Gran Tierra Announces Commencement of Trading on the London Stock
Exchange
Gran Tierra Energy Inc. (“Gran Tierra” or
the “Company”) (NYSE American:GTE) (NYSE MKT:GTE)
(TSX:GTE) (LSE:GTE) is pleased to announce that
its common stock is expected to be admitted today to the standard
listing segment of the Official List of the Financial Conduct
Authority and to trading on the main market of the London Stock
Exchange (
“LSE”) for listed securities under the
ticker “GTE”. The Company’s common stock will also continue to
trade on the NYSE American and on the Toronto Stock Exchange. All
dollar amounts are in United States (
“U.S.”)
dollars. Production amounts are on an average working interest
before royalties (
“WI”) basis. Per barrel of oil
equivalent (
“BOE”) amounts are based on WI sales
before royalties. All numbers and values have been previously
disclosed by the Company in prior press releases and regulatory
filings.
Gary Guidry, President and Chief Executive
Officer (“CEO”) of Gran Tierra, commented:
“Commencement of trading on the LSE today marks an important
milestone for Gran Tierra, as we continue to profitably grow our
exploration and production business in Colombia. We are seeking to
expand our investor base at a very exciting time for the Company.
Our senior management team is very pleased to be returning to the
LSE where we previously achieved a supportive shareholder following
in the past at Caracal Energy Inc. (“Caracal”). As
with previous companies we have managed such as Caracal, we are
committed to creating long-term shareholder value through employing
capital discipline and focusing on increasing net asset value three
to five times over the next five years. With an excellent track
record of profitably growing production, reserves and our resource
base in Colombia, we look forward to sharing Gran Tierra’s
potential future successes with the London and European investment
communities.”
About Gran Tierra
Gran Tierra is an independent international
exploration and production company focused in onshore Colombia. The
Company has built a portfolio that provides significant development
inventory to continue to grow production. Following several
acquisitions in 2016 and 2017, the Company has successfully
consolidated an expansive and dominant land position in the proven
yet underdeveloped Putumayo Basin and executed a new basin entry
into the highly prolific Middle Magdalena Valley
(“MMV”) Basin. The Company has approximately 2.1
million gross acres in onshore Colombia across 34 blocks and is the
operator of 29 of the blocks. Gran Tierra has identified numerous
exploration opportunities to commence a three to five year
continuous exploration program, which it expects will be fully
funded through the reinvestment of cash flows from operations. This
exploration campaign is designed to test the majority of Gran
Tierra’s large portfolio of unrisked mean prospective resources of
1.5 billion BOE1 by drilling 30 to 35 exploration wells in proven
hydrocarbon basins in Colombia, including the Putumayo, the MMV and
Llanos Basins.
Since May 2015, Gran Tierra has been led by Gary
Guidry. Prior to joining Gran Tierra, Mr. Guidry was the President
and CEO of Caracal, a highly successful LSE-listed company with
operations in Chad, Africa. He held that position from
mid-2011 until Caracal was acquired for $1.8 billion in mid-2014.
During his tenure, Caracal’s total shareholder return was 101%
compared to the 8% total return of the FTSE 350 Exploration and
Production Index. He is supported at Gran Tierra by key
members of the former Caracal senior management group. This
experienced team has a proven track record of operational success
and prudent financial management.
Key Highlights from Gran Tierra’s Second
Quarter 2018 (“the Quarter”) Results
Record Company Production
- Achieved a new Company milestone: record average Colombia
production of 35,400 BOE per day (“BOEPD”) in the
Quarter, which was 100% oil, on track with the Company's internal
forecast and 18% higher than 30,098 BOEPD in second quarter
2017
- Increased the Quarter's Colombia production by 57% from second
quarter 2015 when the current Gran Tierra management team joined
the Company and the strategy to refocus Gran Tierra on Colombia
began, which represents an annualized growth rate of 16%
- Forecasted to be on target to meet full year 2018 production
guidance of 36,500 to 38,500 BOEPD, which would represent annual
growth from the 2017 average of 16% to 23%; the Company's
production is expected to exceed 40,000 BOEPD in fourth quarter
2018
Strong Financial
Performance2
- Oil and gas sales of $163 million, net income of $20 million,
EBITDA of $102 million, funds flow from operations of $95 million,
and capital expenditures of $84 million. Net income and EBITDA for
the six months ended June 30, 2018 were $38 million and $191
million respectively.
- Operating netback of $38.28 per BOE, an increase of 75%
relative to second quarter 2017; the Brent oil price only
increased 47% over the same time period
- Exited the Quarter with $126 million of cash and cash
equivalents and an undrawn $300 million credit facility,
representing 0.8 times net debt to the Quarter's annualized funds
flow from operations and 0.7 times net debt to the Quarter's
annualized EBITDA
Key Upcoming Potential
Catalysts
There are multiple potential catalysts for Gran
Tierra planned during the second half of 2018 all of which are
expected to be funded through cash flow and have the potential to
positively impact 2018 year-end reserves, 2018 exit rate & 2019
production volumes, including the drilling of:
- 6 development oil wells & 1 water injector at the
Acordionero oil field, Midas Block (Lisama Sands), MMV Basin; the
ongoing expansion of this field’s production facilities and
waterflood is also planned
- 3 appraisal oil wells at the Ayombero field, Midas Block (La
Luna carbonate), MMV Basin
- 4 exploration wells in the Putumayo Basin and one in the MMV
Basin
On admission to trading on the LSE, the
Company's common stock will be registered with ISIN US38500T1016
and SEDOL number BZ0WN45. The US SEDOL number is B09R9V5 and the
Canadian SEDOL number is B2PPCS5.
Additional information concerning Gran Tierra is
available at www.grantierra.com. Neither information on the
Company's website nor information on any website accessible by
hyperlinks on the Company's website is incorporated in or
constitutes a part of this press release.
Gran Tierra’s Securities and Exchange Commission
(“SEC”) filings are available on the SEC 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.
1 All resources values and ancillary information
contained in this press release have been calculated in compliance
with Canadian National Instrument 51-101 – Standards of Disclosure
for Oil and Gas Activities (“NI 51-101”) and the
Canadian Oil and Gas Evaluation Handbook (“COGEH”)
and are based on the Company's 2017 year-end estimated prospective
resources as evaluated by the Company's independent qualified
reserve evaluator McDaniel & Associates Consultants Ltd.
(“McDaniel”) in reports with an effective date of
December 31, 2017 (the "GTE McDaniel Prospective Resources
Report"), unless otherwise expressly stated.
2 Funds flow from operations, earnings before
interest, taxes and depletion, depreciation and accretion
("DD&A") (" EBITDA") and
operating netback are non-GAAP measures and do not have
standardized meanings under generally accepted accounting
principles in the United States of America ("GAAP"). Net debt is
defined as face value of debt (excluding debt issuance costs), less
cash and cash equivalents as of June 30, 2018. Refer to "Non-GAAP
Measures" in this press release.
Contact Information
For investor and media inquiries please
contact:
Gran Tierra
Gary Guidry
Chief Executive Officer
Ryan EllsonChief Financial Officer
Rodger TrimbleVice President, Investor
Relations
+1-403-265-3221info@grantierra.com
RBC Capital Markets (Financial Advisor
to the listing and Corporate Broker)
Matthew Coakes
Rupert Walford
Martin Copeland
Darrell Law
+44-(0)207-653-4000
Vigo Communications
Patrick d’Ancona
Chris McMahon
Richard Slape
+44 (0)20 7390 0240
Forward Looking Statements and Legal
Advisories:
This press release is neither an offer
to sell nor a solicitation of an offer to buy any securities. The
Company is not conducting any offering or issuance of securities in
connection with the listing of the Company’s common stock on the
LSE and the prospectus of the Company, available on the Company’s
website, has been issued solely in connection with the listing of
the Company's common stock on the LSE.
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"), which can be identified by such
terms as expect, plan, guidance, project, will, believe, target,
potential, future and other terms that are forward-looking in
nature. Such forward-looking statements include, but are not
limited to, the impact on the Company and investors of the listing
on the LSE, the nature of future trading of the Company’s common
stock and capital markets activity, the Company’s exploration and
capital program, including drilling plans, future sources of
funding for capital expenditures and guidance, expected production
levels and the results of the Company’s strategies.
Statements relating to resources are also deemed
to be forward-looking statements, as they involve the implied
assessment, based on certain estimates and assumptions, including
that the resources described can be profitably produced in the
future.
The forward-looking statements contained in this
press release reflect several material factors and expectations and
assumptions of Gran Tierra including, without limitation, that
market conditions will remain stable or improve, that a market will
develop in Gran Tierra’s common stock on the LSE, that potential
and existing investors in Gran Tierra will react favorably to the
additional listing on the LSE, that Gran Tierra will continue to
conduct its operations in a manner consistent with its current
expectations, the general continuance of current or, where
applicable, assumed operational, regulatory and industry conditions
and receipt of required approvals, and the ability of Gran Tierra
to execute its current business and operational plans in the manner
currently planned. Gran Tierra believes the material factors,
expectations and assumptions reflected in the forward-looking
statements are reasonable at this time but no assurance can be
given that these factors, expectations and assumptions will prove
to be correct.
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: adverse
market conditions on the exchanges on which Gran Tierra’s common
stock is trading; low liquidity and trading volume or high
volatility in trading activity around Gran Tierra common stock;
prices and markets for oil and natural gas are unpredictable and
tend to fluctuate significantly; the inability of Gran Tierra
to execute its business plan; the risk that 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; weaknesses or declines in local or global capital
markets or investing activity; the ability to replace reserves and
production and develop and manage reserves on an economically
viable basis; the failure of exploratory drilling to result in
commercial wells; unexpected delays due to limited availability of
drilling equipment and personnel; and the risk factors detailed
from time to time in Gran Tierra’s reports filed with the SEC,
including, without limitation, under the caption “Risk Factors” in
Gran Tierra's Annual Report on Form 10-K filed February 27,
2018 and subsequent Quarterly Reports on Form 10-Q. These filings
are available on the SEC website at www.sec.gov and on SEDAR at
www.sedar.com.
All forward-looking statements included in this
press release are made only 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 securities laws. Gran Tierra’s
forward-looking statements are expressly qualified in their
entirety by this cautionary statement.
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 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 on a per BOE basis as
presented is defined as Brent sales price less quality and
transportation discount, royalties, transportation expenses and
operating expenses. A reconciliation from Brent sales price to
operating netback per BOE is as follows:
|
|
Three Months Ended June 30, |
|
|
|
2018 |
2017 |
|
|
|
|
|
|
|
Per BOE |
|
|
|
|
Brent |
$ |
74.90 |
|
$ |
50.92 |
|
|
|
Quality and Transportation Discount |
(10.52 |
) |
(10.73 |
) |
|
|
Royalties |
(13.17 |
) |
(6.50 |
) |
|
|
Average Realized Price |
51.21 |
|
33.69 |
|
|
|
Transportation Expenses |
(2.04 |
) |
(2.28 |
) |
|
|
Average Realized Price Net of Transportation
Expenses |
49.17 |
|
31.41 |
|
|
|
Operating Expenses |
(10.89 |
) |
(9.50 |
) |
|
|
Operating Netback |
38.28 |
|
21.91 |
|
|
EBITDA, as presented, is defined as net income
or loss adjusted for depletion, depreciation and accretion
(“DD&A”) expenses, interest expense and income tax expense or
recovery. 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. A reconciliation from net
income or loss to EBITDA as follows:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Three Months EndedMarch 31, |
EBITDA - Non-GAAP Measure ($000s) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Net income (loss) |
|
$ |
20,300 |
|
|
$ |
(6,807 |
) |
|
$ |
38,161 |
|
|
$ |
5,964 |
|
|
$ |
17,861 |
|
Adjustments to reconcile net income (loss) to
EBITDA |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
46,607 |
|
|
31,813 |
|
|
86,068 |
|
|
58,689 |
|
|
39,461 |
|
Interest expense |
|
7,375 |
|
|
3,331 |
|
|
12,870 |
|
|
6,426 |
|
|
5,495 |
|
Income tax expense |
|
27,996 |
|
|
13,297 |
|
|
53,767 |
|
|
32,093 |
|
|
25,771 |
|
EBITDA (non-GAAP) |
|
102,278 |
|
|
41,634 |
|
|
190,866 |
|
|
103,172 |
|
|
88,588 |
|
Funds flow from operations, as presented, is net
income or loss adjusted for DD&A expenses, asset impairment,
deferred tax expense, stock-based compensation
expense, amortization of debt issuance costs, cash settlement
of RSUs, unrealized foreign exchange gains and losses, financial
instruments gains or losses, cash settlement of financial
instruments and loss on sale. 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. A
reconciliation from net income or loss to funds flow from
operations is as follows:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Three Months EndedMarch 31, |
Funds Flow From Operations (Non-GAAP) Measure
($000s) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Net income (loss) |
|
$ |
20,300 |
|
|
$ |
(6,807 |
) |
|
$ |
38,161 |
|
|
$ |
5,964 |
|
|
$ |
17,861 |
|
Adjustments to reconcile net income (loss) to funds flow
from operations |
|
|
|
|
|
|
|
|
|
|
DD&A expenses |
|
46,607 |
|
|
31,813 |
|
|
86,068 |
|
|
58,689 |
|
|
39,461 |
|
Deferred tax expense |
|
23,169 |
|
|
11,525 |
|
|
36,651 |
|
|
22,904 |
|
|
13,482 |
|
Stock-based compensation expense |
|
6,893 |
|
|
1,980 |
|
|
10,202 |
|
|
3,183 |
|
|
3,309 |
|
Amortization of debt issuance costs |
|
843 |
|
|
620 |
|
|
1,513 |
|
|
1,225 |
|
|
670 |
|
Cash settlement of RSUs |
|
(240 |
) |
|
(183 |
) |
|
(360 |
) |
|
(501 |
) |
|
(120 |
) |
Unrealized foreign exchange loss (gain) |
|
1,583 |
|
|
3,895 |
|
|
539 |
|
|
1,076 |
|
|
(1,044 |
) |
Financial instruments loss (gain) |
|
4,768 |
|
|
(1,447 |
) |
|
11,714 |
|
|
(6,886 |
) |
|
6,946 |
|
Cash settlement of financial instruments |
|
(9,666 |
) |
|
448 |
|
|
(15,483 |
) |
|
1,216 |
|
|
(5,817 |
) |
Loss on sale |
|
292 |
|
|
9,076 |
|
|
292 |
|
|
9,076 |
|
|
— |
|
Funds flow from operations |
|
$ |
94,549 |
|
|
$ |
50,920 |
|
|
$ |
169,297 |
|
|
$ |
95,946 |
|
|
$ |
74,748 |
|
Prospective Resources
Prospective Resources are those quantities of
petroleum estimated, as of a given date, to be potentially
recoverable from undiscovered accumulations by application of
future development projects. Prospective Resources have both an
associated chance of discovery and a chance of development. Not all
exploration projects will result in discoveries. The chance that an
exploration project will result in the discovery of petroleum is
referred to as the "chance of discovery." Thus, for an undiscovered
accumulation, the chance of commerciality is the product of two
risk components - the chance of discovery and the chance of
development. There is no certainty that any portion of the
Prospective Resources will be discovered. If discovered, there is
no certainty that it will be commercially viable to produce any
portion of the Prospective Resources.
Estimates of the Company's Prospective Resources
are based upon the GTE McDaniel Prospective Resources Report dated
as at December 31, 2017. The estimates of Prospective Resources
provided in this press release are estimates only and there is no
guarantee that the estimated Prospective Resources will be
recovered. Actual resources may be greater than or less than the
estimates provided in this press release and the differences may be
material. There is no assurance that the forecast price and cost
assumptions applied by McDaniel in evaluating Gran Tierra's
Prospective Resources will be attained and variances could be
material. There is no certainty that any portion of the Prospective
Resources will be discovered. If discovered, there is no certainty
that it will be commercially viable to produce any portion of the
Prospective Resources.
Estimates of Prospective Resources are by their
nature more speculative than estimates of proved reserves and would
require substantial capital spending over a significant number of
years to implement recovery. Actual locations drilled and
quantities that may be ultimately recovered from our properties
will differ substantially. In addition, we have made no commitment
to drill, and likely will not drill, all of the drilling locations
that have been attributable to these quantities.
The Prospective Resources in this press release
are classified as mean representing the arithmetic average of the
expected recoverable volume. It is the most accurate single point
representation of the volume distribution.
For a discussion of Gran Tierra’s interest in
the Prospective Resources, the location of the Prospective
Resources, the product type reasonably expected, the risks and
level of uncertainty associated with recovery of the resources, the
significant positive and negative factors relevant to the estimate
of the Prospective Resources, a description of the applicable
projects maturity subcategories and other relevant information
regarding the Prospective Resources estimates, please see the GTE
51-101F1 available on SEDAR at www.sedar.com.
Disclosure of Resources Information and
Cautionary Note to U.S. Investors
In this press release, the Company uses the term
Prospective Resources. The SEC guidelines strictly prohibit the
Company from including Prospective Resources in filings with the
SEC. Investors are urged to consider closely the disclosures and
risk factors in the Company's Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and in the other reports and filings with the
SEC, available from the Company's offices or website. These forms
can also be obtained from the SEC website at www.sec.gov or by
calling 1-800-SEC-0330.
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