- Gran Tierra Announces its Sixth Consecutive Ecuador Oil Discovery from the Charapa-B7 Well and Has Achieved Cumulative Production of Over 1 Million Barrels of Oil in Ecuador
- Gran Tierra Achieved $1 Million in Net Income and Generated $60 Million in Funds Flow from Operations(2), an Increase of 31% from Prior Quarter
- Third Quarter 2024 Total Average WI Production of 32,764 BOPD
- Operating Netback of $101 Million and Adjusted EBITDA of $93 Million(1)(4)
- Exited the Quarter with $278 Million in Cash
- Entered into new credit facility for further liquidity which is currently undrawn
Gran Tierra Energy announced the Company’s financial and operating results for the quarter ended September 30, 2024. 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 November 4, 2024.
Message to Shareholders
'On October 31, 2024 we were excited to have announced the close of our acquisition of i3 Energy. We believe the purchase of i3 Energy uniquely positions Gran Tierra as a premier diversified oil and gas company with assets in Canada, Colombia, and Ecuador. The i3 Energy acquisition has diversified Gran Tierra into Canada and has added 253 net booked drilling locations(1), 77% operated production totaling approximately 18,000 bbls of oil equivalent per day, almost 1.2 million acres (0.6 million acres net) including 53 gross sections in the Montney and 144 gross sections in the Clearwater, two of the most prolific plays in North America. The i3 Energy acquisition has increased Gran Tierra’s PDP reserves(1) by 42 million bbls of oil equivalent ('MMBOE') or 96%, 1P(1) by 88 MMBOE an increase of 97%, and 2P(1) by 174 MMBOE an increase of 119%. We believe the currently depressed natural gas pricing we see in Western Canada will be alleviated as major Liquified Natural Gas projects including LNG Canada are brought online. In the short term, Gran Tierra will focus on developing the significant oil weighted assets in its Canadian and South American portfolio.
We would like to take this opportunity to welcome our new shareholders in Gran Tierra and look forward to engaging with, and updating them on the Company’s strategy in the coming months. We look forward to the integration of our teams and are confident the combined company will have top tier technical and operational skill sets across a broad portfolio. We are eager to implement industry leading technology currently used in Canada in both our Ecuador and Colombia operations, and are equally looking forward to bringing our reservoir modeling, exploration knowledge and asset management expertise into Canada. Combined we are a much stronger company.
Additionally, having our six consecutive discovery in Ecuador and reaching the milestone of 1 million cumulative bbls of oil produced from our operations in Ecuador is a significant achievement for Gran Tierra, highlighting our strong presence and success in the region. The productivity of the Ecuador wells is a testament to the geology in the Oriente and Putumayo Basins, and underpins a key pillar of growth going forward. We remain excited about the potential of the Arawana-Bocachico play, and the two remaining Zabaleta wells to be drilled by the end of the year that will provide essential insights into the size and scope of this promising opportunity', commented Gary Guidry, President and Chief Executive Officer of Gran Tierra.
Operational Update:
- Acquisition of i3 Energy
- On October 31, 2024, Gran Tierra completed its acquisition of i3 Energy. Gran Tierra is integrating the Canadian operations and are forecasting an active Q4 2024, including drilling 19 gross wells (8.4 net), targeting each of its core operating areas in Central AB, Simonette, Clearwater and Wapiti.
- The Company drilled 2 gross (2 net) horizontal Dunvegan oil wells at Simonette. These high-impact 2-mile wells are currently being stimulated and are expected to be brought on stream in late November. With success, Gran Tierra can drill 2 additional Dunvegan development wells in 2025.
- Clearwater activity commenced in mid-October with the Company’s first operated Clearwater multilateral well at Dawson (100% working interest). The 8-leg multilateral horizontal well (11,870 m of total lateral length) was a follow-up to the Company’s initial 6-leg (7,500 m of total lateral length) discovery at Dawson. The 8-leg well follow-up multilateral was located structurally up-dip of the discovery well and encountered high quality reservoir throughout while drilling. The well will be placed on production imminently as the rig has skidded to and spud the third Clearwater well from the same pad. The Company has been working to secure multiple pad sites at East Dawson to facilitate future expansion of the field, upon further operational success. Following these two wells the rig will move to Walrus and drill 2 prospective Falher sands.
- In addition to the operated capital program, Gran Tierra plans to participate in 10 gross (1.67 net) non-operated partner horizontal wells across its land base.
- In connection with i3 Energy acquisition closing on October 31, 2024, the Company amended and restated the existing revolving credit facility agreement of i3 Energy Canada Ltd. (“i3 Energy Canada”) with National Bank of Canada dated March 22, 2024. As a result of the amendment and restatement, among other things, the borrowing base was revised to C$100.0 million (US$74.1 million) with available commitment of a C$50.0 million (US$37.0 million) revolving credit facility comprised of C$35.0 million (US$25.9 million) syndicated facility and C$15.0 million (US$11.1 million) of operating facility. Subject to the next borrowing base redetermination which will occur on or before June 30, 2025, the revolving credit facility is available until October 31, 2025 with a repayment date of October 31, 2026, which may be extended by further periods of up to 364 days, subject to lender approval. The facility is undrawn.
- Exploration
- Gran Tierra has successfully drilled its sixth consecutive oil discovery in Ecuador, the Charapa-B7 well. The wells drilled in Ecuador continue to yield strong results producing over 1 million cumulative bbls of oil to date which highlights the exceptional potential of the Oriente and Putumayo basins.
- The drilling rig has been moved from the Charapa Block and mobilized to the Chanangue Block to drill two wells – the Zabaleta-K1 and Zabaleta Oeste-K1 exploration wells. The Zabaleta-K1 well is located four kilometers to the east of the Arawana-J1 well drilled earlier this year and is 200 feet up structure. The well spud on October 22 2024, and we have currently drilled to 9,488 feet. Both wells will target the Basal Tena formation as well as assess potential in the T-Sand, U-Sand and B-Limestone.
- During the Quarter, the 238 km2 3D seismic program of the Charapa Block was completed, the data has been processed and is currently being interpreted. Preliminary interpretations of the high-quality 3D data confirm 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.
- Development
- The planning, civil works, and facility construction at Cohembi in the Suroriente Block are progressing, paving the way for drilling operations to commence in late Q4 2024.
- Acordionero water treatment facilities expansion is expected to be completed mid-December which will result in an addition of 21,500 bbls of water handling per day which represents a 35% increase in water treatment capacity. This will allow for further well optimizations to increase injection and associated oil production. Gran Tierra continues to steadily increased total fluid production and water injection by ~18% per year to continue growing and maintaining oil production while improving sweep efficiencies and recoveries.
Key Highlights of the Quarter:
- Production: Gran Tierra’s total average WI production, which is before the i3 acquisition that has an effective date of October 31, 2024, was 32,764 BOPD, which was consistent with the second quarter 2024 ('the Prior Quarter'). During the Quarter the Company had lower volumes in the Acordionero field caused by downtime related to workovers, partially offset by higher production in the Costayaco field in Colombia, and increased production from the Chanangue and Charapa Blocks in Ecuador as a result of a successful exploration drilling campaign.
- Net Income: Gran Tierra incurred net income of $1 million, compared to a net income of $36.4 million in the Prior Quarter and a net income of $7 million in the third quarter of 2023.
- Adjusted EBITDA(2): Adjusted EBITDA(2) was $93 million compared to $103 million in the Prior Quarter and $119 million in the third quarter of 2023. Twelve month trailing Net Debt(2) to Adjusted EBITDA(2) was 1.3 times and the Company continues to have a long term target of 1.0 times.
- Funds Flow from Operations(2): Funds flow from operations(2) was $60 million ($1.96 per share), up 31% from the Prior Quarter and down 24% from the third quarter of 2023.
- Cash and Debt: As of September 30, 2024, the Company had a cash balance of $278 million, total debt of $787 million and net debt(2) of $509 million. During the Quarter, the Company issued additional $150 million of 9.50% Senior Notes due October 2029 and received cash proceeds of $140 million. Of the total amount of proceeds received, $100 million has been used for financing the purchase price and transaction costs related to the i3 Energy acquisition with the remainder to be used for general corporate purposes.
- Share Buybacks: As a result of the i3 Energy acquisition announced on August 19, 2024, Gran Tierra was required to pause its share buyback program resulting in only 371,130 shares repurchased during the Quarter. From January 1, 2023 to September 30, 2024, the Company repurchased approximately 4.0 million shares, or 12% of shares issued and outstanding at January 1, 2023, from free cash flow(2).
- Return on Average Capital Employed(2): The Company achieved return on average capital employed(2) of 17% during the Quarter and 16% over the trailing 12 months.
Click here for full announcement
Source: Gran Tierra Energy
