, and
changes in capital cost estimates based on improvements in well
design and performance, as well as changes in service costs. FDC
for 2P reserves increased to $923 million at year-end 2023 from
$677 million at year-end 2022. The increase in FDC in 2023 was
predominantly attributed to the increase in the numbers of future
development well locations identified by McDaniel in the Suroriente
Continuation Agreement.
Total Proved Plus
Total Proved Plus Probable Plus
($ millions) Total Proved Probable Possible
--------------------- ------------ -------------------- -------------------
2024 127 134 138
2025 164 189 196
2026 159 237 246
2027 102 217 260
2028 9 89 139
Remainder -- 57 186
--------------------- ------------ -------------------- -------------------
Total (undiscounted) 561 923 1,165
--------------------- ------------ -------------------- -------------------
Proved plus Probable
($ millions) Proved Proved plus Probable plus Possible
------------------------ ------ -------------------- ----------------------
Acordionero 142 142 142
Chaza Block (Costayaco &
Moqueta) 128 161 161
Suroriente 125 202 286
Ecuador 90 177 232
Other 76 241 344
------------------------ ------ -------------------- ----------------------
Total FDC Costs
(undiscounted) 561 923 1,165
------------------------ ------ -------------------- ----------------------
Finding and Development Costs
Reserves (Mboe) Year Ended December 31, 2023
Proved Developed Producing 43,680
Total Proved 90,104
Total Proved plus Probable 147,106
Total Proved plus Probable plus Possible 206,856
---------------------------------------------- ----------------------------
Capital Expenditures ($000s)
- including and excluding acquired properties 219,060
---------------------------------------------- ----------------------------
Operating Netback* ($/bbl, per WI sales
volumes)
Operating Netback* - fourth quarter 2023 36.05
---------------------------------------------- ----------------------------
*Operating Netback is a Non-GAAP measure and does not have a
standardized meaning under GAAP. Operating netback as presented is
defined as oil sales less operating and transportation expenses.
See "Non-GAAP Measures" in this press release.
Finding and Development Costs, Excluding FDC(*)
Year Ended December 31, 2023
Proved Developed Producing
Reserve Additions (Mboe) 8,451
F&D Costs ($/boe) 25.92
F&D Recycle Ratio 1.4
---------------------------- -----
Finding and Development Costs, Including FDC(*)
Year Ended December 31, 2023
Proved Developed Producing
Change in FDC ($000s) (11,389)
Reserve Additions (Mboe) 8,451
F&D Costs ($/boe) 24.57
F&D Recycle Ratio 1.5
---------------------------- -------
Finding and Development Costs, Excluding FDC(*)
Year Ended December 31, 2023
Total Proved
Reserve Additions (Mboe) 18,322
F&D Costs ($/boe) 11.96
F&D Recycle Ratio 3.0
-------------------------- ------
Finding and Development Costs, Including FDC(*)
Year Ended December 31, 2023
Total Proved
Change in FDC ($000s) 157,950
Reserve Additions (Mboe) 18,322
F&D Costs ($/boe) 20.58
F&D Recycle Ratio 1.8
-------------------------- -------
Finding and Development Costs, Excluding FDC(*)
Year Ended December 31, 2023
Total Proved plus Probable
Reserve Additions (Mboe) 28,893
F&D Costs ($/boe) 7.58
F&D Recycle Ratio 4.8
---------------------------- ------
Finding and Development Costs, Including FDC(*)
Year Ended December 31, 2023
Total Proved plus Probable
Change in FDC ($000s) 245,746
Reserve Additions (Mboe) 28,893
F&D Costs ($/boe) 16.09
F&D Recycle Ratio 2.2
---------------------------- -------
Finding and Development Costs, Excluding FDC(*)
Year Ended December 31, 2023
Total Proved plus Probable plus Possible
Reserve Additions (Mboe) 36,120
F&D Costs ($/boe) 6.06
F&D Recycle Ratio 5.9
------------------------------------------ ------
Finding and Development Costs, Including FDC(*)
Year Ended December 31, 2023
Total Proved plus Probable plus Possible
Change in FDC ($000s) 310,776
Reserve Additions (Mboe) 36,120
F&D Costs ($/boe) 14.67
F&D Recycle Ratio 2.5
------------------------------------------ -------
*In all cases, the F&D number is calculated by dividing the
identified capital expenditures by the applicable reserves
additions both before and after changes in FDC costs. Both F&D
costs take into account reserves revisions during the year on a per
boe basis. F&D recycle ratio is defined as fourth quarter 2023
operating netback per WI sales volume boe divided by the
appropriate F&D costs on a per boe basis. 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. Operating Netback is a Non-GAAP measure
and does not have a standardized meaning under GAAP. Operating
netback is defined as oil sales less operating and transportation
expenses. See "Non-GAAP Measures" in this press release.
Forecast Prices
The pricing assumptions used in estimating NI 51-101 and COGEH
compliant reserves data disclosed above with respect to net present
values of future net revenue are set forth below. The price
forecasts are based on an average of three independent qualified
reserves evaluators' commodity price forecasts at January 1, 2024
(McDaniel, Sproule and GLJ). All three of these companies are
independent qualified reserves evaluators and auditors pursuant to
NI 51-101.
Brent Crude Oil WTI Crude Oil
Year $US/bbl $US/bbl
----- --------------- ---------------
January 1, 2024 January 1, 2024
----- --------------- ---------------
2024 $78.00 $73.67
2025 $79.18 $74.98
2026 $80.36 $76.14
2027 $81.79 $77.66
2028 $83.41 $79.22
----- --------------- ---------------
Suroriente Continuation Agreement
On April 11, 2023, the Company announced that it had entered
into an agreement with Ecopetrol S.A., the national oil company of
Colombia (the "Suroriente Continuation Agreement"), by which the
parties renegotiated the terms and the duration of the contract for
the Suroriente Block in the Department of Putumayo, which was
scheduled to end in mid-2024. The Suroriente Continuation Agreement
provides an opportunity to add significant value, as well as
economic life, to the Suroriente Block by continuing its duration
for 20 years from the Suroriente Continuation Agreement's effective
date. On August 31, 2023, the Company announced that it had
satisfied all outstanding conditions precedent to the effectiveness
of the Suroriente Continuation Agreement.
Corporate Presentation:
Gran Tierra's Corporate Presentation has been updated and is
available on the Company website at www.grantierra.com.
Contact Information
For investor and media inquiries please contact:
Gary Guidry, Chief Executive Officer
Ryan Ellson, Executive Vice President & Chief Financial
Officer
Rodger Trimble, Vice President, Investor Relations
Tel: +1.403.265.3221
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an
independent energy company currently focused on international oil
and natural gas exploration and production in Colombia and Ecuador.
The Company is currently developing its existing portfolio of
assets in Colombia and Ecuador and will continue to pursue
additional growth opportunities that would further strengthen the
Company's portfolio. The Company's common stock trades on the NYSE
American, the Toronto Stock Exchange and the London Stock Exchange
under the ticker symbol GTE. Additional information concerning Gran
Tierra is available at www.grantierra.com. Information on the
Company's website (including the Corporate Presentation referenced
above) does not constitute a part of this press release. Investor
inquiries may be directed to info@grantierra.com or (403)
265-3221.
Gran Tierra's U.S. Securities and Exchange Commission ("SEC")
filings are available on the SEC website at www.sec.gov. The
Company's Canadian securities regulatory filings are available on
SEDAR at www.sedar.com and UK regulatory filings are available on
the National Storage Mechanism (the "NSM") website at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Gran
Tierra's filings on the SEC, SEDAR and the NSM websites are not
incorporated by reference into this press release.
FORWARD LOOKING STATEMENTS ADVISORY
This press release contains opinions, forecasts, projections,
and other statements about future events or results that constitute
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and financial outlook
and forward looking information within the meaning of applicable
Canadian securities laws (collectively, "forward-looking
statements"), which can be identified by such terms as "expect,"
"plan," "can," "will," "should," "guidance," "estimate,"
"forecast," "signal," "progress" and "believes," derivations
thereof and similar terms identify forward-looking statements. Such
forward-looking statements include, but are not limited to, the
Company's expectations regarding its estimated quantities and net
present values of reserves, capital program, and ability to fund
the Company's exploration program over a period of time, statements
about the Company's financial and performance targets and other
forecasts or expectations regarding, or dependent on, the Company's
business outlook for 2024 and beyond, capital spending plans and
any benefits of the changes in our capital program or expenditures,
well performance, production, the restart of production and
workover activity, future development costs, infrastructure
schedules, waterflood impacts and plans, growth of referenced
reserves, forecast prices, five-year expected oil sales and cash
flow and net revenue, estimated recovery factors, liquidity and
access to capital, the Company's strategies and results thereof,
the Company's operations including planned operations and
developments, disruptions to operations and the decline in industry
conditions, and expectations regarding environmental
commitments.
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 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 Colombia and
Ecuador and 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: Gran Tierra's operations are
located in South America and unexpected problems can arise due to
guerilla activity, strikes, local blockades or protests; technical
difficulties and operational difficulties may arise which impact
the production, transport or sale of Gran Tierra's products; other
disruptions to local operations; global and regional changes in the
demand, supply, prices, differentials or other market conditions
affecting oil and gas, including inflation and changes resulting
from a global health crisis, geopolitical events, including the
ongoing conflicts in Ukraine and the Gaza region, or from the
imposition or lifting of crude oil production quotas or other
actions that might be imposed by OPEC and other producing countries
and resulting company or third-party actions in response to such
changes; changes in commodity prices, including volatility or a
prolonged decline in these prices relative to historical or future
expected levels; the risk that current global economic and credit
conditions may impact oil prices and oil consumption more than Gran
Tierra currently predicts, which could cause Gran Tierra to further
modify its strategy and capital spending program; prices and
markets for oil and natural gas are unpredictable and volatile; the
effect of hedges, the accuracy of productive capacity of any
particular field; geographic, political and weather conditions can
impact the production, transport or sale of Gran Tierra's products;
the ability of Gran Tierra to execute its business plan and realize
expected benefits from current initiatives; the risk that
unexpected delays and difficulties in developing currently owned
properties may occur; the ability to replace reserves and
production and develop and manage reserves on an economically
viable basis; the accuracy of testing and production results and
seismic data, pricing and cost estimates (including with respect to
commodity pricing and exchange rates); the risk profile of planned
exploration activities; the effects of drilling down-dip; the
effects of waterflood and multi-stage fracture stimulation
operations; the extent and effect of delivery disruptions,
equipment performance and costs; actions by third parties; the
timely receipt of regulatory or other required approvals for Gran
Tierra's operating activities; the failure of exploratory drilling
to result in commercial wells; unexpected delays due to the limited
availability of drilling equipment and personnel; volatility or
declines in the trading price of Gran Tierra's common stock or
bonds; the risk that Gran Tierra does not receive the anticipated
benefits of government programs, including government tax refunds;
Gran Tierra's ability to comply with financial covenants in its
credit agreement and indentures and make borrowings under its
credit agreement; and the risk factors detailed from time to time
in Gran Tierra's periodic reports filed with the SEC, including,
without limitation, under the caption "Risk Factors" in Gran
Tierra's Annual Report on Form 10-K for the year ended December 31,
2022 filed on February 21, 2023 and its other filings with the SEC.
These filings are available on the Securities and Exchange
Commission website at http://www.sec.gov and on SEDAR at
www.sedar.com.
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.
Guidance is uncertain, particularly when given over extended
periods of time, and results may be materially different. Although
the current capital spending program and long term strategy of Gran
Tierra is based upon the current expectations of the management of
Gran Tierra, should any one of a number of issues arise, Gran
Tierra may find it necessary to alter its business strategy and/or
capital spending program and there can be no assurance as at the
date of this press release as to how those funds may be reallocated
or strategy changed and how that would impact Gran Tierra's results
of operations and financing position. In particular, the
unprecedented nature of the economic downturn and industry decline
may make it particularly difficult to identify risks or predict the
degree to which identified risks will impact Gran Tierra's business
and financial condition. All forward-looking statements are made as
of the date of this press release and the fact that this press
release remains available does not constitute a representation by
Gran Tierra that Gran Tierra believes these forward-looking
statements continue to be true as of any subsequent date. Actual
results may vary materially from the expected results expressed in
forward-looking statements. Gran Tierra disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as expressly required by applicable law. Gran Tierra's
forward-looking statements are expressly qualified in their
entirety by this cautionary statement.
The estimates of future net revenue, cash flow and certain
expenses may be considered to be future-oriented financial
information or a financial outlook for the purposes of applicable
Canadian securities laws. Financial outlook and future-oriented
financial information contained in this press release about
prospective financial performance, financial position or cash flows
are provided to give the reader a better understanding of the
potential future performance of the Company in certain areas and
are based on assumptions about future events, including economic
conditions and proposed courses of action, based on management's
assessment of the relevant information currently available, and to
become available in the future. In particular, this press release
contains projected operational and financial information for 2024
and for the next five years to allow readers to assess the
Company's ability to fund its programs. These projections contain
forward-looking statements and are based on a number of material
assumptions and factors set out above. Actual results may differ
significantly from the projections presented herein. The actual
results of Gran Tierra's operations for any period could vary from
the amounts set forth in these projections, and such variations may
be material. See above for a discussion of the risks that could
cause actual results to vary. The future-oriented financial
information and financial outlooks contained in this press release
have been approved by management as of the date of this press
release. Readers are cautioned that any such financial outlook and
future-oriented financial information contained herein should not
be used for purposes other than those for which it is disclosed
herein. The Company and its management believe that the prospective
financial information has been prepared on a reasonable basis,
reflecting management's best estimates and judgments, and
represent, to the best of management's knowledge and opinion, the
Company's expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. See Gran Tierra's press
release dated January 23, 2024 for additional information regarding
cash flow guidance referred to herein.
Non-GAAP Measures
This press release includes non-GAAP measures which do not have
a standardized meaning under GAAP. Investors are cautioned that
these measures should not be construed as alternatives to oil
sales, 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, they may not be comparable to similar
measures used by other companies.
Operating netback as presented is defined as oil sales less
operating and transportation expenses. Management believes that
operating netback is a useful supplemental measure for investors to
analyze financial performance and provide an indication of the
results generated by Gran Tierra's principal business activities
prior to the consideration of other income and expenses. A
reconciliation of operating netback per boe to the most directly
comparable measure calculated and presented in accordance with GAAP
is as follows:
Three months ended December 31, 2023
------------------
(Thousands of U.S Dollars) ($/bbl, per WI sales volumes)
------------------ --------------------------- -----------------------------
Oil sales 154,944 $ 54.04
Operating expenses (47,637) (16.61)
Transportation
expenses (3,947) (1.38)
------------------ ---- ----------------- ---- ------------------
Operating netback $ 103,360 $ 36.05
================== ==== ================= ==== ================== ===
Unaudited Financial Information
Certain financial and operating results included in this press
release, including debt, capital expenditures, and production
information, are based on unaudited estimated results. These
estimated results are subject to change upon completion of the
Company's audited financial statements for the year ended December
31, 2023, and changes could be material. Gran Tierra anticipates
filing its audited financial statements and related management's
discussion and analysis for the year ended December 31, 2023 on or
before February 20, 2024.
DISCLOSURE OF OIL AND GAS INFORMATION
Boe's have been converted on the basis of six thousand cubic
feet ("Mcf") natural gas to 1 bbl of oil. Boe's 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.
All reserves values, future net revenue and ancillary
information contained in this press release have been prepared by
McDaniel and are derived from the GTE McDaniel Reserves Report,
unless otherwise expressly stated. Any reserves values or related
information contained in this press release as of a date other than
December 31, 2023 has an effective date of December 31 of the
applicable year and is derived from a report prepared by Gran
Tierra's independent qualified reserves evaluator as of such date,
and additional information regarding such estimate or information
can be found in Gran Tierra's applicable Statement of Reserves Data
and Other Oil and Gas Information on Form 51-101F1 filed on SEDAR
at www.sedar.com.
Estimates of net present value and future net revenue contained
herein do not necessarily represent fair market value. Estimates of
reserves and future net revenue for individual properties may not
reflect the same level of confidence as estimates of reserves and
future net revenue for all properties, due to the effect of
aggregation. There is no assurance that the forecast price and cost
assumptions applied by McDaniel in evaluating Gran Tierra's
reserves will be attained and variances could be material. All
reserves assigned in the GTE McDaniel Reserves Report are located
in Colombia and Ecuador and presented on a consolidated basis by
foreign geographic area.
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 revenues presented in this press release represent
the fair market value of the reserves. There are numerous
uncertainties inherent in estimating quantities of crude oil
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.
References to a formation where evidence of hydrocarbons has
been encountered is not necessarily an indicator that hydrocarbons
will be recoverable in commercial quantities or in any estimated
volume. Gran Tierra's reported production is a mix of light crude
oil and medium and heavy crude oil for which there is no precise
breakdown since the Company's oil sales volumes typically represent
blends of more than one type of crude oil. Drilling locations
disclosed herein are derived from the GTE McDaniel Reserves Report
and account for drilling locations that have associated Proved
Undeveloped and Proved plus Probable Undeveloped reserves, as
applicable. 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.
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.
Developed non-producing reserves are those reserves that either
have not been on production, or have previously been on production
but are shut-in and the date of resumption of production is
unknown.
Undeveloped reserves are those reserves expected to be recovered
from known accumulations where a significant expenditure (e.g.,
when compared to the cost of drilling a well) is required to render
them capable of production. They must fully meet the requirements
of the reserves category (proved, probable, possible) to which they
are assigned.
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 NAV per share, F&D costs, F&D recycle ratio,
operating netback, reserve life index 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.
-- NAV per share is calculated as NPV10 (before or after tax, as applicable)
of the applicable reserves category 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 FDC costs.
The calculation of F&D costs incorporates the change in FDC 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 FDC 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.
-- F&D recycle ratio is calculated as described in this press release.
Management uses F&D recycle ratio as an indicator of profitability of its
oil and gas activities.
-- Operating netback is calculated as described in this press release.
Management believes that operating netback is a useful supplemental
measure 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.
-- Reserve life index is calculated as reserves in the referenced category
divided by the referenced estimated production. Management uses this
measure to determine how long the booked reserves will last at current
production rates if no further reserves were added.
-- 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 reserve 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,
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.
Proved reserves are reserves which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to
be economically producible from a given date forward from known
reservoirs under existing economic conditions, operating methods,
and government regulations prior to the time at which contracts
providing the right to operate expires, unless evidence indicates
that renewal is reasonably certain. Probable reserves are reserves
that are less certain to be recovered than proved reserves but
which, together with proved reserves, are as likely as not to be
recovered. Estimates of probable reserves which may potentially be
recoverable through additional drilling or recovery techniques are
by nature more uncertain than estimates of proved reserves and
accordingly are subject to substantially greater risk of not
actually being realized by us. Possible reserves are reserves that
are less certain to be recovered than probable reserves. Estimates
of possible reserves are also inherently imprecise. Estimates of
probable and possible reserves are also continually subject to
revisions based on production history, results of additional
exploration and development, price changes, and other factors.
The Company believes that the presentation of NPV10 is useful to
investors because it presents (i) relative monetary significance of
its oil and natural gas properties regardless of tax structure and
(ii) relative size and value of its reserves to other companies.
The Company also uses this measure when assessing the potential
return on investment related to its oil and natural gas properties.
NPV10 and the standardized measure of discounted future net cash
flows do not purport to present the fair value of the Company's oil
and gas reserves. The Company has not provided a reconciliation of
NPV10 to the standardized measure of discounted future net cash
flows because it is impracticable to do so.
Investors are urged to consider closely the disclosures and risk
factors in the Company's Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and in the other reports and filings with the
SEC, available from the Company's offices or website. These reports
can also be obtained from the SEC website at www.sec.gov.
(END) Dow Jones Newswires
January 23, 2024 17:02 ET (22:02 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Gran Tierra Energy (LSE:GTE)
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Gran Tierra Energy (LSE:GTE)
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