Gran Tierra Provides Operational Update

Source: www.gulfoilandgas.com 1/23/2017, Location: South America

Gran Tierra Energy Inc. (GTE), a company focused on oil and gas exploration and production in Colombia, is pleased to provide an operational update.

During December 2016, Gran Tierra averaged working interest production before royalties (WI) of 31,700 barrels of oil equivalent per day ("boepd"). During November 2016, the Company disposed of its interests in certain non-core and low operating netback assets. The WI production from the two blocks disposed was approximately 950 boepd (average for October 2016) and was not included in December 2016 production as a result of the disposition. Fourth quarter 2016 WI average production was approximately 31,000 boepd, which represents a 34 percent increase compared to fourth quarter 2015 production. Based on the midpoint of the Company's 2017 WI production guidance of 34,000 to 38,000 boepd, Gran Tierra is forecasting a 16 percent increase over fourth quarter 2016 production and a 33 percent increase over 2016 average WI production of approximately 27,000 boepd. Current WI production is approximately 32,000 boepd.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented, "2016 was a transformational year building our Colombia focused portfolio and 2017 is expected to be transformational through execution. Our 2017 exploration capital budget of $85 to $95 million, as announced in December 2016, plans for 8 to 11 gross wells drilled over the course of 2017. These wells are planned to target multi-zone stratigraphic and structural prospects and are expected to test a significant portion of Gran Tierra's large prospective resource base. We have continued to capture learnings from drilling within our fields and maintain our low cost drilling operations as we move to new opportunities within our land blocks and test these exploration prospects. Similar to our rationalizing and selling non-operated positions in blocks to upgrade our asset portfolio, the Company has transferred commitments from non-prospective blocks and relinquished lands to upgrade our exploration lands. Our more focused portfolio, for both assets and exploration, is a higher working interest, operated set of blocks.

The recently acquired Acordionero field is meeting our expectations, and we expect it to average 8,000 - 9,000 barrels of oil per day ("bopd") during 2017. In addition, the water injection pilots in the Lisama A and C sands are expected to provide essential information required to pursue the Possible Reserves in Acordionero, with the first pilot predicted to be onstream by end of first quarter 2017. The Costayaco field is meeting expectations, and we have budgeted for an expansion of our natural gas-to-power capacity to handle increasing fluid production from the waterflooding and new production from the A Limestone. We have a two-well drilling program in Costayaco during first quarter 2017 to obtain open-hole logs and core samples of the A Limestone in pilot holes, which we expect to be followed by two horizontal wells to test the A Limestone's potential production capacity.

We are behind previous expectations in waterflooding and repressuring the reservoirs at Moqueta and in initial production on the discoveries at Cumplidor-1 and Alpha-1 wells in the Putumayo-7 ("PUT-7") Block, where we are cleaning up expected free sand production in these two wellbores. We believe these are operational issues, not asset quality issues, and expect to resolve them in the near future."

Development Program Update

Acordionero Field Development (Gran Tierra 100% WI and Operator)

Gran Tierra has grown Acordionero WI production to a current rate of 6,750 bopd (2017 year to date average), an increase of 47% from the WI production rate of 4,600 bopd at the time of acquisition on August 23, 2016, by drilling the AC-5 and AC-7 development wells. The first of a series of water injection wells, the AC-8i, is currently nearing completion. Ongoing production growth is expected with the planned drilling of the AC-9, AC-10, and AC-11 production wells in the first half of 2017. Current WI production from all of the assets acquired in the PetroLatina acquisition is approximately 7,450 bopd (2017 year to date average).

Gran Tierra is currently in the first phase of a facilities upgrade at Acordionero to increase fluid handling to 15,000 barrels of fluid per day ("bfpd") and oil shipping to 10,000 bopd. This phase is expected to be completed in time to handle the forecasted production from the planned wells to be drilled at the Acordionero-2 drilling pad in the first half of 2017 and the Acordionero-4 drilling pad platform in the second half of 2017. Engineering has also begun on a second phase expansion to ultimately process 25,000 bfpd and ship 15,000 bopd. In addition, the Company plans to expand oil storage to 60,000 barrels ("bbls") at Acordionero.

The AC-5 development well was spud on October 29, 2016 and drilled to 9,285 feet ("ft") total measured depth ("MD") and 9,009 ft true vertical depth ("TVD"). The well was completed on November 10, 2016 as a commingled Lisama A and C oil producer. A total of 659 ft of net pay was perforated in the Lisama A sand and 207 ft of net pay was perforated in the Lisama C sand. The AC-7 development well was spud on December 7, 2016 and drilled to a total depth of 11,160 ft MD and 9,937 ft TVD. The well was completed on December 20, 2016 as a dedicated Lisama A oil producer. The AC-7 also established a new Lowest Known Oil ("LKO") level in the Lisama A sand at Acordionero, adding over 95 feet of proven Lisama A oil column to the field. The AC-5 and AC-7 wells have a combined current stabilized WI production rate of approximately 1,800 bopd (2017 year to date).

The AC-7 cost $3.8 million to drill and $1.7 million to complete and tie-in. This well was the deepest and most challenging well drilled to date in Acordionero, and in spite of these facts, the well was drilled 20% faster (22 days versus 29 days for the previous Acordionero average drill time) and 23% cheaper than the previous Acordionero average of $ 7.1 million to drill, complete and tie-in.

The AC-8i water injection well was spud on December 26, 2016 and reached a total depth of 10,340 ft MD and 10,028 ft TVD on January 12, 2017. The well is the structurally deepest well drilled to date in the field. Two core samples were taken in the Lisama C interval from 10,015 to 10,058 ft MD and from 10,058 to 10,112 ft MD. The Company plans to use these core samples to measure key parameters and laboratory studies for designing the planned waterflood pilot and ultimate waterflood of the reservoir. The initial waterflood pilot is forecasted to be onstream by the end of the first quarter 2017.

The next well, AC-9, is planned to spud on January 30, 2016 and is designed to be a Lisama C oil producer.

Costayaco Field Development (Gran Tierra 100% WI and Operator)

The Costayaco field is producing at an average rate of 13,350 bopd (2017 year to date).

The two recompleted A Limestone wells, Costayaco-9 and Costayaco-19, continue to produce an average of 570 and 1,640 bopd, respectively (2017 year to date). Both wells produce an average of 29.5 degree API oil, an average gas-oil ratio ("GOR") of 209 standard cubic feet per stock tank barrel ("scf/stb") and a low water cut of 1.1%. Costayaco-9 has produced cumulative oil of 39,200 bbls over 81 producing days, and Costayaco-19 has produced cumulative oil of 167,300 bbls over 102 producing days.

The CYC-28 is planned to be Gran Tierra's first dedicated A Limestone horizontal well. A pilot hole is being drilled to obtain formation core samples of the M2 and A Limestones, and comprehensive open hole logs. The well is then expected to be plugged back and a 1,000 meter horizontal section drilled in the A Limestone. The CYC-28 is currently drilling at a depth of 7,825 ft the approximate coring point) and is expected to reach a total depth at 8,173 ft before kicking off and drilling horizontally. Anticipated rig release for the well is the mid-February 2017. A second horizontal well, the CYC-29, is then planned to be drilled in a different part of the Costayaco structure, and expected to spud immediately following the CYC-28 well from the same surface location.

The Guriyaco-1 well was drilled as an exploratory well into the Caballos, T sand, U sand, N sand and A Limestone formations. During 2017 year to date, this well has had average WI production of 132 bopd of 27.7 degree API oil with a 26.3% water and an average GOR of 147 scf/stb while intermittently producing from the Caballos, T sand and U sand formations. Wellbore integrity issues have prevented a full segregated evaluation of the completed formations and the well awaits a workover to restore the integrity in the wellbore. Both the promising petrophysical logs and pressures taken from the Caballos, U sand and T sand formations from the Guriyaco-1 well are consistent with current pressures and log signatures in the adjacent Costayaco field, and as such, the Agencia Nacional de Hidrocarburos (National Hydrocarbon Agency) ("ANH") of Colombia has deemed Guriyaco as an extension of Costayaco. As an extension, the Guriyaco volumes produced from the well are now allowed to be both metered and handled at the Costayaco facilities thereby reducing operating costs for the well. As more data is obtained, the Company plans to assess the potential positive impact on reserves in this extension of Costayaco field. The Company is also still reviewing the potential in both the A Limestone and N sands in this well.

Moqueta Field Development (Gran Tierra 100% WI and Operator)

The Moqueta field is producing at an average WI rate of 6,080 bopd (2017 year to date) and continues to produce on average 27.5 degree API oil from the Caballos and T sand formations with an average gas-oil-ratio of 346 scf/stb and 23% watercut. From inception of production in June 2011 until July 2015, the average reservoir pressure dropped from 1,800 pounds per square inch ("psi") to 1,300 psi. The acceleration of water-injection for both enhanced recovery and pressure maintenance was completed with the conversion of the MQT-13 well to water injection and the optimization of several existing water injection pumps, resulting in a 44% increase in water injection since June 2016, from 9,000 to 13,000 barrels of water injected per day. Reservoir pressure is responding and oil production has been increasing due to the greater water injection, but more slowly than originally forecasted. With the slower response, we are not forecasting any oil production decline at Moqueta in 2017 with little capital requirements. Moqueta is expected to generate significant net cash provided by operating activities in 2017.

Recompletion activities have commenced on the MQT-19 well where the Company expects to carry out the first tests of the A Limestone and M2 Limestone in Moqueta during the first quarter 2017.

Exploration Program Update

Putumayo 7 ("PUT-7") Block (Gran Tierra 100% WI and Operator)

The Cumplidor-1 well discovered oil in the Villeta N sandstone, with 26.2 ft of net oil pay within a gross interval of 54 feet. The well was completed on December 1, 2016, and tied into the long-term testing facilities on site.

The well initially flowed naturally at an approximate average WI production rate of 500 bopd of 19 degree API oil over a 23 hour time period with a GOR of 63 scf/stb, and less than 1% water cut. A jet pump was installed on December 13, 2016 and, similar to wells in the Quinde field in the adjacent Suroriente Block, the Cumplidor-1 well produces sand and ongoing clean-up of the well continues. On January 18, 2017, a larger pump was run to help clean out suspected sand fill in the well. The well currently has WI production of approximately 748 bopd on clean-up over a 35 hour time period. If the Company cannot achieve its target rate of greater than 1,000 bopd for the Cumplidor-1, a workover of this well may be required in the first quarter of 2017.

Although Cumplidor can be correlated as a geologic extension of the Quinde field, initial reservoir pressure was measured at 5,442 psi, which is virgin pressure indicating that the Quinde and Cumplidor fields may be separated.

The Alpha-1 well discovered oil in the Villeta N sandstone, with 13.1 feet of net oil pay within a gross interval of 57.8 feet and confirmed that two dimensional ("2D") seismic can successfully predict N sand thickness on amplitude anomalies. The zone penetrated had original reservoir pressure, 19 degree API oil, no water on tests, and is connected stratigraphically to the Cumplidor-1 well. The well currently has WI production of 70 to 100 bopd, and a xylene squeeze is planned before the end of January 2017 to stimulate the well and potentially induce further sand flow for clean-up of the well. Now that the edge of the structure has been appraised with Alpha-1, opportunities to sidetrack this well are also being evaluated.

The Confianza-1 is the third exploration well which Gran Tierra plans to drill within the Cumplidor-Alpha N sand field. The Confianza-1 is planned to be drilled as an appraisal/exploratory well targeting both the N sandstone amplitudes on 2D seismic (target located between the Cumplidor-1 and Alpha-1 wells) and is expected to also test the deeper A Limestone play, both within the Villeta Formation. This well would be a significant step out from known A Limestone production in the north portion of the Putumayo Basin at Costayaco and data collected from this well could significantly enhance the interpretation of the evolving basin-wide A Limestone play. The well was spud on January 17, 2017.

The Company is also progressing with regulatory approval to acquire a planned 42.7 square-kilometers of three dimensional ("3D") seismic over the Cumplidor-Alpha field during third quarter 2017.The 3D seismic is expected to provide information required for optimization of potential future development well locations and potential waterflooding of the field.

Putumayo 4 ("PUT-4") Block (Gran Tierra 100% WI and Operator) On December 30, 2016 a license was provided to drill the Siriri-1 exploration well which is planned to test both N sandstone amplitudes on 2D seismic and also the deeper A Limestone exploration play. The Siriri-1 drill is expected to spud during the second quarter of 2017.

Llanos - El Porton Block (Gran Tierra 100% WI and Operator)

The civil works are well underway for the Prosperidad-1 exploration well, with the drilling rig expected to begin moving onto the lease site in mid-February 2017.This well is designed to target multi-zone structural exploration prospects in the Mirador, Gacheta, and Une formations. The well is planned to drill to 16,000 ft MD and is expected to spud in late first quarter 2017.

Middle Magdalena Valley - Acordionero Exploitation Area (Gran Tierra 100% WI and Operator)

Progress is underway on the Totumillo structural exploration prospect that is south of the Acordionero field and which has potential targets in similar reservoirs in the Lisama Formation. The prospect is within the Acordionero exploitation license, and Totumillo-1 exploration well is planned to spud in the first half of 2017.


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