Gran Tierra Energy Increases 2011 Capital Program to Develop Recently Acquired Assets in South America
CALGARY, April 11 /CNW/ --
Drilling additional wells to delineate reserves in Colombia, explore in Colombia and Peru, and manage
production in Argentina
CALGARY, April 11 /CNW/ - Gran Tierra Energy Inc. (NYSE AMEX: GTE; TSX: GTE) ('Gran Tierra Energy'), a company focused on oil and gas exploration and production in South
America, today announced capital spending plans on the recently
acquired Petrolifera Petroleum Limited ('Petrolifera') assets.
Gran Tierra Energy intends to spend approximately $55 million on the
newly acquired assets with approximately $25 million in Colombia, $14
million in Peru and $16 million in Argentina. Drilling and completion
costs are expected to amount to $41 million, including $14 million in
Colombia, $13 million in Peru and $14 in Argentina. Seismic costs
total $12 million, mostly in Colombia and facilities costs total $2
million, mostly in Argentina.
This capital program is in addition to the $299 million 2011 capital
program previously announced for Colombia, Peru, Brazil and Argentina
by Gran Tierra Energy, which remains unchanged. This new combined
capital program of approximately $355 million for 2011 is expected to
be funded from existing cash reserves and cash flow.
'Our evaluation of the new assets under management indicates that there
is significant potential to grow reserves and production in the coming
years. With appropriate allocation of capital, we believe we can
unlock significant value from these assets,' said Dana Coffield,
President and Chief Executive Officer of Gran Tierra Energy. 'In
Colombia, Gran Tierra Energy intends to delineate a potential gas
production platform in the Lower Magdalena basin, prepare for 2012
exploration drilling in Peru, and reverse production declines in
Argentina where both oil and gas prices have consistently been rising.'
Colombia
Gran Tierra Energy plans to spend approximately $14 million on drilling
in Colombia, including one exploration well and one delineation well
with the intention of evaluating a potential gas production platform in
the Lower Magdalena Basin.
Sierra Nevada Block (100% working interest and operator)
Following Gran Tierra Energy's announcement of its offer to acquire
Petrolifera, GLJ Petroleum Consultants Ltd. ('GLJ') independent resource evaluators, estimated 101.5 billion cubic feet
('BCF') of United States Securities and Exchange Commission ('SEC') compliant 3P natural gas reserves (15.6 BCF 1P and 34.3 BCF 2P) at
the Brillante discovery well drilled in 2010. GLJ's estimate is
effective December 31, 2010. A delineation well in the Brillante discovery is planned for the third
quarter of 2011 to further define the significant potential of this
discovery. A regional gas market evaluation is underway, as well as an
evaluation of transportation options in the area.
The La Pinta-1 well, drilled in 2010, encountered good oil shows while
drilling in the Upper Porquero reservoirs. Gran Tierra Energy plans to
re-enter this well and perforate this zone to test its oil potential in
the third quarter of 2011.
Gran Tierra Energy also intends to acquire approximately 170 square
kilometers of 3D seismic in preparation for future exploration and
development drilling on the Sierra Nevada Block.
Magdelena Block (100% working interest and operator)
Testing operations on the San Angel-1 well continue and, contingent upon
successful test results, Gran Tierra Energy may acquire approximately
150 square kilometers of 3D seismic in the area.
Turpial Block (50% working interest and operator)
One exploration well is planned for the Turpial Block to evaluate the
heavy oil reservoirs encountered by stratigraphic drilling in the
1970's.
Peru
In 2011, Gran Tierra Energy intends to spend approximately $13 million
in preparation for drilling in early 2012.
Block 107 (100% working interest and operator)
Gran Tierra Energy believes significant resource potential exists on
Block 107 in Peru. One exploration well is planned for the second
quarter of 2012, with 2011 spending dedicated to planning and purchase
of long lead items in preparation for 2012 drilling.
Argentina
Capital spending in Argentina will initially focus on reversing
production declines on properties in the Neuquen Basin. Gran Tierra
Energy plans to spend $14 million on drilling and completions in
Argentina.
Puesto Morales / Puesto Morales Este (100% working interest and
operator)
Gran Tierra Energy plans to conduct work-over programs on approximately
16 wells, along with drilling approximately six development wells,
including three producers and three new water injectors. Gran Tierra
Energy believes it can improve recovery in the existing reservoirs by
minimizing water channeling in the waterflood project through the use
of polymer. The budgeted work program may be adjusted to accommodate
results during implementation of the program.
Production and Reserves
Including the Petrolifera assets, Gran Tierra Energy anticipates average
production in 2011 to range between 17,500 and 19,000 barrels of oil
equivalent ('BOE') per day, net after royalty, weighted approximately 95% to oil.
GLJ converted previously reported NI51-101 year-end 2010 reserves for
Petrolifera Petroleum Ltd., effective December 31, 2010 to SEC format as follows:
_______________________________________________________________
| | | |Proved + Probable|
|2010 Year-End |Proved |Proved + Probable | +Possible((1) ) |
|Net After Royalty|Reserves| Reserves | Reserves |
|_________________|________|__________________|_________________|
|Oil, MMBO((2)) | 5.498 | 8.683 | 13.357 |
|_________________|________|__________________|_________________|
|Gas, MMSCF((2)) | 22,456 | 47,242 | 124,486 |
|_________________|________|__________________|_________________|
|NGL, MMBO((2)) | 0.243 | 0.450 | 0.919 |
|_________________|________|__________________|_________________|
Note:
(1) Possible reserves are those additional reserves that are
less certain to be recovered than probable reserves. There
is a 10% probability that the quantities actually recovered
will equal or exceed the sum of proved plus probable plus
possible reserves.
(2) MMBO (million MMSCF (million MMBOE (million barrels
barrels of oil) standard cubic feet) of oil equivalent
The following table summarizes Gran Tierra Energy's previously reported
SEC compliant year-end 2010 (excluding Petrolifera) net after royalty
reserves, with average start-of month 2010 oil prices, effective December 31, 2010:
_______________________________________________________________
|2010 Year-End |Proved |Proved + Probable |Proved + Probable|
|Net After Royalty|Reserves| Reserves | +Possible((1) ) |
| | | | Reserves |
|_________________|________|__________________|_________________|
|Oil, MMBO((2)) | 23.598 | 31.017 | 46.960 |
|_________________|________|__________________|_________________|
|Gas, MMSCF((2)) | 1,232 | 1,380 | 43,440 |
|_________________|________|__________________|_________________|
|NGL, MMBO((2)) | 0 | 0 | 0.361 |
|_________________|________|__________________|_________________|
Note:
(1) Possible reserves are those additional reserves that are less
certain to be recovered than probable reserves. There is a 10%
probability that the quantities actually recovered will equal or
exceed the sum of proved plus probable plus possible reserves.
(2) MMBO (million barrels MMSCF (million MMBOE (million
of oil) standard cubic feet) barrels of oil
equivalent
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and
production company, headquartered in Calgary, Canada, incorporated in
the United States, trading on the NYSE Amex (GTE) and the Toronto Stock
Exchange (GTE), and operating in South America. Gran Tierra Energy
holds interests in producing and prospective properties in Argentina,
Colombia, Peru and, subject to regulatory approval, Brazil. Gran Tierra
Energy has a strategy that focuses on establishing a portfolio of
producing properties, plus production enhancement and exploration
opportunities to provide a base for future growth.
Gran Tierra Energy's Securities and Exchange Commission filings are
available on a web site maintained by the Securities and Exchange
Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Advisories and Forward Looking Statements:
This news release contains certain forward-looking information and
forward-looking statements (collectively, 'forward-looking statements')
under the meaning of applicable securities laws, including Canadian
Securities Administrators' National Instrument 51-102 - Continuous
Disclosure Obligations and the United States Private Securities
Litigation Reform Act of 1995. The use of the words 'expect',
'potential', 'intend', 'plan', 'may', 'believe', 'anticipates' and
'will' identify these forward-looking statements. In particular, but
without limiting the foregoing, this news release contains
forward-looking statements regarding, among other things, Gran Tierra
Energy's potential to grow reserves and production, its belief that it
can unlock significant value from the the Petrolifera assets, planned
capital expenditures on the assets acquired from Petrolifera and the
allocation of such capital expenditures among properties in Colombia,
Peru and Argentina, sources of funding for Gran Tierra Energy's new
capital program, timing of drilling activities in the Brillante
discovery, plans regarding re-entering and perforation at the La
Pinta-1 well, testing operations on the San Angel-1 well, the
acquisition of 3D seismic, plans for an exploration well in the Turpial
Block, drilling preparations in Peru, and the timing of drilling in
Peru, drilling and completion operations in Argentina and improved
recoveries through minimizing water channeling through the use of
polymer. Reserves referred to as '1P', '2P' and '3P' are defined as
'Total Proved', 'Total Proved plus Probable', and 'Total Proved plus
Probable plus Possible' respectively.
The forward-looking statements contained in this news release reflect
several material factors and expectations and assumptions of Gran
Tierra Energy including, without limitation, assumptions relating to
log evaluations, the accuracy of certain testing results and seismic
data, the accuracy of reserves estimates provided by GLJ, that Gran
Tierra Energy will continue to conduct its operations in a manner
consistent with past operations, the effects of using polymer to
minimize water channeling and the general continuance of current or,
where applicable, assumed operational and industry conditions. Gran
Tierra Energy believes the material factors, expectations and
assumptions reflected in the forward-looking statements are reasonable
at this time but no assurance can be given that these factors,
expectations and assumptions will prove to be correct.
The forward-looking statements contained in this news release are
subject to risks, uncertainties and other factors that could cause
actual results or outcomes to differ materially from those contemplated
by the forward-looking statements, including, among others: Gran Tierra
Energy's operations are located in South America, and unexpected
problems can arise due to guerilla activity, technical difficulties and
operational difficulties which impact or delay its testing and drilling
operations; geographic, political and weather conditions can impede
testing and drilling operations; and the risk that current global
economic and credit market conditions may impact oil prices and oil
consumption more than Gran Tierra Energy currently predicts, which
could cause Gran Tierra Energy to modify its exploration, drilling
and/or construction activities. Although the current capital spending
program of Gran Tierra Energy is based upon the current expectations of
the management of Gran Tierra Energy, there may be circumstances where,
for unforeseen reasons, a reallocation of funds may be necessary as may
be determined at the discretion of Gran Tierra Energy and there can be
no assurance as at the date of this press release as to how those funds
may be reallocated. Should any one of a number of issues arise, Gran
Tierra Energy may find it necessary to alter its current business
strategy and/or capital spending program. Accordingly, readers should
not place undue reliance on the forward-looking statements contained
herein. Further information on potential factors that could affect Gran
Tierra Energy are included in risks detailed from time to time in Gran
Tierra Energy's Securities and Exchange Commission filings, including,
without limitation, under the caption 'Risk Factors' in Gran Tierra
Energy's Annual Report on Form 10-K filed February 25, 2011. These
filings are available on a Web site maintained by the Securities and
Exchange Commission at http://www.sec.gov and on SEDAR at
www.sedar.com. The forward-looking statements contained herein are
expressly qualified in their entirety by this cautionary statement. The
forward-looking statements included in this press release are made as
of the date of this press release and Gran Tierra Energy disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as expressly required by applicable securities
legislation.
BOE's may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 thousand cubic feet:1 barrel of oil is based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.
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Contact Information
For investor and media inquiries please contact:
Jason Crumley
Director, Investor Relations
403-265-3221
info@grantierra.com.
