Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2018, 2017 and 2016
(Expressed in U.S. Dollars, unless otherwise indicated)
1. Description of Business
Gran Tierra Energy Inc., a Delaware corporation (the “Company”
or “Gran Tierra”), is a publicly traded company focused on oil and natural gas exploration and production in Colombia.
2. Significant Accounting Policies
The consolidated financial statements have
been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
Significant accounting policies are:
Basis of consolidation
These consolidated financial statements
include the accounts of the Company and its controlled subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Significant estimates made by management include: oil and natural gas reserves
and related present value of future cash flows; depreciation, depletion, amortization and impairment (“DD&A”);
impairment assessments of goodwill; timing of transfers from oil and gas properties not subject to depletion to the depletable
base; asset retirement obligations; determining the value of the consideration transferred and the net identifiable assets acquired
and liabilities assumed in connection with business combinations and determining goodwill; assessments of the likely outcome of
legal and other contingencies; income taxes; stock-based compensation; and determining the fair value of derivatives and investment.
Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information
may result in revised estimates and actual results may differ from these estimates.
Cash and cash equivalents
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents.
Restricted cash and cash equivalents
Restricted cash and cash equivalents comprises
cash and cash equivalents pledged to secure letters of credit and to settle asset retirement obligations. Letters of credit currently
secured by cash relate to work commitment guarantees contained in exploration contracts. Restrictions will lapse when work obligations
are satisfied pursuant to the exploration contract or an asset retirement obligation is settled. Cash and claims to cash that are
restricted as to withdrawal or use for other than current operations or are designated for expenditure in the acquisition or construction
of long-term assets are excluded from the current asset classification. The long-term portion of restricted cash and cash equivalents
is included in other long-term assets on the Company's balance sheet.
Allowance for doubtful accounts
The Company estimates losses on receivables
based on known uncollectible accounts, if any, and historical experience of losses incurred and accrues a reserve on a receivable
when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of the reserve
may be reasonably estimated.
Investment in PetroTal Corp.
During December 2017, the Company acquired
an investment in common shares of PetroTal Corp. ("PetroTal" formerly Sterling Resources Ltd.) in connection with the
sale of its Peru business unit. At December 31, 2018, this investment represented approximately 46% of PetroTal's issued and
outstanding common shares. The Company determined that it did not have a controlling financial interest in PetroTal, but could
exert significant influence over PetroTal's operating and financial policies as a result of its ownership interest in PetroTal
and the right to nominate two directors to PetroTal's board of directors. Accordingly, Gran Tierra accounted for its investment
in the common shares of PetroTal as an equity method investment, but elected the fair value option for this investment to reflect
the value that market participants would use to value the investment. The fair value of the investment in PetroTal's common shares
is recorded in 'Investments' in the consolidated balance sheet, and the change in fair value is recorded in the consolidated statements
of operations as financial instruments gains or losses.
Derivatives
The Company records derivative instruments
on its balance sheet at fair value as either an asset or liability with changes in fair value recognized in the consolidated statements
of operations as financial instruments gains or losses. While the Company utilizes derivative instruments to manage the price risk
attributable to its expected oil production and foreign exchange risk, it has elected not to designate its derivative instruments
as accounting hedges under the accounting guidance.
Inventory
Inventory consists of oil in tanks and
third party pipelines and supplies and is valued at the lower of cost and net realizable value. The cost of inventory is determined
using the weighted average method. Oil inventories include expenditures incurred to produce, upgrade and transport the product
to the storage facilities and include operating, depletion and depreciation expenses and cash royalties.
Income taxes
Income taxes are recognized using the liability
method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax base,
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or
settled. Valuation allowances are provided if, after considering available evidence, it is not more likely than not that some or
all of the deferred tax assets will be realized.
The tax benefit from an uncertain tax position
is recognized when it is more likely than not, based on the technical merits of the position, that the position will be sustained
on examination by the taxing authorities. Additionally, the amount of the tax benefit recognized is the largest amount of benefit
that has a greater than 50% likelihood of being realized upon ultimate settlement. In evaluating whether a tax position has met
the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing
authority that has full knowledge of all relevant information. The Company recognizes potential penalties and interest related
to unrecognized tax benefits as a component of income tax expense.
In October 2016, the FASB issued ASU 2016-16,
"Intra-Entity Transfers of Assets Other than Inventory." This ASU requires companies to recognize the income tax effects
of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense or benefit in
the period the sale or transfer occurs. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods
within those years. Early adoption was permitted as of the beginning of an annual reporting period. The ASU is required to be applied
on a modified retrospective basis with a cumulative-effect adjustment directly to retained earnings in the period of adoption.
The Company early adopted this ASU on January 1, 2017, and in the three months ending March 31, 2017, wrote off the income tax
effects that had been deferred from past intercompany transactions to opening deficit. A total of $124.5 million, representing
deferred tax assets of 178.6 million, net of $54.1 million of prepaid tax, was recorded directly to opening deficit at January
1, 2017. Deferred tax assets recorded upon adoption were assessed for realizability under Accounting Standards Codification ("ASC")
740 "Income Taxes", and, valuation allowances were recognized on those deferred tax assets as necessary on the date of
adoption. The adoption of ASU 2016-16 did not have any effect on the Company’s cash flows.
Oil and gas properties
The Company uses the full cost method of
accounting for its investment in oil and natural gas properties as defined by the Securities and Exchange Commission (“SEC”).
Under this method, the Company capitalizes all acquisition, exploration and development costs incurred for the purpose of finding
oil and natural gas reserves, including salaries, benefits and other internal costs directly attributable to these activities.
Costs associated with production and general corporate activities; however, are expensed as incurred. Separate cost centers are
maintained for each country in which the Company incurs costs.
The Company computes depletion of oil and
natural gas properties on a quarterly basis using the unit-of-production method based upon production and estimates of proved reserve
quantities. Future development costs related to properties with proved reserves are also included in the amortization base for
computation of depletion. The costs of unproved properties are excluded from the amortization base until the properties are evaluated.
The cost of exploratory dry wells is transferred to proved properties, and thus is subject to amortization, immediately upon determination
that a well is dry in those countries where proved reserves exist.
The Company performs a ceiling test calculation
each quarter in accordance with SEC Regulation S-X Rule 4-10. In performing its quarterly ceiling test, the Company limits, on
a country-by-country basis, the capitalized costs of proved oil and natural gas properties, net of accumulated depletion and deferred
income taxes, to the estimated future net cash flows from proved oil and natural gas reserves discounted at 10%, net of related
tax effects, plus the lower of cost or fair value of unproved properties included in the costs being amortized. If such capitalized
costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to net income
or loss. Any such write-down will reduce earnings in the period of occurrence and results in a lower DD&A rate in future periods.
A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the
ceiling.
The Company calculates future net cash
flows by applying the unweighted average of prices in effect on the first day of the month for the preceding 12-month period, adjusted
for location and quality differentials. Such prices are utilized except where different prices are fixed and determinable from
applicable contracts for the remaining term of those contracts.
Unproved properties are not depleted pending
the determination of the existence of proved reserves. Costs are transferred into the depletable base on an ongoing basis as the
properties are evaluated and proved reserves are established or impairment is determined. Unproved properties are evaluated quarterly
to ascertain whether impairment has occurred. This evaluation considers, among other factors, seismic data, requirements to relinquish
acreage, drilling results and activity, remaining time in the commitment period, remaining capital plans, and political, economic,
and market conditions. During any period in which factors indicate an impairment, the cumulative costs incurred to date for such
property are transferred to the full cost pool and are then subject to depletion. For countries where a reserve base has not yet
been established, the impairment is charged to earnings.
In exploration areas, related seismic costs
are capitalized in unproved property and evaluated as part of the total capitalized costs associated with a property. Seismic costs
related to development projects are recorded in proved properties and therefore subject to depletion as incurred.
Gains and losses on the sale or other disposition
of oil and natural gas properties are not recognized, unless the gain or loss would significantly alter the relationship between
capitalized costs and proved reserves of oil and natural gas attributable to a country.
Asset retirement obligation
The Company records an estimated liability
for future costs associated with the abandonment of its oil and gas properties including the costs of reclamation of drilling sites.
The Company records the fair value of a liability for a legal obligation to retire an asset in the period in which the liability
is incurred with an offsetting increase to the related oil and gas properties. The fair value of an asset retirement obligation
is measured by reference to the expected future cash outflows required to satisfy the retirement obligation discounted at the Company’s
credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to
their expected settlement value, while the asset retirement cost is amortized over the estimated productive life of the related
assets. The accretion of the asset retirement obligation and amortization of the asset retirement cost are included in DD&A.
If estimated future costs of an asset retirement obligation change, an adjustment is recorded to both the asset retirement obligation
and oil and gas properties. Revisions to the estimated asset retirement obligation can result from changes in retirement cost estimates,
revisions to estimated inflation rates and changes in the estimated timing of abandonment.
Other capital assets
Other capital assets, including additions
and replacements, are recorded at cost upon acquisition and include furniture, fixtures and leasehold improvement, computer equipment
and automobiles. Depreciation for furniture and fixtures, computer equipment and automobiles is provided using the straight-line
method over the useful life of the asset. Leasehold improvements are depreciated on a straight-line basis over the shorter of the
estimated useful life and the term of the related lease. The cost of repairs and maintenance is charged to expense as incurred.
Goodwill
Goodwill represents the excess of the aggregate
of the consideration transferred over the net identifiable assets acquired and liabilities assumed. The Company assesses qualitative
factors annually, or more frequently if necessary, to determine whether it is more likely than not that the fair value of a reporting
unit is less than its carrying amount and whether it is necessary to perform the goodwill impairment test. The impairment test
requires allocating goodwill and certain other assets and liabilities to assigned reporting units. The fair value of each reporting
unit is estimated and compared with its net book value. An impairment loss is recognized if the estimated fair value of the reporting
unit is less than its carrying amount, not exceeding the carrying amount of goodwill allocated to that reporting unit. Because
quoted market prices are not available for the Company’s reporting unit, the fair value of the reporting unit is estimated
based upon estimated future cash flows of the reporting unit. The goodwill relates entirely to Colombia. The Company performed
a qualitative assessment of goodwill at December 31, 2018, and based on this assessment, no impairment of goodwill was identified.
Convertible Notes
The Company accounts for its 5.00% Convertible
Senior Notes due 2021 (the "Convertible Notes") as a liability in their entirety. The embedded features of the Convertible
Notes were assessed for bifurcation from the Convertible Notes under the applicable provisions, including the basic conversion
feature, the fundamental change make-whole provision and the put and call options. Based on an assessment, the Company concluded
that these embedded features did not meet the criteria to be accounted for separately.
The Company incurred debt issuance costs
in connection with the issuance of the Convertible Notes which have been presented as a direct deduction against the carrying amount
of the Convertible Notes and are being amortized to interest expense using the effective interest method over the contractual term
of the Convertible Notes.
Revenue from Contracts with Customers
The Company's revenue relates to oil and
natural gas sales in Colombia. The Company recognizes revenue when it transfers control of the product to a customer. This generally
occurs at the time the customer obtains legal title to the product and when it is physically transferred to the delivery point
agreed with the customer. Payment terms are generally within three business days following delivery of an invoice to the customer.
Revenue is recognized based on the consideration specified in contracts with customers. Revenue represents the Company's share
and is recorded net of royalty payments to governments and other mineral interest owners.
The Company evaluates its arrangement with
third parties and partners to determine if the Company acts as a principal or an agent. In making this evaluation, management considers
if the Company obtains control of the product delivered, which is indicated by the Company having the primary responsibility for
the delivery of the product, having ability to establish prices or having inventory risk. If the Company acts in the capacity of
an agent rather than as a principal in transaction, then the revenue is recognized on a net-basis, only reflecting the fee realized
by the Company from the transaction.
Tariffs, tolls and fees charged to other
entities for use of pipelines owned by the Company are evaluated by management to determine if these originate from contracts with
customers or from incidental arrangements. When determining if the Company acted as a principal or as an agent in transactions,
management determines if the Company obtains control of the product. As part of this assessment, management considers detailed
criteria for revenue recognition set out in ASC 606.
In the comparative period, revenue from
the production of oil and natural gas was recognized when the customer took title and assumed the risks and rewards of ownership,
prices were fixed or determinable, the sale was evidenced by a contract and collection of the revenue was reasonably assured.
Stock-based compensation
The Company records stock-based compensation
expense in its consolidated financial statements measured at the fair value of the awards that are ultimately expected to vest.
Fair values are determined using pricing models such as the Black-Scholes-Merton or Monte Carlo simulation stock option-pricing
models and/or observable share prices. For equity-settled stock-based compensation awards, fair values are determined at the grant
date and the expense, net of estimated forfeitures, is recognized using the accelerated method over the requisite service period.
An adjustment is made to compensation expense for any difference between the estimated forfeitures and the actual forfeitures.
For cash-settled stock-based compensation awards, fair values are determined at each reporting date and periodic changes are recognized
as compensation costs, with a corresponding change to liabilities.
The Company uses historical data to estimate
the expected term used in the Black-Scholes option pricing model, option exercises and employee departure behavior. Expected volatilities
used in the fair value estimate are based on the historical volatility of the Company’s shares. The risk-free rate for periods
within the expected term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.
Stock-based compensation expense is capitalized
as part of oil and natural gas properties or expensed as part of general and administrative (“G&A”) or operating
expenses, as appropriate.
Foreign currency translation
The functional currency of the Company,
including its subsidiaries, is the United States dollar. Monetary items are translated into the reporting currency at the exchange
rate in effect at the balance sheet date and non-monetary items are translated at historical exchange rates. Revenue and expense
items are translated in a manner that produces substantially the same reporting currency amounts that would have resulted had the
underlying transactions been translated on the dates they occurred.
DD&A expense on assets is translated
at the historical exchange rates similar to the assets to which they relate. Gains and losses resulting from foreign currency transactions,
which are transactions denominated in a currency other than the entity’s functional currency, are recognized in net income
or loss.
Earnings (loss) per share
Basic earnings (loss) per share is calculated
by dividing net income or loss attributable to common shareholders by the weighted average number of shares of Common Stock and
exchangeable shares issued and outstanding during each period. Diluted net income or loss per share is calculated by adjusting
the weighted average number of shares of Common Stock and exchangeable shares outstanding for the dilutive effect, if any, of share
equivalents. The Company uses the treasury stock method to determine the dilutive effect. This method assumes that all Common Stock
equivalents have been exercised at the beginning of the period (or at the time of issuance, if later), and that the funds obtained
thereby were used to purchase shares of Common Stock of the Company at the volume weighted average trading price of shares of Common
Stock during the period.
Recently Adopted Accounting Pronouncements
Revenue from Contracts with Customers
The Company adopted Accounting Standard
Codification ("ASC") 606
Revenue from Contracts with Customers
with a date of initial application of January 1,
2018 in accordance with the modified retrospective approach without using the practical expedients. Except for providing enhanced
disclosures about the Company's revenue transactions, the application of ASC 606 did not have an impact on the Company’s
consolidated financial position, results of operations or cash flows.
Recognition and Measurement of Financial Assets and Financial
Liabilities
In February 2018, the FASB issued ASU 2018-03,
"Recognition and Measurement of Financial Assets and Financial Liabilities". ASU 2018-03 clarified certain aspects of
the guidance in ASU 2016-01. ASU 2018-03 is effective for annual reporting periods beginning after December 15, 2017 and interim
reporting periods within those annual reporting periods beginning after June 15, 2018. Early adoption is permitted upon adoption
of ASU 2016-01.The amendments should be applied retrospectively with a cumulative-effect adjustment to the effective date of ASU
2016-01. The Company early adopted this update on January 1, 2018. The implementation of this update did not impact the Company’s
consolidated financial position, results of operations or cash flows or disclosure.
In January 2016, the FASB issued ASU 2016-01,
"Recognition and Measurement of Financial Assets and Financial Liabilities". ASU 2016-01 addressed certain aspects of
recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 was effective for annual reporting
periods and interim reporting periods within those annual reporting periods, beginning after December 15, 2017. The implementation
of this update did not impact on the Company’s consolidated financial position, results of operations or cash flows or disclosure.
Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued ASU 2017-04,
"Simplifying the Test for Goodwill Impairment". ASU 2017-04 eliminates step 2 of the goodwill impairment test. An entity
no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a
reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Goodwill
impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying
amount of goodwill. ASU 2017-04 is effective for annual reporting periods and interim reporting periods within those annual reporting
periods, beginning after December 15, 2019. Early adoption is permitted. At December 31, 2018, the Company performed a qualitative
assessment of goodwill and, based on this assessment, no impairment of goodwill was identified.
Recently Issued Accounting Pronouncements
Leases
In February 2016, the FASB issued
ASU 2016-02, “Leases". This ASU will require most lease assets and lease liabilities to be recognized on the
balance sheet and the disclosure of key information about lease arrangements. The ASU will be effective for fiscal years, and
interim periods within those years, beginning after December 15, 2018.
In January 2018, the FASB issued ASU 2018-01,
"Land Easement Practical Expedient for Transition to Topic 842". ASU 2018-01 provides an optional transition practical
expedient that, if elected, would not require an organization to reconsider their accounting for existing or expired land easements
that were not previously accounted for as leases under Topic 840. The effective date and transition requirements for the amendment
are the same as the effective date and transition requirements in ASU 2016-02. The Company is planning to adopt ASU 2018-01 upon
transition to ASU 2016-02 "Leases".
The
Company has completed an assessment of its contract inventory, identified contracts which meet the definition of a lease and is
currently finalizing the value
of right-of-use lease assets and lease liabilities and transition adjustments.
The
Company expects to use practical expedients available for land easements and short-term leases and will apply the guidance of ASU
2016-02 using a modified retrospective transition approach. The Company's preliminarily estimates of a right of use asset is between
$5 to $10 million with the main assets being attributed to office space leases.
Actual amounts recorded will depend on the
Company's final conclusions with respect to the appropriate discount rates and lease terms to be applied on the date of transition.
Fair Value Measurements
In August 2018, the FASB issued ASU 2018-13,
"Changes to the Disclosure Requirements for Fair Value Measurement". ASU 2018-13 will modify certain fair value measurements
disclosure requirements. ASU 2018-13 will be effective for fiscal years, and interim periods within those years, beginning after
December 15, 2019. The disclosure amendments on changes in unrealized gains and losses, and disclosure requirements for significant
unobservable inputs used to develop Level 3 fair value measurements, should be applied prospectively. All other amendments in ASU
2018-13 should be applied retrospectively. Early adoption is permitted. The Company is currently assessing this impact of this
update on its consolidated financial position, results of operations or cash flows.
Financial Instruments - Credit Losses
In June 2016, the FASB issued ASU 2016-13,
"Financial Instruments - Credit Losses". This ASU replaces the current incurred loss impairment methodology with a methodology
that reflects expected credit losses and requires a broader range of reasonable and supportable information to support credit loss
estimates. The ASU will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2019.
The Company is currently assessing this impact of this update on it’s consolidated financial position, results of operations
or cash flows.
3. Segment and Geographic Reporting
The Company is primarily engaged in the
exploration and production of oil and natural gas. The Company has one reportable segment based on geographic organization, Colombia.
Prior to the sale of the Company's Brazil business unit effective June 30, 2017 and its Peru business unit effective December 18,
2017, Brazil and Peru were reportable segments. The "All Other" category represents the Company’s corporate, Brazil
and Peru activities until the date of sale. The Company evaluates reportable segment performance based on income or loss before
income taxes.
The following tables present comparative information on the
Company’s reportable segment and other activities for the years ended December 31, 2017 and 2016:
|
|
Year Ended December 31, 2017
|
|
(Thousands of U.S. Dollars)
|
|
Colombia
|
|
|
All Other
|
|
|
Total
|
|
Oil and natural gas sales
|
|
$
|
413,316
|
|
|
$
|
8,418
|
|
|
$
|
421,734
|
|
DD&A expenses
|
|
|
126,453
|
|
|
|
4,882
|
|
|
|
131,335
|
|
Asset impairment
|
|
|
—
|
|
|
|
1,514
|
|
|
|
1,514
|
|
General and administrative expenses
|
|
|
23,500
|
|
|
|
15,514
|
|
|
|
39,014
|
|
Interest expense
|
|
|
486
|
|
|
|
13,396
|
|
|
|
13,882
|
|
Loss on sale
|
|
|
—
|
|
|
|
(44,385
|
)
|
|
|
(44,385
|
)
|
Income (loss) before income taxes
|
|
|
111,829
|
|
|
|
(74,499
|
)
|
|
|
37,330
|
|
Segment capital expenditures
|
|
|
242,636
|
|
|
|
8,405
|
|
|
|
251,041
|
|
|
|
Year Ended December 31, 2016
|
|
(Thousands of U.S. Dollars)
|
|
Colombia
|
|
|
All Other
|
|
|
Total
|
|
Oil and natural gas sales
|
|
$
|
280,872
|
|
|
$
|
8,397
|
|
|
$
|
289,269
|
|
DD&A expenses
|
|
|
132,569
|
|
|
|
6,966
|
|
|
|
139,535
|
|
Asset impairment
|
|
|
514,314
|
|
|
|
102,335
|
|
|
|
616,649
|
|
General and administrative expenses
|
|
|
17,187
|
|
|
|
16,031
|
|
|
|
33,218
|
|
Interest expense
|
|
|
—
|
|
|
|
14,145
|
|
|
|
14,145
|
|
Gain on acquisition
|
|
|
—
|
|
|
|
929
|
|
|
|
929
|
|
Loss before income taxes
|
|
|
(505,447
|
)
|
|
|
(144,787
|
)
|
|
|
(650,234
|
)
|
Segment capital expenditures
|
|
|
105,963
|
|
|
|
21,826
|
|
|
|
127,789
|
|
|
|
Year Ended December 31, 2017
|
|
(Thousands of U.S. Dollars)
|
|
Colombia
|
|
|
All Other
|
|
|
Total
|
|
Property, plant and equipment
|
|
$
|
1,096,833
|
|
|
$
|
2,391
|
|
|
$
|
1,099,224
|
|
Goodwill
|
|
|
102,581
|
|
|
|
—
|
|
|
$
|
102,581
|
|
All other assets
|
|
|
176,980
|
|
|
|
50,834
|
|
|
$
|
227,814
|
|
Total Assets
|
|
$
|
1,376,394
|
|
|
$
|
53,225
|
|
|
$
|
1,429,619
|
|
4. Accounts Receivable
|
|
As at December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Trade
|
|
$
|
16,332
|
|
|
$
|
37,794
|
|
Other
|
|
|
9,845
|
|
|
|
7,559
|
|
|
|
$
|
26,177
|
|
|
$
|
45,353
|
|
5. Property, Plant and Equipment
|
|
As at December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Oil and natural gas properties
|
|
|
|
|
|
|
|
|
Proved
|
|
$
|
3,226,811
|
|
|
$
|
2,810,796
|
|
Unproved
|
|
|
456,598
|
|
|
|
464,948
|
|
|
|
|
3,683,409
|
|
|
|
3,275,744
|
|
Other
|
|
|
19,549
|
|
|
|
26,401
|
|
|
|
|
3,702,958
|
|
|
|
3,302,145
|
|
Accumulated depletion and depreciation
|
|
|
(2,390,181
|
)
|
|
|
(2,202,921
|
)
|
|
|
$
|
1,312,777
|
|
|
$
|
1,099,224
|
|
Depletion and depreciation expense on property,
plant and equipment for the year ended December 31, 2018, was $197.0 million (year ended December 31, 2017 - $126.8 million; year
ended December 31, 2016 - $130.2 million). A portion of depletion and depreciation expense was recorded as inventory in each year.
Asset impairment for the three years ended December 31,
2018, was as follows:
(Thousands of U.S. Dollars)
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Impairment of oil and gas properties
|
|
$
|
—
|
|
|
$
|
1,514
|
|
|
$
|
615,985
|
|
Impairment of inventory
|
|
|
—
|
|
|
|
—
|
|
|
|
664
|
|
|
|
$
|
—
|
|
|
$
|
1,514
|
|
|
$
|
616,649
|
|
The Company follows the full cost method
of accounting for its oil and gas properties. Under this method, the net book value of properties on a country-by-country basis,
less related deferred income taxes, may not exceed a calculated “ceiling”. The ceiling is the estimated after tax future
net revenues from proved oil and gas properties, discounted at 10% per year. In calculating discounted future net revenues, oil
and natural gas prices are determined using the average price during the 12 months period prior to the ending date of the period
covered by the balance sheet, calculated as an unweighted arithmetic average of the first-day-of-the month price for each month
within such period for that oil and natural gas. That average price is then held constant, except for changes which are fixed and
determinable by existing contracts. Therefore, ceiling test estimates are based on historical prices discounted at 10% per year
and it should not be assumed that estimates of future net revenues represent the fair market value of the Company's reserves. In
accordance with GAAP, Gran Tierra used an average Brent price of $72.08 per bbl for the purposes of the December 31, 2018
ceiling test calculations (December 31, 2017 - $54.19; December 31, 2016 - $42.92).
In the year ended December 31, 2016,
the Company recorded ceiling test impairment losses of $513.65 million in its Colombia cost center, $71.14 million in its Brazil
cost center and $31.2 million in its Peru cost center. The Colombia ceiling test impairment loss related to lower oil prices and
the fact that the acquisitions of PetroLatina and PetroAmerica were initially added into the cost base at estimated fair value.
However, these acquired assets were subjected to a prescribed GAAP ceiling test, which is not a fair value test, and which, as
noted below, uses constant commodity pricing that averages prices during the preceding 12 months. The Brazil ceiling test impairment
loss related to continued low oil prices and increased costs in the depletable base as a result of a $45.0 million impairment of
unproved properties.
2018 Acquisitions
On October 1, 2018, the Company acquired
the remaining 45% working interest ("WI") in the PUT-1 Block in the Putumayo Basin for cash consideration of $28.1 million,
of which $15.2 million was allocated to proved properties.
On August 6, 2018, the Company acquired
a WI in the VMM-2 Block in the Middle Magdalena Valley Basin for cash consideration of $17.0 million, of which $6.2 million was
allocated to proved properties. On December 1, 2018, the Company acquired a further WI in the VMM-2 Block for cash consideration
of $5.0 million, of which $1.6 million was allocated to proved properties. In total, the Company has acquired an 80% WI in the
VMM-2 Block.
On June 20, 2018, the Company acquired
the remaining WI in the Alea 1848-A and 1947-C Blocks in the Putumayo Basin for cash consideration of $3.1 million and was entirely
recorded to unproved properties.
2017 Acquisition
On April 27, 2017, the Company acquired
the Santana and Nancy-Burdine-Maxine Blocks in the Putumayo Basin for cash consideration of $30.4 million, of which $24.4 million
was allocated to proved properties.
2017 Dispositions
On December 18, 2017, Gran Tierra completed
the sale of its Peru business unit. Pursuant to the divestiture, PetroTal acquired all of the issued and outstanding shares in
Gran Tierra's indirect, wholly owned subsidiary that indirectly held all of its Peruvian assets for aggregate consideration of
$33.5 million, comprised of approximately 187.3 million common shares of PetroTal and an estimated cash-settled working capital
adjustment of $0.4 million. Escrow conditions are applicable to 90% of the share consideration, which will be released from escrow
at 15% every 6 months for 36 months following December 18, 2017. Additionally, in connection with the divestiture, Gran Tierra
purchased $11.0 million of subscription receipts which were exchangeable for common shares of PetroTal and subsequently exchanged
them for approximately 58.9 million common shares of PetroTal. After giving effect to the divestiture, Gran Tierra directly and
indirectly holds approximately 246.2 million common shares representing approximately 46% of PetroTal's issued and outstanding
common shares. PetroTal is a junior oil and gas company focused on development of oil and gas assets in Peru.
In connection with the divestiture, Gran
Tierra, through two of its indirect, wholly owned subsidiaries, entered into an investor rights agreement with PetroTal, pursuant
to which, Gran Tierra has the right to nominate two directors to the board of PetroTal, as well as certain demand and piggy-back
registration rights and certain pre-emptive rights, subject to the terms and conditions set forth in the investor rights agreement.
Gran Tierra is prohibited from exercising voting rights over more than 30% of the issued and outstanding PetroTal Common Shares.
In addition, Gran Tierra, through its indirect, wholly-owned subsidiary, entered into a carried interest and option agreement with
PetroTal and a Peruvian subsidiary, pursuant to which Gran Tierra has a 20% carried working interest in Block 107, located in the
Ucayali basin in Peru, which interest may, at the option of Gran Tierra, either be converted to a non-carried working interest
or be forfeited following the drilling of an exploration well in Block 107.
At December 18, 2017, the net book value of the Peru business
unit was greater than proceeds received resulting in a $34.1 million loss on sale.
On June 30, 2017, the Company completed
the disposition of its assets in Brazil. Gran Tierra completed the disposition of its Brazil business unit for a purchase price
of $35.0 million, which, after certain final closing adjustments, resulted in cash consideration of approximately $36.8 million.
At June 30, 2017, the net book value of
the Brazil business unit was greater than proceeds received resulting in a $10.2 million loss on sale.
Unproved Oil and Natural Gas Properties
At December 31, 2018, unproved oil
and natural gas properties consist of exploration lands held in Colombia. Unproved oil and natural gas properties are being held
for their exploration value and are not being depleted pending determination of the existence of proved reserves. Gran Tierra will
continue to assess the unproved properties over the next several years as proved reserves are established and as exploration warrants
whether or not future areas will be developed. The Company expects that approximately 80% of costs not subject to depletion at
December 31, 2018, will be transferred to the depletable base within the next five years and the remainder in the next five
to ten years.
The following is a summary of Gran Tierra’s oil and natural
gas properties not subject to depletion as at December 31, 2018:
|
|
Costs Incurred in
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to
|
|
|
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
Total
|
|
Acquisition costs - Colombia
|
|
$
|
29,444
|
|
|
$
|
11,040
|
|
|
$
|
287,565
|
|
|
$
|
26,236
|
|
|
$
|
354,285
|
|
Exploration costs - Colombia
|
|
|
36,729
|
|
|
|
26,058
|
|
|
|
6,670
|
|
|
|
32,856
|
|
|
|
102,313
|
|
|
|
$
|
66,173
|
|
|
$
|
37,098
|
|
|
$
|
294,235
|
|
|
$
|
59,092
|
|
|
$
|
456,598
|
|
6. Debt and Debt Issuance Costs
The Company's debt at December 31, 2018 and 2017, was as
follows:
|
|
As at December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Senior notes (a)
|
|
$
|
300,000
|
|
|
$
|
—
|
|
Convertible notes (b)
|
|
$
|
115,000
|
|
|
$
|
115,000
|
|
Revolving credit facility (c)
|
|
|
—
|
|
|
|
148,000
|
|
Unamortized debt issuance costs
|
|
|
(15,585
|
)
|
|
|
(6,458
|
)
|
Long-term debt
|
|
$
|
399,415
|
|
|
$
|
256,542
|
|
a) Senior Notes
On February 15, 2018, Gran Tierra Energy
International Holdings Ltd. ("GTEIH"), an indirect, wholly owned subsidiary of the Company, issued $300.0 million of
6.25% Senior Notes due 2025 (the "Senior Notes"). The Senior Notes are fully and unconditionally guaranteed by the Company
and certain subsidiaries of the Company that guarantee its revolving credit facility. Net proceeds from the sale of the Senior
Notes were $288.1 million, after deducting the initial purchasers' discounts and commission and the offering expenses payable by
the Company.
The Senior Notes bear interest at a rate
of 6.25% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2018. The
Senior Notes will mature on February 15, 2025, unless earlier redeemed or repurchased.
Before February 15, 2022, GTEIH may, at
its option, redeem all or a portion of the Senior Notes at 100% of the principal amount plus accrued and unpaid interest and a
make-whole premium. Thereafter, the Company may redeem all or a portion of the Senior Notes plus accrued and unpaid interest applicable
to the date of the redemption at the following redemption prices: 2022 - 103.125%; 2023 - 101.563%; 2024 and thereafter - 100%.
b) Convertible Notes
At December 31, 2018, the Company
had $115 million of Convertible Notes outstanding. The Convertible Notes bear interest at a rate of 5.00% per year, payable semi-annually
in arrears on April 1 and October 1 of each year, beginning on October 1, 2016. The Convertible Notes will mature on April 1, 2021,
unless earlier redeemed, repurchased or converted. The Convertible Notes are unsecured and are subordinated to secured debt to
the extent of the value of the assets securing such indebtedness.
The Convertible Notes are convertible at
the option of the holder at any time prior to the close of business on the business day immediately preceding the maturity date.
The conversion rate is initially 311.4295 shares of Common Stock per $1,000 principal amount of Convertible Notes (equivalent to
an initial conversion price of approximately $3.21 per share of Common Stock). The conversion rate is subject to adjustment in
some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that
occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its Convertible
Notes in connection with such a corporate event in certain circumstances.
The Company may not redeem the Convertible
Notes prior to April 5, 2019, except in certain circumstances following a fundamental change (as defined in the indenture governing
the Convertible Notes). The Company may redeem for all cash or any portion of the Convertible Notes, at its option, on or after
April 5, 2019, if (terms below are as defined in the indenture governing the Convertible Notes):
(i) the last reported sale price of the
Company's Common Stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not
consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including,
the trading day immediately preceding the date on which the Company provides notice of redemption; and
(ii) the Company has filed all reports
that it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (other than current
reports on Form 8-K), during the twelve months preceding the date on which the Company provides such notice.
The redemption price will be equal to 100%
of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the
redemption date. No sinking fund is provided for the Convertible Notes.
If the Company undergoes a fundamental
change, holders may require the Company to repurchase for cash all or any portion of their Convertible Notes at a fundamental change
repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest
to, but excluding, the fundamental change repurchase date.
Net proceeds from the sale of the Convertible
Notes were $109.1 million, after deducting the initial purchasers' discount and the offering expenses payable by the Company.
c) Credit Facility
At December 31, 2018, the Company
had a revolving credit facility with a syndicate of lenders with a borrowing base of $300 million. Availability under the revolving
credit facility is determined by the reserves-based borrowing base determined by the lenders. On November 10, 2018, as a result
of the Ninth Amendment to the credit agreement, the borrowing base of $300 million was reaffirmed and, among other things, the
maturity date of the borrowing under the revolving credit facility was extended from November 10, 2020 to November 10, 2021.
T
he
next re-determination of the borrowing base is due to occur no later than May 2019.
As a result of the Eleventh Amendment to
the credit agreement, amounts drawn down under the revolving credit facility bear interest, at the Company's option, at the USD
LIBOR rate plus a margin ranging from 1.65% to 3.65% (December 31, 2017 - 2.15% to 3.65%), or an alternate base rate plus
a margin ranging from 0.65% to 2.65% (December 31, 2017 - 1.15% to 2.65%), in each case based on the borrowing base utilization
percentage. The alternate base rate is currently the U.S. prime rate. Undrawn amounts under the revolving credit facility bear
interest from 0.41% to 0.91% (December 31, 2017 - 0.54% to 0.91%) per annum, based on the average daily amount of unused commitments.
The Company’s revolving credit facility
is guaranteed by and secured against the assets of certain of the Company’s subsidiaries (the "Credit Facility Group").
Under the terms of the credit facility, the Company is subject on certain restrictions on its ability to distribute funds to entities
outside of the Credit Facility Group, including restrictions on the ability to pay dividends to shareholders of the Company.
d) Interest expense
The following table presents total interest expense recognized
in the accompanying consolidated statements of operations:
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Contractual interest and other financing expenses
|
|
$
|
24,181
|
|
|
$
|
11,467
|
|
|
$
|
8,454
|
|
Amortization of debt issuance costs
|
|
|
3,183
|
|
|
|
2,415
|
|
|
|
5,691
|
|
|
|
$
|
27,364
|
|
|
$
|
13,882
|
|
|
$
|
14,145
|
|
The Company incurred debt issuance costs
in connection with the issuance of the Senior Notes, Convertible Notes and its revolving credit facility. As at December 31,
2018, the balance of unamortized debt issuance costs has been presented as a direct deduction against the carrying amount of debt
and is being amortized to interest expense using the effective interest method over the term of the debt.
7. Share Capital
|
|
Shares of
Common Stock
|
|
|
Exchangeable
Shares of Gran
Tierra
Exchangeco Inc.
|
|
|
Exchangeable
Shares of Gran
Tierra Goldstrike
Inc.
|
|
Balance, December 31, 2017
|
|
|
385,191,042
|
|
|
|
4,422,776
|
|
|
|
1,688,889
|
|
Options exercised
|
|
|
549,189
|
|
|
|
—
|
|
|
|
—
|
|
Shares repurchased and canceled
|
|
|
(4,772,869
|
)
|
|
|
—
|
|
|
|
—
|
|
Exchange of exchangeable shares
|
|
|
6,111,665
|
|
|
|
(4,422,776
|
)
|
|
|
(1,688,889
|
)
|
Balance, December 31, 2018
|
|
|
387,079,027
|
|
|
|
—
|
|
|
|
—
|
|
The Company’s authorized share capital consists of 595,000,000
shares of capital stock, of which 570 million are designated as Common Stock, par value $0.001 per share and 25 million are designated
as Preferred Stock, par value $0.001 per share.
On May 1, 2018, Gran Tierra Exchangeco
Inc., a wholly-owned subsidiary of the Company, announced that it had established a redemption date of July 5, 2018 in respect
of all of its outstanding exchangeable shares. Effective July 5, 2018, all remaining outstanding exchangeable shares of record
on July 4, 2018 were acquired for purchase consideration of one share of Gran Tierra common stock for each exchangeable share,
and on July 9, 2018, the Company retired and canceled one share of Special A Voting Stock and one share of Special B Voting Stock,
which held voting rights in connection with those exchangeable shares. As a result, no shares of Special A Voting Stock and Special
B Voting Stock remain outstanding.
The holders of shares of Common Stock are
entitled to one vote for each share on all matters submitted to a stockholder vote and are entitled to share in all dividends that
the Company’s Board of Directors, in its discretion, declares from legally available funds. The holders of Common Stock have
no pre-emptive rights, no conversion rights, and there are no redemption provisions applicable to the shares.
Share Repurchase Program
On March 7, 2018, the Company announced
that it intended to implement a share repurchase program (the “2018 Program”) through the facilities of the Toronto
Stock Exchange ("TSX") and eligible alternative trading platforms in Canada. Under the 2018 Program, the Company is able
to purchase at prevailing market prices up to 19,269,732 shares of Common Stock, representing approximately 5% of the issued and
outstanding shares of Common Stock as of March 8, 2018. Shares purchased pursuant to 2018 Program will be canceled. The 2018 Program
will expire on March 11, 2019, or earlier if the 5% share maximum is reached.
Equity Compensation Awards
The Company has an equity compensation
program in place for its executives and employees. Equity compensation grants vest either based solely on recipient's continued
employment or achievement of certain key measures of performance. Equity awards consist 80% of Performance Stock Units (“PSUs”)
and 20% of stock options. The Company’s equity compensation awards outstanding as at December 31, 2018, include PSUs,
deferred share units (“DSUs”), and stock options.
In accordance with the 2007 Equity Incentive
Plan, as amended, the Company’s Board of Directors is authorized to issue options or other rights to acquire shares of the
Company’s Common Stock. On June 27, 2012, the shareholders of Gran Tierra approved an amendment to the Company’s 2007
Equity Incentive Plan, which increased the Common Stock available for issuance thereunder from 23,306,100 shares to 39,806,100
shares.
The following table provides information about PSU, DSU, RSU
and stock option activity for the year ended December 31, 2018:
|
|
PSUs
|
|
|
DSUs
|
|
|
RSUs
|
|
|
Stock Options
|
|
|
|
Number of
Outstanding
Share Units
|
|
|
Number of
Outstanding
Share Units
|
|
|
Number of
Outstanding
Share Units
|
|
|
Number of
Outstanding
Stock
Options
|
|
|
Weighted
Average
Exercise
Price /Stock
Option ($)
|
|
Balance, December 31, 2017
|
|
|
6,131,951
|
|
|
|
455,768
|
|
|
|
122,090
|
|
|
|
8,960,692
|
|
|
$
|
3.65
|
|
Granted
|
|
|
3,879,667
|
|
|
|
229,125
|
|
|
|
—
|
|
|
|
2,114,869
|
|
|
|
2.55
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
(120,268
|
)
|
|
|
(549,189
|
)
|
|
|
2.60
|
|
Forfeited
|
|
|
(1,006,957
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(856,772
|
)
|
|
|
4.56
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,822
|
)
|
|
|
(635,188
|
)
|
|
|
6.47
|
|
Balance, December 31, 2018
|
|
|
9,004,661
|
|
|
|
684,893
|
|
|
|
—
|
|
|
|
9,034,412
|
|
|
$
|
3.18
|
|
Vested and exercisable, at December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,649,640
|
|
|
$
|
3.55
|
|
Vested, or expected to vest, at December 31, 2018, through the life of the options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,879,351
|
|
|
$
|
3.19
|
|
Stock-based compensation expense for the year ended December 31,
2018, was $8.3 million (December 31, 2017 - $9.8 million; December 31, 2016 - $6.3 million) and was primarily recorded
in G&A expenses.
At December 31, 2018, there was $9.2
million (December 31, 2017 - $13.7 million) of unrecognized compensation cost related to unvested PSUs and stock options which
is expected to be recognized over a weighted average period of 1.6 years. The weighted-average remaining contractual term of options
vested, or expected to vest, at December 31, 2018 was 2.5 years.
PSUs
PSUs entitle the holder to receive, at
the option of the Company, either the underlying number of shares of the Company's Common Stock upon vesting of such units or a
cash payment equal to the value of the underlying shares. PSUs will cliff vest after three years, subject to the continued employment
of the grantee. Upon vesting, the underlying number of Common Shares or the cash payment equivalent to their value may range from
zero to 200% of the number of PSU's vested, based on the Company’s performance with respect to the applicable performance
targets. As at December 31, 2018, 2.7 million (December 31, 2017 - nil) of PSU's had vested and will be settled in cash. The performance
targets for the PSUs outstanding as at December 31, 2018, were as follows:
(i) 50% of the award is subject to targets
relating to the total shareholder return (“TSR”) of the Company against a group of peer companies
(ii) 25% of the award is subject to
targets relating to net asset value ("NAV") of the Company per share and NAV is based on before tax net present
value discounted at 10% of proved plus probable reserves; and
(iii) 25% of the award is subject to targets
relating to the execution of corporate strategy.
The compensation cost of PSUs is subject
to adjustment based upon the attainability of these performance targets. No settlement will occur with respect to the portion of
the PSU award subject to each performance target for results below the applicable minimum threshold for that target. PSUs in excess
of the target number granted will vest and be settled if performance exceeds the targeted performance goals. The Company currently
intends to settle the PSUs in cash.
DSUs
DSUs entitle the holder to receive, either
the underlying number of shares of the Company's Common Stock upon vesting of such units or, at the option of the Company, a cash
payment equal to the value of the underlying shares. Once a DSU is vested, it is immediately settled. During the year ended December 31,
2018, DSUs were granted to directors and will vest 100% at such time the grantee ceases to be a member of the Board of Directors.
The Company currently intends to settle the DSUs in cash.
RSUs
During the year ended December 31,
2018, the Company paid $0.4 million to cash settle restricted stock units (“RSUs”) (2017 - $0.6 million and 2016 -
$1.2 million). There were no RSU's outstanding as at December 31, 2018.
Stock Options
Each stock option permits the holder to
purchase one share of Common Stock at the stated exercise price. The exercise price equals the market price of a share of Common
Stock at the time of grant. Stock options generally vest over three years. The term of stock options granted starting in May of
2013 is five years or three months after the grantee’s end of service to the Company, whichever occurs first. Stock options
granted prior to May of 2013 continue to have a term of ten years or three months after the end of the grantee’s service
to the Company, whichever occurs first.
For the year ended December 31, 2018,
549,189 stock options were exercised for cash proceeds of $1.4 million (2017 – nil options exercised and shares issued; 2016
– 2,165,370 options exercised and shares issued).
At December 31, 2018, the weighted
average remaining contractual term of outstanding stock options was 2.5 years and of exercisable stock options was 1.9 years.
The fair value of each stock option award
is estimated on the date of grant using the Black-Scholes option pricing model based on assumptions noted in the following table:
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Dividend yield (per share)
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
Volatility
|
|
|
51% to 55%
|
|
|
|
51% to 53%
|
|
|
|
50% to 54%
|
|
Weighted average volatility
|
|
|
54
|
%
|
|
|
52
|
%
|
|
|
52
|
%
|
Risk-free interest rate
|
|
|
2.18% to 3.00%
|
|
|
|
1.75% to 2.10%
|
|
|
|
0.94% to 1.78%
|
|
Expected term
|
|
|
4-5 years
|
|
|
|
4-5 years
|
|
|
|
4-5 years
|
|
The weighted average grant date fair value
for options granted in the year ended December 31, 2018, was $1.15 (2017 - $1.11; 2016 - $1.14). The weighted average grant date
fair value for options vested in the year ended December 31, 2018, was $1.23 (2017 - $1.31; 2016 - $1.52). The total fair value
of stock options vested during year ended December 31, 2018, was $2.8 million (2017 - $2.5 million; 2016 - $2.8 million).
Weighted Average Shares Outstanding
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Weighted Average number of common and exchangeable shares outstanding
|
|
|
390,930,453
|
|
|
|
396,683,593
|
|
|
|
320,851,538
|
|
Shares issuable pursuant to stock options
|
|
|
4,207,542
|
|
|
|
—
|
|
|
|
—
|
|
Shares assumed to be purchased from proceeds of stock options
|
|
|
(3,832,516
|
)
|
|
|
—
|
|
|
|
—
|
|
Shares issuable on conversion of Convertible Notes
|
|
|
35,814,393
|
|
|
|
—
|
|
|
|
—
|
|
Weighted average number of diluted common and exchange shares outstanding
|
|
|
427,119,872
|
|
|
|
396,683,593
|
|
|
|
320,851,538
|
|
For the year ended December 31, 2018, 5,354,545
options, on a weighted average basis, (2017 - 9,681,304 options; 2016 - 10,662,034 options) were excluded from the diluted loss
per share calculation as the options were anti-dilutive.
8. Asset Retirement Obligation
Changes in the carrying amounts of the asset retirement obligation
associated with the Company’s oil and natural gas properties were as follows:
|
Year Ended December 31,
|
(Thousands of U.S. Dollars)
|
2018
|
|
2017
|
Balance, beginning of year
|
$
|
31,564
|
|
|
$
|
43,357
|
|
Liability incurred
|
6,985
|
|
|
3,403
|
|
Settlements
|
(600
|
)
|
|
(1,507
|
)
|
Accretion
|
2,772
|
|
|
3,825
|
|
Revisions in estimated liability
|
2,351
|
|
|
(4,095
|
)
|
Liabilities associated with assets sold
|
—
|
|
|
(16,932
|
)
|
Liabilities assumed in acquisitions
|
727
|
|
|
3,513
|
|
Balance, end of year
|
$
|
43,799
|
|
|
$
|
31,564
|
|
|
|
|
|
Asset retirement obligation - current
|
$
|
123
|
|
|
$
|
323
|
|
Asset retirement obligation - long-term
|
43,676
|
|
|
31,241
|
|
Balance, end of year
|
$
|
43,799
|
|
|
$
|
31,564
|
|
Revisions in estimated liabilities relate
primarily to changes in estimates of asset retirement costs and include, but are not limited to, revisions of estimated inflation
rates, changes in property lives and the expected timing of settling asset retirement obligations. At December 31, 2018, the
fair value of assets that were legally restricted for purposes of settling asset retirement obligations was $2.7 million (December 31,
2017 - $12.7 million). These assets were accounted for as restricted cash and cash equivalents on the Company's balance sheet.
9. Revenue
Most of the Company's revenue is generated
from oil sales at prices which reflect the blended prices received upon shipment by the purchaser at defined sales points or are
defined by contract relative to ICE Brent and adjusted for Vasconia crude, quality and transportation discounts each month. For
the year ended December 31, 2018, 100% (year ended December 31, 2017 - 99%, year-end December 31, 2016 - 99%) of the Company's
revenue resulted from oil sales and quality and transportation discounts were 18% (year ended December 31, 2017 - 21%, year-end
December 31, 2016 - 26%) of the ICE Brent price. During the year ended December 31, 2018, the Company's production was sold primarily
to two major customers in Colombia (year ended December 31, 2017 - three, year-end December 31, 2016 - three).
As at December 31, 2018, accounts
receivable included $4.2 million of accrued sales revenue related to December 2018 production (December 31, 2017 - $11.1 million
related to December 31, 2017 production).
10. Taxes
The income tax expense reported differs from the amount computed
by applying the U.S. statutory rate to loss before income taxes for the following reasons:
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Income (Loss) before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
(14,610
|
)
|
|
$
|
(51,215
|
)
|
|
$
|
(23,986
|
)
|
Foreign
|
|
|
166,097
|
|
|
|
88,545
|
|
|
|
(626,248
|
)
|
|
|
|
151,487
|
|
|
|
37,330
|
|
|
|
(650,234
|
)
|
|
|
|
21
|
%
|
|
|
35
|
%
|
|
|
35
|
%
|
Income tax expense (recovery) expected
|
|
|
31,812
|
|
|
|
13,066
|
|
|
|
(227,582
|
)
|
Impact of foreign taxes
|
|
|
34,629
|
|
|
|
12,310
|
|
|
|
(9,799
|
)
|
Other local taxes
|
|
|
297
|
|
|
|
1,056
|
|
|
|
1,998
|
|
Stock-based compensation
|
|
|
184
|
|
|
|
2,001
|
|
|
|
1,955
|
|
Change in valuation allowance
|
|
|
(21,953
|
)
|
|
|
52,269
|
|
|
|
47,675
|
|
Non-deductible third party royalty in Colombia
|
|
|
1,813
|
|
|
|
3,194
|
|
|
|
2,550
|
|
Other permanent differences
|
|
|
2,089
|
|
|
|
(14,858
|
)
|
|
|
(1,466
|
)
|
Total income tax expense (recovery)
|
|
$
|
48,871
|
|
|
$
|
69,038
|
|
|
$
|
(184,669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax Rate
|
|
|
32
|
%
|
|
|
185
|
%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
—
|
|
|
$
|
3,457
|
|
|
$
|
1,818
|
|
Foreign
|
|
|
43,903
|
|
|
|
20,865
|
|
|
|
18,304
|
|
|
|
|
43,903
|
|
|
|
24,322
|
|
|
|
20,122
|
|
Deferred income tax expense (recovery)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
(1)
|
|
|
4,968
|
|
|
|
44,716
|
|
|
|
(204,791
|
)
|
Total income tax expense (recovery)
|
|
$
|
48,871
|
|
|
$
|
69,038
|
|
|
$
|
(184,669
|
)
|
(1)
The deferred tax recovery for the year ended
December 31, 2016, included $201.3 million associated with the ceiling test impairment loss in Colombia.
In general, it is the Company's practice
and intention to reinvest the earnings of our non-U.S. subsidiaries in such subsidiaries' operations. As of December 31, 2018,
the Company has not made a provision for U.S. or additional foreign withholding taxes on the investments in foreign subsidiaries
that are indefinitely reinvested. Generally, such amounts become subject to taxation upon the remittance of dividends and under
certain other circumstances.
In the fourth quarter of 2018, the Colombia
government approved a number of changes to the tax legislation (the "Tax Reform") including reducing the corporate income
tax rate from 37% in 2018 (including a 4% surtax) to 33% for 2019, 32% for 2020, 31% for 2021 and 30% for 2022 and onwards. The
tax rates applied to the calculation of deferred income taxes, before valuation allowances, have been adjusted to reflect these
changes resulting in a tax expense of $8.3 million. This adjustment is included in the Impact of foreign taxes line above.
As a result of the Tax Reform, the Colombian
government increased the dividend tax on distributions to foreign non-resident entities from 5% to 7.5% if they relate to previously
taxed earnings from 2017 and onwards. The Tax Reform reduced the corporate minimum presumptive income tax from 3.5% to 1.5% in
2019 and 2020, and 0% for 2021 and onwards. The tax is imposed on the taxpayer’s net equity at the prior year-end when the
presumptive income tax exceeds actual taxable profits. Additionally, the Tax Reform subjects indirect transfers of Colombian assets
or shares to tax in Colombia, among other, if the Colombian assets/shares account for 20% or more of the book or fair market value
of the foreign entity that is being transferred.
At December 31, 2017, the Company considered
amounts recorded related to U.S. tax reform to be reasonable estimates, however certain amounts were provisional as the Company’s
interpretation, assessment and presentation of the impact of the tax law change, were further clarified with additional guidance
from tax and accounting authorities received in 2018. With additional guidance provided during the one-year measurement period
and upon finalizing its 2017 annual tax return for its U.S. business, the Company recorded no material changes to its deferred
income tax balances.
|
|
As at December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Deferred Tax Assets
|
|
|
|
|
|
|
|
|
Tax benefit of operating loss carryforwards
|
|
$
|
51,042
|
|
|
$
|
60,460
|
|
Tax basis in excess of book basis
|
|
|
8,854
|
|
|
|
62,768
|
|
Foreign tax credits and other accruals
|
|
|
79,820
|
|
|
|
70,157
|
|
Tax benefit of capital loss carryforwards
|
|
|
32,737
|
|
|
|
52,575
|
|
Deferred tax assets before valuation allowance
|
|
|
172,453
|
|
|
|
245,960
|
|
Valuation allowance
|
|
|
(127,016
|
)
|
|
|
(188,650
|
)
|
|
|
|
45,437
|
|
|
|
57,310
|
|
Deferred Tax Liabilities
|
|
|
23,419
|
|
|
|
28,417
|
|
Net Deferred Tax Assets
|
|
$
|
22,018
|
|
|
$
|
28,893
|
|
At December 31, 2018, the Company has not
recognized the benefit of unused non-capital loss carryforwards of $22.7 million (2017 - $8.6 million) for federal purposes in
the United States, which expire from 2029 to 2038.
At December 31, 2018, the Company has not
recognized the benefit of unused non-capital loss carryforwards of $27.1 million (2017 - $29.6 million) for federal and provincial
purposes in Canada, which expire from 2029 to 2037. The Company has not recognized the benefit of capital loss carry forwards of
$242.4 million (2017 - $243.4 million) for federal and provincial purposes in Canada which can be carried forward indefinitely.
At December 31, 2018, the Company has recognized
the benefit of unused non-capital loss carryforwards of $98.9 million and tax credits of $2.2 million (2017 - $1.1 million) for
federal purposes in Colombia. As a result of the 2016 Colombian Tax Reform, Colombian losses can be carryforward for a period of
12 years, and not indefinitely as under the previous tax regime. There is a grandfathering rule for losses incurred prior to 2017,
which may continue to be carried forward indefinitely. $75.4 million of the Colombian losses can be carried forward indefinitely
and $23.5 million are entitled to a carryforward period of 12 years.
Due to an increase in reserves and expected
oil prices, the Company has revised its estimate of future taxable profits upwards in the future. As a result, the Company recognized
the tax effect of $122.3 million of previously unrecognized tax losses and other tax deductions (tax impact $40.3 million) because
the Company considers it more likely than not that future taxable profits will be available against which such tax losses and other
tax deductions can be used.
As at December 31, 2018 and 2017, Gran
Tierra had no unrecognized tax benefits and related interest and penalties included in its deferred and current tax liabilities
in the consolidated balance sheet. The Company does not anticipate any material changes with respect to unrecognized tax benefit
within the next twelve months. The Company had no other significant interest or penalties related to taxes included in the consolidated
statement of operations for the quarter ended December 31, 2018. The Company and its subsidiaries file income tax returns in the
U.S. and certain other foreign jurisdictions. The Company is subject to income tax examinations for the tax years ended 2010 through
2018 in certain jurisdictions.
11. Accounts Payable and Accrued Liabilities
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Trade
|
|
$
|
123,905
|
|
|
$
|
95,386
|
|
Royalties
|
|
|
3,550
|
|
|
|
6,867
|
|
Employee compensation
|
|
|
8,195
|
|
|
|
8,908
|
|
Other
|
|
|
19,020
|
|
|
|
15,038
|
|
|
|
$
|
154,670
|
|
|
$
|
126,199
|
|
12. Commitments and Contingencies
Purchase Obligations, Firm Agreements and Leases
As at December 31, 2018, future minimum payments under
non-cancelable agreements with remaining terms in excess of one year were as follows:
|
|
Year ending December 31
|
|
(Thousands of U.S. Dollars)
|
|
Total
|
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil transportation services
|
|
$
|
7,053
|
|
|
$
|
3,842
|
|
|
$
|
3,211
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Power generation facility
|
|
|
15,084
|
|
|
|
3,810
|
|
|
|
3,821
|
|
|
|
3,810
|
|
|
|
3,643
|
|
|
|
—
|
|
|
|
—
|
|
Operating leases
|
|
|
7,528
|
|
|
|
2,409
|
|
|
|
2,499
|
|
|
|
1,575
|
|
|
|
1,045
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
29,665
|
|
|
$
|
10,061
|
|
|
$
|
9,531
|
|
|
$
|
5,385
|
|
|
$
|
4,688
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gran
Tierra leases certain office space, compressors, vehicles, equipment and housing. Total rent expense for the year ended December
31, 2018, was $2.3 million (
December 31, 2017
– $3.2
million; December 31, 2016 - $4.0 million).
Indemnities
Corporate indemnities have been provided
by the Company to directors and officers for various items including, but not limited to, all costs to settle suits or actions
due to their association with the Company and its subsidiaries and/or affiliates, subject to certain restrictions. The Company
has purchased directors’ and officers’ liability insurance to mitigate the cost of any potential future suits or actions.
The maximum amount of any potential future payment cannot be reasonably estimated. The Company may provide indemnifications in
the normal course of business that are often standard contractual terms to counterparties in certain transactions such as purchase
and sale agreements. The terms of these indemnifications will vary based upon the contract, the nature of which prevents the Company
from making a reasonable estimate of the maximum potential amounts that may be required to be paid.
Letters of Credit
At December 31, 2018, the Company
had provided letters of credit and other credit support totaling $76.7 million (December 31, 2017 - $76.0 million) as security
relating to work commitment guarantees contained in exploration contracts and other capital or operating requirements.
Contingencies
The ANH and Gran Tierra are engaged in
ongoing discussions regarding the interpretation of whether certain transportation and related costs are eligible to be deducted
in the calculation of the HPR royalty. Based on the Company's understanding of the ANH's position, the estimated compensation,
which would be payable if the ANH’s interpretation is correct, could be up to $56.3 million as at December 31, 2018.
At this time, no amount has been accrued in the consolidated financial statements as Gran Tierra does not consider it probable
that a loss will be incurred.
In addition to the above, Gran Tierra has
a number of lawsuits and claims pending. Although the outcome of these other lawsuits and disputes cannot be predicted with certainty,
Gran Tierra believes the resolution of these matters would not have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows. Gran Tierra records costs as they are incurred or become probable and
determinable.
13. Financial Instruments, Fair Value Measurement, Credit
Risk and Foreign Exchange Risk
Financial Instruments
At December 31, 2018, the Company’s
financial instruments recognized in the balance sheet consist of; cash and cash equivalents; restricted cash and cash equivalents;
accounts receivable; investments; derivatives; accounts payable and accrued liabilities; long-term debt; current and long-term
equity compensation reward liability and other long-term liabilities.
Fair Value Measurement
The fair value of investment, derivatives
and PSU liabilities are being remeasured at the estimated fair value at the end of each reporting period.
The fair value of the short-term portion
of the investment which was received as consideration on the sale of the Company's Peru business unit was estimated using quoted
prices at December 31, 2018, and the market exchange rate at that time. The fair value of the long-term portion of the investment
restricted by escrow conditions was estimated using observable and unobservable inputs; factors that were evaluated included quoted
market prices, precedent comparable transactions, risk free rate, measures of market risk volatility, estimates of the Company's
and PetroTal’s cost of capital and quotes from third parties.
The fair value of commodity price and foreign
currency derivatives is estimated based on various factors, including quoted market prices in active markets and quotes from third
parties. The Company also performs an internal valuation to ensure the reasonableness of third party quotes. In consideration of
counterparty credit risk, the Company assessed the possibility of whether the counterparty to the derivative would default by failing
to make any contractually required payments. Additionally, the Company considers that it is of substantial credit quality and has
the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions.
The fair value of the PSU liability was
estimated based on option pricing model using the inputs, such as quoted market prices in an active market, and PSU performance
factor.
The fair value of investments, derivatives,
RSU, PSU and DSU liabilities at December 31, 2018, and December 31, 2017 were as follows:
|
|
As at December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Investment - current and long-term assets
|
|
$
|
41,435
|
|
|
$
|
44,202
|
|
Derivative asset
|
|
|
—
|
|
|
|
302
|
|
|
|
$
|
41,435
|
|
|
$
|
44,504
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
1,017
|
|
|
$
|
21,151
|
|
RSU, PSU and DSU liability
|
|
|
17,683
|
|
|
|
11,430
|
|
|
|
$
|
18,700
|
|
|
$
|
32,581
|
|
The following table presents losses or gains on financial instruments
recognized in the accompanying consolidated statements of operations:
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Commodity price derivative loss
|
|
$
|
13,972
|
|
|
$
|
17,327
|
|
|
$
|
7,370
|
|
Foreign currency derivative gain
|
|
|
(890
|
)
|
|
|
(1,287
|
)
|
|
|
(1,016
|
)
|
Investment gain
|
|
|
(786
|
)
|
|
|
(111
|
)
|
|
|
—
|
|
Trading securities loss
|
|
|
—
|
|
|
|
—
|
|
|
|
3,925
|
|
|
|
$
|
12,296
|
|
|
$
|
15,929
|
|
|
$
|
10,279
|
|
These gains or losses are presented as financial instruments
loss in the consolidated statements of operations and cash flows.
Investment gain related to fair value gains on the PetroTal
shares Gran Tierra received in connection with the sale of its Peru business unit in December 2017 (Note 5). For the year ended
December 31, 2018, these investment gains were unrealized.
All trading securities were sold during
the year ended December 31, 2016, and the trading securities loss represented a realized loss. The cash proceeds were included
in cash flows from investing activities in the Company's consolidated statements of cash flows because these securities were received
in connection with the sale of the Company's Argentina business unit in 2014.
Financial instruments not recorded at fair
value include the Senior Notes and Convertible Notes (Note 6). At December 31, 2018, the carrying amounts of the Senior Notes
and Convertible Notes were $289.3 million and $112.1 million, respectively, which represents the aggregate principal amount less
unamortized debt issuance costs, and the fair values were $280.4 million and $115.5 million. The fair value of long-term restricted
cash and cash equivalents and the revolving credit facility approximated their carrying value because interest rates are variable
and reflective of market rates. The fair values of other financial instruments approximate their carrying amounts due to the short-term
maturity of these instruments.
GAAP establishes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels.
Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets and liabilities and have the highest
priority. Level 2 and 3 inputs are based on significant other observable inputs and significant unobservable inputs, respectively,
and have lower priorities. The Company uses appropriate valuation techniques based on the available inputs to measure the fair
values of assets and liabilities.
At December 31, 2018, the fair value
of current portion of the investment, DSU liability was determined using Level 1 inputs, the fair value of derivatives and PSUs
was determined using Level 2 inputs and the fair value of the long-term portion of the investment restricted by escrow conditions
was determined using Level 3 inputs. The table below presents a roll-forward of the long-term portion of the investment:
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
Opening balance
|
|
$
|
19,147
|
|
|
$
|
—
|
|
Acquisition
|
|
|
—
|
|
|
|
19,091
|
|
Transfer from long-term (Level 3) to current (Level 1)
|
|
|
(10,522
|
)
|
|
|
—
|
|
Unrealized gain on valuation
|
|
|
846
|
|
|
|
56
|
|
Unrealized loss on foreign exchange
|
|
|
(760
|
)
|
|
|
—
|
|
Closing balance
|
|
$
|
8,711
|
|
|
$
|
19,147
|
|
The Company uses available market data
and valuation methodologies to estimate the fair value of debt. The fair value of debt is the estimated amount the Company would
have to pay a third party to assume the debt, including a credit spread for the difference between the issue rate and the period
end market rate. The credit spread is the Company’s default or repayment risk. The credit spread (premium or discount) is
determined by comparing the Company’s Senior Notes, Convertible Notes and revolving credit facility to new issuances (secured
and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The disclosure above
regarding the fair value of the Convertible Notes was determined using Level 2 inputs based on the indicative pricing published
by certain third-party services or trading levels of the Convertible Notes, which are not listed on any securities exchange or
quoted on an inter-dealer automated quotation system. The disclosure in the paragraph above regarding the fair value of cash and
restricted cash and cash equivalents, revolving credit facility and Senior Notes was based on Level 1 inputs.
The Company’s non-recurring fair
value measurements include asset retirement obligations. The fair value of an asset retirement obligation is measured by reference
to the expected future cash outflows required to satisfy the retirement obligation discounted at the Company’s credit-adjusted
risk-free interest rate. The significant level 3 inputs used to calculate such liabilities include estimates of costs to be incurred,
the Company’s credit-adjusted risk-free interest rate, inflation rates and estimated dates of abandonment. Accretion expense
is recognized over time as the discounted liabilities are accreted to their expected settlement value, while the asset retirement
cost is amortized over the estimated productive life of the related assets.
Commodity Price Risk
The Company may at time utilize commodity
price derivatives to manage the variability in cash flows associated with the forecasted sale of its oil production, reduce commodity
price risk and provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending.
As at December 31, 2018, the Company did not have any commodity price derivatives outstanding.
Foreign Exchange Risk
The Company is exposed to foreign exchange
risk in relation to its Colombian operations predominantly in operating costs, general and administrative costs and transportation
costs. To mitigate exposure to fluctuations in foreign exchange, the Company may enter into foreign exchange derivatives. As at
December 31, 2018, the Company did not have any foreign exchange derivatives outstanding.
Unrealized foreign exchange gains and losses
primarily result from fluctuation of the U.S. dollar to the Colombian peso due to Gran Tierra’s current and deferred tax
liabilities, which are monetary liabilities mainly denominated in the local currency of the Colombian operations. As a result,
foreign exchange gains and losses must be calculated on conversion to the U.S. dollar functional currency. A strengthening in the
Colombian peso against the U.S. dollar results in foreign exchange losses, estimated at $7,209 for each one peso decrease in the
exchange rate of the Colombian peso to one U.S. dollar
.
This effect was calculated based on the Company's December 31,
2018, deferred tax balances.
For the year ended December 31, 2018, 100%
(December 31, 2017 - 98%, December 31, 2016 - 97%) of the Company's oil and natural gas sales were generated in Colombia.
In Colombia, the Company receives 100% of its revenues in U.S. dollars and the majority of its capital expenditures are in U.S.
dollars or are based on U.S. dollar prices.
Credit Risk
Credit risk arises from the potential that
the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed
terms. The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and
cash equivalents, restricted cash and accounts receivable. The carrying value of cash and cash equivalents, restricted cash and
accounts receivable reflects management’s assessment of credit risk
.
At December 31, 2018, cash and cash
equivalents and restricted cash included balances in bank accounts, term deposits and certificates of deposit, placed with financial
institutions with investment grade credit ratings.
Most of the Company’s accounts receivable
relate to uncollateralized sales to customers in the oil and natural gas industry and are exposed to typical industry credit risks.
The concentration of revenues in a single industry affects the Company’s overall exposure to credit risk because customers
may be similarly affected by changes in economic and other conditions. The Company manages this credit risk by entering into sales
contracts with only credit worthy entities and reviewing its exposure to individual entities on a regular basis. For the year ended
December 31, 2018, the Company had two customers which were significant.
To reduce the concentration of exposure
to any individual counterparty, the Company utilizes a group of investment-grade rated financial institutions, for its derivative
transactions. The Company monitors counterparty creditworthiness on an ongoing basis; however, it cannot predict sudden changes
in counterparties’ creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its
ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, the Company may not
realize the benefit of some of its derivative instruments.
14. Supplemental Cash Flow Information
The following table provides a reconciliation of cash, cash
equivalents and restricted cash and cash equivalents with the Company's consolidated balance sheet that sum to the total of the
same such amounts shown in the consolidated statements of cash flows:
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Cash and cash equivalents
|
|
$
|
51,040
|
|
|
$
|
12,326
|
|
|
$
|
25,175
|
|
Restricted cash and cash equivalents - current
|
|
|
1,269
|
|
|
|
11,787
|
|
|
|
8,322
|
|
Restricted cash and cash equivalents - long-term
(1)
|
|
|
1,999
|
|
|
|
2,565
|
|
|
|
9,770
|
|
|
|
$
|
54,308
|
|
|
$
|
26,678
|
|
|
$
|
43,267
|
|
(1)
The long-term portion of restricted cash is included
in other long-term assets on the Company's balance sheet.
Net changes in assets and liabilities from operating activities
were as follows:
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Accounts receivable and other long-term assets
|
|
$
|
17,674
|
|
|
$
|
(2,494
|
)
|
|
$
|
(29
|
)
|
Derivatives
|
|
|
1,017
|
|
|
|
—
|
|
|
|
(3,546
|
)
|
Inventory
|
|
|
(2,127
|
)
|
|
|
(78
|
)
|
|
|
5,510
|
|
Other prepaids
|
|
|
547
|
|
|
|
2,674
|
|
|
|
(615
|
)
|
Accounts payable and accrued and other long-term liabilities
|
|
|
9,034
|
|
|
|
15,617
|
|
|
|
(9,691
|
)
|
Prepaid tax and taxes receivable and payable
|
|
|
(47,566
|
)
|
|
|
(44,936
|
)
|
|
|
(2,966
|
)
|
Net changes in assets and liabilities from operating activities
|
|
$
|
(21,421
|
)
|
|
$
|
(29,217
|
)
|
|
$
|
(11,337
|
)
|
The following table provides additional supplemental cash flow
disclosures:
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Cash paid for income taxes
|
|
$
|
46,277
|
|
|
$
|
54,505
|
|
|
$
|
64,067
|
|
Cash paid for interest
|
|
$
|
16,038
|
|
|
$
|
9,684
|
|
|
$
|
5,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liabilities related to property, plant and equipment, end of year
|
|
$
|
85,204
|
|
|
$
|
76,352
|
|
|
$
|
55,181
|
|
Year ended December 31, 2017 included
non-cash share consideration received in connection with the Company's disposition of its Peru Business unit (see Note 4).
In the year ended December 31, 2016, the
purchase price paid for acquisition of Petroamerica Oil Corp. included $25.8 million of Gran Tierra's Common Stock.
15. Subsequent Event
Subsequent to year-end, the Company announced
that it had entered into an agreement to acquire working interest and operatorship of the Suroriente Block, which would increase
Gran Tierra's WI from 16% to 52%. In addition, the Company would acquire 50% WI in and operatorship of the Putumayo-8 Block, and
100% WI in the Llanos-5 Block. The purchase price for the acquisition is $104.2 million and is subject to certain adjustments and
the satisfaction of certain customary conditions.
Supplementary Data (Unaudited)
1) Oil and Gas Producing Activities
In accordance with Financial Accounting
Standards Board (FASB) Accounting Standards Codification Topic 932, “Extractive Activities—Oil and Gas,” and
regulations of the U.S. Securities and Exchange Commission (SEC), the Company is making certain supplemental disclosures about
its oil and gas exploration and production operations.
A. Estimated Proved NAR Reserves
The following table sets forth Gran Tierra's
estimated proved NAR reserves and total net proved developed and undeveloped reserves as of December 31, 2015, 2016, 2017
and 2018, and the changes in total net proved reserves during the three-year period ended December 31, 2018.
The net proved reserves represent management’s
best estimate of proved oil and natural gas reserves after royalties. Reserve estimates for each property are prepared internally
each year and 100% of the reserves at December 31, 2018, have been evaluated by independent qualified reserves consultants,
McDaniel & Associates Consultants Ltd.
The reserve estimation process requires
us to use significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic
data for each property, and demonstrate reasonable certainty that they are recoverable from known reservoirs under economic and
operating conditions that existed at year end. The determination of oil and natural gas reserves is complex and requires significant
judgment. Assumptions used to estimate reserve information may significantly increase or decrease such reserves in future periods.
The estimates of reserves are subject to continuing changes and, therefore, an accurate determination of reserves may not be possible
for many years because of the time needed for development, drilling, testing, and studies of reservoirs. The process of estimating
oil and gas reserves is complex and requires significant judgment, as discussed in Item 1A. “Risk Factors”. See “Critical
Accounting Estimates” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operation” for a description of Gran Tierra’s reserves estimation process.
|
|
Colombia
|
|
|
|
Liquids
(1)
|
|
|
Gas
|
|
|
|
(Mbbl)
|
|
|
(MMcf)
|
|
Proved NAR Reserves, December 31, 2015
|
|
|
33,386
|
|
|
|
1,823
|
|
Purchases of reserves in place
|
|
|
20,568
|
|
|
|
—
|
|
Extensions and discoveries
|
|
|
1,142
|
|
|
|
435
|
|
Production
|
|
|
(8,125
|
)
|
|
|
(592
|
)
|
Revisions of previous estimates
|
|
|
(1,093
|
)
|
|
|
(71
|
)
|
Proved NAR Reserves, December 31, 2016
|
|
|
45,878
|
|
|
|
1,595
|
|
Purchases of reserves in place
|
|
|
2,041
|
|
|
|
—
|
|
Extensions and discoveries
|
|
|
9,543
|
|
|
|
—
|
|
Improved recoveries
|
|
|
2,461
|
|
|
|
—
|
|
Technical revisions
|
|
|
7,627
|
|
|
|
1,077
|
|
Discoveries
|
|
|
873
|
|
|
|
—
|
|
Production
|
|
|
(9,469
|
)
|
|
|
(588
|
)
|
Proved NAR Reserves, December 31, 2017
|
|
|
58,954
|
|
|
|
2,084
|
|
Purchases of reserves in place
|
|
|
1,871
|
|
|
|
—
|
|
Extensions
|
|
|
6,357
|
|
|
|
—
|
|
Technical revisions
|
|
|
(3,502
|
)
|
|
|
307
|
|
Discoveries
|
|
|
811
|
|
|
|
—
|
|
Production
|
|
|
(10,569
|
)
|
|
|
(209
|
)
|
Proved NAR Reserves, December 31, 2018
|
|
|
53,922
|
|
|
|
2,182
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Reserves NAR, December 31, 2017
|
|
|
39,487
|
|
|
|
1,431
|
|
Proved Developed Reserves NAR, December 31, 2018
|
|
|
36,805
|
|
|
|
1,253
|
|
|
|
|
|
|
|
|
|
|
Proved Undeveloped Reserves NAR, December 31, 2016
|
|
|
10,349
|
|
|
|
127
|
|
Proved Undeveloped Reserves NAR, December 31, 2017
|
|
|
19,467
|
|
|
|
653
|
|
Proved Undeveloped Reserves NAR, December 31, 2018
|
|
|
17,117
|
|
|
|
929
|
|
(1)
At December 31, 2018, 2017, 2016 and 2015
, liquids reserves are 100% oil.
B. Capitalized Costs
Capitalized costs for Gran Tierra's oil and gas producing activities
consisted of the following at the end of each of the years in the two-year period ended December 31, 2018:
(Thousands of U.S. Dollars)
|
|
Proved
Properties
|
|
|
Unproved
Properties
|
|
|
Accumulated
Depletion,
Depreciation
and
Impairment
|
|
|
Net Capitalized
Costs
|
|
Balance, December 31, 2018
|
|
$
|
3,226,811
|
|
|
$
|
456,598
|
|
|
$
|
(2,373,383
|
)
|
|
$
|
1,310,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2017
|
|
$
|
2,810,796
|
|
|
$
|
464,948
|
|
|
$
|
(2,181,715
|
)
|
|
$
|
1,094,029
|
|
C. Costs Incurred
The following tables present costs incurred for Gran Tierra's
oil and gas property acquisitions, exploration and development for the respective years:
(Thousands of U.S. Dollars)
|
|
Colombia
|
|
|
Brazil
|
|
|
Peru
|
|
|
Total
|
|
Balance, December 31, 2015
|
|
$
|
1,882,954
|
|
|
$
|
220,344
|
|
|
$
|
444,878
|
|
|
$
|
2,548,176
|
|
Property acquisition costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
|
|
|
408,793
|
|
|
|
—
|
|
|
|
—
|
|
|
|
408,793
|
|
Unproved
|
|
|
500,081
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,081
|
|
Exploration costs
|
|
|
33,362
|
|
|
|
6,086
|
|
|
|
4,985
|
|
|
|
44,433
|
|
Development costs
|
|
|
72,601
|
|
|
|
9,060
|
|
|
|
—
|
|
|
|
81,661
|
|
Balance, December 31, 2016
|
|
|
2,897,791
|
|
|
|
235,490
|
|
|
|
449,863
|
|
|
|
3,583,144
|
|
Property acquisition costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
|
|
|
28,405
|
|
|
|
1,565
|
|
|
|
—
|
|
|
|
29,970
|
|
Unproved
|
|
|
8,649
|
|
|
|
—
|
|
|
|
4,314
|
|
|
|
12,963
|
|
Exploration costs
|
|
|
64,003
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,003
|
|
Development costs
|
|
|
171,498
|
|
|
|
—
|
|
|
|
|
|
|
|
171,498
|
|
Balance, December 31, 2017
|
|
|
3,170,346
|
|
|
|
237,055
|
|
|
|
454,177
|
|
|
|
3,861,578
|
|
Property acquisition costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
|
|
|
22,213
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,213
|
|
Unproved
|
|
|
29,999
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29,999
|
|
Exploration costs
|
|
|
77,989
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,989
|
|
Development costs
|
|
|
245,974
|
|
|
|
—
|
|
|
|
—
|
|
|
|
245,974
|
|
Balance, December 31, 2018
|
|
$
|
3,546,521
|
|
|
$
|
237,055
|
|
|
$
|
454,177
|
|
|
$
|
4,237,753
|
|
D. Results of Operations for Oil and Gas Producing Activities
(Thousands of U.S. Dollars)
|
|
Colombia
|
|
December 31, 2018
|
|
|
|
|
Oil and natural gas sales
|
|
$
|
613,431
|
|
Production costs
|
|
|
(174,702
|
)
|
Exploration expenses
|
|
|
—
|
|
DD&A expenses
|
|
|
(195,958
|
)
|
Asset Impairment
|
|
|
—
|
|
Income tax expense
|
|
|
(45,293
|
)
|
Results of Operations
|
|
$
|
197,478
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
Oil and natural gas sales
|
|
$
|
413,316
|
|
Production costs
|
|
|
(132,829
|
)
|
Exploration expenses
|
|
|
—
|
|
DD&A expenses
|
|
|
(126,453
|
)
|
Asset Impairment
|
|
|
—
|
|
Income tax expense
|
|
|
(64,000
|
)
|
Results of Operations
|
|
$
|
90,034
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
Oil and natural gas sales
|
|
$
|
280,872
|
|
Production costs
|
|
|
(116,141
|
)
|
Exploration expenses
|
|
|
—
|
|
DD&A expenses
|
|
|
(132,569
|
)
|
Asset Impairment
|
|
|
(514,314
|
)
|
Income tax expense
|
|
|
187,168
|
|
Results of Operations
|
|
$
|
(294,984
|
)
|
E. Standardized Measure of Discounted Future Net Cash Flows
and Changes
The following disclosure is based on estimates
of net proved reserves and the period during which they are expected to be produced. Future cash inflows are computed by applying
the twelve month period unweighted arithmetic average of the price as of the first day of each month within that twelve month period,
unless prices are defined by contractual arrangements, excluding escalations based on future conditions to Gran Tierra’s
after royalty share of estimated annual future production from proved oil and gas reserves.
|
|
Colombia
|
|
|
Brazil
|
|
Twelve month period unweighted arithmetic average of the wellhead price as of the first day of each month within the twelve month period
|
|
|
|
|
|
|
|
|
2018
|
|
$
|
61.16
|
|
|
$
|
—
|
|
2017
|
|
$
|
43.00
|
|
|
$
|
—
|
|
2016
|
|
$
|
31.67
|
|
|
$
|
31.42
|
|
Weighted average production costs
|
|
|
|
|
|
|
|
|
2018
|
|
$
|
18.18
|
|
|
$
|
—
|
|
2017
|
|
$
|
15.73
|
|
|
$
|
—
|
|
2016
|
|
$
|
15.42
|
|
|
$
|
12.19
|
|
Future development and production costs to be incurred in producing
and further developing the proved reserves are based on year end cost indicators. Future income taxes are computed by applying
year end statutory tax rates. These rates reflect allowable deductions and tax credits, and are applied to the estimated pre-tax
future net cash flows. Discounted future net cash flows are calculated using 10% mid-year discount factors. The calculations assume
the continuation of existing economic, operating and contractual conditions. However, such arbitrary assumptions have not proved
to be the case in the past. Other assumptions could give rise to substantially different results.
The Company believes this information does not in any way reflect
the current economic value of its oil and gas producing properties or the present value of their estimated future cash flows as:
•
|
no economic value is attributed to probable and possible reserves;
|
•
|
use of a 10% discount rate is arbitrary; and
|
•
|
prices change constantly from the twelve-month period unweighted arithmetic average of the price as of the first day of each month within that twelve-month period.
|
The standardized measure of discounted future net cash flows
from Gran Tierra's estimated proved oil and gas reserves is as follows:
(Thousands of U.S. Dollars)
|
|
Colombia
|
|
|
Brazil
|
|
|
Total
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Future cash inflows
|
|
$
|
3,351,768
|
|
|
$
|
—
|
|
|
$
|
3,351,768
|
|
Future production costs
|
|
|
(1,225,259
|
)
|
|
|
—
|
|
|
|
(1,225,259
|
)
|
Future development costs
|
|
|
(261,563
|
)
|
|
|
—
|
|
|
|
(261,563
|
)
|
Future asset retirement obligations
|
|
|
(45,045
|
)
|
|
|
—
|
|
|
|
(45,045
|
)
|
Future income tax expense
|
|
|
(326,856
|
)
|
|
|
—
|
|
|
|
(326,856
|
)
|
Future net cash flows
|
|
|
1,493,045
|
|
|
|
—
|
|
|
|
1,493,045
|
|
10% discount
|
|
|
(298,585
|
)
|
|
|
—
|
|
|
|
(298,585
|
)
|
Standardized Measure of Discounted Future Net Cash Flows
|
|
$
|
1,194,460
|
|
|
$
|
—
|
|
|
$
|
1,194,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Future cash inflows
|
|
$
|
2,570,551
|
|
|
$
|
—
|
|
|
$
|
2,570,551
|
|
Future production costs
|
|
|
(1,082,651
|
)
|
|
|
—
|
|
|
|
(1,082,651
|
)
|
Future development costs
|
|
|
(212,712
|
)
|
|
|
—
|
|
|
|
(212,712
|
)
|
Future asset retirement obligations
|
|
|
(33,796
|
)
|
|
|
—
|
|
|
|
(33,796
|
)
|
Future income tax expense
|
|
|
(146,652
|
)
|
|
|
—
|
|
|
|
(146,652
|
)
|
Future net cash flows
|
|
|
1,094,740
|
|
|
|
—
|
|
|
|
1,094,740
|
|
10% discount
|
|
|
(246,692
|
)
|
|
|
—
|
|
|
|
(246,692
|
)
|
Standardized Measure of Discounted Future Net Cash Flows
|
|
$
|
848,048
|
|
|
$
|
—
|
|
|
$
|
848,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Future cash inflows
|
|
$
|
1,487,553
|
|
|
$
|
195,476
|
|
|
$
|
1,683,029
|
|
Future production costs
|
|
|
(803,208
|
)
|
|
|
(85,262
|
)
|
|
|
(888,470
|
)
|
Future development costs
|
|
|
(94,131
|
)
|
|
|
(23,975
|
)
|
|
|
(118,106
|
)
|
Future asset retirement obligations
|
|
|
(24,647
|
)
|
|
|
(1,200
|
)
|
|
|
(25,847
|
)
|
Future income tax expense
|
|
|
(28,446
|
)
|
|
|
(8,957
|
)
|
|
|
(37,403
|
)
|
Future net cash flows
|
|
|
537,121
|
|
|
|
76,082
|
|
|
|
613,203
|
|
10% discount
|
|
|
(117,263
|
)
|
|
|
(43,235
|
)
|
|
|
(160,498
|
)
|
Standardized Measure of Discounted Future Net Cash Flows
|
|
$
|
419,858
|
|
|
$
|
32,847
|
|
|
$
|
452,705
|
|
Changes in the Standardized Measure of Discounted Future
Net Cash Flows
The following table summarizes changes in the standardized measure
of discounted future net cash flows for Gran Tierra's proved oil and gas reserves during three years ended December 31, 2018:
(Thousands of U.S. Dollars)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Balance, beginning of year
|
|
$
|
848,048
|
|
|
$
|
452,705
|
|
|
$
|
464,757
|
|
Sales and transfers of oil and gas produced, net of production costs
|
|
|
(368,097
|
)
|
|
|
(193,197
|
)
|
|
|
(207,776
|
)
|
Net changes in prices and production costs related to future production
|
|
|
858,889
|
|
|
|
(372,138
|
)
|
|
|
13,425
|
|
Extensions, discoveries and improved recovery, less related costs
|
|
|
159,529
|
|
|
|
193,672
|
|
|
|
111
|
|
Previously estimated development costs incurred during the year
|
|
|
110,221
|
|
|
|
71,816
|
|
|
|
34,917
|
|
Revisions of previous quantity estimates
|
|
|
(248,735
|
)
|
|
|
1,128,440
|
|
|
|
(263,713
|
)
|
Accretion of discount
|
|
|
84,804
|
|
|
|
(120,231
|
)
|
|
|
73,076
|
|
Purchases of reserves in place
|
|
|
18,814
|
|
|
|
7,416
|
|
|
|
186,393
|
|
Sales of reserves in place
|
|
|
—
|
|
|
|
(32,847
|
)
|
|
|
—
|
|
Net change in income taxes
|
|
|
(170,854
|
)
|
|
|
(112,838
|
)
|
|
|
178,273
|
|
Changes in future development costs
|
|
|
(98,159
|
)
|
|
|
(174,750
|
)
|
|
|
(26,758
|
)
|
Net increase (decrease)
|
|
|
346,412
|
|
|
|
395,343
|
|
|
|
(12,052
|
)
|
Balance, end of year
|
|
$
|
1,194,460
|
|
|
$
|
848,048
|
|
|
$
|
452,705
|
|
2) Summarized Quarterly Financial Information
|
|
Three Months Ended
|
|
|
Year Ended
|
|
(Thousands of U.S. Dollars, Except Per
Share Amounts)
|
|
March 31,
2018
|
|
|
June 30,
2018
|
|
|
September 30,
2018
|
|
|
December 31,
2018
|
|
|
December 31,
2018
|
|
Oil and natural gas sales
|
|
$
|
138,228
|
|
|
$
|
163,446
|
|
|
$
|
175,118
|
|
|
$
|
136,639
|
|
|
$
|
613,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
17,861
|
|
|
$
|
20,300
|
|
|
$
|
75,295
|
|
|
$
|
(10,840
|
)
|
|
$
|
102,616
|
|
Loss from discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
17,861
|
|
|
$
|
20,300
|
|
|
$
|
75,295
|
|
|
$
|
(10,840
|
)
|
|
$
|
102,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.19
|
|
|
|
(0.03
|
)
|
|
|
0.26
|
|
Loss from discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net income (loss) per share - Basic
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.19
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - Diluted
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.18
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.26
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
(Thousands of U.S. Dollars, Except Per
Share Amounts)
|
|
March 31,
2017
|
|
|
June 30,
2017
|
|
|
September
30, 2017
|
|
|
December 31,
2017
|
|
|
December 31,
2017
|
|
Oil and natural gas sales
|
|
$
|
94,659
|
|
|
$
|
96,128
|
|
|
$
|
103,768
|
|
|
$
|
127,179
|
|
|
$
|
421,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment
|
|
$
|
283
|
|
|
$
|
169
|
|
|
$
|
787
|
|
|
$
|
275
|
|
|
$
|
1,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
12,771
|
|
|
$
|
(6,807
|
)
|
|
$
|
3,130
|
|
|
$
|
(40,802
|
)
|
|
$
|
(31,708
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - Basic and Diluted
|
|
$
|
0.03
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.10
|
)
|
|
$
|
(0.08
|
)
|