8 exploration wells and 11 development and appraisal wells in Colombia,
Brazil, Peru and Argentina
CALGARY, Dec. 13, 2012 /CNW/ - Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE MKT: GTE) , (TSX:
GTE), a company focused on oil exploration and production in South America,
today announced a 2013 capital spending program of $363 million for its
exploration and production development operations in Colombia, Brazil,
Peru and Argentina. The capital spending program allocates $202
million for drilling, $65 million for facilities, equipment and
pipelines, $93 million for seismic activities and $3 million associated
with corporate activities. The budget currently contemplates the
drilling of 10 wells in Colombia, 6 wells in Argentina, 2 wells in
Brazil and 1 well in Peru. Approximately 50% of the drilling budget is
for development and appraisal drilling, and approximately 50% is for
exploration drilling. The approved 2013 capital spending program also
includes funds for 1,148km of 2D and 308km2 of 3D seismic acquisition programs in Colombia, Peru, Argentina and
Brazil, primarily in preparation for additional exploration and
production drilling operations in 2013 and beyond.
Excluding potential exploration success, Gran Tierra Energy is expecting
2013 production to average 27,000 barrels of oil equivalent per day ("BOEPD") gross working interest with no pipeline disruptions. Production is
expected to average approximately 20,000 BOEPD net after royalty (NAR)
before inventory adjustments assuming a 10% contingency for potential
disruptions and $90 average price for Brent. Approximately 96% of this
production consists of light oil, with the balance consisting of
Gran Tierra Energy had $128 million in cash and equivalents and no debt
at the end of the third quarter 2012. Based on current oil prices, the
2013 work program and budget is expected to be funded primarily from
cash flows from operations, cash on hand and potential periodic draws
on our credit facility.
"Gran Tierra Energy will continue executing its current strategy through
2013, a strategy that has consistently grown land, reserves and
production year over year for the last seven years. For the first time,
we will have active drilling and development activities in all four
countries of operations. Our focus on execution sees us entering 2013
with a robust drilling portfolio with a balanced mix of development
drilling to maintain our base of reserves and production, and appraisal
and exploration drilling to grow that base," said Dana Coffield,
President and Chief Executive Officer of Gran Tierra Energy. "This
singular focus on execution has allowed us to not only grow year over
year, but allowed us to do so with an exceptionally strong balance
sheet," concluded Coffield.
The Colombia capital budget for 2013 is $224 million and is expected to
include drilling 4 gross exploration wells and 6 gross appraisal and
development wells. Gran Tierra Energy's oil exploration drilling
program will target prospects in the Putumayo Basin, while development
drilling will focus on the Moqueta and Costayaco oil fields, with total
drilling expenditures of $119 million. Facilities work, including
continued electrification of the Costayaco and Moqueta fields, water
injection facility work at Costayaco and Moqueta, and a production
battery at the Jilguero oil discovery in the Llanos Basin, is expected
to be $39 million. Geological and geophysical ("G&G") work consisting of 308km2 of 3D seismic and 756km of 2D seismic, along with other costs, is
expected to be $66 million. G&G work is planned for the Cauca-6,
Cauca-7, Garibay, Piedmonte Norte, Piedmonte Sur, Putumayo-1,
Putumayo-10 and Magdelena Blocks to mature leads and prospects for
drilling in 2013 and beyond.
Chaza Block (100% working interest and operator)
With the continued successful appraisal of the Moqueta oil discovery
throughout 2012, plans are in place to continue drilling in the field
with the Moqueta-9, -10 and -11 appraisal wells. Gran Tierra Energy is
continuing to pursue its application for a global development licence,
which is expected to be granted in the third quarter of 2013. The
Moqueta Deep exploration well is targeting structures analogous to
those encountered in Moqueta-7, located south of the main Moqueta
field, and is expected to be drilled in the third quarter of 2013.
Gran Tierra Energy continues to see positive response from its water
injection program at the Costayaco field and intends to drill the
Costayaco-18 water injector well in the second quarter of 2013 along
with the Costayaco-19 production well in the third quarter of 2013.
Guayuyaco Block (70% working interest and operator, Ecopetrol 30%)
Gran Tierra Energy intends to drill the Miraflor West-1 oil exploration
well on the Guayuyaco Block in the second quarter of 2013. The company
also intends to begin drilling the Guayuyaco Norte oil exploration well
on the Guayuyaco Block in the fourth quarter of 2013.
Putumayo-1 Block (55% working interest and operator, Lewis Energy 45%)
Gran Tierra Energy intends to drill the Putumayo-1 oil exploration well
on the Putumayo-1 Block in the fourth quarter of 2013.
Garibay Block (50% non-operated working interest; CEPCOLSA 50% and
Gran Tierra Energy, together with Compania Espanola de Petroleos, S.A.U.
("CEPCOLSA"), plans to convert the Jilguero-2 well to a water injection well in
the first quarter of 2013.
Llanos-22 Block (45% non-operated working interest; CEPCOLSA 50% and
Gran Tierra Energy, together with CEPCOLSA, plans to drill an oil
appraisal well on the Llanos-22 Block in the third quarter of 2013.
The Peru budget of $38 million includes drilling one gross exploration
well. Drilling costs are anticipated to be $21 million; approximately
$17 million is budgeted for seismic acquisition, facility costs and
Block 95 (100% working interest and operator subject to approval)
Gran Tierra Energy is scheduled to spud the Bretaña Norte 95-2-1XD
exploration well in Block 95 in December, 2012, and will continue
drilling into the first quarter of 2013. The contract area contains the
Bretaña-1 well, which was drilled in 1974 and tested 18° API gravity
oil on natural flow rates of approximately 807 barrels of oil per day.
Blocks 107 and 133 (100% working interest and operator)
A 392km infill 2D seismic program on Block 107 in the Ucayali Basin is
planned for 2013 in preparation for oil exploration drilling in 2014.
Gran Tierra Energy is planning on drilling one gross exploration well,
four gross development wells and one gross appraisal well. Out of the
$31 million total capital budget for Argentina, $19 million will be
spent on drilling. In addition, the company is planning to conduct
seven workovers and three conversion projects to change producing wells
into water injection wells. The development wells and workovers will
be concentrated in the Puesto Morales field of the Neuquen Basin in an
effort to grow production from these assets.
Santa Victoria (50% working interest and operator; Apache 50%)
Gran Tierra Energy is evaluating the potential to drill a gas
exploration well in 2013. Gran Tierra Energy, as operator, is
interested in testing the gas potential of the Devonian reservoirs, a
proven play in nearby wells, as well as the unconventional gas resource
potential of the Los Monos formation, the primary source rock for the
Puesto Morales (100% working interest and operator)
Development and appraisal drilling is expected to begin in the second
quarter of 2013 in the Puesto Morales field in the Nequen Basin.
Gran Tierra Energy holds interests in four blocks in the onshore
Recôncavo Basin and one block in the offshore Camamu-Almada Basin. The
Brazil capital budget for 2013 is $67 million. Gran Tierra Energy plans
to drill two gross horizontal exploration wells in the Recôncavo Basin
along with additional completion work on the GTE-3 and GTE-4 producing
wells in the Tiê field. The drilling portion of the budget is expected
to be $43 million. Approximately $18 million is intended to be
dedicated to pipelines and facilities and an additional $6 million for
G&G work and other costs.
Brazil's exploration program could increase to six total exploration
wells in 2013 if the onshore resource play concept is tested
successfully with Gran Tierra Energy's initial horizontal drilling
program. Gran Tierra Energy has identified between 20 and 40 drilling
locations on its existing land in the Recôncavo Basin.
REC-T-155 (100% working interest and operator)
Planning for the 1-GTE-07-BA horizontal sidetrack oil exploration well
is continuing, with operations expected to commence in first quarter of
REC-T-129 (100% working interest and operator)
Planning for the horizontal sidetrack of the 1-GTE-02-BA oil exploration
well is continuing, with sidetrack operations expected to commence in
first quarter of 2013.
BM-CAL-7 Block (10% non-operated working interest; Statoil 30% is the
operator; Petrobras 60%)
Gran Tierra Energy, along with its partners, is conducting evaluation
work through 2013 on the BM-CAL-7 Block to mature prospects for
drilling expected to take place in 2014.
Testing of oil bearing reservoirs in the Moqueta-7 well in the Chaza
Block in Colombia is continuing, with results expected before year-end
The Moqueta-8 appraisal well in the Chaza Block in Colombia spud on
November 27, 2012 and is drilling ahead, with total depth ("TD") on the south flank of the Moqueta field expected to be reached before
The Costayaco-17 well in the Chaza Block in Colombia spud on November
23, 2012. This well is being drilled as a production well at the
northern end of the Costayaco field to drain the northern limits of the
The Florida West-1 exploration well in the Sierra Nevada Block in
Colombia spud on November 27, 2012 and is drilling ahead, with TD
expected to be reached before year-end 2012.
The 1-GTE-05HP horizontal well in Block 142 onshore Recôncavo Basin of
Brazil has begun drilling, with results expected in first quarter of
Testing of oil bearing reservoirs in PMN-1117 horizontal multi-stage
fracture stimulation well in the Puesto Morales Block in Argentina is
continuing, with results expected before year-end 2012.
Corporate production, NAR before inventory changes and losses, for the
month of November 2012 averaged approximately 18,200 BOEPD. Oil
delivery restrictions due to disruptions in the Ecopetrol-operated
Trans-Andean oil pipeline in Colombia (the "OTA pipeline") impacted production and deliveries in November, and are expected to
continue to do so through December.
Gran Tierra Energy is taking the following actions to help mitigate
future pipeline disruptions: 1) entering into additional trucking
contracts to potentially evacuate all production capacity, 2) working
through Ecopetrol to secure additional pipeline transportation capacity
through Ecuador pipeline options, and 3) evaluating additional storage
options to enable more continuous production during pipeline
About Gran Tierra Energy Inc.
Gran Tierra Energy is an international oil and gas exploration and
production company, headquartered in Calgary, Canada, incorporated in
the United States, trading on the NYSE MKT Exchange (GTE) and the
Toronto Stock Exchange (GTE), and operating in South America. Gran
Tierra Energy holds interests in producing and prospective properties
in Argentina, Colombia, Peru, and Brazil. Gran Tierra Energy has a
strategy that focuses on establishing a portfolio of producing
properties, plus production enhancement and exploration opportunities
to provide a base for future growth.
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.
Additional information concerning Gran Tierra Energy is available at www.grantierra.com, on SEDAR www.sedar.com) and with the Securities and Exchange Commission (www.sec.gov).
Forward-Looking Statements and Advisories
This news release contains certain forward-looking information and
forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian
Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995.
The use of the words "expected", "anticipated", "scheduled",
"targeting", "potential", "planned", "plans", "continue", "intends",
"will", "contemplates" and variations of these and similar words
identify forward-looking statements. In particular, but without
limiting the foregoing, this news release contains forward-looking
statements regarding, among other things, Gran Tierra Energy's planned
and expected capital spending program for 2013; expectations respecting
drilling, drilling locations, testing, well conversions, sidetrack
operations, construction, water injection, exploration activities,
acquisition of seismic, production and timing of activities and
results; resource potential in South America; expected costs and
allocation of the capital budget; anticipated funding of the capital
program; continuation of the company's current strategy; granting of
the company's application for a global development licence; and effects
of disruptions in the OTA pipeline in Colombia.
The forward-looking statements contained in this news release reflect
several material factors and expectations and assumptions of Gran
Tierra Energy including, without limitation, assumptions relating to
field size and recoverability, the accuracy of testing and production
results and seismic data; the effects of certain drilling techniques;
rig availability; cost and price estimates; and the general continuance
of current or, where applicable, assumed operational, regulatory and
industry conditions. Gran Tierra Energy believes the material factors,
expectations and assumptions reflected in the forward-looking
statements are reasonable at this time but no assurance can be given
that these factors, expectations and assumptions will prove to be
The forward-looking statements contained in this news release are
subject to risks, uncertainties and other factors that could cause
actual results or outcomes to differ materially from those contemplated
by the forward-looking statements, including, among others: unexpected
technical difficulties and operational difficulties may occur, or
delays in obtaining necessary permits may occur or continue which could
impact or delay the commencement of drilling exploration or development
wells; Gran Tierra Energy's operations are located in South America,
and unexpected problems can arise due to guerilla activity; disruptions
on the OTA pipeline may be more than Gran Tierra Energy expects and
activities undertaken to mitigate the impact of such disruptions may
not have the impact currently anticipated by Gran Tierra Energy;
geographic, political and weather conditions can impede testing, which
could impact or delay the commencement of drilling exploration wells;
and the risk that current global economic and credit market conditions
may impact oil prices and oil consumption more than Gran Tierra Energy
currently predicts, which could cause Gran Tierra Energy to modify its
exploration and drilling activities. Although the current capital
spending program is based upon the current expectations of the
management of Gran Tierra Energy, there may be circumstances in which,
for unforeseen reasons, a reallocation of funds may be necessary as may
be determined at the discretion of Gran Tierra Energy and there can be
no assurance as at the date of this press release as to how those funds
may be reallocated. Should any one of a number of issues arise, Gran
Tierra Energy may find it necessary to alter its current business
strategy and/or capital spending program. Accordingly, readers should
not place undue reliance on the forward-looking statements contained
herein. Further information on potential factors that could affect Gran
Tierra Energy are included in risks detailed from time to time in Gran
Tierra Energy's Securities and Exchange Commission filings, including,
without limitation, under the caption "Risk Factors" in Gran Tierra
Energy's Quarterly Report on Form 10-Q filed November 7, 2012. These
filings are available on a Web site maintained by the Securities and
Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com.
The forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement. The forward-looking
statements included in this press release are made as of the date of
this press release and Gran Tierra Energy disclaims any intention or
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except as
expressly required by applicable securities legislation.
Barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. In addition, given that
the value ratio based on the current price of oil as compared with
natural gas is significantly different from the energy equivalent of
six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be
misleading as an indication of value.
SOURCE: Gran Tierra Energy Inc.
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