Gran Tierra Energy Inc. Announces Operations Update
July 10 2019 - 6:00AM
Gran Tierra Energy Inc.
(“Gran Tierra” or the
“Company”)
(NYSE
American:GTE)(TSX:GTE)(LSE:GTE) today announced an
operations update. Production amounts are unaudited and on an
average working interest before royalties (
“WI”)
basis unless otherwise indicated.
Key Highlights
- Southern Putumayo Blockades Lifted – Production
Restored: Gran Tierra has been able to restore oil
production from both the Suroriente and PUT-7 Blocks, which is
currently approximately 4,500 barrels of oil per day equivalent
(“BOEPD”)
- Acordionero Commissioning On-Track: The
commissioning of the expansion of Acordionero’s central processing
and water injection facilities, as well as the installation of
gas-to-power turbines (“Acordionero Projects”),
are progressing as planned with first oil flowing through the new
additional processing equipment on July 3, 2019; the remaining
water treatment and power systems are scheduled to be commissioned
by July 15, 2019, which is expected to allow a rapid increase in
water injection in the Acordionero field up to 40,000 barrels of
water injected per day (“bwipd”) in August
2019
- Acordionero Near-Term Drilling Targeting Lisama E
Sand: The Company is currently drilling the AC-48
development oil well, which is targeting the Lisama E Sand
(currently no reserves assigned to this sand) which, if successful,
would add reserves and production; if the E Sands are not
productive, the well would be completed in the Lisama A
- Total Company Production: Current production
is approximately 34,500 BOEPD, an increase of 5,500 BOEPD from the
previously reported average level of 29,000 BOEPD (5-day average
during June 13 to 17, 2019); 4,500 BOEPD of this increase is
attributable to the Company bringing the Suroriente and PUT-7
Blocks fully back on-line; for second quarter 2019, Gran Tierra’s
average production was approximately 35,550 BOEPD
- Planned Update to Guidance: Gran Tierra
expects to update its guidance with its second quarter 2019 results
press release, which is scheduled to be issued before market open
on August 8, 2019; by that time the Company expects to have fully
assessed the startup of the Acordionero Projects
- 3D Seismic Update: The planned 341 square
kilometer (“km”) 3D seismic shoot has been
operating across the Alea-1848A, the Nancy-Burdine-Maxine, PUT-4,
and PUT-25 Blocks; the program is over 80% surveyed on the ground
and shot-recording has been initiated; the program is scheduled to
finish recording in August 2019, with a processed 3D volume
expected to be interpreted in September 2019
- ANH Bid Round Awards: Gran Tierra has won two
blocks in the recent Agencia Nacional de Hidrocarburos
(“ANH”) bid round in Colombia, the LLA-85 Block in
the Llanos Basin and the VMM-24 Block in the Middle Magdalena
Valley (“MMV”) Basin; the Company believes these
blocks may be highly prospective
- Exploration Drilling: during the second half
of 2019, Gran Tierra plans to drill one exploration well in the
PUT-1 Block (100% WI) and to participate in the drilling of one
exploration well in the LLA-10 Block (50% WI)
- HSE Update: Surpassed over 7.7 million
person-hours without a lost time incident
Gary Guidry, President and Chief Executive
Officer of Gran Tierra, commented, "We are very pleased that the
Colombian national government has successfully negotiated an end to
the blockades in the southern Putumayo. Gran Tierra continues to
seek additional ways to amplify our business benefits for the
people near our operations. Through our operations, local hiring
policies and social programs, we are providing legal, economic and
entrepreneurship opportunities. Gran Tierra has also been awarded
four “Work for Taxes” projects by the Colombian government. Through
this program, the Company plans to develop infrastructure projects
for communities that will be credited against our future tax
liabilities. With our ongoing commissioning of the Acordionero
water injection and gas-to-power projects, recent development
drilling, as well as the lifting of the blockades which were
affecting the southern Putumayo producing fields, we expect to
restore the Company’s production back to over 40,000 BOEPD.
Bringing our southern Putumayo production fully back on-line has
been an important first step in this forecasted production
increase. The next crucial step to get production back on track is
the expected positive oil rate response at Acordionero due to our
planned major ramp-up in water injection in August 2019.”
Acordionero Update (100% WI,
Operator)
- Commissioning On-Track: ° The planned
full commissioning of the Acordionero Projects during July 2019 is
expected to allow expanded water injection from a current level of
approximately 19,000 bwipd to 40,000 bwipd by August 2019 and the
release of rental facilities, which is expected to reduce operating
costs° Water injection of 40,000 bwipd is expected to replace
voidage from production in both the Lisama A and C Sands, increase
the field’s oil production rate, sweep oil to the producers, and
enhance ultimate recovery efficiency of oil and gas in the
Acordionero field° Start-up of the 20 megawatt gas-to-power
project at the same time is expected to significantly enhance power
reliability, improve electric submersible pump
(“ESP”) performance and significantly lower
operating costs° All of these activities are expected to
restore Acordionero’s production back to levels achieved in first
quarter 2019 and to grow production in 2020
- Drilling Efficiencies Continue to be
Achieved:° The AC-42 and AC-43 wells were both
drilled to total depth (“TD”) in 4.4 days, which
was 0.6 days faster than AC-41 and 2.3 days faster than AC-40,
respectively; the cost per well to TD has improved by 22% over
these last 4 wells at the Central Pad ° Both the AC-42 and
AC-43 wells are expected to be on production prior to the end of
July 2019
- Production: ° As previously announced on June
18, 2019, the Company proactively shut-in two oil producers
(AC-21 and AC-13) with high gas-oil ratios
("GOR"); the gas was produced predominately
from the Lisama C Sand, where 20% of the original oil in
place is currently booked; in AC-21, the Company
has isolated production from Lisama C, replaced the
well’s ESP and restored production from the Lisama A
only; the Company plans to convert the AC-13 to
a gas injection well to maximize the oil recovery factor
in the field ° The AC-18 well went off-line as a result
of an ESP failure on June 10, 2019 and is expected to be back on
production on or around July 21, 2019
- Upcoming Drilling Schedule: Plans are in place
to drill approximately five additional oil producers, three water
injectors, and one water source well at Acordionero through to the
end of 2019
Suroriente Update (52% WI,
Operator)
- Cohembi Facility Expansion: ° As part of
an expanded water flood program, activities have commenced to
expand the Cohembi water treatment, injection and processing
facilities under a two-phase expansion program° Phase I is
focused on expanding current water treatment and injection
facilities, while Phase II is focused on fluid handling and
processing trains beyond central processing facilities limitations
by first quarter 2020° This expansion is expected to boost
injection capacity from a current level of 19,000 bwipd to 60,000
bwipd° Cohembi’s oil production is expected to increase to
over 4,000 BOPD over the course of the next year as a result (the
Cohembi field alone had May 2019 WI average production of
2,774 BOEPD)° Water treatment and injection facility
expansion (Phase I) are scheduled for completion during fourth
quarter 2019
Costayaco Update (100% WI,
Operator)
- The CYC-39 infill oil well was drilled and cased in 18 days,
within one day of the fastest well drilled in the field; the well
is currently being completed and is expected to be on production
later in July 2019
- The CYC-40 well is planned to be spud in late July 2019 and
expected to be put on production during August 2019
Appraisal/Development Update -
Middle Magdalena Valley
Ayombero Update (100% WI,
Operator)
- The Ayombero-1 well in the Ayombero-Chuira field was recently
successfully cleaned out, re-perforated across the Galembo
formation of the La Luna Carbonate and has reinitiated long-term
production testing; during July 1 to 6, 2019, the well has flowed
naturally at a controlled average rate of 205 barrels of oil per
day (18 degree API gravity) with an average GOR of 227 standard
cubic feet per barrel, water cut of 0.1% and natural flowing
wellhead pressure of 1,515 pounds per square inch; the well
performance is being carefully monitored to determine if additional
production increases could be achieved by opening up the restricted
choke further
- Gran Tierra is contracting and importing a snubbing unit
(equipment capable of working with high pressure wells) in order to
continue with completion operations in both the Ayombero-2 and
Ayombero-3 wells
- The Company continues to be encouraged by the three Ayombero
wells drilled to date which have confirmed similar lithologies, oil
saturations and over-pressure in the Galembo Member of the La Luna
Carbonate reservoir, suggesting reservoir and structural
continuity; the Company's estimates of oil in place and prospective
resources are unchanged by these short-term issues
Exploration Update
Putumayo Basin
- The planned 341 square km 3D seismic shoot has been operating
across the Alea-1848A, the Nancy-Burdine-Maxine, PUT-4, and PUT-25
Blocks; the program is over 80% surveyed on the ground and
shot-recording has been initiated; the program is scheduled to
finish recording in August 2019, with a processed 3D volume
expected to be interpreted in September 2019; the Company has
identified multiple prospects over the area and the 3D seismic is
expected to significantly de-risk the program; Gran Tierra expects
to commence exploration drilling on the blocks in the first quarter
of 2020
- The Company expects to drill the Vonu Este well in the fourth
quarter of 2019 on the PUT-1 Block (100% WI); this well is designed
to target the fractured A-Limestone and the U Sand; the Vonu-1 well
has produced approximately 800,000 barrels of oil from the
A-Limestone and is still producing over 500 BOEPD; the Costayaco-19
well in the Chaza Block, has produced over 730,000 barrels of oil
from the A-Limestone
Llanos Basin
- The Company has been awarded the LLA-85 Block following the
recent ANH bid round; this block covers 136,400 acres within the
prolific Llanos Basin in Colombia, and is on trend with fields that
produce medium to light oil from the Mirador, Une and Gacheta
Formations; the block is currently 65% covered with 3D seismic and
the Company has preliminarily identified four leads on the block
with plans to start the environmental permitting process for the
future required 3D seismic program; under the terms of the award of
the block, the Company is committed to undertaking a 50 square km
3D seismic survey and one exploration well within a six year
exploration period
- Gran Tierra expects to participate in a non-operated
exploration well (50% WI) in the LLA-10 Block in the second half of
2019
MMV Basin
- The Company has also been awarded the VMM-24 Block in the same
ANH bid round; the block covers 26,867 acres contiguous to Gran
Tierra’s core assets in the prolific MMV Basin and is on-trend with
the Colon, Juglar and Acordionero oil fields, which produce medium
gravity oil from reservoirs such as the Umir, Lisama & La Paz
sandstones intervals; this block is close to Gran Tierra’s
facilities and other existing infrastructure; the Company has
preliminarily identified two leads on the block and plans to start
the environmental licensing process as soon as possible; the
Company is committed to undertaking an 80 square km 3D seismic
survey and two exploration wells within a six year exploration
period
- The Company plans to test the Lisama E Sand in the AC-48 well,
which is currently being drilled; in a previous Acordionero well,
over 90 feet of potential pay was identified based on cuttings, oil
shows and mud gas data, but the zone was over-pressured and was not
tested
Contact Information
For investor and media inquiries please
contact:
Gary Guidry, Chief Executive Officer
Ryan Ellson, Executive Vice President &
Chief Financial Officer
Rodger Trimble, Vice President, Investor
Relations
+1-403-265-3221
info@grantierra.com
About Gran Tierra Energy
Inc.
Gran Tierra Energy Inc. together with its
subsidiaries is an independent international energy company focused
on oil and natural gas exploration and production in Colombia and
Ecuador. The Company is focused on its existing portfolio of assets
in Colombia and Ecuador and will pursue new growth opportunities
throughout Colombia and South America, leveraging our financial
strength. The Company’s common shares trade on the NYSE American,
Toronto Stock Exchange and London Stock Exchange under the ticker
symbol GTE. Additional information concerning Gran Tierra is
available at www.grantierra.com. Information on the Company's
website does not constitute a part of this press release. Gran
Tierra's Securities and Exchange Commission filings are available
on the Securities and Exchange Commission website at
http://www.sec.gov and on SEDAR at http://www.sedar.com and UK
regulatory filings are available on the National Storage Mechanism
website at www.morningstar.co.uk/uk/nsm.
Forward Looking Statements and Legal
Advisories:
This press release contains opinions, forecasts,
projections, and other statements about future events or results
that constitute forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and
financial outlook and forward looking information within the
meaning of applicable Canadian securities laws (collectively,
“forward-looking statements”). The use of the words “expect”,
“plan”, “intend”, “will” “guidance,” “should,” “would,” and
“believes”, derivations thereof and similar terms identify
forward-looking statements. In particular, but without limiting the
foregoing, this press release contains forward-looking statements
regarding: the Company’s strategies, operations, and developments,
including planned drilling and operation activities, the
commissioning and expected benefits of the Acordionero Projects,
the anticipated benefits of new blocks, new technology and
techniques, and development wells in new areas, the Company’s
drilling plans and expected results, the Company’s expectations as
to future production amounts, the announcement of new guidance. The
forward-looking statements contained in this press release reflect
several material factors and expectations and assumptions of Gran
Tierra including, without limitation, that Gran Tierra will
continue to conduct its operations in a manner consistent with its
current expectations, the accuracy of testing and production
results and seismic data, pricing and cost estimates (including
with respect to commodity pricing and exchange rates), rig
availability, the effects of waterflood and the general continuance
of assumed operational, regulatory and industry conditions in
Colombia and Ecuador, and the ability of Gran Tierra to execute its
business and operational plans in the manner currently planned.
Among the important factors that could cause
actual results to differ materially from those indicated by the
forward-looking statements in this press release are: sustained or
future declines in commodity prices and potential resulting future
impairments and reductions in proved reserve quantities and value;
Gran Tierra's operations are located in South America, and
unexpected problems can arise due to guerrilla activity and other
local events; technical difficulties and operational difficulties
may arise which impact the production, transport or sale of our
products; geographic, political and weather conditions can impact
the production, transport or sale of our products; the risk that
current global economic and credit conditions may impact oil prices
and oil consumption more than Gran Tierra currently predicts; the
ability of Gran Tierra to execute its business plan; the risk that
unexpected delays and difficulties in developing properties may
occur; the timely receipt of regulatory or other required approvals
for our activities; the failure of exploratory drilling to result
in commercial wells; unexpected delays due to the limited
availability of drilling equipment and personnel; the risk that oil
prices could continue to fall, or current global economic and
credit market conditions may impact oil prices and oil consumption
more than Gran Tierra currently predicts, which could cause Gran
Tierra to further modify its strategy and capital spending program;
and the risk factors detailed from time to time in Gran Tierra's
periodic reports filed with the Securities and Exchange Commission,
including, without limitation, under the caption “Risk Factors” in
Gran Tierra's Annual Report on Form 10-K for the year ended
December 31, 2018, as amended, and its other filings with the
Securities and Exchange Commission. These filings are available on
the Securities and Exchange Commission website at
http://www.sec.gov and on SEDAR at www.sedar.com.
The forward-looking statements contained in this
press release are based on certain assumptions made by Gran Tierra
based on management's experience and other factors believed to be
appropriate. Gran Tierra believes these assumptions to be
reasonable at this time, but the forward-looking statements are
subject to risk and uncertainties, many of which are beyond Gran
Tierra's control, which may cause actual results to differ
materially from those implied or expressed by the forward looking
statements. All forward-looking statements are made as of the date
of this press release and the fact that this press release remains
available does not constitute a representation by Gran Tierra that
Gran Tierra believes these forward-looking statements continue to
be true as of any subsequent date. Actual results may vary
materially from the expected results expressed in forward-looking
statements. Gran Tierra disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable law.
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