Gran Tierra Energy Inc. is pleased to announce that, based on preliminary results, the Company has made a new-country entry into Ecuador through the submission of winning bids for a total of three blocks, which were offered by the Ministerio de Energia y Recursos Naturales No Renovables ("MERNR") in today's Ronda Intracampos. The three blocks are located in the Oriente Basin and are approximately 140,000 acres in total area, creating a contiguous acreage position extending from Gran Tierra's existing assets in the Putumayo Basin in Colombia. Final award of these blocks is contingent upon regulatory approvals and the execution of the Participation Contracts (the "Contracts").
Key Highlights
- Establishes the Company as one of the top landholders in the play trend which extends from the Putumayo Basin in Colombia through to the Oriente Basin in Ecuador; the Putumayo and Oriente Basins are the same geological basin, with different names due to the international border between Colombia and Ecuador.
- Further strengthens and consolidates Gran Tierra's position in what the Company considers is a conventional oil resource fairway; Ecuador's Napo Formation is equivalent to the Villeta Formation in the Putumayo Basin and has the same multi-zone potential in carbonate and sandstone reservoirs.
- Gran Tierra has secured 100% working interest ("WI") and operatorship in the Charapa Block, Chanangue Block and Iguana Block (collectively, the "Blocks"), which increases Gran Tierra's gross acreage position in the conventional resource plays in Ecuador and Colombia from 1.2 million to over 1.3 million gross acres.
- Gran Tierra's winning bids consisted of a work program bid by block, including the drilling of a total of 14 exploration wells over four years across the Blocks, and the Company's share of revenues which is tied to the Oriente Blend Oil Price and to production volumes; the Contracts are a sliding scale, with the Company take ranging from 87.5% at US$30 per barrel to 40% at US$120 per barrel; there is no consideration payable upon the signing of the Contracts and cash outlays begin with the commencement of the work program.
- Gran Tierra expects to commence its Ecuador exploration drilling program in 2020 with no anticipated changes to the Company's previously issued 2019 guidance; this new exploration program is expected to be fully funded through the Company's forecasted net cash provided by operating activities.
- Through the preliminary award of the Charapa Block, Gran Tierra establishes a proven position in the B-Limestone play trend; the Charapa field has had historic oil production from the B-Limestone over a 17-year period.
- Contiguous acreage extending from Colombia's Putumayo Basin into Ecuador's Oriente Basin provides Gran Tierra with the ability to potentially construct strategic gathering infrastructure on 100%-operated acreage, which would allow the Company to potentially utilize the existing infrastructure in Ecuador.
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented "We are excited about our new-country entry into Ecuador, an achievement which aligns with Gran Tierra's strategy - focusing on proven conventional hydrocarbon basins, with access to established infrastructure, in a strong stable economic environment, combined with a highly competitive fiscal regime. The Blocks would extend our dominant position in Colombia's Putumayo Basin into Ecuador's Oriente Basin, with assets that are highly complementary to our existing land base. Ecuador represents a unique opportunity in terms of scale for Gran Tierra. With our winning bids for the Blocks, we believe we are acquiring significant future potential exploration upside which could enhance our long-term growth strategy and be an excellent fit with Gran Tierra's diverse reserves and resources base in Colombia."
