Gran Tierra Energy Announces Fourth Quarter and 2008 Year-End Financial Results



    
    Company Reports Record Increase in Year over Year Reserves, Production
    Volumes, and Revenues - Cash Balance Grows to $177 Million

    
    CALGARY, Alberta, Feb. 26 /CNW/ -- Gran Tierra Energy Inc. (NYSE
Alternext: GTE, TSX: GTE), a company focused on oil exploration and production
in South America, today announced financial and operating results for the
quarter and year ended December 31, 2008.  Highlights for the year include:

    
    (*) 145% increase in average daily oil production over the prior year with a
      current production rate of approximately 12,000 barrels of oil per day
      (BOPD), net after royalty.
    

    
    (*) Record revenue and other income for the year of $114.0 million, an
      increase of 253% from $32.3 million for 2007.
    

    
    (*) Net income of $23.5 million or $0.19 per share basic and $0.16 per share
      diluted, compared to a net loss of $8.5 million or ($0.09) per share
      basic and diluted in 2007.
    

    
    (*) Cash and cash equivalents of $176.8 million compared to $57.8 million at
      September 30, 2008 and $18.2 million at December 31, 2007.  Gran Tierra
      Energy continues to be debt free.
    Full Year 2008 Financial Highlights:
    
    The company recognized revenue and other income of $114.0 million, an
increase of 253% from $32.3 million for 2007.  Net income for 2008 was $23.5
million or $0.19 per share basic and $0.16 per share diluted, compared to a
net loss of $8.5 million or ($0.09) per share in 2007 basic and diluted.  The
2008 results reflect increased production from the successful exploration and
development programs in both Colombia and Argentina, higher oil prices based
on a higher average West Texas Intermediate (WTI) oil price and the results of
Solana Resources Limited from the November 14, 2008 acquisition date.
    The average price received per barrel of oil in 2008 increased 44% to
$84.89 per barrel from $58.79 per barrel in 2007.
    Cash provided by operations for 2008 was $109.7 million compared to $8.8
million in 2007.
    
    Fourth Quarter 2008 Financial Highlights:
    
    Revenue and other income for the fourth quarter ended December 31, 2008
was $19.7 million, a 24% increase from $16.0 million for the same period of
2007.  The company reported a net loss for the quarter of $12.7 million or
$(0.07) per share diluted as compared to net income of $2.2 million, or $0.02
per share for the same period in 2007.
    Included in the 2008 fourth quarter results are non-cash expenses
resulting from the inclusion of Solana, comprised of a $7.3 million unrealized
foreign exchange loss related to translation of a deferred tax liability, and
additional depletion expense of $6.9 million.
    A general strike in Colombia, which caused the suspension of production
operations in southern Colombia from November 20, 2008 through to year end,
also impacted the results of the quarter. Operating expenses during this
period remained relatively unchanged from the third quarter as the company
retained its employees and continued to maintain its facilities.
    Realized prices in the fourth quarter of 2008 averaged $50.38 per barrel
compared to $72.95 per barrel for the fourth quarter of 2007, reflecting the
recent decline in WTI price.
    
    Balance Sheet Highlights:
    
    The company reported cash and equivalents of $176.8 million at 2008 year
end as compared to $57.8 million at September 30, 2008 and $18.2 million at
December 31, 2007. Working capital was $132.8 million at 2008 year end, as
compared to $43.5 million at September 30, 2008 and $8.1 million at the end of
2007. Shareholders' equity increased to $791.9 million at December 31, 2008
from $76.8 million at December 31, 2007, and the company had no outstanding
long-term debt as of year end. The increase in equity is primarily a result of
the issuance of shares to acquire Solana. Cash included in the assets acquired
from Solana was $81.9 million, net of acquisition costs.
    
    Production Highlights:
    
    Average oil production for the year ended December 31, 2008, net of
royalties, increased 145% to 3,629 BOPD from 1,482 BOPD in 2007. The increase
in production is due primarily to increased production from the continued
development of the Costayaco field in the Chaza Block in Colombia and the
successful drilling of the Proa -1 well in the Surubi Block in Argentina.
    Average oil production for the fourth quarter of 2008, net after
royalties, was 4,074 BOPD. Production was impacted by the strike at the
Ecopetrol operated Orito facilities which resulted in a suspension of crude
oil transportation in southern Colombia from November 20, 2008 through year
end 2008. Crude oil transportation resumed on January 12, 2009.
    Current production is approximately 12,000 BOPD, net after royalty, and
the company anticipates that production will be 15,000 BOPD, net after
royalty, at the end of the first quarter of 2009.
    
    2008 Reserve Review:
    
    Externally audited proved oil reserves (as per SEC Reserves Definitions)
net after royalty to Gran Tierra Energy as of December 31, 2008 tripled to
19.2 million barrels of oil (BO) proved compared to 6.4 million BO proved as
of December 31, 2007.
    As per Canadian NI 51-101 and the Reserves definitions in the COGE
Handbook, reserves net after royalty to Gran Tierra Energy as of December 31,
2008 increased significantly from 2007 to 18.8 million BO proved, 8.7 million
BO probable, and 18.6 million BO possible. This compares to reserves as of
December 31, 2007 of 6.4 million BO proved, 5.0 million BO probable and 4.9
million BO possible.
    Commenting on the results, Dana Coffield, President and Chief Executive
Officer of Gran Tierra Energy Inc., stated, "2008 was a milestone year for
Gran Tierra Energy.  Associated with the acquisition of Solana Resources, the
high-point was the consolidation of a 100% working interest in the Costayaco
field, one of the largest oil discoveries in Colombia in recent years.  With
this and with additional drilling success, Gran Tierra Energy was able to
triple proved reserves during the year.  In parallel, our net after royalty
production volumes have increased dramatically and we are on track to reach
20,000 barrels of oil per day, net to the company, in the second half of this
year."
    Coffield continued, "The fourth quarter of the year proved to be
challenging as a result of falling oil prices and a significant deferral of
production in Colombia in December.  In spite of this, our balance sheet is
stronger than it has ever been.  Our capital program for 2009 will be fully
funded from cash flow and cash on hand.  This includes a development drilling
program to grow production, an exploration drilling program to continue
exploring for new reserves, and diverse seismic programs in Colombia, Peru,
and Argentina to prepare for continued exploration drilling in 2010."
    "The successful execution of our strategy to date has positioned Gran
Tierra Energy to not only survive in the current business environment, but to
thrive.  Our 2008 results and strong balance sheet should allow Gran Tierra
Energy to continue pursuing its long term goal of becoming a significant
player in the international oil and gas exploration and production arena by
prudently executing our growth strategy," Coffield concluded.
    
    Related News - Costayaco 6 and 7 Update:
    
    The company reported the recent completion of production testing at
Costayaco-6 in Colombia.  Only water was recovered in this testing. Additional
testing will be undertaken to optimize the use of this wellbore for water
disposal or for reservoir pressure support.  In addition, the drilling of
Costayaco-7 has been initiated.  This development well is being drilled in the
north central portion of the Costayaco field and will take approximately 45
days to drill and complete.
    
    Conference Call Information:
    
    Gran Tierra Energy Inc. will hold a conference call to review its fourth
quarter and full year 2008 results on Thursday, February 26, 2009 at 11:00
a.m. Eastern Time.  The call will be hosted by Dana Coffield, President and
Chief Executive Officer. Interested parties may access the conference call by
dialing (888) 713-4218 (domestic) or (617) 213-4870 (international), pass code
# 43836235.  The call will also be available via web cast at
http://www.grantierra.com, or http://www.streetevents.com,
http://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 and will be available until 11:59
p.m. on February 26, 2009, by dialing (888) 286-8010 (domestic) or (617)
801-6888 (international) using confirmation pass code 72426646.
    
    About Gran Tierra Energy Inc.:
    
    Gran Tierra Energy Inc. is an international oil and gas exploration and
production company, headquartered in Calgary, Canada, incorporated in the
United States, trading on the NYSE Alternext exchange (GTE) and the Toronto
Stock Exchange (GTE), and operating in South America. The company holds
interests in producing and prospective properties in Argentina, Colombia and
Peru. The company 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. Additional information
concerning Gran Tierra Energy is available at http://www.grantierra.com.
Investor inquiries may be directed to info@grantierra.com or (866) 973-4873
    
    Cautionary Statement:
    
    Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved plus
probable plus possible reserves. The estimate of reserves for individual
properties may not reflect the same confidence level as estimates of reserves
for all properties, due to the effects of aggregation.
    Estimates of total net proved oil reserves at December 31, 2008 have been
prepared in accordance with the definitions for proved reserves set out in
Rule 4-10 of Regulation S-X of the U.S. Securities and Exchange Commission.
Reserves were estimated for proved, proved plus probable and proved plus
probable plus possible cases under the reserve definitions of National
Instrument 51-101 (NI 51-101) of Canada and for the proved case under the
definitions of the Securities Exchange Commission (SEC) of the United States.
The evaluation was conducted in accordance with standard industry practice and
reserves definitions, procedures and guidance contained in the Canadian Oil
and Gas Evaluation Handbook (COGE Handbook).
    
    Forward Looking Statements:
    
    The statements in this news release regarding Gran Tierra Energy's belief
that the company's production will be 15,000 BOPD, net after royalty at the
end of the first quarter of 2009, that it is on track for achieving 20,000
BOPD this year, that its 2009 capital program will be fully funded from cash
flow and cash on hand, that it is positioned to thrive in the current business
environment, and its 2009 testing and drilling plans for Costayaco 6 and 7,
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 United States Private Securities
Litigation Reform Act of 1995. These statements 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.
There are a number of important factors that could cause the results or
outcomes discussed herein to differ materially from that indicated by the
forward-looking statements, including, among others: Gran Tierra Energy's
operations are located in South America, and unexpected problems can arise due
to guerilla activity, technical difficulties and operational difficulties
which impact the production, transport or sale of its products; geographic,
political and weather conditions can impact the production, transport or sale
of its products; and the risk that the current global economic and credit
crisis may impact oil prices and oil consumption more than Gran Tierra Energy
currently predicts. 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 6, 2008. These 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  Gran Tierra Energy
does not undertake an obligation to update forward-looking or other statements
in this release.
    
    Basis of Presentation of Financial Results:
    
    Gran Tierra Energy's financial results are reported in United States
dollars and prepared in accordance with generally accepted accounting
principles in the United States.

    
     Contacts:
    

    
     Dana Coffield                             Al Palombo
     Gran Tierra Energy, Inc.                  Cameron Associates
     President & Chief Executive Officer       Investor Relations
     (866) 973-4873                            (212) 554-5488
     info@grantierra.com                       al@cameronassoc.com
    

    
                          Financial Tables to Follow
    Gran Tierra Energy Inc.
    
    Consolidated Statements of Operations and Retained Earnings (Accumulated
Deficit)
    
    For the Years and Quarters ended December 31, 2008, 2007
    
    Prepared in accordance with generally accepted accounting principles in
the United States
    
    (Thousands of U.S. Dollars, Except Share and Per Share Amounts)
    

    
                          Year Ended December 31,   Quarter Ended December 31,
    REVENUE AND OTHER       2008           2007         2008          2007
     INCOME                                          (Unaudited)   (Unaudited)
      Oil and natural gas
       sales              $112,805       $31,853      $18,932       $15,925
      Interest               1,224           425          795            48
                           114,029        32,278       19,727        15,973
    EXPENSES
      Operating             19,218        10,474        8,452         3,755
      Depletion,
       depreciation and
       accretion            25,737         9,415       10,516         2,865
      General and
       administrative       18,593        10,232        5,783         2,648
      Liquidated damages         -         7,367            -             -
    

    
      Derivative financial
       instruments (gain)
       loss                   (193)        3,040       (3,180)        2,247
      Foreign exchange
       (gain) loss           6,235           (78)       7,969            15
                            69,590        40,450       29,540        11,530
    

    
    INCOME (LOSS) BEFORE
     INCOME TAXES           44,439        (8,172)      (9,813)        4,443
    Income tax expense
     (recovery)            (20,944)         (295)       2,881         2,280
    NET INCOME (LOSS) AND
     COMPREHENSIVE INCOME
     (LOSS)                $23,495       $(8,467)    $(12,694)       $2,163
    ACCUMULATED DEFICIT,
     BEGINNING OF PERIOD   (16,511)       (8,044)      19,678       (18,674)
    RETAINED EARNINGS
     (ACCUMULATED DEFICIT),
     END OF PERIOD          $6,984      $(16,511)      $6,984      $(16,511)
    

    
    NET INCOME (LOSS) PER
     SHARE - BASIC            0.19         (0.09)       (0.07)         0.02
    NET INCOME (LOSS) PER
     SHARE -DILUTED           0.16         (0.09)       (0.07)         0.02
    WEIGHTED AVERAGE SHARES
     OUTSTANDING -
     BASIC             123,421,898    95,096,311  176,768,596    95,049,083
    WEIGHTED AVERAGE
     SHARES
     OUTSTANDING -
     DILUTED           143,194,590    95,096,311  185,847,980   110,577,835
    



    
    Gran Tierra Energy Inc.
    Consolidated Balance Sheets
    As at December 31, 2008, 2007
    
    Prepared in accordance with generally accepted accounting principles in
the United States
    
    (Thousands of U.S. Dollars, Except Share and Per Share Amounts)
    

    
                                                        As at December 31,
                                                       2008           2007
    ASSETS
    Current Assets
      Cash and cash equivalents                     $176,754        $18,189
      Accounts receivable                              7,905         10,695
      Inventory                                          999            787
      Taxes receivable                                 5,789          1,177
      Prepaids                                         1,103            442
      Derivative financial instruments                   233              -
      Deferred tax asset                               2,262            220
    

    
    Total Current Assets                             195,045         31,510
    

    
    Oil and Gas Properties (using the full cost
     method of accounting)
      Proved                                         380,855         44,292
      Unproved                                       384,195         18,910
    

    
    Total Oil and Gas Properties                     765,050         63,202
    

    
      Other Assets                                     2,502            716
    

    
    Total Property, Plant and Equipment              767,552         63,918
    

    
    Long Term Assets
      Deferred tax asset                              10,131          1,839
      Taxes receivable                                     -            525
      Other long-term assets                           1,315              -
      Goodwill                                        98,582         15,005
    

    
    Total Long Term Assets                           110,028         17,369
    

    
    Total Assets                                  $1,072,625       $112,797
    

    
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
      Accounts payable                               $21,134        $11,327
      Accrued liabilities                             12,841          6,139
      Derivative financial instruments                     -          1,594
      Current taxes payable                           28,163          3,284
      Deferred tax liability                             100          1,108
    

    
    Total Current Liabilities                         62,238         23,452
    

    
      Long term liabilities                               40            132
      Deferred tax liability                         213,093          9,235
      Deferred remittance tax                          1,077          1,332
      Derivative financial instruments                     -          1,055
      Asset retirement obligation                      4,251            799
    

    
    Total Long Term Liabilities                      218,461         12,553
    

    
    Shareholders' Equity
      Common shares                                      226             95
        (190,248,384 and 80,389,676 common shares
         and 48,238,269 and 14,787,303 exchangeable
         shares, par value $0.001 per share, issued
         and outstanding as at December 31, 2008 and
         2007, respectively)
      Additional paid in capital                     753,236         72,458
      Warrants                                        31,480         20,750
      Retained earnings (accumulated deficit)          6,984        (16,511)
    

    
    Total Shareholders' Equity                       791,926         76,792
    

    
    Total Liabilities and Shareholders' Equity    $1,072,625       $112,797
    



    
    Gran Tierra Energy Inc.
    Consolidated Statements of Cash Flow
    For the Years ended December 31, 2008, 2007
    
    Prepared in accordance with generally accepted accounting principles in
the United States
    
    (Thousands of U.S. Dollars, Except Share and Per Share Amounts)
    

    
                                                      Year Ended December 31,
                                                        2008          2007
    Operating Activities
    Net income (loss)                                $23,495        $(8,467)
    Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
      Depletion, depreciation and accretion           25,737          9,415
      Deferred taxes                                  (6,418)           185
      Stock based compensation                         2,520            810
      Liquidated damages                                   -          5,839
      Unrealized foreign exchange loss                 6,985              -
      Unrealized (gain) loss on financial
       instruments                                    (2,882)         2,648
    Net changes in non-cash working capital
      Accounts receivable                             34,943         (5,604)
      Inventory                                         (107)            25
      Prepaids                                           261            234
      Accounts payable and accrued liabilities        10,697          2,808
      Taxes receivable and payable                    14,840            869
      Settlement of asset retirement obligations        (334)             -
    

    
    Net cash provided by operating activities        109,737          8,762
    

    
    Investing Activities
      Restricted cash                                      -          1,010
      Oil and gas property expenditures              (55,217)       (15,976)
      Cash acquired on acquisition net of
       acquisition costs                              81,912              -
      Long term assets and liabilities                   446           (427)
    

    
    Net cash provided by (used in) investing
     activities                                       27,141        (15,393)
    

    
    Financing Activities
      Restricted cash                                      -              -
      Proceeds from issuance of common stock          21,687            719
    

    
    Net cash provided by financing activities         21,687            719
    

    
    Net (decrease) increase in cash and cash
     equivalents                                     158,565         (5,912)
    Cash and cash equivalents, beginning of year      18,189         24,101
    

    
    Cash and cash equivalents, end of year          $176,754        $18,189
    

    
    Cash                                             110,688         18,189
    Term deposits                                     66,066              -
    

    
    Cash and cash equivalents, end of year          $176,754        $18,189
    

    
    Supplemental cash flow disclosures:
      Cash paid for interest                              $-            $80
      Cash paid for taxes                            $11,587           $116
    Non-cash investing activities:
    Non-cash working capital related to capital
     additions                                       $11,096         $8,259

    




For further information:

For further information: Dana Coffield, President & Chief Executive
Officer of Gran Tierra Energy Inc., 1-866-973-4873, info@grantierra.com; or
Investor Relations, Al Palombo of Cameron Associates, +1-212-554-5488,
al@cameronassoc.com, for Gran Tierra Energy Inc. Web Site:
http://www.grantierra.com

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