Gran Tierra Energy and Solana Resources Sign Agreement to Combine to Create a Premier International Oil and Gas Exploration and Production Company



    
    Companies to Host Joint Investor Conference Call on Tuesday July 29, 2008
    at 11:00 a.m. Eastern

    
    CALGARY, Alberta, July 29 /CNW/ -- Gran Tierra Energy Inc. (Amex:   GTE;
TSX: GTE) and Solana Resources Limited (TSX-V: SOR; AIM: SORL) announced today
that they have entered into a definitive agreement providing for the business
combination of Gran Tierra Energy Inc. and Solana Resources Limited.  The
transaction is expected to create an exploration and production company with a
significantly increased operating scale and balance sheet.
    Mr. Dana Coffield, President and Chief Executive Officer of Gran Tierra,
will continue as the President and Chief Executive Officer of the combined
company, while Mr. J. Scott Price, President and Chief Executive Officer of
Solana, will join the board of directors of the combined company.  The board
of directors will be comprised of seven members including the current
directors of Gran Tierra: Jeffrey Scott, Walter Dawson, Verne Johnson, Nick
Kirton, and Dana Coffield, as well as Scott Price, and the current Chairman of
the Solana board of directors, Mr. Ray Antony.  Mr. Scott, Chairman of the
Gran Tierra board of directors, will maintain his position as Chairman.
    Commenting on the transaction Mr. Coffield stated, "We are very pleased
to make this announcement and we expect the transaction will create a much
more substantial company in a consolidating global industry while preserving
Gran Tierra's operating leadership.  The combination creates a company with a
100 percent working interest in one of the most important oil discoveries in
Colombia in recent years, the Costayaco field.  The anticipated production and
cash flow growth from Colombia will fund continued exploration on the
resulting company's combined land position, in addition to increasing the
capability to undertake much larger and material new venture initiatives in
the future."
    Mr. Price stated, "The combination of the two companies will not only
consolidate a premium light oil asset in Colombia, but will also launch a
substantive, well financed, South American focused entity with an enviable
land position and a portfolio of opportunities across the risk spectrum.  We
believe this transaction will result in significant value accruing from the
asset consolidation and resultant economies of scale."
    
    Summary of the Transaction
    
    Under the terms of the Agreement, each Solana shareholder will receive
either (i) 0.9527918 of a common share of Gran Tierra or; (ii) 0.9527918 of a
common share of a Canadian subsidiary of Gran Tierra (an "Exchangeable Share")
for each common share of Solana held, which represents a premium of
approximately 14.1 % to the 20 day weighted average trading price to July 28,
2008 of the Solana shares on the TSX Venture Exchange and Gran Tierra's July
28, 2008, closing price on the Toronto Stock Exchange of CAD $5.73.  The
shares of the Canadian subsidiary of Gran Tierra: (i) will have the same
voting rights, dividend entitlements and other attributes as Gran Tierra
common stock; (ii) will be exchangeable, at each shareholder's option, on a
one-for-one basis, into Gran Tierra common stock; and (iii) subject to
compliance with the listing requirements of the Toronto Stock Exchange, will
be listed on the Toronto Stock Exchange. The Exchangeable Shares will
automatically be exchanged for Gran Tierra common stock five years from
closing, and in certain other events.
    The transaction will be completed pursuant to a statutory plan of
arrangement pursuant to the Business Corporations Act (Alberta).  Upon
completion of the transaction, Solana will become an indirect wholly-owned
subsidiary of Gran Tierra.  The plan of arrangement will be accomplished on a
tax deferred basis in Canada, but may be a taxable transaction for non-
Canadian holders of Solana securities.  On a fully diluted basis, upon the
closing of the plan of arrangement, Solana securityholders will own
approximately 49% of the combined company and Gran Tierra securityholders will
own approximately 51% of the combined company.
    The proposed transaction is subject to regulatory, stock exchange, court
and shareholder approvals.  Gran Tierra and Solana expect to hold shareholder
meetings in October 2008.  A joint proxy statement and management information
circular is expected to be mailed to shareholders of the companies in
September 2008.  The parties have agreed to pay each other a termination fee
of $21 million in certain circumstances and an expense reimbursement fee of
$1.5 million in certain other circumstances.
    Complete details of the plan of arrangement are set out in the agreement,
which will be filed by Solana on SEDAR (www.sedar.com) and Gran Tierra on
SEDAR and with the Securities and Exchange Commission (www.sec.gov).
    Following the offer becoming or being declared unconditional in all
respects and as soon as it is able to do so (subject to any applicable
requirements of the AIM Rules), Gran Tierra will procure that Solana will
apply to the London Stock Exchange for the cancellation of the admission of
Solana shares to trading on AIM.  A notice period of not less than 20 business
days prior to the cancellation of trading will take effect upon the offer
becoming or being declared unconditional in all respects.  Cancellation of
admission to trading on AIM is likely to reduce significantly the liquidity
and marketability of any Solana shares in respect of which the offer has not
been accepted.  Gran Tierra will also seek to have the Solana shares delisted
from the TSX Venture Exchange and to cease Solana being a reporting issuer
under applicable Canadian securities laws.
    
    Highlights of the Combined Entity
    
    Management of Gran Tierra and Solana expect that the combination will
provide many benefits, including the following:
    -- Creation of a stronger South American oil producer with significant
producing assets in Colombia;
    -- Significant exploration portfolio properties in each of Colombia,
Argentina and Peru;
    -- Consolidation of 100% of the working interest in the Costayaco field
(95% economic interest excluding government royalties), a major light oil
discovery made in Colombia in 2007, currently under delineation and
development;
    -- An entity with a pro-forma enterprise value of approximately $1.35
billion based on Gran Tierra's stock price on July 28, 2008, which is expected
to result in enhanced liquidity and a more competitive cost of capital; and
    -- Strong pro-forma cash flows which are expected to allow the combined
entity to internally finance the exploration and development of the Costayaco
field, pursue other exploration opportunities on the combined company's large
undeveloped land base in Colombia, Argentina and Peru, and pursue additional
new venture growth opportunities.
    
    Key Pro Forma Operating and Financial Information for the Combined Entity
    
    Some of the key pro forma and financial metrics for the combined company
include the following:(1)

    
    Estimated Combined 2008 Exit Production         15,000 boe/d
    Pro-forma enterprise value (2)                  $1.35 billion
    Fully diluted shares outstanding                268.3 million
    Pro-forma proven reserves(3)                    18.4 MMboe
    Pro-forma land base(4)
           Colombia                                 1.5 million acres
           Argentina                                1.3 million acres
           Peru                                     3.4 million acres
    

    
    Notes:
    (1) Represents current estimates of Gran Tierra and Solana management and
        is disclosed net after all royalties; "boe/d" is barrels of oil
        equivalent per day.
    (2) Pro-forma enterprise value is equal to pro-forma fully diluted market
        capitalization plus estimated pro-forma net debt; pro-forma market
        capitalization is calculated based on July 28, 2008 Gran Tierra
        closing share price on the Toronto Stock Exchange of CAD $5.73
        converted at today's closing CAD/USD exchange rate
        of 1.0226; estimated net debt is calculated as debt less working
        capital and proceeds from the exercise of in-the-money dilutive
        instruments.
    (3) Represents the sum of the independent reserves reports for Gran Tierra
        and Solana as at December 31, 2007, updated to reflect the mid-year
        2008 reserve report for Costayaco prepared by GLJ Petroleum
        Consultants at the request of Gran Tierra, reported in millions of
        barrels of oil equivalent "MMboe" net after royalties.
    (4) Represents the approximate net acreage for Gran Tierra and Solana,
        based on management's current estimates.
    
    Mr. Glenn Van Doorne, Chief Operating Officer of Solana, a Petroleum
Geologist, and Mr. Dana Coffield, President and CEO of Gran Tierra, a
Geologist, are the qualified persons who have reviewed the technical
information contained in this news release.
    
    Advisors
    
    Blackmont Capital Inc. is acting as exclusive financial advisor to Gran
Tierra with respect to the transaction and has verbally advised the board of
directors of Gran Tierra that it is of the opinion, as of the date hereof,
that the consideration to be offered by Gran Tierra pursuant to the proposed
combination is fair, from a financial point of view, to Gran Tierra
shareholders.
    Tristone Capital Inc. is acting as exclusive financial advisor to Solana
with respect to the transaction and  has verbally advised the board of
directors of Solana that it is of the opinion, as of the date hereof, that the
consideration to be received by Solana shareholders is fair, from a financial
point of view, to Solana shareholders.
    
    Conference Call Information:
    
    Gran Tierra and Solana will hold a joint conference call to review the
transaction on Tuesday, July 29, 2008 at 11:00 a.m. Eastern Daylight Time. The
call will be hosted by Mr. Dana Coffield, President and Chief Executive
Officer of Gran Tierra, and Mr. Scott Price, President and Chief Executive
Officer of Solana Resources. Interested parties may access the conference call
by dialing (888) 713-4213 (domestic) or (617) 213-4865 (international), pass
code # 95621291.  The call will also be available via web cast at
www.grantierra.com, or http://www.streetevents.com, or
http://www.fulldisclosure.com
    If you are unable to participate, an audio replay of the call will be
available beginning two hours after the call and will be available until 11:59
p.m. on August 4, 2008, by dialing (888) 286-8010 (domestic) or (617) 801-6888
(international) using confirmation pass code 74702931.
    
    About Gran Tierra Energy Inc.:
    
    Gran Tierra is an international oil and gas exploration and production
company operating in South America, headquartered in Calgary, Canada and is
incorporated in the United States. The company holds interests in producing
and prospective properties in Colombia, Argentina and Peru. The company has a
strategy that focuses on growing a portfolio of producing properties, plus
production enhancement and exploration opportunities to provide a base for
future growth. Gran Tierra trades on the American Stock Exchange under the
symbol "GTE" and on the Toronto Stock Exchange under the symbol "GTE".
    Additional information concerning Gran Tierra is available at
www.grantierra.com, on SEDAR (www.sedar.com) and with the Securities and
Exchange Commission (www.sec.gov).
    
    About Solana Resources Limited:
    
    Solana is an international resource company engaged in the acquisition,
exploration, development and production of oil and natural gas. The company's
properties are located in Colombia, South America and are held through its
wholly owned subsidiary, Solana Petroleum Exploration (Colombia) Limited. The
Company is headquartered in Calgary, Alberta, Canada.  Solana trades on the
TSX Venture Exchange under the symbol "SOR" and on the AIM Exchange under the
symbol "SORL".
    Additional information concerning Solana is available at
www.solanaresources.com and on SEDAR (www.sedar.com)
    
    Barrels of Oil Equivalent
    
    Barrels of oil equivalent (boe) is calculated using the conversion factor
of 6,000 cubic feet ("6Mcf") of natural gas being equivalent to one barrel of
oil.  Boes may be misleading, particularly if used in isolation.  A boe
conversion ratio of 6 Mcf per barrel is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
    
    Forward Looking Statements:
    
    This press release includes "forward-looking statements" within the
meaning of the U.S. federal and Canadian securities laws, including Canadian
Securities Administrators' National Instrument 51-102 Continuous Disclosure
Obligations and the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements are commonly identified by such terms and phrases
as "would", "may", "will", "anticipates", "expects" or "expected to" and other
terms with similar meaning indicating possible future events or actions or
potential impact on the businesses or shareholders of Gran Tierra Energy Inc.
and Solana Resources Limited.  Such statements include, but are not limited
to, statements about the anticipated benefits, savings and synergies of the
plan of arrangement, including future financial and operating results, the
plans, objectives, expectations and intentions of the combined company, the
future development of the combined company's business, and the contingencies
and uncertainties to which Gran Tierra and Solana may be subject prior to
closing the transaction and other statements that are not historical facts.
The press release also includes information that has not been reviewed by the
independent auditors of Gran Tierra or Solana. There is no assurance that the
proposed transaction contemplated in this press release will be completed at
all, or completed upon the same terms and conditions described.
    The following factors, among others, could cause actual results to differ
materially from those set forth in the forward-looking statements: the ability
to obtain required approvals of the plan of arrangement on the proposed terms
and schedule; the failure of the shareholders of Solana to approve the plan of
arrangement or the shareholders of Gran Tierra to approve the issuance of the
Gran Tierra shares to the holders of Solana securities in the proposed
transaction; the risk that the businesses will not be integrated successfully;
the risk that the cost savings and any revenue synergies from the plan of
arrangement may not be fully realized or may take longer to realize than
expected; and disruption from the transaction making it more difficult to
maintain relationships with regulatory agencies, employees or suppliers.
Additional factors that could cause results to differ materially from those
described in the forward-looking statements can be found in the periodic
reports filed by Gran Tierra with the Securities and Exchange Commission and
available at the Securities and Exchange Commission's internet site
www.sec.gov and on SEDAR at www.sedar.com, as well as Solana's continuous
disclosure documents filed on Solana's SEDAR profile at www.sedar.com.
    All forward-looking statements in this press release are expressly
qualified by information contained in each company's filings with regulatory
authorities and subject to their obligations under applicable securities laws,
neither company undertakes to publicly update forward-looking statements,
whether as a result of new information, future events or otherwise.
    
    Additional Information
    
    Shareholders are urged to read the joint proxy statement/management
information circular regarding the proposed transaction and the registration
statement filed on Form S-3 by Gran Tierra when they become available, because
they will contain important information. Shareholders will be able to obtain a
free copy of the joint proxy statement/management information circular, as
well as other filings including the registration statement on Form S-3
containing information about Gran Tierra, without charge, at the Securities
and Exchange Commission's internet site www.sec.gov.  Copies of the joint
proxy statement and the filings with the Securities and Exchange Commission
that will be incorporated by reference in the joint proxy statement and
registration statement on Form S-3 can also be obtained, without charge, by
directing a request to Gran Tierra at 1-800-916-4873.
    The respective directors and executive officers of Gran Tierra and Solana
and other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction.  Information regarding Gran
Tierra's directors and executive officers is available in the 2007 Annual
Report on Form 10-K/A filed with the Securities and Exchange Commission by
Gran Tierra on May 12, 2008, and information regarding Solana's directors and
executive officers will be included in the joint proxy statement/management
information circular.  Other information regarding the participants in the
proxy solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the joint proxy
statement and other relevant materials to be filed with the Securities and
Exchange Commission when they become available.
    No regulatory authority has approved or disapproved the content of this
release.  Neither the TSX Venture Exchange nor the Toronto Stock Exchange
accepts responsibility for the adequacy or accuracy of this release.

    
     Gran Tierra Energy Inc.    Solana Resources Limited   Al Palombo
     Dana Coffield              J. Scott Price             Cameron Associates
     President & Chief          President & Chief          Investor Relations
     Executive Officer          Executive Officer
     (800) 916-4873             (403) 770-1822             (212) 554-5488
     info@grantierra.com        jsp@solanaresources.com    al@cameronassoc.com

    




For further information:

For further information: Dana Coffield, President & Chief Executive
Officer of Gran Tierra Energy Inc., 1-800-916-4873, info@grantierra.com; or J.
Scott Price, President & Chief Executive Officer of Solana Resources Limited,
+1-403-770-1822, jsp@solanaresources.com; or Al Palombo, Investor Relations of
Cameron Associates, +1-212-554-5488, al@cameronassoc.com Web Site:
http://www.grantierra.com                 http://www.solanaresources.com

Organization Profile

Gran Tierra Energy Inc.

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SOLANA RESOURCES LIMITED

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