Gran Tierra Energy Inc. Announces Second Quarter 2018 Results and Operational Update
Press Release by Gran Tierra
CALGARY, Alberta, Aug. 02, 2018 -- Gran Tierra Energy Inc. ("Gran Tierra" or the "Company") (NYSE American:GTE)(NYSE MKT:GTE)(TSX:GTE) today announced the Company's financial and operating results for the second quarter ended June 30, 2018 ("the Quarter"). All dollar amounts are in United States ("U.S.") dollars unless otherwise indicated. 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. For per BOE amounts based on net after royalty ("NAR") production, see Gran Tierra's Quarterly Report on Form 10-Q filed August 2, 2018.
Key Highlights
Achieved record production of 35,400 BOE per day ("BOEPD") in the Quarter with an average production rate of 36,426 BOEPD in June 2018; the Company remains on track to meet full year 2018 production guidance of 36,500 to 38,500 BOEPD, with fourth quarter 2018 production expected to exceed 40,000 BOEPD
Strong financial performance in the Quarter: net income of $20 million ($0.05 per share, basic), funds flow from operations1 of $95 million ($0.24 per share, basic) and capital expenditures of $84 million
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 EBITDA1
Acordionero production facility expansion and additional development drilling on track and on budget, with an active second half 2018 planned
In mid-July 2018, Gran Tierra reached an important safety milestone with no lost time injury for 5 million person-hours; the Company achieved this milestone while increasing activity levels in all of its assets
Expanded 2018 capital program to range of $305 million to $325 million to:
appraise and develop the Ayombero/Chuira field
drill additional development wells in Costayaco and Acordionero
potential to positively impact 2018 year-end reserves, 2018 exit rate and 2019 production
Gran Tierra expects the increased 2018 capital program to be fully funded by cash from operating activities in 2018 of $330 to $340 million, based on first half 2018 results and a forecast Brent oil price of $73/bbl in the second half of 2018
Successful development drilling in Costayaco with the CYC-30 well producing from U Sand and Caballos Formation at a stable average rate of 1,491 barrels of oil per day ("bopd") with a water cut of 7% and gas-oil ratio ("GOR") of 82 standard cubic feet per bbl ("scf/bbl") during June 2018; the Company is updating its mapping and reservoir model for the legacy sandstone reservoirs based on these excellent results
Cumplidor-2 was drilled on prognosis using the new three-dimensional ("3D") seismic and has been producing from the N Sand at a stable average oil rate of 300 bopd with a water cut of 0.3% and GOR of 77 scf/bbl since June 19, 2018; this well is expected to produce greater than 500 bopd when a larger pump is installed
10 gross development wells (10 net) are planned for the second half of 2018
Exciting second half 2018 exploration well drilling program has commenced:
Juglar Deep: spud on July 7, 2018, in the Middle Magdalena Valley ("MMV") Basin targeting the deeper La Luna conventional carbonate resource oil play; in shallower formations already drilled, log analysis indicates that 40 feet ("ft") of potential net oil in the La Paz and 12 ft of potential gas pay in the Mugrosa may exist
Chilanguita-1: planned spud in August 2018 on the Putumayo Alea 1848A block, where Gran Tierra recently increased its WI to 100%, to target the A-Limestone, M2-Limestone, U and T Sands and the Caballos Formation
Exploration drilling pad is complete in the PUT-7 block where the Company plans to drill the Pomorroso, Pecari and Northwest multi-zone prospects over the next 6 months to target the A-Limestone and the U and N Sands
1 Net debt is defined as face value of debt (excluding debt issuance costs), less cash and cash equivalents. Funds flow from operations and earnings before interest, taxes and depletion, depreciation and accretion ("DD&A") ("EBITDA") are non-GAAP measures and do not have standardized meanings under generally accepted accounting principles in the United States of America ("GAAP"). Refer to "Non-GAAP Measures" in this press release.
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: "During the second quarter of 2018, our high quality, operated, diversified suite of assets in Colombia continued to deliver strong operational and financial performance with record high oil production. Gran Tierra's strategy is focused on economic returns with an emphasis on profitable production and reserves growth to create long term shareholder value. With our large resource base and drilling inventory, low base declines and high netback production, we continued to demonstrate this Quarter that Gran Tierra has created a sustainable business model, and we expect the revised 2018 capital program to be fully funded by forecasted cash from operating activities in 2018.
Acordionero continues to be Gran Tierra's self-funding growth engine in terms of material economic production increases. During the first half of 2018, our MMV drilling program also delivered exciting results at the Ayombero-1 well, which we believe may have opened up an exciting new front for appraisal and development in the La Luna conventional carbonate play. In the Putumayo Basin, we are also highly encouraged by recent development drilling in the sandstone reservoirs of Gran Tierra's legacy Costayaco field.
Click here to access full press release.
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