Gran Tierra Announces 2020 Year-End Reserves & Operational Update

Source: 1/26/2021, Location: South America

- Achieved 100% 1P Reserves Replacement
- Added 8.3 MMBOE of 1P Reserves
- Realized 1P Finding and Development Costs of $2.65/boe
- 1P and 2P Net Asset Value per Share Before Tax of $1.15 and $3.25
- 1P Reserves Equal 59% of 2P Reserves, Demonstrating Strength of Company's Proved Reserves Base
- Achieved Company's Best Safety Year in 2020: Zero Lost Time Incident Frequency

Gran Tierra Energy Inc., a company focused on oil exploration and production in Colombia and Ecuador, announced the Company's 2020 year-end reserves as evaluated by the Company's independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. ("McDaniel") in a report with an effective date of December 31, 2020 (the "GTE McDaniel Reserves Report") and an operational update.

All dollar amounts are in United States ("U.S.") dollars and all reserves and production volumes are on a working interest before royalties ("WI") basis. Production is expressed in barrels ("bbl") of oil per day ("bopd") or bbl of oil equivalent ("boe") per day ("boepd"), while reserves are expressed in bbl, boe or million boe ("MMBOE"), unless otherwise indicated. All reserves values, future net revenue and ancillary information contained in this press release have been prepared by McDaniel 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") and derived from the GTE McDaniel Reserves Report, unless otherwise expressly stated. The following reserves categories are discussed in this press release: Proved Developed Producing ("PDP"), Proved ("1P"), 1P plus Probable ("2P") and 2P plus Possible ("3P").

Commenting on Gran Tierra's 2020 year-end reserves, operational update and future plans, Gary Guidry, President and Chief Executive Officer of Gran Tierra, said: "Our teams in Colombia, Ecuador and Canada rose to meet the many challenges of 2020 through their diligent management of COVID-19 safety protocols and sharp focus on maintaining and increasing the value of our assets. As a result, we are pleased to announce significant reserve additions in both the PDP and 1P categories, despite our large reductions in capital investment during 2020. This achievement demonstrates that the Company's core conventional oil assets continue to show positive waterflood responses and low base decline rates.

The advancement of our waterflooding efforts in the Acordionero, Costayaco and Moqueta oil fields has clearly allowed Gran Tierra to continue to convert Probable and Possible reserves into the Proved reserves categories. Even though we decided during 2020 to reduce capital spending, we believe the Company's excellent performance in terms of PDP and 1P reserves additions is a testament to the quality of our assets.

With our strategy, we believe Gran Tierra is well-positioned for the resumption of prudent growth in 2021 and strong potential free cash flow1 generation. We have already increased production approximately 24% from our third quarter 2020 average, which we believe reflects the strength of our Proved reserves. Our 2021 capital budget of $130 to $150 million is a balanced, returns-focused program which prioritizes free cash flow generation over the rate of development, exploration and production growth, with investment primarily directed to the Acordionero and Costayaco oil fields. With a keen focus on further strengthening our balance sheet, we plan to direct free cash flow to ongoing debt reduction in 2021 and beyond.

During fourth quarter 2020, Gran Tierra resumed development activities throughout our portfolio, including the ongoing well workover operations and the restart of development drilling at Acordionero. We also restarted workover operations at Costayaco and look forward to a planned initiation of development drilling in that field during second quarter 2021. We forecast 2021 average production of 28,000 to 30,000 bopd for the Company.

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 and communities by voluntarily and proactively taking steps to protect the environment and provide social benefits because it is the right thing to do. In 2020, we also had our best safety year in the history of the Company.

We believe that Gran Tierra successfully navigated the exceptional challenges of 2020 and are excited to return to an economically sound growth trajectory in 2021 and beyond, with a focus on free cash flow generation and debt reduction."

During 2020, Gran Tierra achieved:
- Material PDP and 1P reserves additions, in particular at Acordionero, Costayaco and Moqueta, as a result of ongoing successful waterflooding operations
- PDP reserves replacement of 133% with PDP reserves additions of 11.0 MMBOE
- 1P reserves replacement of 100% with 1P reserves additions of 8.3 MMBOE
- Finding and development costs ("F&D") including future development costs ("FDC") of $5.06/boe on a PDP basis and $2.65/boe on a 1P basis
- F&D recycle ratios including FDC of 3.5 times (PDP) and 6.7 times (1P)
- Significant reserves additions at Acordionero: 7.1 MMBOE (PDP) and 2.6 MMBOE (1P)
- Despite a material reduction in the McDaniel's forecast oil price assumptions relative to one year ago (the average Brent oil price over the next 5 years in the GTE McDaniel Reserves Report is $54.04/bbl):
- Gran Tierra's 2020 year-end 1P NPV10 after tax decreased only 21% compared to 2019 year-end
- This performance was achieved in part due to large reductions in forecast operating costs based on the actual savings achieved by the Company in 2020
- As of December 31, 2020, McDaniel estimates that Gran Tierra's total 1P undiscounted operating costs over the remaining life of the Company's fields are approximately 26% less than the McDaniel estimate as of December 31, 2019*
- Acordionero, Costayaco, Moqueta and Suroriente now represent 83% of Gran Tierra's 1P reserves and 78% of 2P reserves
- PDP reserves account for 55% of 1P reserves and 1P reserves account for 59% of 2P reserves, demonstrating the strength of the Company's reserves base and the potential future conversion of Probable reserves into 1P reserves and Proved Undeveloped reserves into PDP reserves
- Gran Tierra's mature waterflood assets, Costayaco and Moqueta, continued to grow and deliver value, with total reserves additions of 3.8 MMBOE (PDP) and 5.5 MMBOE (1P)
- FDC are forecast to be $312 million for 1P reserves and $565 million for 2P reserves
- Realized a 39% increase in 2P reserve life index to 17 years and a 51% increase in 1P reserve life index to 10 years

* Calculations of operating cost reductions made in respect of 2019 figures, as provided in the McDaniel report with an effective date of December 31, 2019, prepared for Gran Tierra in their capacity as independent qualified reserves evaluator in accordance with NI 51-101 and COGEH

Operational Update
2020 Safety
- Gran Tierra's teams are proud of their excellent safety performance during the many challenges of 2020, including the proactive implementation of COVID-19 protocols that enabled continuity of the Company's operations
- The Company achieved its first year with a Lost Time Incident Frequency of zero, during which the Company logged close to 4 million man-hours
- The Company's Total Recordable Case Frequency decreased 33% compared with 2019, falling to a rate of 0.08 cases per 1 million man-hours versus 0.12 cases per 1 million man-hours in 2019

Average Production
- 2020: 22,624 bopd
- Third quarter 2020: 18,944 bopd
- Fourth quarter 2020: 21,907 bopd
- During January 1-25, 2021: 23,428 bopd

Closing of Sale of PetroTal Shares
- As previously announced, Gran Tierra Resources Limited ("GTRL"), a wholly owned subsidiary of Gran Tierra, sold an aggregate of 109,006,250 common shares of PetroTal Corp. ("PetroTal") for an aggregate purchase price of approximately $15 million
- As of market close on January 26, 2021, the remaining 137,093,750 shares of PetroTal owned by GTRL had a market value of approximately $26 million

Acordionero Oil Field
Gran Tierra continues to workover offline oil wells to restore them to production with two workover rigs As of January 25, 2021, approximately 3,500 bopd of production has been restored as a result of this workover program

The Company restarted development drilling at Acordionero on November 30, 2020 and has since drilled the AC-64 and AC-65 oil wells and the AC-66i water injection well in fourth quarter 2020, and the AC-67i water injection well in early January 2021; the team is currently performing open hole logging operations on the AC-68 oil well The AC-64 and AC-65 oil wells were brought on production ahead of schedule in late December 2020

The drilling rig is forecast to continue drilling new development wells at Acordionero throughout 2021; there are 5 oil wells remaining to be drilled from the new southwest pad, which are expected to be finished by the end of first quarter 2021, prior to moving the rig to the next pad to drill 5 additional oil wells, for a total of 10 new oil wells

Costayaco Oil Field
Gran Tierra initiated workover operations in late November 2020 and completed 3 workovers during fourth quarter 2020; the workover rig remains active with 5 jobs planned to be completed prior to the end of first quarter 2021

Efforts are underway to restart development drilling during early second quarter 2021, with a 3 well program; the rig is currently stacked on location over the planned CYC-42 infill oil well location

Personnel Announcement
Effective immediately, Tony Berthelet, Chief Operating Officer, is no longer with Gran Tierra

Future Net Revenue
Future net revenue reflects McDaniel's forecast of revenue estimated using forecast prices and costs, arising from the anticipated development and production of reserves, after the deduction of royalties, operating costs, development costs and abandonment and reclamation costs but before consideration of indirect costs such as administrative, overhead and other miscellaneous expenses. The estimate of future net revenue below does not necessarily represent fair market value.

Total Company WI Reserves
The following table summarizes Gran Tierra's NI 51-101 and COGEH compliant reserves in Colombia and Ecuador derived from the GTE McDaniel Reserves Report calculated using forecast oil and gas prices and costs. Gran Tierra has determined that Ecuador reserves, included in Total Probable and Total Possible reserve categories for Light and Medium Crude Oil, are not material to present separately on a country basis. Therefore all amounts are presented on a consolidated basis.

NPV Summary
Gran Tierra's reserves were evaluated using McDaniel's commodity price forecasts at January 1, 2021. It should not be assumed that the NPV of cash flow estimated by McDaniel represents the fair market value of the reserves.

Future Development Costs
FDC reflects McDaniel's best estimate of what it will cost to bring the proved undeveloped and probable reserves on production. Changes in forecast FDC occur annually as a result of development activities, acquisition and disposition activities, and changes in capital cost estimates based on improvements in well design and performance, as well as changes in service costs. FDC for total 1P Colombia reserves decreased to $312 million at year-end 2020 from $386 million at year-end 2019. The decrease in FDC in 2020 was predominantly attributed to costs incurred in 2020 to develop the Acordionero field as well as reduced 1P FDC costs for the PUT-7 and VMM-2 blocks.

Forecast prices
The pricing assumptions used in estimating NI 51-101 and COGEH compliant reserves data disclosed above with respect to net present values of future net revenue are set forth below. The price forecasts are based on McDaniel's standard price forecast effective January 1, 2021. McDaniel is an independent qualified reserves evaluator and auditor pursuant to NI 51-101.

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