TIDMGTE
CALGARY, Alberta, Sept. 22, 2020 (GLOBE NEWSWIRE) -- Gran Tierra Energy
Inc. ("Gran Tierra" or the "Company") (NYSE American:GTE) (TSX:GTE)
(LSE:GTE), today announced an operational update. All dollar amounts are
in United States ("U.S.") dollars and production amounts are on an
average working interest before royalties ("WI") basis unless otherwise
indicated. Per barrel ("bbl") of oil equivalent ("BOE") amounts are
based on WI sales before royalties.
Key Highlights:
-- Production Restarted: during third quarter 2020 to date (July 1-September
21, 2020), production has averaged approximately 18,700 BOE per day
("BOEPD"); during September 1-21, 2020, production has increased to an
approximate average of 21,250 BOEPD (second quarter 2020 averaged 20,165
BOEPD); Gran Tierra's oil production volumes have been positively
impacted by the resumption of production at the Suroriente and PUT-7
Blocks in the southern Putumayo region, as well as at several minor
fields, and by the recommencement of workover activities at the
Acordionero oil field
-- Waterfloods Outperforming: waterflood response across all of Gran
Tierra's core assets has continued to outperform management's
expectations; in particular, Acordionero has continued to see material
increases in reservoir pressures during third quarter 2020 to date; the
continued focus on surveillance, analysis and optimization of
Acordionero's waterflood has led to a shallowing of the field's oil
production decline rate
-- Resumption of Operations: with the recent partial recovery in oil prices
and tightening of differentials, Gran Tierra's operations team has
seamlessly restarted several field activities throughout the Company's
Colombian portfolio, in strict accordance with COVID-19 safety protocols
for the Company's employees and local communities; Gran Tierra has
performed in excess of 2,500 COVID-19 tests and managed to safely move
more than 1,500 employees in and out of the Company's operations during
five separate crew-changes since the pandemic started; although the
evolving situation with the COVID-19 pandemic may impact the timing of
current and planned activities, Gran Tierra remains confident that its
COVID-19 protocols should allow ongoing progress in the resumption of
operations
-- Resumption of Acordionero Workover and Development Activities
(100% WI):
-- Acordionero Workover Activity Underway: the first workover
rig restarted operations on September 1, 2020 and is
currently on its third workover, the AC-58 oil well; the
AC-52 and AC-53 oil wells have already been returned to
production on schedule and under budget; this first
workover rig is forecast to continue operations in the
field through the end of 2020 and into first quarter 2021;
a second workover rig is expected to arrive at Acordionero
in October 2020 to accelerate well workover activity; a
total of 10 to 12 offline oil wells are expected to be
worked over by 2020 year-end to restore production; the
total combined productive capacity of the 10 highest
priority wells for workover is estimated to be
approximately 3,500 bbl of oil per day ("BOPD"), with
weighted averages for water cut of 13%, gas-oil ratio of
639 standard cubic feet per bbl and API oil gravity of 17
degrees (based on 30-day averages prior to each well going
offline earlier this year)
-- Acordionero Development Drilling Expected To Commence
Q4/2020: a drilling rig is expected to restart operations
during fourth quarter 2020 to drill 1 to 2 new oil wells by
2020 year-end; these new wells are expected to begin
production during first quarter 2021; the drilling rig is
forecast to continue drilling new development oil wells at
Acordionero throughout 2021; the next 10 planned wells (8
oil producers and 2 water injectors) are scheduled to be
drilled from the new southwest pad currently under
construction; each of these new wells is expected to have
an initial oil production rate of approximately 550 BOPD
(initial 30-day average rate), in line with the strong
performance of wells drilled in the field over the last
year
-- Costayaco/Vonu Workovers Expected to Resume in October 2020 (100%
WI): a workover rig is expected to start operations in October
2020 to workover 3 offline oil wells and recomplete 2 wells to add
U Sand water injection; the total combined productive capacity of
the offline oil wells is estimated to be approximately 1,000 BOPD
with weighted averages for water cut of 44%, gas-oil ratio of 811
standard cubic feet per bbl and API oil gravity of 29 degrees
(based on 30-day averages prior to each well going offline earlier
this year)
-- Suroriente Block (52% WI) Production Ramping Up: restart of the
Cohembi field, previously shut-in due to local farmer blockades,
commenced on August 28, 2020; Cohembi's average WI production
(September 1-21, 2020) is approximately 2,160 BOPD; volumes are
expected to continue to increase to the block's estimated WI
capacity of approximately 3,600 BOPD (based on the 30-day average
prior to the block being shut-in earlier this year)
-- Majority of Minor Oil Fields Production Back Online: the restart
of the majority of minor fields has commenced and the fields are
coming back online at rates higher than recorded just prior to the
shut-ins; current production from these restarted minor fields is
approximately 1,600 BOPD, with an additional 400 BOPD expected to
be added during fourth quarter 2020; the cost optimizations
achieved across the Company's assets are being realized in these
reactivations, both in processes and personnel, as well as
operating strategy going forward
-- Operating Cost Reductions: the Company's optimization programs have
reduced operating costs by approximately $3.00/bbl; these cost-saving
initiatives included personnel optimization, contract renegotiations and
increased utilization of associated gas in gas-to-power operations;
additional operational improvements have been identified and are
forecasted to provide a further operating cost reduction of approximately
$0.50/bbl in fourth quarter 2020
-- VAT & Income Tax Refunds Received: as of August 31, 2020, Gran Tierra has
collected total value-added tax ("VAT") and income tax receivables of
approximately $51 million; the Company expects to collect approximately
another $25 to $35 million before the end of 2020; therefore, Gran Tierra
forecasts a total collection of approximately $76 to $86 million in VAT
and income tax receivables during 2020
-- Oil Price Hedges In Place To Protect Cash Flows: Gran Tierra has entered
into a series of Brent oil price hedges; for second half 2020, these
hedges effectively give the Company a Brent floor price of $35.68/bbl on
11,000 BOPD if Brent falls as low as $27.05/bbl, below which Gran Tierra
would receive Brent plus $8.63/bbl; for first half 2021, the Company has
an effective Brent floor price of $45.29/bbl on 7,000 BOPD if Brent falls
as low as $35.00/bbl, below which Gran Tierra would receive Brent plus
$10.29/bbl; additional detail is provided in the following table:
Type of
Instrument & Volume Sold Put Bought Put Sold Call Premium
Period* (BOPD) ($/bbl)* ($/bbl)* ($/bbl)* ($/bbl)
Collars:
July 1, to
December
31, 2020 11,000 27.05 35.68 43.43 0.54
Collars:
January 1,
to June 30,
2021 7,000 35.00 45.29 53.79 n/a
Swaptions:
July 1, to
December
31, 2021 3,000 n/a n/a 56.75 n/a
*Weighted Average ICE Brent
-- Gran Tierra Positioned to Thrive in 2021: The Company's initiatives
during the severe downturn of 2020 have been focused on portfolio
optimization and the preservation of liquidity and value; with the
recovery in oil prices, Gran Tierra is now pacing projects to allow the
safe resumption of operations while following strict COVID-19 safety
protocols; the Company is analyzing multiple scenarios focused on
providing strong returns and free cash flow in 2021 in order to reduce
debt, and to optimize the ultimate oil recovery, free cash flow and
long-term value from all assets; Gran Tierra believes its robust asset
base will resume average production in excess of 30,000 BOEPD in 2021,
based on current assumptions, including commodity prices remaining at
current levels and that the level of global economic disruption from the
COVID-19 pandemic does not increase next year
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra,
commented: "We are very pleased we have safely and diligently
recommenced operations throughout our extensive Colombian portfolio. The
safety of our staff, contractors and the local communities where we
operate is paramount. Gran Tierra's proper management of COVID-19 safety
protocols has led to an earlier restart of activities than originally
forecast and we commend our teams in Colombia and Canada for all of
their excellent work during the many challenges of 2020. We are also
greatly appreciate the support the Colombian government continues to
provide the local oil industry, as evidenced by the ongoing payments of
VAT and income tax refunds. One of our key objectives is to finish 2020
strong to set up Gran Tierra for an exciting 2021. We believe we are
well-positioned to withstand the current volatile environment with our
low base decline, conventional oil asset base and the operational
control for capital allocation and timing, while maintaining a low cost
structure and the safety of our people."
Contact Information
For investor and media inquiries please contact:
Gary Guidry
President & Chief Executive Officer
Ryan Ellson
Executive Vice President & Chief Financial Officer
Rodger Trimble
Vice President, Investor Relations
+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 focused on oil and natural gas exploration
and production in Colombia and Ecuador. The Company is focused on
maximizing the value of its existing portfolio of assets. Gran Tierra's
common shares trade on the NYSE American, Toronto Stock Exchange and
London Stock Exchange under the ticker symbol GTE. Additional
information concerning Gran Tierra is available at www.grantierra.com.
Information on the Company's website does not constitute a part of this
press release. Gran Tierra's Securities and Exchange Commission filings
are available on the Securities and Exchange Commission 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.
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"). The use of the words
"expect", "plan", "can," "will," "should," "guidance," "forecast,"
"signal," "measures taken to" 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 strategies to adjust
production volumes, capital investments and operating and general and
administrative costs, including previously planned drilling and
operation activities, the Company's anticipated procedures to restart
production and waterflood operations and expectations as to resumption
of production amounts, future well results (including initial oil
production rates and productive capacity based on past performance),
expected cost reductions, the impact of hedges, average production in
2021, the impact and timing of the Company's COVID-19 protocols, the
Company's expectations as to 2020 results and VAT and income tax
receivables and its positioning for 2021. 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 actual results to differ
materially from those indicated by the forward-looking statements in
this press release are: our ability to comply with covenants in our
credit agreement; our ability to obtain amendments to the covenants in
our credit agreement so as to avoid an event of default under our credit
agreement and senior notes; a reduction in our borrowing base and our
ability to repay any excess borrowings; sustained or future declines in
commodity prices and the demand for oil; continued or future excess
supply of oil and natural gas; potential future impairments and
reductions in proved reserve quantities and value; problems in
connection with production and waterflood restart; continued spread of
the COVID-19 virus and extensions or previously announced lockdowns and
possible future restrictions against oil and gas activities in Colombia
and Ecuador; global economic disruption from the COVID-19 pandemic in
2021; Gran Tierra's operations are located in South America, and
unexpected problems can arise due to guerrilla activity, community
protests or blockades and other local events that may impact our ability
to access our locations or transport oil; technical difficulties and
operational difficulties may arise which impact the production,
transport or sale of our products; geographic, political, global health
and weather conditions can impact the production, transport or sale of
our products; Gran Tierra's ability to raise capital; Gran Tierra's
ability to identify and complete successful acquisitions; Gran Tierra's
ability to execute business plans; unexpected delays and difficulties in
developing currently owned properties may occur; the timely receipt of
regulatory or other required approvals for Gran Tierra's operating
activities; the failure of exploratory drilling to result in commercial
wells; unexpected delays due to the limited availability of drilling
equipment and personnel; current global economic and credit market
conditions may impact oil prices and oil consumption differently than
the Company currently predicts, which could cause it to further modify
our strategy and capital spending program; volatility or declines in the
trading price of Gran Tierra's common stock and the continued listing of
its shares on a national stock exchange; 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, 2019 and Quarterly Reports on Form 10-Q
for the three months ended March 31, 2020 and June 30, 2020, and its
other filings with the Securities and Exchange Commission. These filings
are available on the Securities and Exchange Commission website at
http://www.sec.gov and on SEDAR at www.sedar.com.
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. In particular, the unprecedented nature of
the current economic downturn, pandemic and industry decline may make it
particularly difficult to identify risks or predict the degree to which
identified risks will impact Gran Tierra's business and financial
condition. 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.
The estimates of future production, tax collection figures and operating
cost reductions set forth in this press release may be considered to be
future-oriented financial information or a financial outlook for the
purposes of applicable Canadian securities laws. Financial outlook and
future-oriented financial information contained in this press release
about prospective 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. These projections may not be appropriate for other purposes.
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. These
projections may also be considered to contain future-oriented financial
information or a financial outlook. The actual results of Gran Tierra's
operations for any period will likely 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 operational and 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.
Presentation of Oil and Gas Information
BOEs have been converted on the basis of 6 thousand cubic feet ("Mcf")
of natural gas to 1 bbl of oil. BOEs may be misleading, particularly if
used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an
energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead. In
addition, given that the value ratio based on the current price of oil
as compared with natural gas is significantly different from the energy
equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1
bbl would be misleading as an indication of value. 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.
(END) Dow Jones Newswires
September 22, 2020 19:51 ET (23:51 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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