- Achieved Total Average Production of 30,607 BOPD During Second Quarter 2022, The Highest Since 2019
- Second Quarter 2022 Total Average Production Up 4% from First Quarter 2022 and 25% from Second Quarter 2021
- Ecuador and Colombia 2022 Exploration Programs Remain On-Track
- As of June 30, 2022, Cash on Balance Sheet of $109 Million and Credit Facility Fully Repaid
Gran Tierra Energy Inc. announced an operations and financial update. All dollar amounts are in United States dollars, and production amounts are on an average working interest before royalties ("WI") basis unless otherwise indicated. Per barrel ("bbl") and bbl per day ("BOPD") amounts are based on WI sales before royalties.
Message to Shareholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: "Gran Tierra remains on track and on budget with our development and exploration drilling programs for 2022. The positive results from our Acordionero and Costayaco infill development well programs have been key to our ability to steadily increase oil production during 2022.
At the same time, we have achieved a major milestone for the Company by completely paying off our credit. We have significantly strengthened our balance sheet by steadily reducing our credit facility balance from $207 million as of June 30, 2020, to $0 as of June 2, 2022. Gran Tierra has a strong balance sheet with cash of $109 million as of June 30, 2022. We have also terminated our current credit facility and plan to replace it with a smaller facility which aligns with our current business objectives. The material strengthening of Gran Tierra's balance sheet over the past two years is a testament to the Company's commitment to capital discipline, high quality oil and low-cost oil assets and higher commodity prices.
After a two-year pause during the low and volatile oil price environment of 2020 and 2021, we are excited to once again be drilling high-impact exploration wells. In Ecuador, we remain on-track to spud our first planned exploration well in that country on the Chanangue Block during third quarter 2022. In Colombia, we are progressing our exploration activities and we look forward to the planned drilling during second half 2022 of the Rose exploration well in the Putumayo Basin and the Gaitas exploration well in the Middle Magdalena Valley Basin.
We believe Gran Tierra is well positioned to optimize value from each of our assets through continued development and enhanced oil recovery activities in 2022. Our waterflood programs across all our assets continue to perform well, as demonstrated by our second quarter 2022 total average production of 30,607 BOPD, up 25% from second quarter 2021."
Operations Update:
Production:
- Gran Tierra's total average production during second quarter 2022 was 30,607 BOPD, which was in-line with management expectations, and up 4% from first quarter 2022 and up 33% from second quarter 2021. This was the Company's highest quarterly total average production since fourth quarter 2019.
- Gran Tierra was able to consistently increase production during second quarter 2022 despite the temporary impact of brief intermittent farmers' blockades in the southern Putumayo Basin. The Company believes that these blockades, since resolved, reduced the Company's second quarter 2022 total average production by approximately 1,100 BOPD or 3.5%.
Acordionero:
- During first half 2022, Gran Tierra successfully drilled 16 wells (10 oil producers and 6 water injectors) in the Acordionero field.
- The successful results of the 10 new oil wells contributed to the Company's ability to steadily increase oil production during first half 2022.
- The Company continues to make progress with its planned polymer flood pilot project in this field, with polymer injection planned to begin in the newly drilled AC-95i injection well during third quarter 2022.
Costayaco and Moqueta:
- All 5 of the 2022 planned Costayaco infill development oil wells have been drilled and are on production.
- The Moqueta work program of 3 infill development wells is expected to begin in fourth quarter 2022 and is planned to continue into 2023.
Exploration:
Ecuador
- Gran Tierra is in the final stages of wellsite construction for the planned Bocachico-1 exploration well in the Chanangue Block and expects to start drilling this well during third quarter 2022.
- The Company has also started construction of the Charapa-B drilling pad in the Charapa Block.
- Environmental licenses are in place for Gran Tierra's multi-well exploration program in both the Chanangue and Charapa Blocks.
- Significant progress has also been made with Gran Tierra's environmental licensing for exploration drilling in the Iguana Block with approval expected during second half 2022.
Colombia
- Gran Tierra plans to spud the Gaitas exploration well in the Middle Magdalena Valley Basin, which is designed to target the Lisama Formation, which is the producing formation at the Acordionero oil field. The Gaitas location is approximately 7 kilometers south-southwest of Acordionero's Southwest Pad and is expected spud in late July 2022.
- In the Putumayo Basin, Gran Tierra continues progressing its exploration activities. The wellsite construction has started for the planned Rose-1 exploration well in the ALEA-1848A Block, which has a planned spud date in third quarter 2022.
- Gran Tierra spud the Churuco exploration well in the Chaza Block on June 2, 2022, which targeted a potential, separate reservoir located between the Company's Costayaco and Moqueta oil fields. While Churuco found the target reservoir, well log evaluation indicated that the reservoir was water-bearing. The Company plans to plug and abandon the well in accordance with government regulations.
Financial Update:
- As previously announced, Gran Tierra had completely paid off its bank-syndicated credit facility as of June 2, 2022.
- As part of a focus on significant debt reduction, the Company steadily reduced its credit facility balance from $207 million as of June 30, 2020, to $0 as of June 2, 2022.
- Over the same time period, the Company built its cash position from $17 million as of June 30, 2020, to $109 million as of June 30, 2022.
- Gran Tierra has terminated its current credit facility and plans to replace it with a new, smaller credit facility once all securities pledges against the current facility are released.
- At present, the Company has no oil price hedges in place for second half 2022. Therefore, all of Gran Tierra's oil production is receiving the full benefit of the Brent oil price which is currently above $100 per bbl.
