CALGARY, Alberta, May 28, 2024 (GLOBE NEWSWIRE) — Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”) (NYSE American:GTE) (TSX:GTE) (LSE:GTE) today announced an operational update. All dollar amounts are in United States dollars, and production amounts are on an average working interest before royalties (“WI”) basis unless otherwise indicated. Per barrel (“bbl”) and bbl of oil per day (“BOPD”) amounts are based on WI sales before royalties.
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: “Gran Tierra is thrilled to announce the test results from the Arawana-J1 well (100% WI, Operator), marking a significant milestone for our operations in Ecuador. These results not only highlight the potential of the Arawana field area but continues to demonstrate the success of our exploration program in our core southern Colombia (Rose discovery) and northern Ecuador (Bocachico and Charapa Norte discoveries). We are very excited that the closest analogue to the Arawana field area, in terms of closure, thickness, rock and fluid properties, is our Cohembi field located in Colombia’s South Putumayo Basin, which we operate and is located just 20 km to the north. As disclosed with our latest annual Company reserves disclosure as of December 31, 2023, the ultimate gross Proved plus Probable (“2P”) original recoverable reserves from Cohembi as estimated by McDaniel & Associates Consultants Ltd., the Company’s independent qualified reserves evaluator is 82 million bbls. A major advantage of operating in both Ecuador and Colombia is the ability to quickly monetize production from new discoveries. With nearby infrastructure and regulatory approvals already in place, we are well-positioned to quickly appraise and develop the Arawana field. We will utilize Gran Tierra’s strong cash flow, solid balance sheet, and new production from this discovery to fund the development.
In addition, to our progress testing Arawana-J1, we are pleased to provide an update on our drilling operations. The rig that drilled Arawana-J1 was moved to the Bocachico Norte-J1 well cellar, where the Bocachico Norte-J1 well (100% WI, Operator) was spud on May 24th, marking the start of the second exploration well in our 2024 exploration plan. As of May 27th, the well is drilling ahead at approximately 6,670 feet to an expected total depth of approximately 10,800 feet. Following the drilling and completion of the Bocachico Norte-J1 well, the rig will move to the Charapa Block (100% WI, Operator) to commence drilling three exploration wells. Once this phase is complete, the rig will return to the Chanangue block to drill two additional exploration wells from the K pad, Zabaleta-K1 and Zabaleta Oeste-K1 (100% WI, Operator). We are particularly excited about the Zabaleta wells, as they are positioned up dip from Arawana-J1 and on the structural high, promising further potential for significant discoveries in the vertically stacked intervals of the Basal Tena, U-Sand, T-Sand and Hollin high permeability sandstones. Gran Tierra is currently working closely with the Ministry of Energy and Mines of Ecuador to fast track the exploration and development of all of Gran Tierra’s Ecuadorian blocks.
The Arawana-J1 discovery, which was the highest-risk well in our 2024 exploration program, has set the stage for Gran Tierra to deliver strong reserve results and has opened another development horizon in Ecuador that we expect to fully fund from internally generated cash flow. This success also validates our refined geological model, which has proven effective with the last four exploration wells yielding four oil discoveries. We are confident that our future development and exploration programs will continue to drive our growth and success in the region.”
Arawana-J1 Oil Discovery:
- Gran Tierra has run production casing, cemented and perforated the Basal Tena oil zone and has begun production testing.
- The Basal Tena was perforated over 23.5 ft of reservoir. A jet pump was run and the well has produced at stabilized rates over 48 hours at 1,174 barrels oil per day (“bopd”), 20-degree API gravity oil, less than 1% water cut, and a gas-oil ratio (“GOR”) of 258 standard cubic feet per stock tank barrel (“scf/stb”).
- The well continues to clean-up and over the past 12 hours the well has produced at stabilized rates of 1,358 BOPD of 20-degree API gravity oil, less than 1% water cut, and a GOR of 239 scf/stb.
The analogue for the Arawana field area is the Cohembi field 20 km north, where Gran Tierra is in the process of expanding the waterflood to optimize recovery from the field. Cohembi produces from the N-sands, the geologic equivalent of the Basal Tena at the Arawana field area. The closure, thickness, rock and fluid properties are very similar to that of the Arawana field area. One notable difference of the Arawana field area is a higher gas-oil ratio providing a lower oil viscosity which is excellent for enhanced oil recovery by waterflooding while providing natural gas for power generation.
| Arawana Field Area vs. Cohembi Field Analogue | Arawana | Cohembi |
| Average Depth (feet) | 9,000 | 9,150 |
| Initial Pressure (psi) | 5,000 | 5,200 |
| Initial Gas-Oil Ratio (scf/stb) | 239 | 125 |
| API Gravity | 20 | 18 |
| Initial Oil Viscosity (cps) | 9.7 | 27.0 |
| Bubble Point Pressure (psi) | 940 | 580 |
| Viscosity at Bubble Point (cps) | 6.4 | 17.0 |
| Average Thickness (feet) | 19 | 19 |
| Average Porosity (%) | 25% | 22% |
| 2P Closure (acres) | 11,500 | 10,250 |
| Reserves (million barrels of oil)1 | TBD | 82 |
| 2P Ultimate number of wells booked drilling locations | TBD | 49 |
| Implied Spacing (acres/well) | TBD | 210 |
| Average Rate/well Initial 90-Day Production (bopd) | 1,000 | 800 |
| Average Recovery/well (million barrels of oil) | TBD | 1.7 |
1 Reserves refers to gross ultimate Proven plus Probable original recoverable reserves
*Cohembi information is based on GTE’s McDaniel Reserves Report as of December 31, 2023. Arawana information is based on initial production data from May 2024. See “Presentation of Oil and Gas Information”
TBD – To be determined
Exploration Update:
- Bocachico Norte-J1 (100% WI, Operator):
- Upon completion of drilling the Arawana-J1 well, the drilling rig was moved on the same well pad and commenced drilling the Bocachico Norte-J1 exploration well. The Bocachico Norte-J1 exploration well is a follow-up to the successful Bocachico-J1 (100% WI, Operator) exploration well to test both the deeper T-Sandstone and Basal Tena prospectivity.
- The Bocachico-J1 well had initial 90-day production rates in the Basal Tena (N-Sand geologic equivalent to Cohembi) of greater than 1,100 BOPD, continues to produce at approximately 850 BOPD, 20-degree API oil, and has less than 1% water cut.
- Charapa Seismic Program:
- The 20km Charapa-block 2D seismic commitment was successfully completed and the data is now being processed. The 238km2 3D program is 13% complete and will be finished shooting in mid-June. The processed 3D dataset is expected to be delivered by the third quarter of 2024 and will be used to high-grade multiple compelling structural leads identified on vintage 2D seismic lines, which are expected to be drilled in 2025.
- Remainder of the 2024 Ecuador Exploration Program:
- Upon completion of the Bocachico Norte-J1 exploration well, the rig will be moved to the Charapa Block to drill three exploration wells and finally back to the Chanangue Block to target two Zabaleta exploration wells to test the Basal Tena up dip from Arawana-J1, and test additional deeper U- and T-Sandstone units on the structural high.
Corporate Presentation:
- Gran Tierra’s Corporate Presentation has been updated and is available at www.grantierra.com.
Contact Information
For investor and media inquiries please contact:
Gary Guidry
President & Chief Executive Officer
Ryan Ellson
Executive Vice President & Chief Financial Officer
+1-403-265-3221
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company currently focused on oil and natural gas exploration and production in Colombia and Ecuador. The Company is currently developing its existing portfolio of assets in Colombia and Ecuador and will continue to pursue additional new growth opportunities that would further strengthen the Company’s portfolio. The Company’s common stock trades on the NYSE American, the Toronto Stock Exchange and the London Stock Exchange under the ticker symbol GTE. Additional information concerning Gran Tierra is available at www.grantierra.com. Except to the extent expressly stated otherwise, information on the Company’s website or accessible from our website or any other website is not incorporated by reference into and should not be considered part of this press release. Investor inquiries may be directed to [email protected] or (403) 265-3221.
Gran Tierra’s Securities and Exchange Commission (the “SEC”) filings are available on the SEC website at http://www.sec.gov. The Company’s Canadian securities regulatory filings are available on SEDAR+ at http://www.sedarplus.ca and UK regulatory filings are available on the National Storage Mechanism website at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Forward-Looking Statements and Legal Advisories:
This press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, “forward-looking statements”). All statements other than statements of historical facts included in this press release regarding the Company’s strategies related to drilling operations; expectations regarding reserves amounts; future well costs and production results; expectations regarding future free cash flow and liquidity; anticipated capital expenditures, including the funding, location and impact of capital expenditures; and operating costs for the Company’s drilling and development operations, and those statements preceded by, followed by or that otherwise include the words “expect,” “plan,” “can,” “will,” “should,” “guidance,” “forecast,” “budget,” “estimate,” “signal,” “progress” and “believes,” derivations thereof and similar terms identify forward-looking statements. In particular, but without limiting the foregoing, this press release contains forward-looking statements regarding: the Company’s expected future production, capital expenditures and free cash flow, the Company’s targeted cash balance and uses of excess free cash flow, including the repayment of borrowings under its credit facility, the Company’s plans regarding strategic investments, acquisitions and growth, the Company’s drilling program and the Company’s expectations of commodity prices and its positioning for 2024. The forward-looking statements contained in this press release reflect several material factors and expectations and assumptions of Gran Tierra including, without limitation, that Gran Tierra will continue to conduct its operations in a manner consistent with its current expectations, pricing and cost estimates (including with respect to commodity pricing and exchange rates), the general continuance of assumed operational, regulatory and industry conditions in Colombia and Ecuador, and the ability of Gran Tierra to execute its business and operational plans in the manner currently planned.
Among the important factors that could cause our actual results to differ materially from the forward-looking statements in this press release include, but are not limited to: our operations are located in South America and unexpected problems can arise due to guerilla activity, strikes, local blockades or protests; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; other disruptions to local operations; global health events; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including inflation and changes resulting from a global health crisis, geopolitical events, including the conflicts in Ukraine and the Gaza region, or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including volatility or a prolonged decline in these prices relative to historical or future expected levels; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than we currently predict. which could cause further modification of our strategy and capital spending program; prices and markets for oil and natural gas are unpredictable and volatile; the effect of hedges; the accuracy of productive capacity of any particular field; geographic, political and weather conditions can impact the production, transport or sale of our products; our ability to execute our business plan and realize expected benefits from current initiatives; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the ability to replace reserves and production and develop and manage reserves on an economically viable basis; the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates); the risk profile of planned exploration activities; the effects of drilling down-dip; the effects of waterflood and multi-stage fracture stimulation operations; the extent and effect of delivery disruptions, equipment performance and costs; actions by third parties; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; volatility or declines in the trading price of our common stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to comply with financial covenants in our indentures and make borrowings under any future credit agreement; and the risk factors detailed from time to time in Gran Tierra’s periodic reports filed with the Securities and Exchange Commission, including, without limitation, under the caption “Risk Factors” in Gran Tierra’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 20, 2024 and its other filings with the SEC. These filings are available on the SEC website at http://www.sec.gov and on SEDAR+ at www.sedarplus.ca.
The forward-looking statements contained in this press release are based on certain assumptions made by Gran Tierra based on management’s experience and other factors believed to be appropriate. Gran Tierra believes these assumptions to be reasonable at this time, but the forward-looking statements are subject to risk and uncertainties, many of which are beyond Gran Tierra’s control, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. All forward-looking statements are made as of the date of this press release and the fact that this press release remains available does not constitute a representation by Gran Tierra that Gran Tierra believes these forward-looking statements continue to be true as of any subsequent date. Actual results may vary materially from the expected results expressed in forward-looking statements. Gran Tierra 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 law. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Presentation of Oil and Gas Information
All reserves value and ancillary information contained in this press release have been prepared by the Company’s independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. (“McDaniel”) in a report with an effective date of December 31, 2023 (the “GTE McDaniel Reserves Report”) and calculated in compliance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”), unless otherwise expressly stated.
Estimates of net present value contained herein do not necessarily represent fair market value. Estimates of reserves for individual properties may not reflect the same level of confidence as estimates of reserves for all properties, due to the effect of aggregation. Total Proved plus Probable reserves of Gran Tierra in Colombia and Ecuador (presented on a consolidated basis by foreign geographic area) pursuant to the GTE McDaniel Reserves Report is 147 million bbls. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra’s reserves will be attained and variances could be material. There are numerous uncertainties inherent in estimating quantities of crude oil reserves. The reserve information set forth in the GTE McDaniel Reserves Report are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided therein.
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. 2P reserves are proved plus provable reserves.
References to a formation where evidence of hydrocarbons has been encountered is not necessarily an indicator that hydrocarbons will be recoverable in commercial quantities or in any estimated volume. Gran Tierra’s reported production is a mix of light crude oil and medium and heavy crude oil for which there is not a precise breakdown since the Company’s oil sales volumes typically represent blends of more than one type of crude oil. Well test results should be considered as preliminary and not necessarily indicative of long-term performance or of ultimate recovery. Well log interpretations indicating oil and gas accumulations are not necessarily indicative of future production or ultimate recovery. If it is indicated that a pressure transient analysis or well-test interpretation has not been carried out, any data disclosed in that respect should be considered preliminary until such analysis has been completed. References to thickness of “oil pay” or of a formation where evidence of hydrocarbons has been encountered is not necessarily an indicator that hydrocarbons will be recoverable in commercial quantities or in any estimated volume.
Certain information in this press release may constitute “analogous information” as defined in NI 51-101, including but not limited to, information relating to the properties or wells in geographical proximity to properties that are or may be held by Gran Tierra. Such information has been obtained from independent government sources, regulatory agencies or other industry participants. Gran Tierra believes the information is relevant as it helps to define the reservoir or asset characteristics in which Gran Tierra holds or may hold an interest. Gran Tierra is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor pursuant to NI 51-101 COGEH. Such information is not an estimate of the reserves or asset characteristics attributable to properties held or potentially to be held by Gran Tierra and there is no certainty that the reservoir data and economics information for the properties held or potentially to be held by Gran Tierra will be similar to the information presented in this press release. The reader is cautioned that the data relied upon by Gran Tierra may be in error and/or may not be analogous to such properties held or to be held by Gran Tierra. The type curves referenced in this press release reflect a selection from a type curves library provided by McDaniel. In each case the type curve referenced is that which in management’s assessment feels best represents the expected average technical drilling results based upon Gran Tierra wells in the area as well as non-Gran Tierra wells determined by management to be analogous for purposes of the type curve assignments. Type curves presented incorporate the most recent data from actual well results and would only be representative of the specific drilled locations. There is no guarantee that Gran Tierra will achieve the estimated or similar results derived therefrom. The potential technical estimates have been generated using the relevant oil type curve noted above, Arawana test results and incorporating management assumptions relating to such amounts which are based on historical results. Accordingly, undue reliance should not be placed on the same. Such information has been prepared by management for the purposes of making capital investment decisions and for internal budget preparation only.
This press release discloses 2P drilling locations in Cohembi, which are Proved locations and Probable locations derived from the GTE McDaniel Reserves Report and account for drilling locations that have associated Proved and/or Probable reserves, as applicable.
Disclosure of Reserve Information and Cautionary Note to U.S. Investors
Unless expressly stated otherwise, all estimates of proved, probable and possible reserves disclosed in this press release have been prepared in accordance with NI 51-101. Estimates of reserves made in accordance with NI 51-101 will differ from corresponding GAAP standardized measure prepared in accordance with applicable SEC rules and disclosure requirements of the U.S. Financial Accounting Standards Board (“FASB”), and those differences may be material. NI 51-101, for example, requires disclosure of reserves estimates based on forecast prices and costs, whereas SEC and FASB standards require that reserves be estimated using average prices for the previous 12 months and that the standardized measure reflect discounted future net income taxes related to the Company’s operations. In addition, NI 51-101 permits the presentation of reserves estimates on a “company gross” basis, representing Gran Tierra’s working interest share before deduction of royalties, whereas SEC and FASB standards require the presentation of net reserve estimates after the deduction of royalties and similar payments. There are also differences in the technical reserves estimation standards applicable under NI 51-101 and, pursuant thereto, the COGEH, and those applicable under SEC and FASB requirements. In addition to being a reporting issuer in certain Canadian jurisdictions, Gran Tierra is a registrant with the SEC and subject to domestic issuer reporting requirements under U.S. federal securities law, including with respect to the disclosure of reserves and other oil and gas information in accordance with U.S. federal securities law and applicable SEC rules and regulations (collectively, “SEC requirements”). Disclosure of such information in accordance with SEC requirements is included in the Company’s Annual Report on Form 10-K and in other reports and materials filed with or furnished to the SEC and, as applicable, Canadian securities regulatory authorities. The SEC permits oil and gas companies that are subject to domestic issuer reporting requirements under U.S. federal securities law, in their filings with the SEC, to disclose only estimated proved, probable and possible reserves that meet the SEC’s definitions of such terms. Gran Tierra has disclosed estimated proved, probable and possible reserves in its filings with the SEC. In addition, Gran Tierra prepares its financial statements in accordance with United States generally accepted accounting principles, which require that the notes to its annual financial statements include supplementary disclosure in respect of the Company’s oil and gas activities, including estimates of its proved oil and gas reserves and a standardized measure of discounted future net cash flows relating to proved oil and gas reserve quantities. This supplementary financial statement disclosure is presented in accordance with FASB requirements, which align with corresponding SEC requirements concerning reserves estimation and reporting.
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