Gran Tierra Energy Announces Third Quarter 2009 Results
Record Quarterly Production of 12,945 Barrels of Oil Per Day, Net After Royalty, Attained
Key highlights of the quarter ended
- Increased production 209% to 12,945 barrels of oil per day (BOPD) net
after royalty (NAR) for the quarter ended September 30, 2009,
compared with 4,194 BOPD NAR for the same period in 2008;
- Reached daily production plateau target of 19,000 BOPD gross for the
Costayaco field at the end of August, ahead of schedule. In addition,
the Costayaco gross field production reached five million cumulative
barrels of oil on September 10, 2009 triggering an increase in
government royalties for Costayaco;
- Net loss for the quarter was $2.8 million and includes a foreign
exchange loss of $18.9 million, due to a 20.3 million unrealized
non-cash foreign exchange loss, offset in part by a realized foreign
exchange gain of $1.4 million;
- Funds flow from operations for the quarter was $53.1 million compared
with $17.8 million for the same period in 2008 (see table below);
- Ecopetrol's Trans-Andean oil pipeline in Southern Colombia was
disrupted between July 10, 2009 and August 10, 2009; consolidated
production averaged 4,700 BOPD NAR during this period;
- Costayaco-9 logging indicates that reservoirs lie completely within
the field's oil column; the well was subsequently tested and put on
production at approximately 2,000 BOPD gross from the lower
(Caballos) of two reservoirs;
- Gran Tierra Energy opened an office in Brazil and appointed Julio
Cesar Moreira as President of the Brazil business unit;
- Cash and cash equivalents of $151.6 million at September 30, 2009;
and
- Gran Tierra Energy remains debt free.
"During the third quarter we executed our exploration and development program and grew production to record levels in spite of a period of reduced production due to a disruption in Ecopetrol's pipeline system. In addition, we achieved our daily production target of 19,000 BOPD gross from the Costayaco field ahead of schedule, and generated strong funds flow from operations in both
Production Review
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
-------------------------------- -----------------------------
(Barrels
of Oil) Colombia Argentina Total Colombia Argentina Total
-------------------------------- -----------------------------
Gross
Production 1,364,021 104,233 1,468,254 415,203 71,242 486,445
Royalties (227,667) (11,654) (239,321) (72,762) (8,172) (80,934)
Inventory
Adjustment (29,089) (8,890) (37,979) (10,059) (9,586) (19,645)
-------------------------------- -----------------------------
Production
Net After
Royalties
(NAR) 1,107,265 83,689 1,190,954 332,382 53,484 385,866
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Barrels of
Oil Per Day
(BOPD)(NAR) 12,035 910 12,945 3,613 581 4,194
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
-------------------------------- -----------------------------
(Barrels
of Oil) Colombia Argentina Total Colombia Argentina Total
-------------------------------- -----------------------------
Gross
Production 3,555,577 302,842 3,858,419 998,967 183,601 1,182,568
Royalties (508,689) (36,105) (544,794) (168,222) (21,655) (189,877)
Inventory
Adjustment (27,359) (10,218) (37,577) (24,363) (14,371) (38,734)
-------------------------------- -----------------------------
Production
Net After
Royalties
(NAR) 3,019,529 256,519 3,276,048 806,382 147,575 953,957
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Barrels of
Oil Per Day
(BOPD)(NAR) 11,060 940 12,000 2,943 539 3,482
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Financial Review
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- -----------------------------
2009 2008 % Change 2009 2008 % Change
-------------------------------- -----------------------------
(Thousands of
U.S. Dollars)
Revenue and
Interest $ 75,354 $ 40,339 87 $167,430 $ 94,302 78
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Net income
(loss) $ (2,816) $ 22,987 (112) $(16,884) $ 36,189 (147)
-------------------------------- -----------------------------
-------------------------------- -----------------------------
(US Dollars
per Share)
Net Income
(Loss) Per
Share -
Basic $ (0.01) $ 0.20 (105) $ (0.07) $ 0.34 (121)
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Net Income
(Loss) Per
Share -
Diluted $ (0.01) $ 0.18 (106) $ (0.07) $ 0.30 (123)
-------------------------------- -----------------------------
-------------------------------- -----------------------------
Funds flow from operations (1) reconciled to net income (loss) is as
follows:
Funds flow From Operations - Three Months Ended Nine Months Ended
Non-GAAP Measure September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
------------------- -------------------
(Thousands of U.S. Dollars)
Net income (loss) $ (2,816) $ 22,987 $(16,884) $ 36,189
Adjustments to reconcile
net income (loss) to funds
flows from operations
Depletion, depreciation
and accretion 35,246 6,757 95,466 15,221
Deferred taxes (697) (6,863) (5,650) (7,729)
Stock-based compensation 1,198 418 3,483 1,265
Unrealized (gain) loss on
financial instruments (77) (5,528) 294 242
Unrealized foreign exchange loss 20,273 - 32,982 -
------------------- -------------------
Funds flows from operations $ 53,127 $ 17,771 $109,691 $ 45,188
------------------- -------------------
------------------- -------------------
(1) Gran Tierra Energy has disclosed a non-GAAP measure "funds flow from
operations" in this press release which does not have any
standardized meaning prescribed under GAAP. Management uses this
financial measure to analyze operating performance and the income
(loss) generated by Gran Tierra Energy's principal business
activities prior to the consideration of how non-cash items affect
that income, and believes that this financial measure is also useful
supplemental information for investors to analyze operating
performance and Gran Tierra Energy's financial results. Investors
should be cautioned that this measure should not be construed as an
alternative to net income (loss) or other measures of financial
performance as determined in accordance with GAAP. Gran Tierra
Energy's method of calculating this measure may differ from other
companies and, accordingly, it may not be comparable to similar
measures used by other companies. Funds flow from operations, as
presented, is based on net income (loss) adjusted for depletion,
depreciation and accretion, deferred taxes, stock based compensation,
unrealized loss (gain) on financial instruments and unrealized
foreign exchange losses.
Third Quarter 2009 Financial Highlights:
Revenue and interest increased by 87% to
Operating expenses increased by 102% to
Depletion, depreciation and accretion expenses (DD&A) for the quarter ended
General and administrative expenses (G&A) increased by 75% to
Included in the third quarter 2009 results is an
The net loss for the third quarter of 2009 was
Balance Sheet Highlights:
The company reported cash and equivalents of
Production Highlights:
Average daily consolidated light and medium crude oil production for the three months ended
Average daily Colombian production of light and medium crude oil for the three months ended
Average daily Argentine production of light and medium crude oil for the quarter ended
While production increased on a year-over-year basis, production was negatively impacted by the 32 day disruption of Ecopetrol's Trans Andean pipeline in Southern
Revised 2009 Capital Program
Gran Tierra Energy's revised capital program for 2009 is
Putumayo Basin
--------------
Gran Tierra Energy is one of the largest exploration landholders in the Putumayo Basin of Southern
Piedemonte Sur Block (100% working interest; 73,898 gross acres)
The Piedemonte Sur Block is located immediately west of the Orito Field, the largest oil field in the Putumayo Basin. Environmental licensing and rig contracting for an exploration well in 2010 has begun.
Piedemonte Norte Block (100% working interest; 78,742 gross acres)
The Piedemonte Norte Block lies southwest of the Chaza Block where the Costayaco field is located. A 120 Km 3D seismic program is planned for this block in 2010 which will be followed by the drilling of an exploration well.
Rumiyaco Block (100% working interest; 82,624 gross acres)
The Rumiyaco Block is south of the Piedemonte Sur Block and extends to the
Chaza Block (100% working interest; 80,242 gross acres)
In August, Gran Tierra Energy successfully completed the drilling and logging of Costayaco-9, a vertical development well located 1,950 feet southwest of Costayaco-8. Well logs indicate that the T Sandstone of the Villeta formation lies completely within the field's oil column and that the Caballos formation encountered an oil-water contact consistent with the established Caballos oil-water contact for the field. The well has since been tied in to new infrastructure and is currently producing approximately 2,000 BOPD from only the Caballos formation; the T Sandstone will be produced at a later time once the lower reservoir is depleted.
Costayaco-10 was spudded on
Costayaco field's production plateau of 19,000 BOPD gross was achieved ahead of schedule in August. In addition, the Costayaco field reached the five million cumulative barrels of oil production milestone on
In the fourth quarter of 2009, the Dantayaco-1 exploration well (previously named Rio Mocoa) is scheduled to be drilled to test an independent prospect west of the Costayaco field. Environmental licensing and rig contracting has been initiated for drilling of a second prospect, Moqueta, in early 2010.
Guayuyaco Block (70% working interest; 52,366 gross acres)
The Guayuyaco Block contains both the Guayuyaco and Juanambu producing oil fields. A development well, Juanambu-2, has been added to the 2009 work program and is scheduled to spud late in the fourth quarter of 2009.
Azar Block (40% working interest; 51,639 gross acres)
The two seismic programs were completed on the Azar Block, a 40 kilometer 2D program and a 50 square kilometer 3D program, and interpretation is underway.
Mecaya Block (15% working interest; 74,128 gross acres)
The exploration well (Mecaya-2) that was planned for the third quarter of 2009 has been deferred to 2010.
No exploration activities are planned for the
Llanos Basin
------------
San
The company has begun the process to relinquish the San
Garibay Block (50% non-operated working interest; 75,936 gross acres)
The 110 square kilometer 3D seismic program to further define the exploration potential of the area has been completed.
Magdalena Basin
---------------
Gran Tierra Energy is the operator of three blocks in the Magdalena Basin encompassing 201,293 gross acres, or 58,396 net acres; two in the Middle Magdalena Basin (Rio Magdalena and Talora Blocks) and one in the Lower Magdalena (Magangue Block).
Rio
A 75 square kilometer 3D seismic program has been completed along with the long-term production test of the Popa-2 gas-condensate discovery.
Talora Block (20% working interest; 108,334 gross acres)
Approval has been sought from the National Hydrocarbon Agency of
Magangue Block (37.8% working interest; 20,647 gross acres)
Production is currently shut in while liquid metering is being installed. No exploration activities are planned for the Magangue Block during 2009.
Catatumbo Basin
---------------
The Catatumbo Basin is an extension of the Maracaibo basin in
Catguas Block Area A (50% working interest, 113,792 acres gross)
No work is scheduled in Catguas Area A in 2009.
Catguas Block Area B (85% working interest, 279,358 acres gross):
The well re-entry and two exploration well commitments scheduled for the second half of 2009 have been deferred until 2010.
Blocks 122 and 128 (100% working interest and operator)
The expanded environmental impact assessments for Blocks 122 and 128 have been submitted to the Peruvian government for review and approval. Consultations with communities in the region have concluded.
These assessments are in preparation for a 500 kilometer 2D seismic survey expected to start in the first quarter of 2010 over 16 principal leads amongst the 24 leads identified on the two blocks. Stratigraphic test drilling on up to four prospects is expected to take place in 2010. In addition, a pre-feasibility engineering field development study has been completed.
Gran Tierra Energy is the largest exploration landholder in the Noroeste Basin of northern
In
Conference Call Information:
Gran Tierra Energy Inc. will host its third quarter 2009 results conference call on
President and CEO
To pre-register for this conference call, please visit:
https://www.theconferencingservice.com/prereg/key.process?key=PQUBDX7UL
Interested parties may access the conference call by dialing 1-888-713-4213 (domestic) or 617-213-4865 (international), pass code 17088675. The call will also be available via web cast at www.grantierra.com, www.streetevents.com, or www.fulldisclosure.com. The web cast will be available on Gran Tierra Energy's website until the next earnings call.
If you are unable to participate, an audio replay of the call will be available beginning two hours after the call until
Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in
Gran Tierra Energy's Securities and Exchange Commission filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Forward Looking Statements:
The statements in this news release regarding Gran Tierra Energy's belief that the company is positioned to support future growth and fund its ongoing development and exploration program, its planned operations described under the operation updates for each of the countries in which the company operates, together with all other statements regarding expected or planned development, testing, drilling or exploration, or that otherwise reflect expected future results or events, are forward looking statements or financial outlook (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations and the
Basis of Presentation of Financial Results:
Gran Tierra Energy's financial results are reported in
Gran Tierra Energy Inc.
Condensed Consolidated Statements of Operations and Retained Earnings
(Accumulated Deficit) (Unaudited)
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------
2009 2008 2009 2008
---------------------------------------------------
REVENUE AND OTHER INCOME
Oil and natural
gas sales $ 75,171 $ 40,082 $ 166,606 $ 93,873
Interest 183 257 824 429
---------------------------------------------------
75,354 40,339 167,430 94,302
---------------------------------------------------
EXPENSES
Operating 9,099 4,513 25,063 10,766
Depletion,
depreciation and
accretion 35,246 6,757 95,466 15,221
General and
administrative 7,076 4,036 19,226 12,810
Derivative financial
instruments
(gain) loss (77) (4,475) 207 2,987
Foreign exchange
(gain) loss 18,867 (1,351) 32,353 (1,734)
---------------------------------------------------
70,211 9,480 172,315 40,050
---------------------------------------------------
INCOME (LOSS) BEFORE
INCOME TAXES 5,143 30,859 (4,885) 54,252
Income tax expense (7,959) (7,872) (11,999) (18,063)
---------------------------------------------------
NET INCOME (LOSS) AND
COMPREHENSIVE INCOME
(LOSS) (2,816) 22,987 (16,884) 36,189
RETAINED EARNINGS
(ACCUMULATED DEFICIT),
BEGINNING OF PERIOD (7,084) (3,309) 6,984 (16,511)
---------------------------------------------------
RETAINED EARNINGS
(ACCUMULATED DEFICIT),
END OF PERIOD $ (9,900) $ 19,678 $ (9,900) $ 19,678
---------------------------------------------------
---------------------------------------------------
NET INCOME (LOSS)
PER SHARE - BASIC $ (0.01) $ 0.20 $ (0.07) $ 0.34
NET INCOME (LOSS)
PER SHARE - DILUTED $ (0.01) $ 0.18 $ (0.07) $ 0.30
WEIGHTED AVERAGE
SHARES OUTSTANDING
- BASIC 242,232,717 114,324,583 240,585,878 105,509,871
WEIGHTED AVERAGE
SHARES OUTSTANDING
- DILUTED 242,232,717 128,303,724 240,585,878 119,733,940
Gran Tierra Energy Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Thousands of U.S. Dollars)
September 30, December 31,
--------------------------
2009 2008
--------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 151,599 $ 176,754
Restricted cash 1,892 -
Accounts receivable 77,657 7,905
Inventory 3,375 999
Taxes receivable 1,046 5,789
Prepaids 1,001 1,103
Derivative financial instruments - 233
Deferred tax assets 1,299 2,262
-------------------------
Total Current Assets 237,869 195,045
-------------------------
Oil and Gas Properties (using the
full cost method of accounting)
Proved 362,256 380,855
Unproved 362,825 384,195
-------------------------
Total Oil and Gas Properties 725,081 765,050
Other capital assets 2,852 2,502
-------------------------
Total Property, Plant and Equipment 727,933 767,552
-------------------------
Other Long Term Assets
Deferred tax assets 3,940 10,131
Other long-term assets 1,067 1,315
Goodwill 98,210 98,582
--------------------------
Total Other Long Term Assets 103,217 110,028
-------------------------
Total Assets $ 1,069,019 $ 1,072,625
-------------------------
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 13,881 $ 21,134
Accrued liabilities 23,733 12,841
Derivative financial instruments 61 -
Taxes payable 11,124 28,163
Deferred tax liability - 100
Asset retirement obligation 290 -
-------------------------
Total Current Liabilities 49,089 62,238
-------------------------
Deferred tax liability 233,207 213,093
Deferred remittance tax 1,281 1,117
Asset retirement obligation 4,001 4,251
-------------------------
Total Long Term Liabilities 238,489 218,461
-------------------------
Commitments and Contingencies
Shareholders' Equity
Common shares 608 226
(214,865,802 and 190,248,384 common shares
and 27,447,637 and 48,238,269 exchangeable
shares, par value $0.001 per share, issued
and outstanding as at September 30, 2009
and December 31, 2008, respectively)
Additional paid in capital 762,190 753,236
Warrants 28,543 31,480
Retained earnings (accumulated deficit) (9,900) 6,984
-------------------------
Total Shareholders' Equity 781,441 791,926
-------------------------
Total Liabilities and Shareholders' Equity $ 1,069,019 $ 1,072,625
-------------------------
-------------------------
Gran Tierra Energy Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Thousands of U.S. Dollars)
Nine Months Ended
September 30,
-------------------------
2009 2008
-------------------------
Operating Activities
Net income (loss) $ (16,884) $ 36,189
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depletion, depreciation and accretion 95,466 15,221
Deferred taxes (5,650) (7,729)
Stock based compensation 3,483 1,265
Unrealized loss on financial instruments 294 242
Unrealized foreign exchange loss 32,982 -
Settlement of asset retirement obligations (52) -
Net changes in non-cash working capital
Accounts receivable (68,633) (26,584)
Inventory (286) 217
Prepaids 102 (48)
Accounts payable and accrued liabilities 6,501 6,967
Taxes receivable and payable (12,296) 18,705
-------------------------
Net cash provided by operating activities 35,027 44,445
-------------------------
Investing Activities
Restricted cash (1,892) -
Oil and gas property and other
capital asset expenditures (65,595) (26,587)
Proceeds from disposition of oil
and gas property 4,800 -
Long term assets and liabilities 248 (30)
-------------------------
Net cash used in investing activities (62,439) (26,617)
-------------------------
Financing Activities
Proceeds from issuance of common stock 2,257 21,743
-------------------------
Net cash provided by financing activities 2,257 21,743
-------------------------
Net (decrease) increase in cash
and cash equivalents (25,155) 39,571
Cash and cash equivalents, beginning of period 176,754 18,189
-------------------------
Cash and cash equivalents, end of period $ 151,599 $ 57,760
-------------------------
-------------------------
Cash $ 66,980 $ 22,165
Term deposits 84,619 35,595
-------------------------
Cash and cash equivalents, end of period $ 151,599 $ 57,760
-------------------------
-------------------------
Supplemental cash flow disclosures:
Cash paid for taxes $ 27,896 $ 9,701
-------------------------
-------------------------
Non-cash investing activities:
Non-cash working capital related to
capital additions $ 8,233 $ 13,574
-------------------------
-------------------------
For further information: For media and investor inquiries please contact Dave Feick, Equicom Group, (866) 973-4873, (403) 218-2839, info@grantierra.com