Gran Tierra Energy Inc. Reports Second Quarter 2024 Net Income of
$36 Million and Continued Exploration Success
- High Impact Exploration
Program Continues to Deliver Exciting Catalysts for Growth with the
Completion of the Charapa 3D Seismic Program Along with Drilling of
the Bocachico Norte-J1 and Charapa B6 Wells
- Arawana-J1 and
Bocachico-J1 Wells Continue to Yield Strong Production Results and
Continued Positive Exploration Results with Bocachico
Norte-J1
- Second
Quarter 2024
Total Average WI Production of
32,776 BOPD, a
4% Increase in Production per
Share from Second Quarter 2023
- Since January 1, 2023,
Gran Tierra has Re-purchased Approximately
3.9 million or
11% of Its Outstanding
Shares
- Achieved
Second Quarter
2024 Net Income
of $36
Million
- Operating Netback
of $113 Million
and Adjusted EBITDA of $103
Million(1)(3)
- Exited the Quarter
with $115
Million in Cash
CALGARY, Alberta, July 31, 2024 (GLOBE NEWSWIRE)
-- Gran Tierra Energy Inc. (“Gran Tierra”
or the “Company”) (NYSE American:GTE)(TSX:GTE)(LSE:GTE)
announced the Company’s financial and operating results for the
quarter ended June 30, 2024 (“the
Quarter”). All dollar amounts are in United States
dollars, and production amounts are on an average working interest
(“WI”) before royalties basis unless otherwise
indicated. Per barrel (“bbl”) and bbl per day
(“BOPD”) amounts are based on WI sales before
royalties. For per bbl amounts based on net after royalty
(“NAR”) production, see Gran Tierra’s Quarterly
Report on Form 10-Q filed July 31, 2024.
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran
Tierra, commented: “During the second quarter of 2024, Gran Tierra
systematically stimulated and added electrical submersible pumps
into each of our Costayaco 56, 57, 58, and 59 wells, which were
drilled as part of the 2024 development campaign. While the
temporary offline status of these wells for the planned completions
did impact second-quarter production, the improvements have
resulted in enhanced production and all wells are back online. We
continue to be excited about these development wells demonstrating
further potential to enhance recovery and optimize value from
further development drilling and waterflood optimization.
In Ecuador, we have drilled a second successful well in the
Bocachico field to the west of the recent Arawana discovery which
we have completed, and testing is underway. More recently, we are
seeing very encouraging results in the Charapa-B6 well which has
been cored with excellent oil shows in the targeted Hollin
formation and is now being completed for testing. Importantly, we
are constructing two new drilling pads at the exciting Arawana
field area with the first expected to be completed by early
September.
We are encouraged by the preliminary results of Bocachico
Norte-J1 which confirmed our geological interpretation of the
Bocachico discovery with potential pay in the T-Sand, B-Limestone
and the Basal Tena and we look forward to testing each zone in the
third quarter. We are looking forward to the second half of the
year where we plan to drill the remainder of our high impact near
field exploration wells in Ecuador including drilling two wells to
further assess the Arawana discovery. From a development
perspective, we are completing the civil works associated with
building infrastructure and pads in the Suroriente Block in the
southern Putumayo. We expect to begin drilling wells in the fourth
quarter of 2024. We are very pleased about our first half results
and there are still many more catalysts we are looking forward to
in the second half of 2024.”
Ecuador Exploration Update:
-
Chanangue Block
- During the
Quarter the Bocachico Norte-J1 well was spud and drilled. Log data
and core data is positive and testing in multiple zones including
the Basal Tena sand, the T-sand and B-limestone is planned during
the third quarter of 2024. Based on logs there is reservoir and net
pay in the Basal Tena, T-sand and the B-Limestone. The B-Limestone
was not a primary target but had positive shows while drilling,
which indicates it may be connected to a fracture network. The
completion will allow for multi-zone commingling when finished. The
preliminary data confirms Gran Tierra’s geological understanding of
the Bocachico field and provides further data of the fault
mechanism between the Bocachico and Arawana fields.
- The Arawana-J1
and Bocachico-J1 wells continue to yield strong production results
with a combined 1,600 to 1,800 BOPD. Gran Tierra plans to convert
both wells from jet pump to electrical submersible pumping systems
in the second half of 2024.
- Charapa
Block
- Upon completion
of the Bocachico Norte-J1 well, the rig was moved from the
Chanangue Block to the Charapa Block. On July 14th, 2024, the
Charapa B6 well was spud with the primary target being the Hollin
formation. 60 feet of core was recovered and analyzed from the
Hollin structure and the core was saturated with oil from the top
to base, further corroborating the expected hydrocarbon column in
our geological model of the Charapa field. Drilling is expected to
be completed this week followed by casing and testing. Following
the drilling of the Charapa B6 well, the rig will begin drilling
the Charapa B7 well from the same pad and then move to appraise the
Arawana discovery.
- The 3D seismic
program of the Charapa Block has been completed, and the data is
currently being processed. Preliminary interpretations of the
high-quality 3D data confirms potential prospectivity and
additional areas of interest identified on seismic including better
definition over the Charapa structure. The 3D data will further
delineate reserves, underpin future drilling locations scheduled
for 2025 and support future development planning.
Key Highlights of the
Quarter:
-
Production: Gran Tierra’s total average WI
production was 32,776 BOPD, an increase of 2% compared to the first
quarter 2024 (“the Prior Quarter”) and up 4% on a
per share basis since the second quarter 2023. During the Quarter
the Company systematically stimulated and installed electrical
submersible pumps on four of the high producing Costayaco wells
that were drilled as part of the 2024 development campaign. The
process required that each well be taken offline for a period of
time, which negatively impacted second quarter 2024 production by
approximately 700 BOPD. All four wells are now back online with
positive production results and Gran Tierra anticipates these
positive trends will continue through the remainder of the
year.
- Net Income: Gran
Tierra incurred net income of $36 million, compared to a net loss
of $0.1 million in the Prior Quarter and a net loss of $11 million
in the second quarter of 2023.
- Adjusted
EBITDA(1):
Adjusted EBITDA(1) was $103 million compared to $95
million in the Prior Quarter and $97 million in the second quarter
of 2023. Twelve month trailing Net Debt(1) to Adjusted
EBITDA(1) was 1.3 times and is expected to be less than
1.0x by year end 2024, which is consistent with the Company’s
previous guidance.
- Funds
Flow from
Operations(1):
Funds flow from operations(1) was $46 million ($1.48 per
share), down 38% from the Prior Quarter and down 13% from the
second quarter of 2023. The main driver of the decrease in funds
flow is the result of tax planning that resulted in the immediate
increase of current taxes by $28 million. The company strategically
revised its 2022 tax return to use its long-term tax receivables
balance to offset current tax liabilities, rather than applying net
operating loss carryforwards. This decision was driven by higher
current and future tax rates and increased profitability in
Colombia. As a result, the current tax expense increased by
approximately $28 million, but this was offset by long-term tax
receivables, resulting in no cash outflow. However, the increased
tax expense did negatively impact our funds flow from
operations(1). Nonetheless, this approach preserved our
net operating loss carryforwards of approximately $85 million for
future periods, providing greater tax benefit in 2024 and in the
future. This tax initiative also allowed us to recover $18 million
of taxes receivable in 2024 and accelerate the recovery of an
estimated $65 million of taxes receivable over the next three
years.
- Cash and
Debt: As of June 30, 2024, the Company had a cash
balance of $115 million, total debt of $637 million and net
debt(1) of $521 million.
- Share
Buybacks: Gran Tierra purchased approximately 0.4 million
shares during the Quarter. From January 1, 2023 to July 29, 2024,
the Company has repurchased approximately 3.9 million shares, or
11% of shares issued and outstanding at January 1, 2023, from free
cash flow(1).
- Return
on Average Capital
Employed(1):
Achieved return on average capital employed(1) of 18%
during the Quarter and 17% over the trailing 12 months.
Additional Key Financial
Metrics:
- Capital
Expenditures: Capital expenditures of $61 million were
higher than the $55 million in the Prior Quarter due to the launch
of a 2024 exploration 3D seismic and drilling campaign, in addition
to completions of the Costayaco development wells during the
Quarter and down from $66 million compared to the second quarter of
2023.
- Oil
Sales: Gran Tierra generated oil sales of $166 million, up
5% from the second quarter of 2023 as a result of stronger Brent
pricing and lower Vasconia, Castilla and Oriente oil differentials
offset by 5% lower sales volumes as a result of an increased build
in inventory due to timing of sales. Oil sales increased 5% from
the Prior Quarter primarily due to a 4% increase in Brent price and
narrower Castilla and Vasconia oil differentials offset by a
slightly higher Oriente oil differential and 2% lower sales
volumes.
- Quality
and Transportation Discounts: The Company’s quality and
transportation discounts per bbl were down during the Quarter at
$12.79, compared to $15.36 in the Prior Quarter and $14.10 in the
second quarter of 2023. The Castilla oil differential per bbl
narrowed to $8.21 from $8.82 in the Prior Quarter and from $9.41 in
the second quarter of 2023 (Castilla is the benchmark for the
Company’s Middle Magdalena Valley Basin oil production). The
Vasconia differential per bbl narrowed to $4.00 from $5.05 in the
Prior Quarter, and from $5.53 in the second quarter of 2023.
Finally, the Ecuadorian benchmark, Oriente, per bbl was $8.38, up
from $8.02 in the Prior Quarter, and down from $11.43 one year ago.
The current(2) Castilla differential is approximately
$9.40 per bbl, the Vasconia differential is approximately $4.60 per
bbl and the Oriente differential is approximately $9.00 per
bbl.
-
Operating Expenses: Gran Tierra’s operating
expenses decreased by 3% to $47 million, compared to the Prior
Quarter primarily due to lower workover activities. Compared to the
second quarter of 2023, operating expenses decreased by 3% from
$48.5 million, primarily due to lower lifting costs, partially
offset by higher workover activities. On a per bbl basis operating
expense increased by 2% when compared to the second quarter of 2023
and decreased by 1% when compared to the Prior Quarter.
-
Transportation Expenses: The Company’s
transportation expenses increased by 24% to $6 million, compared to
the Prior Quarter of $5 million and increased by 54% from $4
million in the second quarter of 2023. Transportation expenses in
the Quarter were higher as a result of Gran Tierra utilizing longer
distance delivery points due to low water levels in the Magdalena
river.
-
Operating
Netback(1)(3):
The Company’s operating netback(1)(3) was $38.80 per
bbl, up 10% from the Prior Quarter and up 12% from the second
quarter of 2023.
- General
and Administrative (“G&A”) Expenses: Commensurate with
increased activity, G&A expenses before stock-based
compensation were $3.69 per bbl, up from $3.22 per bbl in the Prior
Quarter due to increased activity, consultant and information
technology expenses and up from $3.12 per bbl, when compared to the
second quarter of 2023 due to increased activity and information
technology expense, general office expense and bank fees.
- Cash
Netback(1): Cash
netback(1) per bbl was $15.85, compared to $25.13 in the
Prior Quarter primarily as a result of higher current tax expenses
of $14.54 per bbl compared to a current tax expense of $1.33 per
bbl in the Prior Quarter (see explanation above in funds flow from
operations section). Compared to one year ago, cash
netback(1) per bbl decreased by $1.52 from $17.37 per
bbl as a result of higher current taxes in the Quarter mentioned
above and offset by stronger realized pricing.
Financial and Operational Highlights (all amounts in
$000s, except per share and bbl amounts)
| |
Three Months Ended
June 30, |
|
Three
Months
Ended
March 31, |
|
Six Months Ended
June 30, |
|
|
2024 |
2023 |
|
2024 |
|
2024 |
2023 |
| |
|
|
|
|
|
|
|
| Net Income
(Loss) |
$36,371 |
$(10,825) |
|
$(78) |
|
$36,293 |
$(20,525) |
|
Per Share - Basic and Diluted(4) |
$1.16 |
$(0.33) |
|
$— |
|
$1.15 |
$(0.61) |
| |
|
|
|
|
|
|
|
| Oil
Sales |
$165,609 |
$157,902 |
|
$157,577 |
|
$323,186 |
$302,092 |
| Operating
Expenses |
(47,035) |
(48,491) |
|
(48,466) |
|
(95,501) |
(89,860) |
| Transportation
Expenses |
(5,690) |
(3,691) |
|
(4,584) |
|
(10,274) |
(6,757) |
| Operating
Netback(1)(3) |
$112,884 |
$105,720 |
|
$104,527 |
|
$217,411 |
$205,475 |
| |
|
|
|
|
|
|
|
| G&A Expenses
Before Stock-Based Compensation |
$10,737 |
$9,549 |
|
$9,516 |
|
$20,253 |
$20,745 |
| G&A Stock-Based
Compensation Expense |
6,160 |
317 |
|
3,361 |
|
9,521 |
1,817 |
| G&A Expenses,
Including Stock Based Compensation |
$16,897 |
$9,866 |
|
$12,877 |
|
$29,774 |
$22,562 |
| |
|
|
|
|
|
|
|
| Adjusted
EBITDA(1) |
$103,004 |
$97,291 |
|
$94,792 |
|
$197,796 |
$187,156 |
| |
|
|
|
|
|
|
|
|
EBITDA(1) |
$101,187 |
$91,794 |
|
$91,891 |
|
$193,078 |
$179,009 |
| |
|
|
|
|
|
|
|
| Net Cash Provided by
Operating Activities |
$73,233 |
$37,877 |
|
$60,827 |
|
$134,060 |
$87,130 |
| |
|
|
|
|
|
|
|
| Funds Flow from
Operations(1) |
$46,167 |
$53,106 |
|
$74,307 |
|
$120,474 |
$113,122 |
| |
|
|
|
|
|
|
|
| Capital
Expenditures |
$61,273 |
$65,565 |
|
$55,331 |
|
$116,604 |
$136,627 |
| |
|
|
|
|
|
|
|
| Free Cash
Flow(1) |
$(15,106) |
$(12,459) |
|
$18,976 |
|
$3,870 |
$(23,505) |
| |
|
|
|
|
|
|
|
|
Average Daily Volumes (BOPD) |
|
|
|
|
|
|
|
| WI Production Before
Royalties |
32,776 |
33,719 |
|
32,242 |
|
32,509 |
32,671 |
|
Royalties |
(6,774) |
(6,515) |
|
(6,397) |
|
(6,586) |
(6,301) |
| Production
NAR |
26,002 |
27,204 |
|
25,845 |
|
25,923 |
26,370 |
| (Increase) Decrease in
Inventory |
(811) |
67 |
|
235 |
|
(288) |
(143) |
| Sales |
25,191 |
27,271 |
|
26,080 |
|
25,635 |
26,227 |
| Royalties, % of WI
Production Before Royalties |
21% |
19% |
|
20% |
|
20% |
19% |
| |
|
|
|
|
|
|
|
|
Per bbl |
|
|
|
|
|
|
|
| Brent |
$85.03 |
$77.73 |
|
$81.76 |
|
$83.42 |
$79.91 |
| Quality and
Transportation Discount |
(12.79) |
(14.10) |
|
(15.36) |
|
(14.15) |
(16.27) |
|
Royalties |
(15.31) |
(11.98) |
|
(13.08) |
|
(14.16) |
(12.38) |
| Average Realized
Price |
56.93 |
51.65 |
|
53.32 |
|
55.11 |
51.26 |
| Transportation
Expenses |
(1.96) |
(1.21) |
|
(1.55) |
|
(1.75) |
(1.15) |
| Average Realized Price
Net of Transportation Expenses |
54.97 |
50.44 |
|
51.77 |
|
53.36 |
50.11 |
| Operating
Expenses |
(16.17) |
(15.86) |
|
(16.40) |
|
(16.29) |
(15.25) |
| Operating
Netback(1)(3) |
38.80 |
34.58 |
|
35.37 |
|
37.07 |
34.86 |
| G&A Expenses
Before Stock-Based Compensation |
(3.69) |
(3.12) |
|
(3.22) |
|
(3.45) |
(3.52) |
| Severance
Expenses |
(0.08) |
— |
|
(0.43) |
|
(0.26) |
— |
| Realized Foreign
Exchange Gain (Loss) |
0.37 |
(4.18) |
|
(0.49) |
|
(0.06) |
(2.37) |
| Interest Expense,
Excluding Amortization of Debt Issuance Costs |
(5.38) |
(3.81) |
|
(5.12) |
|
(5.24) |
(3.85) |
| Interest
Income |
0.35 |
0.21 |
|
0.23 |
|
0.29 |
0.24 |
| Net Lease
Payments |
0.02 |
0.15 |
|
0.12 |
|
0.07 |
0.17 |
| Current Income Tax
Expense |
(14.54) |
(6.46) |
|
(1.33) |
|
(7.88) |
(6.34) |
| Cash
Netback(1) |
$15.85 |
$17.37 |
|
$25.13 |
|
$20.54 |
$19.19 |
| |
|
|
|
|
|
|
|
|
Share Information (000s) |
|
|
|
|
|
|
|
| Common Stock
Outstanding, End of Period(4) |
31,022 |
33,287 |
|
31,401 |
|
31,022 |
33,287 |
| Weighted Average
Number of Shares of Common Stock Outstanding - Basic and
Diluted(4) |
31,282 |
33,300 |
|
31,813 |
|
31,547 |
33,872 |
(1) Funds flow from operations,
operating netback, net debt, cash netback, return on average
capital employed, earnings before interest, taxes and depletion,
depreciation and accretion (“DD&A”)
(“EBITDA”) and
EBITDA adjusted for non-cash lease expense, lease payments, foreign
exchange gains or losses, stock-based compensation expense, other
gains or losses, and financial instruments gains or losses
(“Adjusted EBITDA”), cash flow and free cash flow
are non-GAAP measures and do not have standardized meanings under
generally accepted accounting principles in the United States of
America (“GAAP”). Cash flow refers to funds flow
from operations. Free cash flow refers to funds flow from
operations less capital expenditures. Refer to “Non-GAAP Measures”
in this press release for descriptions of these non-GAAP measures
and, where applicable, reconciliations to the most directly
comparable measures calculated and presented in accordance with
GAAP.
(2) Gran Tierra’s third quarter-to-date 2024 total
average differentials are for the period from July 1 to July 31,
2024.
(3) Operating netback as presented is defined as oil
sales less operating and transportation expenses. See the table
titled Financial and Operational Highlights above for the
components of consolidated operating netback and corresponding
reconciliation.
(4) Reflects our 1-for-10 reverse stock split that
became effective May 5, 2023.
Conference Call
Information:
Gran Tierra will host its second quarter 2024 results conference
call on Thursday, August 1, 2024, at 9:00 a.m. Mountain Time, 11:00
a.m. Eastern Time. Interested parties may access the conference
call by registering at the following link:
https://register.vevent.com/register/BIadb0ea054da04f06a3bbd95b354cc66f.
The call will also be available via webcast at
www.grantierra.com.
Corporate Presentation:
Gran Tierra’s Corporate Presentation has been
updated and is available on the Company website at
www.grantierra.com.
Contact Information
For investor and media inquiries please
contact:
Gary Guidry
President & Chief Executive Officer
Ryan Ellson
Executive Vice President & Chief Financial Officer
+1-403-265-3221
info@grantierra.com
About Gran Tierra Energy
Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an
independent international energy company currently focused on oil
and natural gas exploration and production in Colombia and Ecuador.
The Company is currently developing its existing portfolio of
assets in Colombia and Ecuador and will continue to pursue
additional new growth opportunities that would further strengthen
the Company’s portfolio. The Company’s common stock trades on the
NYSE American, the Toronto Stock Exchange and the London Stock
Exchange under the ticker symbol GTE. Additional information
concerning Gran Tierra is available at www.grantierra.com. Except
to the extent expressly stated otherwise, information on the
Company’s website or accessible from our website or any other
website is not incorporated by reference into and should not be
considered part of this press release. Investor inquiries may be
directed to info@grantierra.com or (403) 265-3221.
Gran Tierra’s Securities and Exchange Commission
(the “SEC”) filings are available on the SEC website at
http://www.sec.gov. The Company’s Canadian securities regulatory
filings are available on SEDAR+ at http://www.sedarplus.ca and UK
regulatory filings are available on the National Storage Mechanism
website at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Forward Looking Statements and Legal
Advisories:
This press release contains opinions, forecasts, projections, and
other statements about future events or results that constitute
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and financial outlook
and forward looking information within the meaning of applicable
Canadian securities laws (collectively, “forward-looking
statements”). All statements other than statements of historical
facts included in this press release regarding our business
strategy, plans and objectives of our management for future
operations, capital spending plans and benefits of the changes in
our capital program or expenditures, our liquidity and financial
condition, and those statements preceded by, followed by or that
otherwise include the words “expect,” “plan,” “can,” “will,”
“should,” “guidance,” “forecast,” “budget,” “estimate,” “signal,”
“progress” 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 leverage ratio target, the
Company’s plans regarding strategic investments, acquisitions and
growth, the Company’s drilling program and the Company’s
expectations of commodity prices, exploration and production trends
and its positioning for 2024. The forward-looking statements
contained in this press release reflect several material factors
and expectations and assumptions of Gran Tierra including, without
limitation, that Gran Tierra will continue to conduct its
operations in a manner consistent with its current expectations,
pricing and cost estimates (including with respect to commodity
pricing and exchange rates), and the general continuance of 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 our
actual results to differ materially from the forward-looking
statements in this press release include, but are not limited to:
our operations are located in South America and unexpected problems
can arise due to guerilla activity, strikes, local blockades or
protests; technical difficulties and operational difficulties may
arise which impact the production, transport or sale of our
products; other disruptions to local operations; global health
events; global and regional changes in the demand, supply, prices,
differentials or other market conditions affecting oil and gas,
including inflation and changes resulting from a global health
crisis, geopolitical events, including the conflicts in Ukraine and
the Gaza region, or from the imposition or lifting of crude oil
production quotas or other actions that might be imposed by OPEC
and other producing countries and the resulting company or
third-party actions in response to such changes; changes in
commodity prices, including volatility or a prolonged decline in
these prices relative to historical or future expected levels; the
risk that current global economic and credit conditions may impact
oil prices and oil consumption more than we currently predict.
which could cause further modification of our strategy and capital
spending program; prices and markets for oil and natural gas are
unpredictable and volatile; the effect of hedges; the accuracy of
productive capacity of any particular field; geographic, political
and weather conditions can impact the production, transport or sale
of our products; our ability to execute our business plan, which
may include acquisitions, and realize expected benefits from
current or future initiatives; the risk that unexpected delays and
difficulties in developing currently owned properties may occur;
the ability to replace reserves and production and develop and
manage reserves on an economically viable basis; the accuracy of
testing and production results and seismic data, pricing and cost
estimates (including with respect to commodity pricing and exchange
rates); the risk profile of planned exploration activities; the
effects of drilling down-dip; the effects of waterflood and
multi-stage fracture stimulation operations; the extent and effect
of delivery disruptions, equipment performance and costs; actions
by third parties; the timely receipt of regulatory or other
required approvals for our operating activities; the failure of
exploratory drilling to result in commercial wells; unexpected
delays due to the limited availability of drilling equipment and
personnel; volatility or declines in the trading price of our
common stock or bonds; the risk that we do not receive the
anticipated benefits of government programs, including government
tax refunds; our ability to access debt or equity capital markets
from time to time to raise additional capital, increase liquidity,
fund acquisitions or refinance debt; our ability to comply with
financial covenants in our indentures and make borrowings under any
future credit agreement; and the risk factors detailed from time to
time in Gran Tierra’s periodic reports filed with the Securities
and Exchange Commission, including, without limitation, under the
caption “Risk Factors” in Gran Tierra’s Annual Report on Form 10-K
for the year ended December 31, 2023 filed February 20, 2024 and
its other filings with the SEC. These filings are available on the
SEC website at http://www.sec.gov and on SEDAR+ at
www.sedarplus.ca.
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. The risk that the assumptions on which the 2024 outlook
are based prove incorrect may increase the later the period to
which the outlook relates. 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. In addition,
historical, current and forward-looking sustainability-related
statements may be based on standards for measuring progress that
are still developing, internal controls and processes that continue
to evolve, and assumptions that are subject to change in the
future.
The estimates of future financial performance
and production set forth in this press release may be considered to
be future-oriented financial information or a financial outlook for
purposes of applicable Canadian securities laws. Financial outlook
and future-oriented financial information contained in this press
release about the Company’s prospective Net Debt to Adjusted EBITDA
ratio, financial performance, financial position or cash flows are
provided to give the reader a better understanding of the potential
future performance of the Company in certain areas and are based on
assumptions about future events, including economic conditions and
proposed courses of action, based on management’s assessment of the
relevant information currently available, and to become available
in the future. In particular, this press release contains projected
operational and financial information for 2024. These projections
contain forward-looking statements and are based on a number of
material assumptions and factors set out above. Actual results may
differ significantly from the projections presented herein. The
actual results of Gran Tierra’s operations for any period could
vary from the amounts set forth in these projections, and such
variations may be material. See above for a discussion of the risks
that could cause actual results to vary. The future-oriented
financial information and financial outlooks contained in this
press release have been approved by management as of the date of
this press release. Readers are cautioned that any such financial
outlook and future-oriented financial information contained herein
should not be used for purposes other than those for which it is
disclosed herein. The Company and its management believe that the
prospective financial information has been prepared on a reasonable
basis, reflecting management’s best estimates and judgments, and
represent, to the best of management’s knowledge and opinion, the
Company’s expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. See Gran Tierra’s press
release dated January 23, 2024 for additional information regarding
2024 financial and production outlook.
Non-GAAP Measures
This press release includes non-GAAP financial
measures as further described herein. These non-GAAP measures do
not have a standardized meaning under GAAP. Investors are cautioned
that these measures should not be construed as alternatives to net
income or loss, cash flow from operating activities or other
measures of financial performance as determined in accordance with
GAAP. Gran Tierra’s method of calculating these measures may differ
from other companies and, accordingly, they may not be comparable
to similar measures used by other companies. Each non-GAAP
financial measure is presented along with the corresponding GAAP
measure so as to not imply that more emphasis should be placed on
the non-GAAP measure.
Operating netback, as presented, is defined as
oil sales less operating and transportation expenses. See the table
entitled Financial and Operational Highlights above for the
components of consolidated operating netback and corresponding
reconciliation.
Return on average capital employed as presented
is defined as earnings before interest and taxes
("EBIT"; annualized, if the period is other than
one year) divided by average capital employed (total assets minus
cash and current liabilities; average of the opening and closing
balances for the period).
| |
|
Three Months
Ended June 30, |
|
Twelve Month
Trailing June 30, |
|
As at June 30, |
|
Return on Average Capital Employed - (Non-GAAP) Measure
($000s) |
|
|
2024 |
|
|
|
2024 |
|
|
|
2024 |
|
| Net
Income |
|
$ |
36,371 |
|
|
$ |
50,531 |
|
|
|
| Adjustments to
reconcile net income to EBIT: |
|
|
|
|
|
|
|
Interest Expense |
|
|
18,398 |
|
|
|
68,114 |
|
|
|
|
Income Tax Expense (Recovery) |
|
|
(9,072 |
) |
|
|
54,155 |
|
|
|
| EBIT |
|
$ |
45,697 |
|
|
$ |
172,800 |
|
|
|
| |
|
|
|
|
|
|
|
Total Assets |
|
|
|
|
|
$ |
1,379,584 |
|
|
Less Current Liabilities |
|
|
|
|
|
|
245,708 |
|
|
Less Cash and Cash Equivalents |
|
|
|
|
|
|
115,327 |
|
| Capital
Employed |
|
|
|
|
|
$ |
1,018,549 |
|
| |
|
|
|
|
|
|
|
Annualized EBIT* |
|
$ |
182,788 |
|
|
|
|
|
|
Divided by Average Capital Employed |
|
|
1,018,549 |
|
|
|
1,018,549 |
|
|
|
| Return on Average
Capital Employed |
|
|
18 |
% |
|
|
17 |
% |
|
|
*Annualized EBIT was calculated for the three
months ended June 30, 2024, by multiplying the quarter-to-date EBIT
by 4.
Cash netback as presented is defined as net
income or loss adjusted for DD&A expenses, deferred tax expense
or recovery, stock-based compensation expense or recovery,
amortization of debt issuance costs, non-cash lease expense, lease
payments, unrealized foreign exchange gain or loss and other gain
or loss. Management believes that operating netback and cash
netback are useful supplemental measures for investors to analyze
financial performance and provide an indication of the results
generated by Gran Tierra’s principal business activities prior to
the consideration of other income and expenses. A reconciliation
from net income or loss to cash netback is as follows:
| |
Three Months Ended
June 30, |
|
Three
Months
Ended
March 31, |
|
Six Months Ended
June 30, |
|
Cash Netback - (Non-GAAP) Measure ($000s) |
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
|
2024 |
|
|
2023 |
|
| Net Income
(Loss) |
$ |
36,371 |
|
$ |
(10,825 |
) |
|
$ |
(78 |
) |
|
$ |
36,293 |
|
$ |
(20,525 |
) |
| Adjustments to
reconcile net income (loss) to cash netback |
|
|
|
|
|
|
|
|
DD&A expenses |
|
55,490 |
|
|
56,209 |
|
|
|
56,150 |
|
|
|
111,640 |
|
|
108,405 |
|
|
Deferred tax (recovery) expense |
|
(51,361 |
) |
|
13,975 |
|
|
|
13,479 |
|
|
|
(37,882 |
) |
|
29,252 |
|
|
Stock-based compensation expense |
|
6,160 |
|
|
317 |
|
|
|
3,361 |
|
|
|
9,521 |
|
|
1,817 |
|
|
Amortization of debt issuance costs |
|
2,760 |
|
|
1,019 |
|
|
|
3,306 |
|
|
|
6,066 |
|
|
1,800 |
|
|
Non-cash lease expense |
|
1,381 |
|
|
1,109 |
|
|
|
1,413 |
|
|
|
2,794 |
|
|
2,253 |
|
|
Lease payments |
|
(1,311 |
) |
|
(636 |
) |
|
|
(1,058 |
) |
|
|
(2,369 |
) |
|
(1,242 |
) |
|
Unrealized foreign exchange gain |
|
(3,323 |
) |
|
(8,062 |
) |
|
|
(2,266 |
) |
|
|
(5,589 |
) |
|
(7,548 |
) |
|
Other gain |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(1,090 |
) |
| Cash
netback |
$ |
46,167 |
|
$ |
53,106 |
|
|
$ |
74,307 |
|
|
$ |
120,474 |
|
$ |
113,122 |
|
| |
EBITDA, as presented, is defined as net income
or loss adjusted for DD&A expenses, interest expense and income
tax expense or recovery. Adjusted EBITDA, as presented, is defined
as EBITDA adjusted for non-cash lease expense, lease payments,
foreign exchange gain or loss, stock-based compensation expense or
recovery, other gain or loss and financial instruments loss.
Management uses this supplemental measure to analyze performance
and income generated by our principal business activities prior to
the consideration of how non-cash items affect that income, and
believes that this financial measure is useful supplemental
information for investors to analyze our performance and our
financial results. A reconciliation from net income or loss to
EBITDA and adjusted EBITDA is as follows:
| |
Three Months Ended
June 30, |
|
Three
Months
Ended
March 31, |
|
Six Months Ended
June 30, |
|
Twelve
Month
Trailing
June 30, |
|
EBITDA - (Non-GAAP) Measure ($000s) |
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
| Net Income
(Loss) |
$ |
36,371 |
|
$ |
(10,825 |
) |
|
$ |
(78 |
) |
|
$ |
36,293 |
|
$ |
(20,525 |
) |
|
$ |
50,531 |
|
| Adjustments to
reconcile net income (loss) to EBITDA and Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
55,490 |
|
|
56,209 |
|
|
|
56,150 |
|
|
|
111,640 |
|
|
108,405 |
|
|
|
218,819 |
|
|
Interest expense |
|
18,398 |
|
|
12,678 |
|
|
|
18,424 |
|
|
|
36,822 |
|
|
24,514 |
|
|
|
68,114 |
|
|
Income tax (recovery) expense |
|
(9,072 |
) |
|
33,732 |
|
|
|
17,395 |
|
|
|
8,323 |
|
|
66,615 |
|
|
|
54,155 |
|
| EBITDA |
$ |
101,187 |
|
$ |
91,794 |
|
|
$ |
91,891 |
|
|
$ |
193,078 |
|
$ |
179,009 |
|
|
$ |
391,619 |
|
|
Non-cash lease expense |
|
1,381 |
|
|
1,109 |
|
|
|
1,413 |
|
|
|
2,794 |
|
|
2,253 |
|
|
|
5,508 |
|
|
Lease payments |
|
(1,311 |
) |
|
(636 |
) |
|
|
(1,058 |
) |
|
|
(2,369 |
) |
|
(1,242 |
) |
|
|
(4,145 |
) |
|
Foreign exchange (gain) loss |
|
(4,413 |
) |
|
4,707 |
|
|
|
(815 |
) |
|
|
(5,228 |
) |
|
6,409 |
|
|
|
185 |
|
|
Stock-based compensation expense |
|
6,160 |
|
|
317 |
|
|
|
3,361 |
|
|
|
9,521 |
|
|
1,817 |
|
|
|
13,426 |
|
|
Other (gain) loss |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(1,090 |
) |
|
|
3,387 |
|
|
Financial instruments loss |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
15 |
|
| Adjusted
EBITDA |
$ |
103,004 |
|
$ |
97,291 |
|
|
$ |
94,792 |
|
|
$ |
197,796 |
|
$ |
187,156 |
|
|
$ |
409,995 |
|
| |
Funds flow from operations, as presented, is
defined as net income or loss adjusted for DD&A expenses,
deferred tax expense or recovery, stock-based compensation expense
or recovery, amortization of debt issuance costs, non-cash lease
expense, lease payments, unrealized foreign exchange gain or loss,
other gain or loss and financial instruments loss. Management uses
this financial measure to analyze performance and income or loss
generated by our principal business activities prior to the
consideration of how non-cash items affect that income or loss, and
believes that this financial measure is also useful supplemental
information for investors to analyze performance and our financial
results. Free cash flow, as presented, is defined as funds flow
from operations adjusted for capital expenditures. Management uses
this financial measure to analyze cash flow generated by our
principal business activities after capital requirements and
believes that this financial measure is also useful supplemental
information for investors to analyze performance and our financial
results. A reconciliation from net income or loss to both funds
flow from operations and free cash flow is as follows:
| |
Three Months Ended
June 30, |
|
Three
Months
Ended
March 31, |
|
Six Months Ended
June 30, |
|
Twelve
Month
Trailing
June 30, |
Funds Flow From Operations -
(Non-GAAP) Measure ($000s) |
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
| Net Income
(Loss) |
$ |
36,371 |
|
$ |
(10,825 |
) |
|
$ |
(78 |
) |
|
$ |
36,293 |
|
$ |
(20,525 |
) |
|
$ |
50,531 |
|
| Adjustments to
reconcile net income (loss) to funds flow from
operations |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
55,490 |
|
|
56,209 |
|
|
|
56,150 |
|
|
|
111,640 |
|
|
108,405 |
|
|
|
218,819 |
|
|
Deferred tax (recovery) expense |
|
(51,361 |
) |
|
13,975 |
|
|
|
13,479 |
|
|
|
(37,882 |
) |
|
29,252 |
|
|
|
(10,375 |
) |
|
Stock-based compensation expense |
|
6,160 |
|
|
317 |
|
|
|
3,361 |
|
|
|
9,521 |
|
|
1,817 |
|
|
|
13,426 |
|
|
Amortization of debt issuance costs |
|
2,760 |
|
|
1,019 |
|
|
|
3,306 |
|
|
|
6,066 |
|
|
1,800 |
|
|
|
10,097 |
|
|
Non-cash lease expense |
|
1,381 |
|
|
1,109 |
|
|
|
1,413 |
|
|
|
2,794 |
|
|
2,253 |
|
|
|
5,508 |
|
|
Lease payments |
|
(1,311 |
) |
|
(636 |
) |
|
|
(1,058 |
) |
|
|
(2,369 |
) |
|
(1,242 |
) |
|
|
(4,145 |
) |
|
Unrealized foreign exchange gain |
|
(3,323 |
) |
|
(8,062 |
) |
|
|
(2,266 |
) |
|
|
(5,589 |
) |
|
(7,548 |
) |
|
|
(3,126 |
) |
|
Other (gain) loss |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(1,090 |
) |
|
|
3,387 |
|
|
Financial instruments loss |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
15 |
|
| Funds flow from
operations |
$ |
46,167 |
|
$ |
53,106 |
|
|
$ |
74,307 |
|
|
$ |
120,474 |
|
$ |
113,122 |
|
|
$ |
284,137 |
|
|
Capital expenditures |
$ |
61,273 |
|
$ |
65,565 |
|
|
$ |
55,331 |
|
|
$ |
116,604 |
|
$ |
136,627 |
|
|
$ |
198,859 |
|
| Free cash
flow |
$ |
(15,106 |
) |
$ |
(12,459 |
) |
|
$ |
18,976 |
|
|
$ |
3,870 |
|
$ |
(23,505 |
) |
|
$ |
85,278 |
|
| |
Net debt as of June 30, 2024, was $521
million, calculated using the sum of 6.25% Senior Notes, 7.75%
Senior Notes, and 9.50% Senior Notes excluding deferred financing
fees totaling $637 million, less cash and cash equivalents of $115
million.
Presentation of Oil and Gas
Information
References to a formation where evidence of
hydrocarbons has been encountered is not necessarily an indicator
that hydrocarbons will be recoverable in commercial quantities or
in any estimated volume. Gran Tierra’s reported production is a mix
of light crude oil and medium and heavy crude oil for which there
is not a precise breakdown since the Company’s oil sales volumes
typically represent blends of more than one type of crude oil. Well
test results should be considered as preliminary and not
necessarily indicative of long-term performance or of ultimate
recovery. Well log interpretations indicating oil and gas
accumulations are not necessarily indicative of future production
or ultimate recovery. If it is indicated that a pressure transient
analysis or well-test interpretation has not been carried out, any
data disclosed in that respect should be considered preliminary
until such analysis has been completed. References to thickness of
“oil pay” or of a formation where evidence of hydrocarbons has been
encountered is not necessarily an indicator that hydrocarbons will
be recoverable in commercial quantities or in any estimated
volume.
This press release contains certain oil and gas
metrics, including operating netback and cash netback, which do not
have standardized meanings or standard methods of calculation and
therefore such measures may not be comparable to similar measures
used by other companies and should not be used to make comparisons.
These metrics are calculated as described in this press release and
management believes that they are useful supplemental measures for
the reasons described in this press release.
Such metrics have been included herein to
provide readers with additional measures to evaluate the Company’s
performance; however, such measures are not reliable indicators of
the future performance of the Company and future performance may
not compare to the performance in previous periods.
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