Gran Tierra Energy Announces Financial Update & 2021 Guidance

Source: 12/7/2020, Location: South America

Gran Tierra Energy Inc. announced a financial update and the Company's 2021 capital budget and production guidance.

Key Highlights:
- Results of Semi-Annual Credit Facility Redetermination: The semi-annual redetermination of Gran Tierra's bank-syndicated revolving credit facility has been completed, and the syndicate of lenders party to the facility have agreed to amend the facility as follows:
- The committed borrowing base under the credit facility has been redetermined to $215 million
$200 million will be readily available, with $15 million subject to the consent of the majority of lenders - The credit facility matures in November 2022
- The Company expects the credit facility's balance to be approximately $185 million as of December 31, 2020
- Hedges In Place Designed To Protect Cash Flows: The Company has the following Brent oil price hedges in place:

2021 Capital Program: Gran Tierra plans to direct approximately 60% of the 2021 capital program toward continued development of the Acordionero field in the Middle Magdalena Valley Basin, another 35% toward development activities in the Putumayo Basin and the remaining 5% toward exploration-related activities throughout the Company's portfolio, in both Colombia and Ecuador

Fully Funded Capital Program: the Base Case 2021 capital budget of $130-150 million is expected to be fully funded from the Base Case 2021 cash flow1 forecast of $150-170 million

Control of Capital Program: Gran Tierra has 100% working interest in and operatorship of the Company's major assets in Colombia and Ecuador; this full control gives the Company the flexibility to optimize its development and exploration programs with changes, either up or down, with oil prices

Debt Reduction: with 2021 expected free cash flow4 and changes in non-cash working capital (primarily related to the ongoing collection of tax receivables), Gran Tierra expects its credit facility to be paid down in the Base Case to a balance of $130-150 million by December 31, 2021

Gran Tierra expects approximate 2021 expenses and operating netback2 per bbl5 to be in the following ranges:

Acordionero Oil Field
Gran Tierra continues to workover offline oil wells to restore them to production with two workover rigs The Company has also restarted development drilling at Acordionero by spudding the AC-64 oil well on November 30, 2020, from the newly constructed southwest pad; the Company has drilled to the planned total depth of AC-64, is currently running production casing in the well and plans to complete this well during December 2020

The drilling rig is then expected to drill the AC-65 oil well and the AC-66 water injection well in sequence during December 2020, Gran Tierra plans to finish the drilling of AC-65 before 2020 year-end and of AC-66 in January 2021

The plan is to begin the completion of AC-65 before 2020 year-end and to finish this work in January 2021, and to complete AC-66 in January 2021

The planned AC-64 and AC-65 oil wells are forecast to be brought on production during January 2021 The drilling rig is forecast to continue drilling new development wells at Acordionero throughout 2021; the next 10 planned wells (8 oil producers and 2 water injectors) are scheduled to be drilled from the new southwest pad

The planned new oil wells are each expected to have an initial oil production rate of approximately 550 BOPD (initial 30-day average rate), in line with the strong performance of wells drilled in the field during 2019 and first quarter 2020

Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: "The safety of our staff, contractors and the local communities where we operate is always paramount. Our teams in Colombia, Canada and Ecuador have risen to meet the many challenges of 2020 through their diligent management of COVID-19 safety protocols. As a result, Gran Tierra has resumed development activities throughout our portfolio, including the ongoing well workover operations and the restart of development drilling at Acordionero.

Our teams' excellent work throughout 2020 has strongly positioned the Company for the resumption of prudent growth in 2021. We would also like to thank our bank lending syndicate for their ongoing support during these volatile times.

Our forecast 2021 capital budget is a balanced, returns-focused program which prioritizes free cash flow4 generation over the rate of development, exploration and production growth. With a keen focus of further strengthening our balance sheet, we plan to direct free cash flow4 to further debt reduction in 2021.

We see material upside in our exploration portfolio located in highly prospective geological trends in Colombia and Ecuador. For 2021, we have budgeted a measured 5% of our capital program to ongoing exploration-related activities, mostly directed at our large landholdings in the Putumayo Basin of Colombia and Oriente Basin of Ecuador.

Our 2021 plans are fully aligned with Gran Tierra's "Beyond Compliance Policy" which focuses on our commitments to environmental, social and governance ("ESG") excellence. Gran Tierra looks for significant opportunities and benefits to the environment or communities and voluntarily goes beyond what is legally required to protect the environment and provide social benefits because it is the right thing to do.

Gran Tierra has benefited from the continued support of the oil and gas industry by the governments of Colombia and Ecuador. In particular, the Colombian government has been supportive through expedited tax refunds, extensions on the timing to perform contractual commitments and during our resumption of workover and drilling activities and the reopening of suspended oil fields.

We believe we are well-positioned to navigate the current volatile environment with our low base decline, conventional oil asset base and the operational control for capital allocation and timing, while maintaining a low cost structure and the safety of our people."

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