Gran Tierra Energy reports that another significant milestone has been achieved in Ecuador with a seventh successful oil discovery further confirming the significant potential of the Arawana / Zabaleta field area. In addition, Gran Tierra (by way of its wholly-owned subsidiary) has entered into a purchase and sale agreement with Logan Energy Corp pursuant to which Logan would acquire 50% and operatorship of a portion of Gran Tierra’s Simonette Montney assets for approx. C$52 million in cash, subject to customary adjustments. After the closing of the Transaction, Gran Tierra would retain 50 percent working interest in the Assets. The Transaction provides a growth-focused platform to advance Gran Tierra’s Montney development and is aligned with the Company’s corporate strategy of long-term value creation.
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra commented, 'Gran Tierra is excited to announce its seventh Ecuador oil discovery from the Zabaletea-K1 well. This well was a pivotal exploration well that has further substantiated and delineated the Arawana / Zabaleta field area. The Zabaleta-K1 was drilled over 4 kilometers from the Arawana-J1 well drilled earlier this year and was charged with oil highlighting the magnitude of this discovery. The success of this well solidifies Gran Tierra’s understanding of the field area and will be a key pillar of development growth plans in South America for years to come.'
Seventh Ecuador Oil Discovery Substantiates Significant Potential in the Arawana / Zabaleta Field Area
- The Zabaleta-K1 well is the fourth exploration well drilled in the Chanangue Block and marks the seventh oil discovery by Gran Tierra in Ecuador.
- The successful Zabaleta test further validates the proven Basal Tena geological model 4 kilometers away from Arawana-J1 and supports the significant potential of the Arawana / Zabaleta productive trend.
- Gran Tierra has run production casing, cemented and perforated the Basal Tena oil zone and has begun production testing.
- The Basal Tena oil zone was perforated over 21.5 ft of reservoir with 12.8 ft of net reservoir based on log evaluation. A jet pump was run and the well has produced at stabilized rates over 24 hours at 1,105 bbls of oil per day, 17-degree API gravity oil, a 2% water cut, and a gas-oil ratio of 59 standard cubic feet per stock tank barrel.
- The rig has been moved to drill the Zabaleta Oeste exploration well which was spud on November 21, 2024, which marks the fulfillment of the final exploration commitment in the Chanangue block.
Message to Shareholders
'We are also thrilled to announce the sale of a portion of our interest in the Simonette Montney play while keeping a material stake in its future growth. This strategic partnership with a top-tier operator, who already has established infrastructure in the area, will significantly accelerate development and generate near-term cash flow. We intend to use a portion of the proceeds to deliver value to our shareholders through development of other key assets in the portfolio and share buybacks, while also strengthening our balance sheet by reducing net debt. We are also pleased to monetize by diluting half of our interest in one of the assets recently acquired in the i3 Energy acquisition by selling approximately 4 percent of production, and 1P reserves we acquired for approximately 19 percent of total consideration while still maintaining material interest and value in the assets. This transaction validates Gran Tierra’s position as a top-tier growth focused mid cap E&P company,' commented Gary Guidry, President and Chief Executive Officer of Gran Tierra.
Strategic Rationale
- Accelerates Simonette Asset Development: Leverages pre-development work and infrastructure completed by Logan to accelerate drilling on the Simonette Assets into the fourth quarter of 2024 from the first quarter of 2026.
- Partnering with a Leading Montney Operator: Simonette operations will be spearheaded by an industry-leading Montney oil producer with significant operating experience and proven track record of success.
- Strategic Infrastructure Already In-Place: Gain access to Logan’s area infrastructure, which eliminates the need for new projects, reduces upcoming capital spends and accelerates asset development timelines and value.
- Synergistic Operations Drive Cost Savings: Cost reduction across the combined asset base led by increased development scale, shared pad sites, personnel efficiencies, gathering pipelines and access to infrastructure.
- Attractive Transaction Metrics: Premium value realized for the Assets with an opportunity to capture additional upside through long-term asset development.
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Source: Gran Tierra Energy
