Gran Tierra Energy Inc.
("Gran Tierra" or
the "Company") (NYSE American:GTE) (NYSE: MKT:GTE)
(TSX:GTE), today announced its financial and operating results for
the quarter ended September 30, 2017. All dollar amounts
are in United States ("
U.S.") dollars unless
otherwise indicated. Production amounts are on a working interest
("
WI") before royalties basis unless otherwise
indicated. Per barrel of oil equivalent ("
BOE")
amounts are based on WI sales before royalties. For per BOE amounts
based on net after royalty ("
NAR") production, see
Gran Tierra's Quarterly Report on Form 10-Q filed November 2,
2017.
Key Highlights
- Colombia only average production in the third quarter 2017
("the Quarter") was 32,570 barrels of oil
equivalent per day (“BOEPD”), which was 14% higher
compared with 28,481 BOEPD in the first quarter of 2017 and 8%
higher compared with 30,098 BOEPD in the second quarter of
2017 (the "Prior Quarter").
- Increased total Company average production in the Quarter to
32,570 BOEPD, 26% higher compared with total Company average
production in third quarter 2016 of 25,835 BOEPD. The Company
increased production despite the sale of its Brazil assets on June
30, 2017, which had average production in the Prior Quarter of
1,339 BOEPD, and other non-core asset sales of approximately 950
BOEPD in November 2016. The Quarter's average production before
royalties was 4% or 1,133 BOEPD higher compared with the Prior
Quarter, largely because of record Company production from
development activities in the Acordionero field.
- Continued significant exposure to oil price strength with oil
representing 99% of total Company production in the Quarter.
- Demonstrated ongoing strong financial performance in the third
quarter 2017:
- Net income of $3 million compared with net loss of $7 million
in the Prior Quarter. Net loss in the Prior Quarter included loss
on sale of the Company's Brazil business unit of $9 million;
- Funds flow from operations1 increased by 8% to $55 million
compared with the Prior Quarter and 134% from the third quarter
2016 while the Brent price only increased 11% from third quarter
2016;
- Oil and gas sales increased by 4% compared with the Prior
Quarter to 27,447 BOEPD and by 28% relative to the third quarter of
2016.
- Despite only a 2% increase in Brent price from the Prior
Quarter, operating netback1 increased by 8% compared with the Prior
Quarter to $23.58 per BOE and increased by 48% relative to third
quarter of 2016;
- Operating expenses per BOE decreased by 4% compared with the
Prior Quarter to $9.12 per BOE as a result of higher production
during the Quarter;
- Transportation expenses per BOE decreased by 11% compared with
the Prior Quarter to $2.02 per BOE due to the increased use
of transportation routes that had lower costs than the routes used
in the Prior Quarter;
- General and administrative ("G&A")
expenses per BOE decreased by 13% compared with the Prior Quarter
to $2.33 per BOE;
- The Company exited the Quarter with approximately $195 million
of liquidity comprised of $180 million of undrawn capacity on its
$300 million credit facility and $15 million of cash. On September
18, 2017, the Company entered into an amendment to its credit
agreement, which, among other things, extended the maturity date of
the borrowings under its revolving credit facility from September
18, 2018 to October 1, 2018. Subject to documentation, the maturity
date is expected to be further extended to November 2020 and the
borrowing base is expected to be confirmed at $300 million until
May 2018.
Message to Shareholders
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented "We are just over two years into
our strategy of focusing the Company on full-cycle value creation
in Colombia. Our 2016 acquisitions have provided an exciting
exploration and production portfolio in proven hydrocarbon
producing basins with mature transportation infrastructure. Being
operator in more than 90% of our assets allows sustainable
production growth and cash flow to fund our organic programs
(exploration and enhanced oil recovery) and ultimately value
creation measured in net asset value per share.
Our portfolio in Colombia continued to deliver
strong production growth and cash flow generation during the
Quarter, even after giving effect to the sale of our Brazilian
assets. Our consolidated production increased 5% from the first to
second quarter 2017 and 4% from the second to third quarter 2017,
highlighting the strength of our core assets and the success of our
Acordionero drilling program and exploration discoveries.
Production from new wells at Acordionero continues to exceed
expectations and the field generated an average of 10,743 BOEPD
during the Quarter and an exit rate of 12,870 BOEPD, as compared to
the 4,730 BOEPD at the time of purchase in August 2016.
We continue to drive down costs and, with our
increased production combined with our attractive netbacks, net
income of $3 million was achieved in the Quarter. Funds flow from
operations rose to $55 million in the Quarter, an increase of 8%
from the Prior Quarter and 22% from the first quarter 2017. Capital
expenditures exceeded funds from operations in the Quarter
primarily because of the successful 95 square kilometers
("km") of three dimensional
("3D") seismic shoots in the Putumayo-7 block.
Despite an active capital program, we are generating free cash flow
from our three core fields - Acordionero, Costayaco, and
Moqueta.
During the Quarter, in the Middle Magdalena
Valley ("MMV") Basin, the Acordionero field
continues to exceed our expectations in all aspects, including
operating and drilling costs, reservoir quality and continuity, oil
quality, and well productivity. During the Quarter, we
successfully injected high-rate water into the Lisama A sands where
most of the original oil-in-place is located and we plan to be
continuously injecting pilot water into the Lisama A and C
reservoirs by the end of the 2017. We are also on track with
construction of production and injection facilities for full
injection and voidage replacement planned to begin through the
course of 2018. When we acquired these assets in August 2016, all
of the MMV Basin fields, including Acordionero, were producing
5,620 BOEPD and approximately 13 months later to September 30,
2017, the fields produced 11,565 BOEPD during the Quarter with an
exit rate of 13,639 BOEPD. Also, in the 13 months since the
acquisition, the MMV Basin properties have generated $116 million
of oil and gas sales, $85 million of operating netback and incurred
$66 million of capital expenditures. We are also finalizing the
completion of the surface drilling locations for the Ayombero and
Totumillo exploration prospects in the MMV Basin and both wells are
anticipated to be drilled within the next three months.
In the Putumayo Basin, production was negatively
impacted from continued outages on the regional electric power grid
supplied by an interim substation which was installed by the local
utility company after the Mocoa disaster in April 2017. The outages
force us to temporarily shut in both production and, more
importantly, water injection in the Costayaco and Moqueta
fields. By the end of 2017, we are scheduled to be generating
all our own electric power at the Costayaco central facility with
our gas-to-power project, which was started in 2016, and which will
help with reliability for the regional consumers and in our
producing fields.
In addition to the power outages, the
Costayaco-29 horizontal well in the A-Limestone has to date
underperformed our expectations. While we are very encouraged by
the light oil and low water-cut production, sustainable production
rates from the initial 60% of the well that was stimulated have not
met our expectations. Currently, our A-Limestone vertical wells in
the Costayaco field and Vonu-1 are outperforming Costayaco-29. We
are currently working with an integrated Halliburton team to
optimize further stimulation treatments of this well, including the
40% of the wellbore which has yet to be stimulated. As expected in
any new play, there is a learning curve which we are quickly
navigating.
During the Prior Quarter, we drilled and
completed the directional Vonu-1 exploration well in the Putumayo-1
Block (Gran Tierra operator and 55% WI). Based on logs, the
well had 127 net feet of oil pay throughout five zones. After
testing light oil from the Villeta U Sand, we brought the Vonu-1
well online on July 21, 2017, for long-term production testing from
the A-Limestone only. Since that time, the well has averaged 1,803
BOEPD (100% gross) or 992 BOEPD WI and is currently producing 1,925
BOEPD (100% gross) or 1,059 BOEPD WI. Vonu-1 has proved to be our
strongest A-Limestone well to date in terms of oil production
performance.
During September and October 2017, we drilled
and cased the Siriri-1 exploration well in the Putumayo-4 Block
(Gran Tierra operator and 100% WI), approximately 40 km from the
Vonu-1 well. Based on log analysis, we encountered an estimated 216
feet of net oil pay across five zones, including 70 feet in the
A-Limestone and 64 feet in the potential new oil play of the
B-Limestone.
We completed a 52 square km 3D seismic program
in the Putumayo-7 Block (Gran Tierra operator and100% WI) during
the Quarter and plan on drilling the Northwest-1 and Pomorroso-1
exploration wells on the basis of this newly acquired 3D seismic
over the next three months. Both prospects are designed to target
the N Sand, A-Limestone and U Sand. In addition, the 43 square km
3D seismic program shot over the Cumplidor-Confianza-Alpha
discoveries was also completed in the Quarter and is expected to
assist in prioritizing development and waterflooding plans for the
light oil tested in the N Sand, A-Limestone and U Sand.
We are very encouraged by the continued success
in the A-Limestone and our technical and operational teams have
done a tremendous job, from developing a new play concept in
September 2016 to having had success in the A-Limestone throughout
the Putumayo Basin. We have a very strong land position in the
Putumayo with 16 blocks and 1.1 million gross acres covering the
main exploration fairways for multi-horizon potential in the
limestone and sandstone plays.
While the activity we had forecasted has
materialized more slowly than anticipated, Gran Tierra's Colombia
only production has increased 14% from the first quarter of 2017
and 8% from the Prior Quarter as we continue to unlock significant
value with conventional sandstone and A-Limestone resources in the
Putumayo Basin and strongly grow production in the MMV Basin."
Financial and Operational Highlights
(all amounts in $000s, except per share and BOE
amounts)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
June 30, |
September 30, |
|
September 30, |
September 30, |
|
2017 |
2017 |
2016 |
|
2017 |
2016 |
Net Income
(Loss) |
$ |
3,130 |
|
$ |
(6,807 |
) |
$ |
(229,619 |
) |
|
$ |
9,094 |
|
$ |
(338,210 |
) |
Per
Share - Basic and Diluted |
$ |
0.01 |
|
$ |
(0.02 |
) |
$ |
(0.71 |
) |
|
$ |
0.02 |
|
$ |
(1.11 |
) |
|
|
|
|
|
|
|
Oil and Gas
Sales |
$ |
103,768 |
|
$ |
96,128 |
|
$ |
68,539 |
|
|
$ |
294,555 |
|
$ |
197,655 |
|
Operating
Expenses |
(27,321 |
) |
(27,208 |
) |
(25,638 |
) |
|
(78,466 |
) |
(62,453 |
) |
Transportation
Expenses |
(6,038 |
) |
(6,492 |
) |
(5,773 |
) |
|
(19,472 |
) |
(24,318 |
) |
Operating
Netback(1) |
$ |
70,409 |
|
$ |
62,428 |
|
$ |
37,128 |
|
|
$ |
196,617 |
|
$ |
110,884 |
|
|
|
|
|
|
|
|
G&A
Expenses Before Stock-Based Compensation |
$ |
6,965 |
|
$ |
7,610 |
|
$ |
4,778 |
|
|
$ |
22,138 |
|
$ |
16,414 |
|
G&A
Stock-Based Compensation |
1,686 |
|
1,903 |
|
814 |
|
|
4,738 |
|
4,200 |
|
G&A
Expenses, Including Stock Based Compensation |
$ |
8,651 |
|
$ |
9,513 |
|
$ |
5,592 |
|
|
$ |
26,876 |
|
$ |
20,614 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1) |
$ |
60,491 |
|
$ |
41,634 |
|
$ |
24,634 |
|
|
$ |
163,663 |
|
$ |
89,350 |
|
|
|
|
|
|
|
|
Funds Flow from
Operations(1) |
$ |
55,128 |
|
$ |
50,920 |
|
$ |
23,527 |
|
|
$ |
151,074 |
|
$ |
68,798 |
|
|
|
|
|
|
|
|
Capital
Expenditures |
$ |
71,694 |
|
$ |
57,865 |
|
$ |
25,080 |
|
|
$ |
175,719 |
|
$ |
69,667 |
|
|
|
|
|
|
|
|
Average Daily Volumes (BOEPD) |
|
|
|
|
|
|
WI Production
Before Royalties |
32,570 |
|
31,437 |
|
25,835 |
|
|
31,305 |
|
25,730 |
|
Royalties |
(5,055 |
) |
(5,014 |
) |
(3,855 |
) |
|
(5,052 |
) |
(3,576 |
) |
Production
NAR |
27,515 |
|
26,423 |
|
21,980 |
|
|
26,253 |
|
22,154 |
|
(Increase)
Decrease in Inventory |
(68 |
) |
(140 |
) |
(495 |
) |
|
(64 |
) |
951 |
|
Sales |
27,447 |
|
26,283 |
|
21,485 |
|
|
26,189 |
|
23,105 |
|
Royalties, % of
WI Production Before Royalties |
16 |
% |
16 |
% |
15 |
% |
|
16 |
% |
14 |
% |
|
|
|
|
|
|
|
Per BOE(2) |
|
|
|
|
|
|
Brent |
$ |
52.18 |
|
$ |
50.92 |
|
$ |
46.98 |
|
|
$ |
52.59 |
|
$ |
42.07 |
|
Quality and
Transportation Discount |
(11.08 |
) |
(10.73 |
) |
(12.30 |
) |
|
(11.38 |
) |
(10.85 |
) |
Royalties |
(6.38 |
) |
(6.50 |
) |
(5.40 |
) |
|
(6.69 |
) |
(4.22 |
) |
Average
Realized Price |
34.72 |
|
33.69 |
|
29.28 |
|
|
34.52 |
|
27.00 |
|
Transportation
Expenses |
(2.02 |
) |
(2.28 |
) |
(2.47 |
) |
|
(2.28 |
) |
(3.32 |
) |
Average
Realized Price Net of Transportation Expenses |
32.70 |
|
31.41 |
|
26.81 |
|
|
32.24 |
|
23.68 |
|
Operating
Expenses |
(9.12 |
) |
(9.50 |
) |
(10.93 |
) |
|
(9.17 |
) |
(8.51 |
) |
Operating
Netback(1) |
23.58 |
|
21.91 |
|
15.88 |
|
|
23.07 |
|
15.17 |
|
G&A
Expenses |
(2.33 |
) |
(2.67 |
) |
(2.04 |
) |
|
(2.59 |
) |
(2.24 |
) |
Severance
Expenses |
(0.39 |
) |
— |
|
— |
|
|
(0.14 |
) |
(0.18 |
) |
Transaction
Expenses |
— |
|
— |
|
(2.60 |
) |
|
— |
|
(1.00 |
) |
Equity
Tax |
— |
|
— |
|
— |
|
|
(0.14 |
) |
(0.42 |
) |
Realized
Foreign Exchange (Loss) Gain |
(0.04 |
) |
— |
|
1.24 |
|
|
(0.13 |
) |
0.19 |
|
Realized
Financial Instruments Gain |
0.10 |
|
0.16 |
|
0.19 |
|
|
0.18 |
|
0.06 |
|
Interest
Expense, Excluding Amortization of Debt Issuance
Costs |
(1.12 |
) |
(0.95 |
) |
(1.26 |
) |
|
(1.00 |
) |
(0.69 |
) |
Interest
Income |
0.10 |
|
0.09 |
|
0.31 |
|
|
0.11 |
|
0.26 |
|
Current Income
Tax Expense |
(1.45 |
) |
(0.62 |
) |
(1.66 |
) |
|
(1.58 |
) |
(1.60 |
) |
Cash
Netback(1) |
$ |
18.45 |
|
$ |
17.92 |
|
$ |
10.06 |
|
|
$ |
17.78 |
|
$ |
9.55 |
|
|
|
|
|
|
|
|
Share Information (000s) |
|
|
|
|
|
|
Common Stock
Outstanding, End of Period |
386,873 |
|
386,742 |
|
347,292 |
|
|
386,873 |
|
347,292 |
|
Exchangeable
Shares Outstanding, End of Period |
7,899 |
|
8,030 |
|
8,380 |
|
|
7,899 |
|
8,380 |
|
Weighted
Average Number of Common and Exchangeable Shares Outstanding -
Basic |
394,771 |
|
398,585 |
|
321,725 |
|
|
397,439 |
|
304,099 |
|
Weighted
Average Number of Common and Exchangeable Shares Outstanding -
Diluted |
394,775 |
|
398,585 |
|
321,725 |
|
|
397,451 |
|
304,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
(Thousands of
U.S. Dollars) |
September 30, 2017 |
December 31, 2016 |
% Change |
Cash, Cash
Equivalents and Current Restricted Cash and Cash
Equivalents |
$ |
19,045 |
|
$ |
33,497 |
|
(43 |
) |
Revolving
Credit Facility |
$ |
120,000 |
|
$ |
90,000 |
|
33 |
|
Convertible
Senior Notes |
$ |
115,000 |
|
$ |
115,000 |
|
— |
|
|
|
|
|
|
|
|
|
|
(1) Operating netbacks, earnings before
interest, taxes, depletion, depreciation and accretion
("DD&A") and asset impairment
("adjusted EBITDA"), funds flow from operations
and cash netbacks are non-GAAP measures and do not have a
standardized meaning under generally accepted accounting principles
in the United States of America ("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.
(2) Per BOE amounts are based on WI sales before
royalties. For per BOE amounts based on NAR production, see Gran
Tierra's Quarterly Report on Form 10-Q filed November 2,
2017.
Conference Call
Information:
Gran Tierra Energy Inc. will host its third
quarter 2017 results conference call on Friday, November 3,
2017. Details of the conference call are as follows:
Date: |
Friday, November 3, 2017 |
Time: |
11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) |
North American participants call: |
1-844-348-3792 (Toll-Free) |
Outside of Canada & USA call: |
1-614-999-9309 |
Interested parties may also access the live
webcast on the investor relations page of Gran Tierra’s website at
www.grantierra.com. An archive of the webcast will be available on
Gran Tierra’s website until November 10, 2017. In addition, an
audio replay of the conference call will be available following the
call until November 7, 2017. To access the replay, dial
toll-free 1-855-859-2056 (North America), or 1-404-537-3406
(outside of Canada and USA), conference ID: 89553720.
About Gran Tierra Energy
Inc.
Gran Tierra Energy Inc. together with its
subsidiaries is an independent international energy company focused
on oil and natural gas exploration and production in Colombia. The
Company also has business activities in Peru. The Company is
focused on its existing portfolio of assets in Colombia and will
pursue new growth opportunities throughout Colombia, leveraging our
financial strength. The Company’s common shares trade on the NYSE
American and the Toronto Stock Exchange under the ticker symbol
GTE. Additional information concerning Gran Tierra is available at
www.grantierra.com. Information on the Company's website does not
constitute a part of this press release. Investor inquiries may be
directed to 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 and
on SEDAR at http://www.sedar.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"). Such forward-looking statements
include, but are not limited to, the Company's expectations and
guidance, the Company’s strategies, the Company’s operations
including planned operations, oil production, and the completion of
certain infrastructure.
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 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: sustained or
future declines in commodity prices; potential future impairments
and reductions in proved reserve quantities and value; Gran
Tierra’s operations are located in South America and unexpected
problems can arise due to guerilla activity; technical difficulties
and operational difficulties may arise which impact the production,
transport or sale of our products, including instability of
electricity supply at our production facilities; geographic,
political and weather conditions can impact the production,
transport or sale of our products; the risk that current global
economic and credit conditions may impact oil prices and oil
consumption more than Gran Tierra currently predicts; the ability
of Gran Tierra to execute its business plan; the risk that
unexpected delays and difficulties in developing currently owned
properties may occur; the timely receipt of regulatory or other
required approvals for our operating activities; 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 oil prices could continue to fall, or 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; 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 filed March 1, 2017 and its Quarterly
Reports. These filings are available on the SEC website at
http://www.sec.gov and on SEDAR at www.sedar.com. 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.
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 securities laws. Gran
Tierra’s forward-looking statements are expressly qualified in
their entirety by this cautionary statement.
The estimates of future production 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 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 information for
2017 average WI production and fourth quarter 2017 average WI
production. 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 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.
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
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 oil and gas
sales net of royalties and operating and transportation expenses.
Cash netback as presented is net income or loss before DD&A
expenses, asset impairment, deferred income tax recovery,
amortization of debt issuance costs, unrealized foreign exchange
gains and losses, loss on sale of Brazil business unit, gain on
acquisition, non-cash operating and G&A expenses and unrealized
financial instruments gains and losses. Management believes that
operating and cash netbacks 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
corresponding reconciliation. A reconciliation from net income or
loss to cash netback is as follows:
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
Cash Netback -
Non-GAAP Measure ($000s) |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss) |
|
$ |
3,130 |
|
|
$ |
(6,807 |
) |
|
$ |
(229,619 |
) |
|
$ |
9,094 |
|
|
$ |
(338,210 |
) |
Adjustments to
reconcile net income (loss) income to cash netback |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
34,492 |
|
|
31,644 |
|
|
35,729 |
|
|
92,729 |
|
|
104,525 |
|
Asset impairment |
|
787 |
|
|
169 |
|
|
319,974 |
|
|
1,239 |
|
|
469,715 |
|
Deferred income tax expense (recovery) |
|
13,760 |
|
|
11,525 |
|
|
(110,451 |
) |
|
36,664 |
|
|
(166,202 |
) |
Amortization of debt issuance costs |
|
643 |
|
|
620 |
|
|
2,184 |
|
|
1,868 |
|
|
2,813 |
|
Unrealized foreign exchange (gain) loss |
|
(1,380 |
) |
|
3,895 |
|
|
2,387 |
|
|
(304 |
) |
|
2,437 |
|
Loss on sale of Brazil business unit |
|
— |
|
|
9,076 |
|
|
— |
|
|
9,076 |
|
|
— |
|
Gain on acquisition |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(11,712 |
) |
Non-cash operating expenses |
|
66 |
|
|
77 |
|
|
44 |
|
|
197 |
|
|
180 |
|
Non-cash G&A expenses |
|
1,686 |
|
|
1,903 |
|
|
814 |
|
|
4,738 |
|
|
4,200 |
|
Unrealized financial instruments loss (gain) |
|
1,976 |
|
|
(999 |
) |
|
2,489 |
|
|
(3,693 |
) |
|
2,262 |
|
Cash
netback |
|
$ |
55,160 |
|
|
$ |
51,103 |
|
|
$ |
23,551 |
|
|
$ |
151,608 |
|
|
$ |
70,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA, as presented, is net income or
loss adjusted for depletion, depreciation and accretion
(“DD&A”) expenses, asset impairment, interest expense and
income tax recovery or expense. Management uses these financial
measures 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 these
financial measures are also useful supplemental information for
investors to analyze performance and our financial results. A
reconciliation from net income or loss to adjusted EBITDA is as
follows:
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
(Thousands of
U.S. Dollars) |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss) |
|
$ |
3,130 |
|
|
$ |
(6,807 |
) |
|
$ |
(229,619 |
) |
|
$ |
9,094 |
|
|
$ |
(338,210 |
) |
Adjustments to
reconcile net income (loss) to adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
34,492 |
|
|
31,644 |
|
|
35,729 |
|
|
92,729 |
|
|
104,525 |
|
Asset impairment |
|
787 |
|
|
169 |
|
|
319,974 |
|
|
1,239 |
|
|
469,715 |
|
Interest expense |
|
3,989 |
|
|
3,331 |
|
|
5,122 |
|
|
10,415 |
|
|
7,842 |
|
Income tax expense (recovery) |
|
18,093 |
|
|
13,297 |
|
|
(106,572 |
) |
|
50,186 |
|
|
(154,522 |
) |
Adjusted EBITDA
(non-GAAP) |
|
$ |
60,491 |
|
|
$ |
41,634 |
|
|
$ |
24,634 |
|
|
163,663 |
|
|
89,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds flow from operations, as presented, is net
income or loss adjusted for DD&A expenses, asset
impairment, deferred tax expense or recovery, stock-based
compensation expense, amortization of debt issuance costs,
cash settlement of RSUs, unrealized foreign exchange gains and
losses, financial instruments gains, cash settlement of financial
instruments, loss on sale of Brazil business unit and gain on
acquisition. 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:
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
Funds Flow From
Operations - Non-GAAP Measure ($000s) |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss) |
|
$ |
3,130 |
|
|
$ |
(6,807 |
) |
|
$ |
(229,619 |
) |
|
9,094 |
|
|
$ |
(338,210 |
) |
Adjustments to
reconcile net income (loss) to funds flow from
operations |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
34,492 |
|
|
31,644 |
|
|
35,729 |
|
|
92,729 |
|
|
104,525 |
|
Asset impairment |
|
787 |
|
|
169 |
|
|
319,974 |
|
|
1,239 |
|
|
469,715 |
|
Deferred tax expense (recovery) |
|
13,760 |
|
|
11,525 |
|
|
(110,451 |
) |
|
36,664 |
|
|
(166,202 |
) |
Stock-based compensation expense |
|
1,752 |
|
|
1,980 |
|
|
858 |
|
|
4,935 |
|
|
4,380 |
|
Amortization of debt issuance costs |
|
643 |
|
|
620 |
|
|
2,184 |
|
|
1,868 |
|
|
2,813 |
|
Cash settlement of RSUs |
|
(33 |
) |
|
(183 |
) |
|
(24 |
) |
|
(534 |
) |
|
(1,210 |
) |
Unrealized foreign exchange (gain) loss |
|
(1,380 |
) |
|
3,895 |
|
|
2,387 |
|
|
(304 |
) |
|
2,437 |
|
Financial instruments loss (gain) |
|
1,675 |
|
|
(1,447 |
) |
|
2,051 |
|
|
(5,211 |
) |
|
1,824 |
|
Cash settlement of financial instruments |
|
302 |
|
|
448 |
|
|
438 |
|
|
1,518 |
|
|
438 |
|
Loss on sale of Brazil business unit |
|
— |
|
|
9,076 |
|
|
— |
|
|
9,076 |
|
|
— |
|
Gain on acquisition |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(11,712 |
) |
Funds flow from
operations |
|
$ |
55,128 |
|
|
$ |
50,920 |
|
|
$ |
23,527 |
|
|
$ |
151,074 |
|
|
$ |
68,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presentation of Oil and Gas Information
BOEs have been converted on the basis of 6
thousand cubic feet ("Mcf") of natural gas to 1
barrel of oil. BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 Mcf: 1 barrel 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 barrel would be misleading as an
indication of value.
This press release contains certain oil and gas
metrics, including operating netback and cash 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. 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.
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 on the Company's website at
www.grantierra.com. These forms can also be obtained from the SEC
website at www.sec.gov.
Contact Information
For investor and media inquiries please contact:
Gary Guidry
Chief Executive Officer
Ryan Ellson
Chief Financial Officer
Rodger Trimble
Vice President, Investor Relations
403-265-3221
info@grantierra.com
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