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Colombia/Ecuador: Gran Tierra Energy provides operations and financial update

13 Apr 2021

  • Achieved First Quarter 2021 Average Production of 24,463 BOPD, Up 12% from Prior Quarter
  • Increased Current Average Production to 28,930 BOPD, Highest Since February 2020
  • Increased Acordionero Field Current Average Production1 to 16,400 BOPD, Highest Since September 2019
  • Reaffirms 2021 Full-Year Production Guidance of 28,000-30,000 BOPD
Photo - see caption

Gran Tierra Energy has announced an operations and financial update. All dollar amounts are in United States dollars and all production volumes are on a working interest before royalties ('WI') basis and are expressed in barrels ('bbl') of oil per day ('bopd'), unless otherwise stated.

Key Highlights:

Production: Gran Tierra's average production for various time periods is outlined in the table below:

Photo - see caption

(1) Approximate average production over the period from March 28, 2021 to April 10, 2021

  • 2021 Production Guidance: Based on the Company's significant progress in increasing production during and subsequent to the first quarter of 2021, Gran Tierra reaffirms its 2021 full-year production guidance of 28,000-30,000 bopd
  • Credit Facility and Cash Balances: As of March 31, 2021, the Company had paid down its credit facility balance by $10 million to $180 million and had increased its cash and cash equivalents balance to $20 million, compared to a credit facility balance of $190 million and cash and cash equivalents balance of $14 million as of December 31, 2020
  • Acordionero Oil Field (100% WI)
    • Utilizing 2 workover rigs, Gran Tierra continues to workover wells that went offline in 2020, which the Company decided not to workover at that time due to low oil prices; during the current workover campaign, the average workover cost has decreased 28% from 2019
    • The development drilling rig has also remained active since starting on November 30, 2020, drilling both producers and injectors; the average cost per well has decreased 36% since 2019; the AC-75 well achieved a new record cycle time from spud to on-production of 10.6 days, at a total cost of $1.9 million
    • The combination of the workover and drilling programs has resulted in Acordionero's current average production(2) of 16,400 bopd, with approximately 700 bopd of additional production to be added from existing wells; Gran Tierra also plans to drill and complete an additional 3 to 5 wells and bring them on production during the second quarter of 2021
    • Acordionero's current average production2 is the highest level achieved since September 2019; Gran Tierra believes its prudent reservoir management of Acordionero's waterflood has allowed the Company to restore this field's production to a level last achieved more than 18 months ago, which strongly demonstrates the effectiveness of the waterflood
  • Costayaco Oil Field (100% WI)
    • In March 2021, Gran Tierra commenced its infill development drilling campaign to drill 3 oil producers; this drilling program is the first in Costayaco since November 2019
    • The CYC-42 infill oil well was drilled during the first quarter of 2021 with indications of high quality reservoir in the U, T, and Caballos Sands based on well logs, with potential prospectivity in the M2 Carbonate; the CYC-42 well was drilled in 12.1 days at a cost of $1.9 million, a 30% decrease from the last 4 wells drilled in Costayaco
    • Currently, the CYC-43 infill well is being drilled and is expected be cased and cemented on or around April 12, 2021
    • The CYC-44 infill well is expected to spud on or around May 15, 2021
    • All 3 wells are expected to be on production by the end of the second quarter of 2021
    • Workovers on 6 producing wells were completed during the first quarter of 2021, with oil production restored and ramping back up
  • Moqueta Oil Field (100% WI)
    • During the second quarter of 2021, Gran Tierra plans a 5-well workover program, which is expected to consist of 1 workover and 1 stimulation to restore production, and also 3 injector conversions to further optimize the waterflood and increase production in the second half of 2021
  • Suroriente Block (52% WI and Operator)
    • At the Cohembi oil field in the Suroriente Block, a facility expansion program is progressing as planned, which is expected to allow additional production to be brought online in the second half of 2021
    • A workover rig is expected to move to the Suroriente Block in mid-April 2021, where it is expected to accelerate the running of larger pumps in 2 oil wells and to restore production in 3 additional oil wells which are currently offline

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented:

'At the beginning of the fourth quarter of 2020, we decided to hedge 15,000 bopd of first half 2021 production and to resume development operations across all of our major assets. Throughout the first quarter of 2021, we have significantly and profitably restored Gran Tierra's total production. Our ability to ramp up Gran Tierra's production to the highest level in over a year clearly demonstrates our team's success at optimizing our core oil fields under waterflood, while preserving and maximizing the long-term value of all of our assets. Based on our significant progress in increasing production during the first quarter of 2021, we reaffirm Gran Tierra's 2021 full-year production guidance of 28,000-30,000 bopd.

Our 2021 capital budget of $130-150 million remains a balanced, returns-focused program which prioritizes free cash flow generation and debt reduction. If Brent oil prices continue to be well above our original 2021 budget forecast of $49 per bbl, we plan to further accelerate debt reduction through the remainder of 2021. We also continue to advance exploration-related activities for our prioritized, high impact exploration program and we expect to increase activity in 2022.

Our teams in Colombia, Canada and Ecuador have done an excellent job by safely and effectively executing our development program during the many challenges faced by Gran Tierra and our industry in 2020 and 2021. The health and safety of our people and all of our stakeholders where we operate will continue to be a focus in 2021 through our industry-leading COVID-19 safety practices and protocols. In addition, our 'Beyond Compliance Philosophy and Policy' continues. Where Gran Tierra identifies significant opportunities and benefits to the environment and communities, we voluntarily strive to go beyond what is legally required to protect the environment and provide social benefits, because it is the right thing to do.'

(2) Approximate average production over the period from March 28, 2021 to April 10, 2021

Original article link

Source: Gran Tierra Energy

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