Ecuador and Colombia
Press Release

Gran Tierra Energy Inc. Announces 2023 Guidance

Bnamericas Published: Thursday, December 08, 2022

Gran Tierra Energy release

CALGARY, Alberta, Dec. 07, 2022 (GLOBE NEWSWIRE) -- Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”) (NYSE American:GTE)(TSX:GTE)(LSE:GTE) today announced its 2023 capital budget and production guidance. All dollar amounts are in United States dollars and all production volumes are on a working interest before royalties basis and are expressed in barrels (“bbl”) of oil per day (“BOPD”), unless otherwise stated.

Key Highlights:

  • 2023 Guidance: 
    • Gran Tierra is forecasting the following ranges for the Company’s 2023 budget:

2023 Budget

Low Case

Base Case Case

High Case

Average Brent Oil Price ($/bbl)

75.00

85.00

95.00

Total Company Production (BOPD)

32,000-34,000

32,000-34,000

32,000-34,000

Operating Netback4 ($ million)

380-430

470-520

550-600

EBITDA3 ($ million)

350-400

440-490

510-560

Cash Flow1 ($ million)

230-280

270-320

310-360

Total Capital ($ million)

210-250

210-250

210-250

Free Cash Flow2 ($ million)

25

65

105

Number of Development Wells (gross)

18-23

18-23

18-23

Number of Exploration/Appraisal Wells (gross)

4-6

4-6

4-6

  • 2023 Capital Program – Profitable Production Growth and High Impact Exploration: 
    • Gran Tierra has a large, diversified development and exploration portfolio in Colombia and Ecuador. The Company’s planned 2023 capital program is a balanced program between development and optimization of existing assets and potentially high-impact exploration.
    • Development: Gran Tierra expects to allocate approximately 70% of its 2023 capital program towards development activities in its core assets in Colombia. The Company plans to drill 10 to 12 development wells in the Acordionero oil field in the Middle Magdalena Valley Basin. Acordionero’s 2023 plans also include drilling pad extensions, expanded polymer injection pilots (after encouraging 2022 results), and ongoing waterflood optimization. In the Putumayo Basin, Gran Tierra plans to drill 6 to 8 development wells in the Costayaco oil field and 2 to 3 development wells in the Moqueta oil field. The Company expects to execute its Colombian development drilling campaign during the first half of 2023.
    • Exploration: Approximately 30% of the Company’s 2023 capital program is expected to be allocated to exploration activities and the drilling of 4 to 6 exploration/appraisal wells in Colombia and Ecuador. Gran Tierra’s 2023 exploration drilling is planned to follow up on the encouraging results from the Company’s 2022 exploration program. The Company focuses its exploration program on short-cycle time, near-field prospects in proven basins with access to infrastructure.
  • Fully Funded Capital Program Generating Free Cash Flow2: Gran Tierra’s mid-point Base Case 2023 capital budget of $230 million is expected to be fully funded from the Base Case 2023 mid-point cash flow1 forecast of $295 million, based on an assumed average $85.00/bbl Brent oil price. The Company’s midpoint Base Case 2023 EBITDA3 guidance of $465 million is well above the midpoint of the Base Case 2023 capital budget of $230 million. Gran Tierra remains focused on generating strong free cash flow2, ongoing net debt5 reduction via bond buybacks and shareholder returns via share buybacks.
  • Control of Capital Program: Gran Tierra has 100% working interest in and operatorship of the Company's major assets in Colombia and Ecuador. This full control gives the Company the flexibility to quickly optimize its development and exploration programs with changes, either up or down, in oil prices.
  • Impact of Colombian Tax Reforms: After accounting for Colombia’s recently enacted tax reforms, Gran Tierra’s mid-point Base Case 2023 budget is expected to incur 2023 current taxes of approximately $110 to $130 million (payable in second quarter 2024).

Message to Shareholders

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: "Our teams’ excellent work throughout 2022 has strongly positioned the Company for continued development and enhanced oil recovery activities in 2023 to optimize the value from each of our producing assets in Colombia. In addition, we plan to allocate about 30% of our 2023 capital program to prioritized exploration drilling opportunities in Colombia and Ecuador to follow up on our exciting initial exploration results in that 2022.

Our forecast 2023 capital budget is a balanced, returns-focused program which is expected to provide free cash flow2 generation, ongoing strengthening of our balance sheet, shareholder returns via share buybacks, optimization of ultimate oil reserves value and exposure to exploration upside. We see material potential in our exploration portfolio located in highly prospective geological trends in Ecuador and Colombia. We believe Gran Tierra is well-positioned to navigate 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."

1 “Cash flow” refers to line item “net cash provided by operating activities” under generally accepted accounting principles in the United States of America (“GAAP”).
2 “Free cash flow” is a non-GAAP measure and does not have a standardized meaning under GAAP. Free cash flow is defined as “net cash provided by operating activities” less capital expenditures. Refer to "Non-GAAP Measures" in this press release. Forecast 2023 free cash flow of $135 million “before exploration” is equal to the Base Case midpoint cash flow of $295 million less the Base Case midpoint total capital of $230 million, with Base Case midpoint exploration-only capital of approximately $70 million added back. Forecast 2023 free cash flow of $65 million “after exploration” is equal to the Base Case midpoint cash flow of $295 million less the Base Case midpoint total capital of $230 million. Free cash flows in the table above are the midpoints of the ranges of cash flows less the midpoints of the ranges of capital expenditures for each oil price scenario.
3 Earnings before interest, taxes and depletion, depreciation and accretion (“EBITDA”) is a non-GAAP measure and does not have a standardized meaning under GAAP. Refer to "Non-GAAP Measures" in this press release.
4 “Operating netback” is a non-GAAP measures and does not have standardized meaning under GAAP. Refer to “Non-GAAP Measures” in this press release.
5 Net debt is defined as GAAP total debt before deferred financing fees less cash.

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