• First Quarter 2023 Total Average Production of 31,611 BOPD, Up 8% from One Year Ago
• Second Quarter-To-Date 2023(1) Total Average Production of Approximately 32,400 BOPD
• Net Loss of $10 Million, Net Income of $115 Million Over Last 12 Months
• Adjusted EBITDA(2) of $89 Million, $459 Million Over Last 12 Months
• Funds Flow from Operations(2) of $60 Million, $339 Million Over Last 12 Months
• Cash Balance of $106 Million and Net Debt(2) of $466 Million, as of March 31, 2023
• Colombia Development Campaign Progressing with 14 Wells Drilled in the Quarter and Another 4 Wells Drilled Second Quarter-To-Date 2023

Gran Tierra Energy has announced the Company’s financial and operating results for the quarter ended March 31, 2023.

Key Highlights of the Quarter:

• Production:
  • Gran Tierra’s total average production for the Quarter was 31,611 BOPD, up 8% from first quarter 2022 and decreased by 3% compared to fourth quarter 2022.
  • The Company’s second quarter-to-date 2023 total average production has been approximately 32,400 BOPD.
• Oil Price: The Brent oil price averaged $82.10 per bbl, down 16% from one year ago, and down 7% from the Prior Quarter.
• Quality and Transportation Discounts: The Company’s quality and transportation discount narrowed to $18.45 per bbl, down from $19.74 per bbl in the Prior Quarter and was up from $12.56 per bbl one year ago. The Castilla oil differential increased to $15.17 per bbl from $6.38 per bbl one year ago (Castilla is the benchmark for the Company’s Middle Magdalena Valley Basin oil production). The Vasconia differential increased to $7.87 per bbl from $3.60 per bbl one year ago (Vasconia is the benchmark for the Company’s Putumayo Basin oil production). Differentials narrowed in March 2023 and continued to narrow in April 2023. The current Castilla differential is approximately $11.30 per bbl and the Vasconia differential is approximately $6.30 per bbl.
• Net Income: Gran Tierra incurred a net loss of $10 million, compared to net income of $14 million one year ago, and net income of $33 million in the Prior Quarter. The Company’s net income over the last 12 months was $115 million.
• Basic and Diluted Earnings Per Share: Gran Tierra incurred a net loss of $0.03 per share, compared to net income of $0.09 per share in the Prior Quarter and $0.04 per share one year ago.
• Adjusted EBITDA: Adjusted EBITDA was $89 million compared to $119 million one year ago, and $109 million in the Prior Quarter. The Company’s trailing twelve-month Adjusted EBITDA was $459 million, resulting in an annualized net debt to Adjusted EBITDA ratio of 1.0 times.
• Funds Flow from Operations: Funds flow from operations was $60 million, down 31% from one year ago and down 26% from the Prior Quarter. Over the last 12 months, Gran Tierra’s funds flow from operations was $339 million.
• Free Cash Flow: Gran Tierra generated free cash flow of $73 million over the last twelve months. During the Quarter the Company’s capital expenditures exceeded funds flow from operations by approximately $11 million as a result of the Company’s front-end loaded 2023 development program which saw the drilling of 14 development wells in the Quarter, out of the total 2023 budgeted plan for 18-23 development wells.
• Share Buybacks:
  • Share Buybacks: During the Quarter, pursuant to Gran Tierra’s current normal course issuer bid (“NCIB”), Gran Tierra purchased approximately 13.1 million shares, for a total purchase price of $10.7 million, at a weighted average price of approximately $0.82 per share. Since the commencement of the NCIB on September 1, 2022, Gran Tierra has purchased 35.8 million shares, representing approximately 9.7% of Gran Tierra’s outstanding shares as of June 30, 2022.
• Bond Buybacks:
  • As part of Gran Tierra’s ongoing commitment to reduce its net debt, during the Quarter, the Company bought back $8.0 million in face value of Gran Tierra’s 6.25% senior notes due February 2025 (the “2025 bonds”). The cost of the 2025 bonds’ buyback was approximately $6.8 million, representing a discount of about 15% to the face value of the 2025 bonds.
• Cash and Net Debt:
  • As of March 31, 2023, the Company had a cash balance of $106 million and net debt of $466 million (net of the buyback of 2025 bonds described above).
  • Gran Tierra’s credit facility, with a capacity of up to $150 million, remains undrawn.
• Additional Key Financial Metrics:
  • Capital Expenditures: Capital expenditures of $71 million were lower than the Prior Quarter’s level of $73 million and up from $41 million compared to a year ago. During the Quarter, Gran Tierra drilled 14 development wells in Colombia.
  • Oil Sales: Gran Tierra generated oil sales of $144 million, down 17% from one year ago and down 11% from the Prior Quarter. The changes in oil sales were driven primarily by the decrease in Brent oil price and widening of quality and transportation discounts over the same time periods.
  • Operating Netback: The Company’s operating netback was $35.18 per bbl, down 33% from one year ago and down 9% from the Prior Quarter. As with oil sales, changes in operating netback were largely driven by the decrease in Brent oil price and widening of quality and transportation discounts over the same time periods.
  • Operating Expenses: Compared to the Prior Quarter, Gran Tierra’s operating expenses decreased 7% to $14.59 per bbl, down from $15.61 per bbl, primarily due to lower workover activities in the Quarter. Compared to one year ago, operating expenses increased by 9% on a per bbl basis, due to higher lifting costs mainly attributed to equipment rentals costs related to operations in Ecuador.
  • General and Administrative (“G&A”) Expenses: G&A expenses before stock-based compensation were $3.95 per bbl, up from $2.71 per bbl in the Prior Quarter.
  • Cash Netback: Cash netback per bbl was $21.16, compared to $27.54 in the Prior Quarter as a result of a decrease in Brent price of $6.53 per bbl. Compared to one year ago, cash netback per bbl only decreased $12.20 from $33.36, despite a $15.80 per bbl decrease in the Brent oil price over the same period.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented:
“During the Quarter, Gran Tierra completed a significant portion of its development campaign with the drilling of 14 development wells in three of our major fields which have been producing oil at rates in line with our expectations. The drilling of these wells is a testament to our team's commitment to operational excellence and their ability to execute our capital program efficiently. By completing the majority of our development program in the first three months of 2023, we expect to benefit from higher oil production rates for the remainder of the year with the goal of maximizing our production and cash flow. We continued to see positive results from our ongoing waterfloods across our operations primarily in Suroriente and Acordionero and are beginning to see positive results in our polymer flood in Acordionero.

We are very pleased with our recently announced agreement with Ecopetrol, the national oil company of Colombia, by which Gran Tierra and Ecopetrol renegotiated the agreement for the Suroriente Block in the Putumayo Basin, which was scheduled to end in mid-2024. This agreement provides an opportunity to add significant value, as well as economic life, to Suroriente by continuing its duration for 20 years. The additional term of the agreement allows long-term investment in infrastructure and work programs to enhance oil recovery efficiency in existing fields, and appraisal drilling to potentially prolong the life of the fields. We are also excited to recommence exploration drilling during second half 2023.”

Operations Update:

• Colombia Development Campaign:
  • Acordionero:
    • Development drilling resumed in January 2023 with a 10-well program. Eight of the wells were drilled by the end of the Quarter with 5 on production, two on injection and one in progress.
    • As a result of the program and continued good performance of the field’s enhanced oil recovery via waterflood, Acordionero has averaged approximately 19,000 BOPD during second quarter-to-date 2023(1), which is the highest level since May 2019.
    • During the Quarter, Gran Tierra achieved a new water injection record of approximately 65,000 bbl of water injected per day (“bwipd”) up from 59,894 bwipd in first quarter 2022.
    • The polymer flood pilot was expanded with the start up of a second polymer injection well during the Quarter, with a third polymer injection well planned for second quarter 2023. Acordionero’s polymer flood pilot is expected to increase the field’s ultimate oil recovery.
  • Costayaco:
    • Four wells were drilled in Costayaco during the Quarter: Two producers are currently being completed with tie-in expected in early May 2023 and two water injection wells are completed and expected to begin injection during second quarter 2023. Two additional producers and one additional injector remain to be drilled as part of the Costayaco development plan for 2023. Completion and stimulation of the producing wells and waterflood optimization through additional injection are expected to continue to grow production in Costayaco throughout the year.
    • Costayaco-53 set a new record low for the amount of time to drill in Costayaco, coming in at just over 9 days from spud to rig release.
  • Moqueta:
    • Two wells were drilled in Moqueta during the Quarter and both are on production and awaiting stimulation. Two additional development wells are planned in 2023 along with two conversions to injector wells that are expected to grow production and optimize waterflood in Moqueta.
  • Suroriente:
    • On April 11, 2023 the Company announced it had entered into an agreement with Ecopetrol S.A. (“Ecopetrol”), the national oil company of Colombia, by which the parties renegotiated the agreement for the Suroriente Block (“Suroriente”) in the Department of Putumayo, which was scheduled to end in mid-2024 (the “Agreement”).
    • The Agreement provides an opportunity to add significant value, as well as economic life, to Suroriente by continuing its duration for 20 years from the Agreement's effective date. The additional term of the contract allows long-term investment in infrastructure and work programs to enhance oil recovery efficiency in existing fields, and appraisal drilling to potentially prolong the life of the fields. Gran Tierra will continue to be the operator of Suroriente and is committing to a capital investment program of $123 million over a three-year period from the Agreement's effective date, expected to be funded by Gran Tierra's internal cash flow.
    • The Agreement is subject to certain conditions precedent including regulatory approval by the Superintendence of Industry and Commerce of Colombia (“SIC”). The satisfaction of such conditions precedent will determine the Agreement's effective date.
• Exploration Campaign:
  • Gran Tierra plans to drill four wells in Ecuador, three in the Charapa Block to appraise the discovery in the Hollin Formation and one in the Chanangue Block during the second half of 2023.
  • Gran Tierra has completed the selection process and secured a drilling rig, which the Company plans to mobilize from Colombia to Ecuador.
  • Gran Tierra expects to drill between 4 to 6 exploration wells in 2023 in Colombia and Ecuador combined.

KeyFacts Energy: Gran Tierra Colombia country profile   l   Ecuador country profile