TIDMGTE
-- 2024 Capital Expenditure Budget of $210-240 Million and Expected 2024
Cash Flow1 of $280-320 Million in Base Case
-- Plan to Drill 13-17 Development Wells and 6-9 High Impact Near-Field
Exploration Wells
-- Forecast 2024 Production of 32,000-35,000 BOPD, Increases of 4% from
2023, 11% from 2022 and 28% from 2021
-- Forecast 2024 Free Cash Flow2 of $175 Million Before Exploration, $75
Million After Exploration in Base Case
-- Plan to Allocate Up to 50% of Free Cash Flow to Share Buybacks
-- Met 2023 Production Guidance by Achieving 2023 Total Company Average
Production of Approximately 32,650 BOPD, an Increase of 6% from 2022
-- Strong Results from the Costayaco-56 Well Producing Over 2,000 BOPD
-- Achieved Company's Best Safety Performance on Record in 2023
-- Development Drilling Campaigns Underway in Acordionero and Costayaco
Fields with Encouraging Results
CALGARY, Alberta, Jan. 23, 2024 (GLOBE NEWSWIRE) -- Gran Tierra
Energy Inc. ("Gran Tierra" or the "Company") (NYSE American:GTE)
(TSX:GTE) (LSE: GTE) today announced its 2024 capital budget and
production guidance. All dollar amounts are in United States
dollars and all production volumes are on a working interest before
royalties basis and are expressed in barrels ("bbl") of oil per day
("BOPD"), unless otherwise stated.
Key Highlights:
-- 2024 Guidance:
-- Gran Tierra is forecasting the following ranges for the Company's
2024 budget:
2024 Budget Low Case Base Case High Case
--------------------------------- ------------- ------------- -------------
Average Brent Oil Price ($/bbl) 70.00 80.00 90.00
--------------------------------- ------------- ------------- -------------
Total Company Production (BOPD) 32,000-35,000 32,000-35,000 32,000-35,000
--------------------------------- ------------- ------------- -------------
Operating Netback(4) ($ million) 380-420 450-490 530-570
--------------------------------- ------------- ------------- -------------
EBITDA(3) ($ million) 335-395 400-460 480-540
--------------------------------- ------------- ------------- -------------
Cash Flow(1) ($ million) 240-280 280-320 330-370
--------------------------------- ------------- ------------- -------------
Total Capital ($ million) 190-220 210-240 210-240
--------------------------------- ------------- ------------- -------------
Free Cash Flow(2) ($ million) 20-90 40-110 90-160
--------------------------------- ------------- ------------- -------------
Number of Development Wells
(gross) 13-17 13-17 13-17
--------------------------------- ------------- ------------- -------------
Number of Exploration Wells
(gross) 4-7 6-9 6-9
--------------------------------- ------------- ------------- -------------
-- 2024 Base Capital Program -- Profitable Production Growth and High Impact
Near-Field Exploration:
-- Building on a successful development campaign in 2023, Gran Tierra
plans to continue to grow production, while also seeking to add
new reserves and future growth through exploration. A key area of
focus for the Company, that is underpinned by the 2023
announcement of the Suroriente Continuation Agreement, is the
South Putumayo and Ecuador development and exploration corridor
which includes the Suroriente, Alea-1848A, Put-7, Charapa and
Chanangue Blocks. This corridor offers material growth potential
through development and exploration. This core growth area for the
Company is expected to provide years of drilling opportunities and
profitable production growth.
-- Development: Gran Tierra expects to allocate approximately 55-60%
of its 2024 capital program towards development activities in its
core assets in Colombia, including:
-- Acordionero: the Company plans to drill 6 to 8 development
wells in the Acordionero oil field in the Middle Magdalena
Valley Basin. Acordionero's 2024 plans also include
drilling pad extensions and ongoing waterflood
optimization.
-- Costayaco: in this oil field, located in the northern
Putumayo Basin, Gran Tierra plans to drill 3 to 5
development wells.
-- Suroriente: in the southern Putumayo Basin, Gran Tierra
plans to commence development drilling later in second half
2024 in the Cohembi oil field located in the Suroriente
Block, which would be the first wells drilled by the
Company in this block since 2018. In addition to
development drilling, the Company is also planning facility
expansion, an increase in gas to power generation, new
development well pads and social investment in the area.
With the planned investments in 2024, production is
expected to materially increase in 2025 and 2026.
-- Exploration: Approximately 40-45% of the Company's 2024 capital
program is expected to be allocated to high impact near-field
exploration activities and the drilling of 6 to 9 exploration
wells in Colombia and Ecuador in the Base Case and High Case. Gran
Tierra's 2024 exploration drilling is planned to follow up on the
encouraging results from the Company's 2022 exploration program.
The Company focuses its exploration program on short-cycle time,
near-field prospects in proven basins with access to
transportation infrastructure. In addition to drilling exploration
wells, the Company plans to commence a 238 km2 3D seismic program
over the Charapa Block in Ecuador and pre-invest in advancing
drilling licenses and building pads for the 2025 exploration
program in Colombia and Ecuador.
-- Fully Funded Capital Program Generating Free Cash Flow2: Gran Tierra's
mid-point Base Case 2024 capital budget of $225 million is expected to be
fully funded from the Base Case 2024 mid-point Cash Flow1 forecast of
$300 million, based on an assumed average $80.00/bbl Brent oil price.
Gran Tierra remains focused on generating strong Free Cash Flow2, ongoing
net debt5 reduction and shareholder returns via share buybacks.
-- Share Buybacks: During 2024, Gran Tierra plans to allocate up to
approximately 50% of its Free Cash Flow to share buybacks in the Base
Case. During 2023, the Company repurchased approximately 7.1% of its
outstanding shares.
-- Control of Capital Program: Gran Tierra holds a 100% working interest in
and operatorship of the Company's major assets in Colombia and Ecuador.
This full control provides the Company with the flexibility to swiftly
optimize its development and exploration programs in response to
fluctuations, whether positive or negative, in oil prices.
Gran Tierra's Commitment to Go "Beyond Compliance" in
Environmental, Social and Governance
-- 2023 was the Company's safest year on record, with a total of 16.3
million person-hours without a Lost Time Injury (LTI), and a Total
Recordable Case Frequency (TRCF) of 0.02, which places Gran Tierra within
the region`s top quartile in safety performance.
-- Gran Tierra is pleased to announce that the Company has been accepted by
the Voluntary Principles Initiative (VPI) as an official member of the
Voluntary Principles for Security and Human Rights world-wide initiative.
This appointment strengthens the Company's commitment to the responsible
implementation of Human Rights policies and practices in all our
operations.
-- In 2023, Gran Tierra signed a four-year extension with the prominent
environmental NGO Conservation International to continue and expand upon
the Company's highly successful NaturAmazonas program, the largest
reforestation program of its nature in Colombia. This extension continues
to harmonize economic development and conservation in the Piedmont region
of the Putumayo department in southern Colombia.
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran
Tierra, commented: "Gran Tierra Energy is looking forward to a
successful and profitable 2024 and we are committed to delivering
value to all our stakeholders by focusing on safety, sustainable
growth, and robust return of capital to shareholders. Our 2024
budget, expected to be fully funded by Cash Flow(1) , takes a
balanced, returns-focused approach to capital allocation. We plan
to focus on four key areas: profitably growing reserves and
production in our existing assets, prudently pursuing high impact
exploration in our portfolio, fortifying our balance sheet through
net debt(5) reduction, and executing share buybacks. During 2024,
we are targeting a net debt(5) to EBITDA(3) ratio of 0.8 to 1.2
times.
We are excited to restart drilling in our high-impact
exploration portfolio in 2024 which may present us with
opportunities for substantial growth in both Ecuador and Colombia.
Having meticulously high-graded our exploration portfolio, we are
dedicated to pursuing transformative opportunities that could
enhance our growth trajectory and bring significant value to our
stakeholders.
We believe Gran Tierra is well-positioned to navigate the
current volatile environment with our low base decline,
conventional oil asset base and our full operational control of
capital allocation and timing. As we profitably pursue our
operational and financial objectives, we remain steadfast in our
commitment to the well-being of our employees and the communities
in which we operate, recognizing their vital importance to our
success."
Operations Update:
-- Production:
-- Gran Tierra achieved total company average production in 2023 of
approximately 32,650 BOPD, an increase of 6% from 2022 and 23%
from 2021, and was within the Company's prescribed 2023 guidance.
-- Colombia Development:
-- Following Gran Tierra's successful 2023 development drilling
campaigns at the Acordionero and Costayaco fields, the Company has
accelerated its 2024 development program and, in mid-December
2023, commenced ongoing multi-well drilling campaign in both
fields.
-- Costayaco Development Campaign (Putumayo Basin):
-- Since December 2023, Gran Tierra has so far drilled 2 oil
wells.
-- The first well in the current drilling campaign, the
CYC-56, was spud on December 16, 2023. The well has been
completed and is now on production and yielding encouraging
results. The Company is completing the second well, the
CYC-57, with production testing planned during January
2024.
-- During January 8-15, 2024, the CYC-56 produced on jet pump
at a stable average rate of 2,118 BOPD (30-degree API
gravity) with a watercut of 1.4% and a gas-oil ratio of 141
standard cubic feet per stock tank bbl.
-- The CYC-56 provides further evidence that multiple
additional drilling opportunities may exist in the northern
region of Costayaco where the Company plans to target
un-swept portions of oil with future wells.
-- During all of 2024, the Company plans to drill a total of 3
to 5 development wells in Costayaco.
-- Acordionero Development Campaign (Middle Magdalena Valley Basin):
-- Since December 2023, Gran Tierra has drilled 4 wells so far
(3 oil producers and 1 water injector) in Acordionero, with
results meeting expectations.
-- During all of 2024, the Company plans to drill a total of 6
to 8 development wells in Acordionero.
Corporate Presentation:
-- Gran Tierra's Corporate Presentation has been updated and is available at
www.grantierra.com.
(1) "Cash Flow" refers to line item "net cash provided by
operating activities" under generally accepted accounting
principles in the United States of America ("GAAP").
(2) "Free Cash Flow" is a non-GAAP measure and does not have a
standardized meaning under GAAP. Free cash flow is defined as "net
cash provided by operating activities" less capital
expenditures. Refer to "Non-GAAP Measures" in this press
release. Forecast 2024 free cash flow of $175 million "before
exploration" is equal to the Base Case midpoint cash flow of $300
million less the Base Case midpoint total capital of $225 million,
with Base Case midpoint exploration -only capital of approximately
$100 million added back. Forecast 2024 Free Cash Flow of $75
million "after exploration" is equal to the Base Case midpoint cash
flow of $300 million less the Base Case midpoint total capital of
$225 million. Free Cash Flows in the table above are the midpoints
of the ranges of cash flows less the midpoints of the ranges of
total capital expenditures for each oil price scenario.
(3) Earnings before interest, taxes and depletion, depreciation
and accretion ("EBITDA") is a non-GAAP measure and does not have a
standardized meaning under GAAP. Refer to "Non-GAAP Measures" in
this press release.
(4) "Operating netback" is a non-GAAP measures and does not have
standardized meaning under GAAP. Refer to "Non-GAAP Measures" in
this press release.
(5) Net debt is defined as GAAP total debt before deferred
financing fees less cash.
Contact Information
For investor and media inquiries please contact:
Gary Guidry
President & Chief Executive Officer
Ryan Ellson
Executive Vice President & Chief Financial Officer
Rodger Trimble
Vice President, Investor Relations
+1-403-265-3221
info@grantierra.com
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an
independent international energy company currently focused on oil
and natural gas exploration and production in Colombia and Ecuador.
The Company is currently developing its existing portfolio of
assets in Colombia and Ecuador and will continue to pursue
additional growth opportunities that would further strengthen the
Company's portfolio. The Company's common stock trades on the NYSE
American, the Toronto Stock Exchange and the London Stock Exchange
under the ticker symbol GTE. Additional information concerning Gran
Tierra is available at www.grantierra.com. Information on the
Company's website (including the Corporate Presentation referenced
above) does not constitute a part of this press release. Investor
inquiries may be directed to info@grantierra.com or (403)
265-3221.
Gran Tierra's Securities and Exchange Commission filings are
available on the SEC website at http://www.sec.gov. The Company's
Canadian securities regulatory filings are available on SEDAR at
http://www.sedar.com and UK regulatory filings are available on the
National Storage Mechanism website at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Forward Looking Statements and Legal Advisories:
This press release contains opinions, forecasts, projections,
and other statements about future events or results that constitute
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and financial outlook
and forward looking information within the meaning of applicable
Canadian securities laws (collectively, "forward-looking
statements," which can be identified by such terms as "expect",
"plan", "can," "will," "should," "guidance," "forecast," "signal,"
"measures taken to" and "believes", derivations thereof and similar
terms identify forward-looking statements. Such forward-looking
statements include, but are not limited to, the Company's capital
budget amount and uses; ability of hedges to protect cash flows,
the Company's strategies related to drilling and operation
activities; expectations regarding reservoir prospects and
production amounts; future well results (including initial oil
production rates and productive capacity based on past
performance); expected future net cash provided by operating
activities (described in this press release as "cash flow"), free
cash flow, operating netback, EBITDA and certain associated
metrics; anticipated capital expenditures, including the location
and impact of capital expenditures; operating and general and
administrative costs; production guidance for 2024; and the
Company's expectations as to debt repayment, share repurchases and
its positioning for 2024. The forward-looking statements contained
in this press release reflect several material factors and
expectations and assumptions of Gran Tierra including, without
limitation, that Gran Tierra will continue to conduct its
operations in a manner consistent with its current expectations,
pricing and cost estimates (including with respect to commodity
pricing and exchange rates), and the general continuance of current
or, where applicable, assumed operational, regulatory and industry
conditions in Colombia and Ecuador and areas of potential
expansion, and the ability of Gran Tierra to execute its business
and operational plans in the manner currently planned. Gran Tierra
believes the material factors, expectations and assumptions
reflected in the forward-looking statements are reasonable at this
time but no assurance can be given that these factors, expectations
and assumptions will prove to be correct
Among the important factors that could cause actual results to
differ materially from those indicated by the forward-looking
statements in this press release are: Gran Tierra's operations are
located in South America and unexpected problems can arise due to
guerilla activity, strikes, local blockades or protests; technical
difficulties and operational difficulties may arise which impact
the production, transport or sale of Gran Tierra's products; other
disruptions to local operations; global health events; global and
regional changes in the demand, supply, prices, differentials or
other market conditions affecting oil and gas, including inflation
and changes resulting from a global health crisis, geopolitical
events, including the ongoing conflicts in Ukraine and the Gaza
region, or from the imposition or lifting of crude oil production
quotas or other actions that might be imposed by OPEC, and other
producing countries and resulting company or third-party actions in
response to such changes; changes in commodity prices, including
volatility or a prolonged decline in these prices relative to
historical or future expected levels; the risk that current global
economic and credit conditions may impact oil prices and oil
consumption more than Gran Tierra currently predicts. Which could
cause Gran Tierra to further modify its strategy and capital
spending program; prices and markets for oil and natural gas are
unpredictable and volatile; the effect of hedges; the accuracy of
productive capacity of any particular field; geographic, political
and weather
conditions can impact the production, transport or sale of Gran
Tierra's products; the ability of Gran Tierra to execute its
business plan and realize expected benefits from current
initiatives; the risk that unexpected delays and difficulties in
developing currently owned properties may occur; the ability to
replace reserves and production and develop and manage reserves on
an economically viable basis; the accuracy of testing and
production results and seismic data, pricing and cost estimates
(including with respect to commodity pricing and exchange rates);
the risk profile of planned exploration activities; the effects of
drilling down-dip; the effects of waterflood and multi-stage
fracture stimulation operations; the extent and effect of delivery
disruptions, equipment performance and costs; actions by third
parties; the timely receipt of regulatory or other required
approvals for Gran Tierra's operating activities; the failure of
exploratory drilling to result in commercial wells; unexpected
delays due to the limited availability of drilling equipment and
personnel; volatility or declines in the trading price of Gran
Tierra's common stock or bonds; the risk that Gran Tierra does not
receive the anticipated benefits of government programs, including
government tax refunds; Gran Tierra's ability to comply with
financial covenants in its credit agreement and indentures and make
borrowings under its credit agreement; and the risk factors
detailed from time to time in Gran Tierra's periodic reports filed
with the Securities and Exchange Commission, including, without
limitation, under the caption "Risk Factors" in Gran Tierra's
Annual Report on Form 10-K for the year ended December 31, 2022
filed February 21, 2023 and its other filings with the SEC. These
filings are available on the SEC website at http://www.sec.gov and
on SEDAR at www.sedar.com. Guidance is uncertain, particularly when
given over extended periods of time, and results may be materially
different. Although the current capital spending program and long
term strategy of Gran Tierra is based upon the current expectations
of the management of Gran Tierra, should any one of a number of
issues arise, Gran Tierra may find it necessary to alter its
business strategy and/or capital spending program and there can be
no assurance as at the date of this press release as to how those
funds may be reallocated or strategy changed and how that would
impact Gran Tierra's results of operations and financing position.
In particular, the unprecedented nature of the current economic
downturn, and industry decline may make it particularly difficult
to identify risks or predict the degree to which identified risks
will impact Gran Tierra's business and financial condition. All
forward-looking statements are made as of the date of this press
release and the fact that this press release remains available does
not constitute a representation by Gran Tierra that Gran Tierra
believes these forward-looking statements continue to be true as of
any subsequent date. Actual results may vary materially from the
expected results expressed in forward-looking statements. Gran
Tierra disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable law. Gran Tierra's forward-looking
statements are expressly qualified in their entirety by this
cautionary statement.
The estimates of future production, EBITDA, net cash provided by
operating activities (described in this press release as "cash
flow"), free cash flow, operating netback, total capital, taxes and
certain expenses and costs may be considered to be future-oriented
financial information or a financial outlook for the purposes of
applicable Canadian securities laws. Financial outlook and
future-oriented financial information contained in this press
release about prospective financial performance, financial position
or cash flows are provided to give the reader a better
understanding of the potential future performance of the Company in
certain areas and are based on assumptions about future events,
including economic conditions and proposed courses of action, based
on management's assessment of the relevant information currently
available, and to become available in the future. In particular,
this press release contains projected operational and financial
information for 2024. These projections contain forward-looking
statements and are based on a number of material assumptions and
factors set out above. Actual results may differ significantly from
the projections presented herein. The actual results of Gran
Tierra's operations for any period could vary from the amounts set
forth in these projections, and such variations may be material.
See above for a discussion of the risks that could cause actual
results to vary. The future-oriented financial information and
financial outlooks contained in this press release have been
approved by management as of the date of this press release.
Readers are cautioned that any such financial outlook and
future-oriented financial information contained herein should not
be used for purposes other than those for which it is disclosed
herein. The Company and its management believe that the prospective
financial information has been prepared on a reasonable basis,
reflecting management's best estimates and judgments, and
represent, to the best of management's knowledge and opinion, the
Company's expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results.
Presentation of Oil and Gas Information
This press release contains certain oil and gas metrics,
including operating netback, which do not have standardized
meanings or standard methods of calculation and therefore such
measures may not be comparable to similar measures used by other
companies and should not be used to make comparisons. Such metrics
are calculated as described in this press release and have been
included herein to provide readers with additional measures to
evaluate the Company's performance; however, such measures are not
reliable indicators of the future performance of the Company and
future performance may not compare to the performance in previous
periods.
References to a formation where evidence of hydrocarbons has
been encountered is not necessarily an indicator that hydrocarbons
will be recoverable in commercial quantities or in any estimated
volume. Gran Tierra's reported production is a mix of light crude
oil and medium and heavy crude oil for which there is no precise
breakdown since the Company's oil sales volumes typically represent
blends of more than one type of crude oil. Well test results should
be considered as preliminary and not necessarily indicative of
long-term performance or of ultimate recovery. Well log
interpretations indicating oil and gas accumulations are not
necessarily indicative of future production or ultimate recovery.
If it is indicated that a pressure transient analysis or well-test
interpretation has not been carried out, any data disclosed in that
respect should be considered preliminary until such analysis has
been completed. References to thickness of "oil pay" or of a
formation where evidence of hydrocarbons has been encountered is
not necessarily an indicator that hydrocarbons will be recoverable
in commercial quantities or in any estimated volume.
Non-GAAP Measures
This press release includes forward-looking non-GAAP financial
measures as further described herein. These non-GAAP measures do
not have a standardized meaning under GAAP. Investors are cautioned
that these measures should not be construed as an alternative to
net income or loss or other measures of financial performance as
determined in accordance with GAAP. Gran Tierra's method of
calculating these measures may differ from other companies and,
accordingly, it may not be comparable to similar measures used by
other companies. These non-GAAP financial measures are presented
along with the corresponding GAAP measure so as to not imply that
more emphasis should be placed on the non-GAAP measure.
Gran Tierra is unable to provide forward-looking net income, net
cash provided by operating activities, and oil and gas sales, the
GAAP measures most directly comparable to the non-GAAP measures
EBITDA, free cash flow and operating netback, respectively, due to
the impracticality of quantifying certain components required by
GAAP as a result of the inherent volatility in the value of certain
financial instruments held by the Company and the inability to
quantify the effectiveness of commodity price derivatives used to
manage the variability in cash flows associated with the forecasted
sale of its oil production and changes in commodity prices.
Operating netback as presented is defined as projected 2024 oil
and gas sales less projected 2024 operating and transportation
expenses. The most directly comparable GAAP measures are oil and
gas sales and oil and gas sales price, respectively. Management
believes that operating netback is useful supplemental measures for
management and investors to analyze financial performance and
provides an indication of the results generated by our principal
business activities prior to the consideration of other income and
expenses. Gran Tierra is unable to provide a quantitative
reconciliation of either forward-looking operating netback to its
most directly comparable forward-looking GAAP measure because
management cannot reliably predict certain of the necessary
components of such forward-looking GAAP measures.
EBITDA as presented is defined as projected 2024 net income
adjusted for DD&A expenses, interest expense and income tax
expense or recovery. The most directly comparable GAAP measure is
net income. Management uses this financial measure to analyze
performance and income or loss generated by our principal business
activities prior to the consideration of how non-cash items affect
that income, and believes that this financial measure is also
useful supplemental information for investors to analyze
performance and our financial results. Gran Tierra is unable to
provide a quantitative reconciliation of forward-looking EBITDA to
its most directly comparable forward-looking GAAP measure because
management cannot reliably predict certain of the necessary
components of such forward-looking GAAP measure.
Free cash flow as presented is defined as GAAP projected "net
cash provided by operating activities" less projected 2024 capital
spending. The most directly comparable GAAP measure is net cash
provided by operating activities. Management believes that free
cash flow is a useful supplemental measure for management and
investors to in order to evaluate the financial sustainability of
the Company's business. Gran Tierra is unable to provide a
quantitative reconciliation of forward-looking free cash flow to
its most directly comparable forward-looking GAAP measure because
management cannot reliably predict certain of the necessary
components of such forward-looking GAAP measure.
(END) Dow Jones Newswires
January 23, 2024 17:04 ET (22:04 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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