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Item 9.01
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Financial Statements and Exhibits.
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(d) Exhibits.
Forward Looking Statements and Legal Advisories:
This Current Report on Form 8-K contains opinions, forecasts,
projections, guidance, plans 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 future operations including planned operations, the exploration
and development of the Company’s blocks, areas and fields, the Company’s expectations regarding certain plays, the
Company’s business model and the Company’s plans, including completion and testing plans, objectives, expectations,
evaluations and intentions regarding production, exploration and exploration upside and development, the Company’s projected
and forecasted growth and results, expected allocation of capital and drilling including trends, infrastructure schedules and the
expected timing of certain projects.
The forward-looking statements contained in this Current Report
on Form 8-K 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 access capital
and other resources and 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 Current Report on Form 8-K are 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 subsequent quarterly reports on Form 10-Q. These filings are available on the Web site maintained by the Securities
and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. Although the current guidance, capital spending program
and long term strategy of Gran Tierra 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 Current Report on Form 8-K as to how those funds may be reallocated or strategy
changed and how that would impact Gran Tierra’s results of operations and financing position.
All forward-looking statements are made as of the date of this
Current Report on Form 8-K and the fact that this Current Report on Form 8-K 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.
Oil and Gas Disclaimer:
BOEs have been converted on the basis of 6 thousand cubic feet
(“Mcf”) of natural gas to 1 bbl. 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.
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. 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.
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 forms can also be obtained from the SEC via the internet
at www.sec.gov.
Glossary of Oil and Gas Terms:
In this document, the abbreviations set forth below have the
following meanings:
bbl
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barrel
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Mcf
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thousand cubic feet
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Mbbl
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thousand barrels
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MMcf
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million cubic feet
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MMbbl
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million barrels
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Bcf
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billion cubic feet
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BOE
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barrels of oil equivalent
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bopd
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barrels of oil per day
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MMBOE
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million barrels of oil equivalent
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NGL
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natural gas liquids
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BOEPD
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barrels of oil equivalent per day
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NAR
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net after royalty
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NAR sales volumes represent production NAR adjusted for inventory
changes and losses. Our oil and gas reserves are reported NAR. Our production is also reported NAR, except as otherwise specifically
noted as "working interest production before royalties." NGL volumes are converted to BOE on a one-to-one basis with
oil. Gas volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content
of gas and oil. The rate is not necessarily indicative of the relationship between oil and gas prices. BOEs may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the wellhead.
Below are explanations of some commonly used terms in the oil
and gas business and in this report.
Developed acres.
The number of acres that are allocated
or assignable to producing wells or wells capable of production.
Development well.
A well drilled within the proved
area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.
Dry hole.
Exploratory or development well that does
not produce oil or gas in commercial quantities.
Exploitation activities.
The process of the recovery
of fluids from reservoirs and drilling and development of oil and gas reserves.
Exploration well.
An exploration well is a well
drilled to find a new field or new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally,
an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well.
Field.
An area consisting of a single reservoir
or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.
Gross acres or gross wells.
The total acres or wells
in which we own a working interest.
Net acres or net wells.
The sum of the fractional
working interests we own in gross acres or gross wells expressed as whole numbers and fractions of whole numbers.
Possible reserves.
Possible reserves are those additional
reserves that are less certain to be recovered than probable reserves. The SEC provides a complete definition of possible reserves
in Rule 4-10(a)(17) of Regulation S-X.
Probable reserves.
Probable reserves are those additional
reserves that are less certain to be recovered than proved reserves but that, together with proved reserves, are as likely as not
to be recovered. The SEC provides a complete definition of probable reserves in Rule 4-10(a)(18) of Regulation S-X.
Productive well.
A well that is found to be capable
of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses
and taxes.
Proved developed reserves.
In general, reserves
that can be expected to be recovered from existing wells with existing equipment and operating methods. The SEC provides a complete
definition of developed oil and gas reserves in Rule 4-10(a)(6) of Regulation S-X.
Proved reserves.
Those quantities of oil and natural
gas, 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 and under existing economic conditions, operating methods and government regulations
prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably
certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons
must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identified by drilling and limited by fluid contacts,
if any, and
(B) Adjacent undrilled portions of the reservoir that can, with
reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available
geoscience and engineering data.
(ii) In the absence of data on fluid contacts, proved quantities
in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering,
or performance data and reliable technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has defined
a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in
the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology
establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application
of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the
reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir
or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering
analysis on which the project or program was based; and
(B) The project has been approved for development by all necessary
parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at
which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period
prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month
price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon
future conditions.
Proved undeveloped reserves.
In general, reserves
that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure
is required for recompletion. The SEC provides a complete definition of undeveloped oil and gas reserves in Rule 4-10(a)(31)
of Regulation S-X.
Reserves.
Reserves are estimated remaining quantities
of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development
projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist,
the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances
to market, and all permits and financing required to implement the project.
Undeveloped acreage.
Lease acreage on which wells
have not been drilled or completed to a point that would permit the production of economic quantities of oil and gas regardless
of whether such acreage contains proved reserves.
Working interest.
The operating interest that gives
the owner the right to drill, produce and conduct operating activities on the property and a share of production and requires the
owner to pay a share of the costs of drilling and production operations.