Gran Tierra Energy Inc. (GTE), a company focused on oil and gas exploration and production in Colombia, is pleased to announce its 2017 capital budget and production guidance.
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented "During 2016, we have successfully delivered on our strategy of expanding, upgrading and diversifying Gran Tierra's portfolio in Colombia. Our 2017 capital budget is expected to be fully funded from cash from operating activities1 and to deliver strong organic production and reserves growth as we drill development and exploration oil wells throughout our newly diverse Colombian opportunity set. We expect to further delineate the exciting new "A" Limestone play at Costayaco. We will also continue drilling "N" sands and "A" Limestone exploration prospects throughout the Putumayo Basin where our first "N" sands well, the Cumplidor-1 on the Putumayo-7 Block, was declared a discovery on December 12, 2016. We are the largest landholder in the Putumayo with approximately 1.1 million gross acres (0.9 million net acres) of land and believe we have a competitive advantage in this under-explored proven basin with our dominant land position and proprietary seismic database. In the Middle Magdalena Valley Basin, we anticipate an ongoing ramp up in production at our Acordionero field, where results to date have exceeded our original expectations. At Acordionero, we expect to continuously drill both development and water injection wells throughout 2017 and beyond.
"Gran Tierra operates over 90 percent of its production and 23 out of 33 blocks in Colombia. Therefore, we have significant control and flexibility on capital allocation and timing. The Company now has a robust portfolio of reserves to develop that can be paced with oil price recovery. We can accelerate our capital program if oil prices increase significantly in 2017 or decrease capital investment in the event of a depressed commodity environment. At our budgeted 2017 Brent oil price of $56.00/barrel2 ("bbl"), we forecast that we will generate cash from operating activities1 of $240 million to $260 million, which is expected to equal or exceed our 2017 capital budget of $200 million to $250 million. With our operated, low cost, high netback, positive cash-flowing asset base, our focus is on organic production growth and drilling 30 to 35 exploration wells over the next three years, all funded from cash from operating activities."
Highlights of 2017 Capital Budget and Production Guidance
2017 Capital Budget
- Colombia remains Gran Tierra's primary focus and, based on the midpoint of the guidance, is expected to represent approximately 93 percent of the 2017 capital program;
- Based on the midpoint of the guidance, the capital budget is forecasted to be split with approximately 57 percent directed to development and 43 percent to exploration;
- Approximately, 15-20 percent of the 2017 capital program is expected to be directed at facilities, a large portion of this investment would be dedicated to facilities expansion at the Acordionero field in order to increase its oil production capacity to 15,000 barrels of oil equivalent per day (boepd) by 2017 yearend
- The 2017 capital program assumes up to 6 drilling rigs being active during the year.
2017 Production Guidance
Gran Tierra expects 2017 average working interest (WI) production before royalties of 34,000 to 38,000 boepd from the Company's assets in Colombia and Brazil, which would represent an increase of 25 to 40% from our approximate 2016 average WI production before royalties of 27,200 boepd. The 2017 guidance includes 1,200 to 1,500 boepd of production from Brazil. The Company's production guidance only includes forecasted volumes from existing operations and expected development projects; no volumes are assumed for any exploration success.