Gran Tierra Announces 4th Quarter & Year-End Results for 2020

Source: 2/25/2021, Location: South America

- Realized 100% 1P and 133% PDP Reserves Replacement, with $2.65 and $5.06/BOE F&D Costs
- Achieved 2020 Production of 22,624 bopd
- Forecast 2021 Production of 28,000-30,000 bopd for Annual Growth of 24-33%
- Reduced Annual Operating and G&A Costs by $92 Million
- Achieved Company's Best Safety Year in 2020: Zero Lost Time Incident Frequency

Gran Tierra Energy Inc. announced the Company's financial and operating results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter and Full Year 2020 Operational and Financial Highlights

- With the unprecedented impact of the COVID-19 pandemic and the related crash in world oil prices, Gran Tierra took decisive action during the first half of 2020 to shut-in minor fields, curtail drilling activity and defer workovers in order to protect the Company's balance sheet and liquidity, while still achieving 2020 average working interest ("WI") production of 22,624 barrels ("bbl") of oil per day ("bopd") (100% oil)
- In the low oil price environment, Gran Tierra made the prudent decision not to maximize production and to defer growth until oil prices rebounded in the second half of 2020
- Gran Tierra took these actions while maintaining proper reservoir management and protecting the long term value of the Company's assets as demonstrated by the strong 2020 reserves replacement ratios
- The Company forecasts 2021 WI production of 28,000 to 30,000 bopd, for annual growth of 24% to 33%

Reserves (2) :
- Achieved material Proved reserves additions, in particular in the Company's core assets as a result of the continued positive reservoir responses from waterflooding; the Proved Developed Producing ("PDP") reserves replacement ratio was 133% with PDP reserves additions of 11.0 million bbl of oil equivalent ("MMBOE"), while the Total Proved ("1P") reserves replacement ratio was 100% with 1P reserves additions of 8.3 MMBOE
- The Company's strong 1P reserves replacement resulted in 1P reserves of 79 MMBOE (100% oil) as of year-end 2020; at December 31, 2020, 1P net present value discounted at 10% ("NPV10") was $1.2 billion before tax and 1P net asset value ("NAV") was $1.15 per share before tax(2); Total Proved plus Probable ("2P") NPV10 was $2.0 billion before tax and 2P NAV was $3.25 per share before tax(2)
- Realized PDP and 1P Finding and Development ("F&D") Costs of $5.06 and $2.65/BOE, respectively

Safety: Gran Tierra achieved its first year with a Lost Time Incident ("LTI") Frequency of zero, during which the Company logged 15 million LTI-free person-hours

Beyond Compliance:
The ANH, Colombia's oil and gas industry regulator, recognized Gran Tierra with an award on gender equality and diversity in operations, in recognition of the Company's best practices in the Colombian oil and gas industry

Gran Tierra's NaturAmazonas program received the award in the fauna category at the Seventh Latin American Green Awards for its "Honey from the Amazon" project, which is aimed at preserving and commercializing honey from the local bee population; the "Honey from the Amazon" project was selected from 30 finalists out of more than 2,000 environmental projects from all across Latin America

Significant Reductions in Operating and G&A Costs: The Company's gross cash general and administrative ("G&A") costs were $23 million for the year ended 2020, down 32% from $33 million for the year ended 2019; on an aggregate basis, total operating, G&A and transportation costs decreased to $145 million for the year ended 2020; down $92 million, a 39% reduction, from $237 million for the year ended 2019; the majority of the cost reductions represent structural improvements in the Company's operations, which are expected to be maintained as oil prices recover further

Collection of VAT and Income Tax Receivables: Through both direct tax refunds and value-added tax ("VAT") on the Company's oil sales, Gran Tierra collected total VAT and income tax receivables of $114 million during 2020

Credit Facility Paid Down and Cash Balance: By the end of fourth quarter 2020 ("the Quarter"), the Company paid down its credit facility balance to $190 million and had $14 million in cash and cash equivalents, compared to a balance on the credit facility of $200 million and cash and cash equivalents of $21 million at the end of third quarter 2020 ("the Prior Quarter")

Drilling and Completion Capital Cost Reductions: During the Quarter, as a result of ongoing cost saving initiatives, the Company successfully reduced per well drilling and completion capital costs at Acordionero by approximately 18% and 52%, respectively, compared to 2019 averages; the Company also expects future per well drilling and completion capital costs to be reduced by approximately 18% at Costayaco compared to 2019; the 2021 Costayaco drilling campaign is scheduled to begin in early second quarter 2021

Net Loss and EBITDA: Gran Tierra realized a net loss of $778 million or $(2.12) per share (basic and diluted), and EBITDA(5) of $(635) million for the year ended 2020, both of which included a non-cash ceiling test and inventory impairment of $564 million and a non-cash goodwill impairment of $103 million

Adjusted EBITDA and Funds Flow: During the Quarter, the Company realized a net loss of $48 million, Adjusted EBITDA(5) of $22 million, and funds flow from operations(5) of $9 million or $0.02 per share (basic and diluted), compared with $108 million, $22 million and $8 million, respectively, in the Prior Quarter Oil Sales, and Operating Netback: During the Quarter, Gran Tierra generated Fourth Quarter oil sales of $65 million, up 22% or $12 million from the Prior Quarter, largely driven by a 16% increase in WI production and a 4% increase in Brent oil price; the Quarter's operating netback(5) of $17.67 per bbl was only $6.78 per bbl lower than fourth quarter 2019's operating netback of $24.45 per bbl, despite a $17.16 per bbl drop in Brent oil price, as a result of lower operating expenses and royalties; the Brent oil price averaged $45.26 per bbl during the Quarter

Capital Expenditures: As expected, the Quarter's expenditures of approximately $40 million increased significantly from the Prior Quarter's level of $7 million, reflecting the restart of development drilling operations at the Acordionero field; the Company also accelerated certain budgeted first half 2021 capital expenditures into the Quarter to maximize operational efficiencies

Message to Shareholders
"I would like to thank our teams in Colombia, Canada and Ecuador for their excellent work and dedication in the face of a most challenging year for Gran Tierra and our industry," commented Gary Guidry, President and Chief Executive Officer of Gran Tierra. "The diligent management of COVID-19 safety protocols kept our people and the communities in which we operate safe, and allowed us to continue operating through the significant downturn our industry experienced in 2020. Throughout the course of the first half of 2020, we took quick decisive action to protect our balance sheet by deferring our capital program, reducing our well workover activities, implementing cost saving initiatives, and shutting in higher-cost, lower-production minor fields, all while preserving the long-term value of our asset base. The Colombian government was very proactive in supporting the industry during this time, implementing measures to help companies with commitment management and tax reimbursements.

During the second half of 2020, we realized and solidified our many cost saving initiatives, while cautiously planning a restart of our workovers and minor fields, as well as our development drilling program which commenced during the Quarter. Our key objective during the second half of 2020 was restarting our workover and drilling operations to economically rebuild production to achieve strong 2020 reserves replacement. With our workover and drilling campaigns charging ahead, production growing, and a new lower cost structure in place, we believe we have successfully positioned the Company to thrive in 2021 and beyond.

Our 2021 capital budget is a balanced, returns-focused program which prioritizes free cash flow(3) generation and debt reduction. We have allocated a modest amount to advance exploration-related activities for our high-impact exploration portfolio, which we plan to accelerate in 2022. Our 2021 program is designed to continue focusing on optimizing our four core assets under waterflood and maximizing the long-term value from all of our assets."

Mr. Guidry continued, "As difficult as 2020 was, Gran Tierra never faltered in its commitment to the health and safety of our people and all of our stakeholders. As a result, we achieved our best safety year on record with an LTI frequency of zero during 2020. Suspending and restarting oil fields, drilling and workover operations and construction projects are the highest risk activities that we face in the industry and our team did an excellent job. Health and safety will continue to be a focus in 2021 through our industry-leading COVID-19 safety practices and protocols. In addition, our 'Beyond Compliance Policy' continues. Where Gran Tierra identifies significant opportunities and benefits to the environment and communities, we voluntarily strive to go beyond what is legally required to protect the environment and provide social benefits, because it is the right thing to do."

Gran Tierra's Commitment to Go "Beyond Compliance" in Environmental, Social and Governance

- In 2020, Gran Tierra had its best safety record, achieving an LTI frequency of 0.00
- A perfect LTI frequency of 0.00 is a remarkable achievement in any year and particularly in 2020, with multiple activities including field suspensions, startups, and the implementation of new safety protocols to deal with the COVID-19 pandemic
- The Company's LTI frequency of 0.00 was well below both the 2019 industry averages of 0.42 for Latin America and 0.30 for North American exploration and production companies, as reported by the International Association of Oil and Gas Producers and was in the top percentile in any region globally(9)
- Early in 2020, we implemented several enhanced COVID-19 preventative measures, with a focus on reducing the spread of COVID-19 to protect our employees, contractors and communities living near our operations

- Through the NaturAmazonas project in the Putumayo Basin, in partnership with the international non-governmental organization Conservation International, Gran Tierra has committed to reforesting 1,000 hectares of land and securing and maintaining 18,000 hectares of forest in the Andes-Amazon rainforest corridor
- Gran Tierra has planted a total of 838,740 trees and has conserved, preserved or reforested 1,624 hectares of land through all of the Company's environmental efforts

Reducing Green House Gas Emissions:
- For the last 5 years, Gran Tierra has voluntarily released an assessment of its greenhouse gas ("GHG") emissions
- Gran Tierra is reducing GHG emissions at its facilities through gas-to-power projects that conserve excess natural gas that would otherwise be flared, and uses the gas instead for power generation
- In 2019, Gran Tierra completed a $25 million gas-to-power project at the Acordionero field, the Company’s single biggest producing asset, which has in turn decreased diesel fuel consumption by 85%; previously, gas-to-power projects were completed at the Moqueta field in 2018 and the Costayaco field in 2017
- The NaturAmazonas project alone is expected to sequester approximately 8.7 million tonnes of CO2 over its lifetime, which is equivalent to 215 billion passenger miles driven or the energy use of 10 million homes for one year(10)

Economic Opportunities:
- Over 20,000 local labor opportunities have been created by Gran Tierra over the past five years
- Gran Tierra maintains its commitment to contribute to the social and economic development of the regions where it operates by maximizing local hiring, as well as contracting local goods and services; through this commitment, Gran Tierra has awarded over $39 million to local companies during 2020 alone

Human Rights:
- In 2020, over 1,500 people benefited from Gran Tierra’s human rights initiatives
- In 2020, Gran Tierra and the Colombian Anti Mines Campaign de-mined over 7,700 hectares of land, and through these efforts, 871 community members from the Southern Putumayo region have directly benefited from this humanitarian de-mining initiative

2021 Operational Update

Acordionero Oil Field
Utilizing 2 workover rigs, Gran Tierra continues to workover Acordionero oil wells that went offline during the decline in oil prices during 2020, in order to restore them to production; in connection with the improving oil price environment in second half 2020, this workover program started at the beginning of the Quarter

The Company also restarted development drilling at Acordionero on November 30, 2020 and has since drilled 8 wells (6 producers and 2 injectors) of the 10-well program at the new South West pad; all 6 producers are currently on production

All 10 wells South West pad wells are scheduled to be drilled by the end of the first quarter of 2021; once complete, the rig is scheduled to move to Pad-6 in the field to drill an additional five producers

The AC-69 drill achieved a record cycle time, from spud to on-production, of 11.5 days, at a total drill and complete capital cost of $1.9 million

The combination of the workover and drilling programs has resulted in Acordionero's total WI production averaging approximately 13,000 bopd during February 2021 month-to-date, with approximately 2,500 bopd of additional production to be added from existing wells over the next few months

Acordionero's WI production dipped below 10,000 bopd in the early part of the second half of 2020 due to last year's temporary suspension of workover and development drilling activities; Acordionero's production is expected to return to the production levels realized in February 2020 with minimal capital spend over the next few months

Costayaco Oil Field
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 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 February 23, 2021, the remaining 137,093,750 shares of PetroTal owned by GTRL had a market value of approximately $37 million.

2021 Guidance
Gran Tierra is reiterating the Company's forecasted ranges for the 2021 budget:
- Brent has averaged $58.15 per bbl from January 1 to February 23, 2021; based on the current Brent forward price curve, and with all other assumptions the same as in the guidance table above, the Company would anticipate its annualized fourth quarter 2021 EBITDA to be approximately $290 to $310 million

Hedging: Gran Tierra has entered into Brent oil hedges on 15,000 bopd of WI production during the first half of 2021, with a weighted average floor of $45.13/bbl and ceiling of $51.38/bbl, to provide downside price protection since 70-80% of the Company's budgeted 2021 capital investment is projected to occur during the first half of 2021; Gran Tierra has 7,000 bopd hedged(11) for the second half of 2021 with a weighted average floor of $55.75/bbl and ceiling of $63.18/bbl

Quality and Transportation Discount: increased in 2020 to $10.98 per bbl compared to $10.48 per bbl in 2019; the increase was due to higher Castilla and Vasconia differentials in 2020 compared to 2019

Operating Expenses: decreased to $13.44 per bbl compared with $14.36 per bbl in 2019, primarily as a result of lower power generation and equipment rental costs resulting from successful completion of power generation and expansion facilities in the Acordionero field and cost savings attributed to the shut-in of higher cost minor fields for a portion of 2020

Transportation Expenses: decreased by 21% to $1.27 per bbl in 2020 from $1.60 per bbl in 2019 primarily as a result of utilization of alternative transportation routes during 2020 which had lower cost per bbl

Cash G&A Expenses: only increased to $2.70 per bbl in 2020 from $2.61 per bbl in 2019 despite a 35% decrease in WI production

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