Gran Tierra Energy Inc. Announces First Quarter 2011 Results
CALGARY, May 9 /CNW/ --
Quarter highlighted by additional reserve potential at the Moqueta field
and successful closing of Petrolifera Acquisition
CALGARY, May 9 /CNW/ - Gran Tierra Energy Inc. ('Gran Tierra Energy') (NYSE Amex: GTE) (TSX: GTE), a company focused on oil and gas exploration and production in South
America, today announced financial and operating results for the
quarter ended March 31, 2011. All dollar amounts are in United States
dollars unless otherwise indicated.
Highlights for the quarter include:
-- Quarterly oil production of 14,372 barrels of oil per day
('BOPD') net after royalty ('NAR'), a 4% decrease in average
daily production from the same period in 2010 of 14,908 BOPD
NAR due to Tumaco Port maintenance downtime;
-- Quarterly gas production of 1.048 million cubic feet per day
('MMCFD') NAR, a 319% increase in average daily production from
the same period in 2010 of 0.250 MMCFD NAR;
-- Revenue and other income for the quarter of $122.5 million, a
32% increase over the same period in 2010;
-- Net income of $13.7 million or $0.05 per share basic and
diluted, compared to net income of $10.0 million or $0.04 per
share basic and diluted in the same period in 2010;
-- Funds flow from operations of $66.6 million compared to $54.3
million for the same period in 2010;
-- Cash and cash equivalents were $253.9 million at March 31, 2011
compared to $355.4 million at December 31, 2010 largely due to
capital spending and timing differences relating to when
Ecopetrol settles their accounts receivables;
-- Working capital decreased to $224.6 million at March 31, 2011
compared to $265.8 million at December 31, 2010. Gran Tierra
Energy assumed $31.3 million of debt following the closing of
the Petrolifera Petroleum Ltd. ('Petrolifera') acquisition;
-- Announced and subsequently closed the acquisition of
Petrolifera on March 18, 2011;
-- Successfully drilled and tested Moqueta-4 delineation well in
the Moqueta oil discovery in Colombia. Subsequent to the end of
the quarter, successfully drilled the Moqueta-5 delineation
well, which further increases the reserve potential of the
field;
-- Continued construction of the Moqueta to Costayaco flow-line
with first long-term test production expected in late May 2011;
-- Plugged and abandoned the Taruka-1, Canangucho-1 and,
subsequent to end of the quarter, San Angel-1 exploration wells
in Colombia along with the Kanatari-1 exploration well in Peru;
-- Successfully farmed out a 50% working interest in the Santa
Victoria Block in the Noroeste Basin of Argentina to Apache
Corporation ('Apache');
-- Qualified as a Class B Operator from Brazil's Agencia Nacional
de Petroleo Gas Natural e Biocombustiveis ('ANP') allowing Gran
Tierra Energy to act as an Operator in both the onshore and
shallow water (<400 meters water depth) offshore of Brazil; and
-- Matured plans for robust exploration, delineation and
development drilling campaigns in Colombia, Brazil, Peru and
Argentina through 2011 and into 2012.
'Gran Tierra Energy continues to expand its exploration and development
portfolio through the successful completion of the Petrolifera
acquisition in March. This acquisition added production enhancement
opportunity in Argentina, reserve development opportunity in Colombia,
and exploration opportunity in Colombia and Peru. In parallel with the
integration of the newly acquired assets, Gran Tierra Energy is
continuing appraisal of the Moqueta oil field in Colombia in
preparation for long-term testing expected to start in May for the new
reserves that continue to grow with each new delineation well,' said
Dana Coffield, President and Chief Executive Officer of Gran Tierra
Energy. 'Our opportunities in Peru have significantly expanded from
the same time last year as we continue to mature our portfolio in
anticipation of drilling in 2012. Finally, our development and
exploration drilling campaign in Brazil remains on track, with plans to
initiate Gran Tierra Energy's drilling program late in the second
quarter of 2011,' concluded Coffield.
Production
Review
Three Months Ended March 31, 2011 Three Months Ended March 31, 2010
(Barrels of
Oil
Equivalent) Colombia Argentina Total Colombia Argentina Total
Gross
Production 1,717,696 109,942 1,827,638 1,713,436 86,445 1,799,881
Royalties (483,212) (12,777) (495,989) (465,131) (10,097) (475,228)
Inventory
Adjustment (21,659) (817) (22,476) 21,017 (235) 20,782
Production
Net After
Royalties
(NAR) 1,212,825 96,348 1,309,173 1,269,322 76,113 1,345,435
Barrels of
Oil
Equivalent
Per Day
(BOEPD)
(NAR) 13,476 1,070 14,546 14,103 846 14,949
Financial
Review
Three Months Ended March 31,
2011 2010 % Change
(Thousands
of U.S.
Dollars)
Revenue and
Interest $ 122,519 $ 93,110 32
Net income $ 13,713 $ 9,960 38
(US Dollars
per Share)
Net Income
Per Share -
Basic $ 0.05 $ 0.04 25
Net Income
Per Share -
Diluted $ 0.05 $ 0.04 25
Funds flow from operations((1)) reconciled to net income is as follows:
Funds flow From
Operations - Non-GAAP
Measure Three Months Ended March 31,
2011 2010
(Thousands of U.S.
Dollars)
Net income $ 13,713 $ 9,960
Adjustments to
reconcile net income
to funds flow from
operations
Depletion,
depreciation,
accretion and
impairment 63,357 40,343
Deferred taxes (187) (10,054)
Stock-based
compensation 3,453 1,362
Unrealized gain on
financial instruments (62) (44)
Unrealized foreign
exchange loss 4,458 12,707
Settlement of asset
retirement
obligations (4) -
Equity taxes
payable long-term 6,132 -
Gain on acquisition (24,300) -
Funds flows from $ $
operations 66,560 54,274
(1) Funds flow from operations is a non-GAAP measure which does not
have any standardized meaning prescribed under GAAP. Management
uses this financial measure to analyze operating performance and
the income (loss) generated by Gran Tierra Energy's principal
business activities prior to the consideration of how non-cash
items affect that income (loss), and believes that this financial
measure is also useful supplemental information for investors to
analyze operating performance and Gran Tierra Energy's financial
results. Investors should be cautioned that this measure should
not be construed as an alternative to net income (loss) or other
measures of financial performance as determined in accordance with
GAAP. Gran Tierra Energy's method of calculating this measure may
differ from other companies and therefore, it may not be
comparable to similar measures used by other companies or
appropriate for other purposes. Funds flow from operations, as
presented, is net income (loss) adjusted for depletion,
depreciation and accretion, deferred taxes, stock based
compensation, unrealized loss (gain) on financial instruments,
unrealized foreign exchange losses (gains), settlement of asset
retirement obligations, equity taxes payable long-term and gain on
acquisition.
First Quarter 2011 Financial Highlights:
Revenue and interest increased 32% to $122.5 million for the three
months ended March 31, 2011 compared to $93.1 million in the same
quarter in 2010 due to an increase of 36% in realized crude oil prices.
Operating expenses for the first quarter of 2011 amounted to $16.4
million, a 61% increase from $10.2 million in the same period in 2010
due mainly to higher workover costs, fuel and power costs, water
injection costs, and higher trucking costs due to port maintenance in
Colombia. For the three months ended March 31, 2011, operating expenses
on a barrel of oil equivalent ('BOE') basis increased by 65% to $12.52 from $7.57.
Depletion, depreciation, accretion and impairment expense ('DD&A') for the current quarter increased to $63.4 million compared to $40.3 million for the same quarter in 2010 due to a
$31.9 million ceiling test impairment in the Peru cost center. On a BOE
basis, DD&A has increased 61% to $48.39 for the first quarter of 2011
compared to $29.99 in the same period in 2010.
General and administrative expense ('G&A') of $13.6 million increased 90% from $7.2 million in the same period in 2010
primarily due to increased employee related costs reflecting expanded
operations and the acquisition of Petrolifera. G&A expenses per BOE
increased 95% to $10.42 for the current quarter, compared to $5.34 for
the first quarter of 2010.
Equity tax for the current quarter of $8.1 million represents a
Colombian tax of 6.2% on the balance sheet equity recorded in our
Colombia branches at January 1, 2011. The equity tax is assessed every
four years. The tax for the four-year period from 2011 to 2014 is
payable in eight semi-annual installments over the four-year period but
is expensed in the first quarter of 2011 at the commencement of the
four-year period. Accordingly, the equity tax expense for the previous
four-year period was recorded prior to 2010 and no expense is recorded
in the first quarter of 2010.
A foreign exchange loss of $5.2 million was recorded in the first
quarter of 2011, of which $4.5 million is an unrealized non-cash
foreign exchange loss. This compares to the $14.3 million foreign
exchange loss recorded in the same quarter of 2010, of which $12.7
million was an unrealized non-cash foreign exchange loss. The
unrealized foreign exchange losses arose primarily as a result of the
translation of a deferred tax liability. The deferred tax liability is
denominated in Colombian pesos and the decline in the U.S. dollar
against the Colombian peso of 2% in the current quarter and 6% for the
three months ended March 31, 2010 resulted in the foreign exchange
losses.
The results for the first quarter of 2011 include a non-cash gain of
$24.3 million recognized on the acquisition of Petrolifera.
Net income of $13.7 million or $0.05 per share basic and diluted was
recorded for the first quarter of 2011, compared to net income of $10.0
million, or $0.04 per share basic and diluted, for the same period in
2010.
Balance Sheet Highlights:
The company reported cash and cash equivalents of $253.9 million at
March 31, 2011 as compared to $355.4 million at December 31, 2010. The
decline in cash is due to capital spending and timing differences
relating to when Ecopetrol settles their accounts receivables. Working
capital decreased to $224.6 million at March 31, 2011, as compared to
$265.8 million at December 31, 2010 due to the assumption of $31.3
million of debt following the closing of the Petrolifera acquisition.
Shareholders' equity increased to $1,047.8 million at March 31, 2011
from $886.9 million at December 31, 2010, and the company had $31.3
million short-term bank debt as of March 31, 2011 related to the
reserve-backed credit facility held by Petrolifera. Gran Tierra Energy
intends to pay off this debt after the Argentine restriction preventing
its repayment expires in August 2011.
Production Highlights:
Average daily consolidated light and medium crude oil and natural gas
production for the three months ended March 31, 2011 decreased 3% to
14,546 BOEPD NAR compared to 14,949 BOEPD NAR for the same period in
2010. First quarter production was impacted by the previously
announced maintenance at the Tumaco Port crude offloading terminal in
the Pacific Coast city of Tumaco. The port was offline from December
28, 2010 to February 7, 2011, during which time Gran Tierra Energy was
able to sell a portion of its crude oil production through trucking and
other pipeline options.
Average daily Colombian production of light and medium crude oil and
natural gas for the three months ended March 31, 2011 decreased 4% to
13,476 BOEPD NAR compared to 14,103 BOEPD NAR for the same period in 2010. The
production is primarily from the Costayaco field in the Chaza Block in
Colombia where Gran Tierra Energy has a 100% working interest.
Average daily Argentine production of light and medium crude oil and
natural gas for the quarter ended March 31, 2011 increased 27% to 1,070
BOEPD NAR compared to 846 BOEPD NAR for the same period in 2010 due to
the inclusion of Petrolifera production beginning March 19, 2011.
Average daily consolidated production in April, 2011 averaged
approximately 17,500 BOEPD NAR. This included approximately 14,700
BOPD NAR of crude oil in Colombia, approximately 2,300 BOPD NAR of
crude oil in Argentina, and approximately 3.0 MMCFD NAR of natural gas
(or approximately 500 BOEPD NAR).
Capital Program and Operations Update
Gran Tierra Energy successfully completed the acquisition of Petrolifera
Petroleum Ltd. in the first quarter of 2011. The acquisition was
approved at a meeting of Petrolifera shareholders on March 17, 2011 and
by the Court of Queen's Bench of Alberta on March 18, 2011 with over
99% of the votes cast voting in favor of the acquisition.
Gran Tierra Energy's 2011 capital program outlook for 2011 marginally
increased to $357 million, from $355 million. This includes $196
million for Colombia, $49 million for Peru, $50 million for Argentina,
and $62 million for Brazil. Of this, $190 million is for drilling, $79 million for infrastructure, $87 million for
seismic acquisition and $1 million for other activities. Of the $190
million in drilling, approximately $87 million is for exploration and
the balance is for delineation and development drilling.
As a result of the Petrolifera acquisition and revised work programs,
Gran Tierra Energy previously increased its production projections to
17,500 BOEPD - 19,000 BOEPD for 2011.
COLOMBIA
Upcoming Exploration Wells
Environmental permitting for the Rumiyaco-1 oil exploration well in the
Rumiyaco Block of the Putumayo Basin has been approved. Civil
construction work is expected to begin in May, 2011 and the well is
expected to start drilling in the third quarter of 2011.
The Turpial-1 exploration well in the Middle Magdelena Basin is expected
to begin drilling in the third quarter of 2011 targeting a heavy oil
prospect on the Turpial Block.
The Melero-1 exploration well on the Garibay block of the Llanos basin
is expected to start drilling in the second quarter of 2011.
La Vega Este-1 oil exploration well in the Azar Block is on schedule to
be drilled in the fourth quarter of 2011.
A new oil exploration well to test the Pacayaco prospect, is also
expected to be drilled in the third quarter of 2011.
The Brillante SE-2x well is expected to be drilled in the third quarter
of 2011.
Two stratigraphic test wells, one in Putumayo 10 Block and one in
Piedemonte Norte Block, will not be drilled due to lack of appropriate
slimhole drilling rigs. These targets will be considered for drilling
in 2012 with conventional drilling rigs.
Moqueta Field, Chaza Block
The Moqueta-4 delineation well was drilled and tested at 1,674 BOPD from
the Caballos and T-Sandstone without the assistance of pumps. The
Moqueta-5 deviated delineation well began drilling on April 6, 2011
from the same well pad as the Moqueta-4 delineation well and reached
total measured depth of 5,309 feet in Basement on April 27. Based on
mud logs, electric logs and RFT (Repeat Formation Tester) pressure
data, the Caballos, T Sandstone and U Sandstone reservoirs appear to be
saturated with oil with a total interpreted net pay of 167 feet. No
water is evident on the logs. The reservoirs were penetrated
approximately 50 feet deeper than in Moqueta-4, increasing the reserve
potential of the field. The lack of evidence of water in any reservoirs
encountered to date indicates additional oil reserves may be found
further down dip with additional delineation drilling.
Moqueta-6, expected to spud in third quarter of 2011, will be drilled as
a deviated well from the Moqueta-4 surface location in order to further
investigate the down dip limits of the oil columns encountered in the
Villeta U, Villeta T and Caballos formation reservoirs. Subject to
further drilling engineering work, the bottom hole location is
approximately 550 meters west of Moqueta-4 and the reservoirs are
expected approximately 175 feet structurally lower than in Moqueta-5.
Planning is underway for Moqueta-7, expected to be drilled in the first
quarter of 2012 at a new surface location approximately 1,750 meters
west of Moqueta-4. This location will allow additional appraisal of
the down dip extent of the field. Moqueta-7 could be used as an oil
producer or water injector depending on the well results.
New 3D seismic acquisition is expected to start in the second quarter to
assist in refining the mapping of the Moqueta field and planning
further delineation and development drilling. First long-term test
production from a new 6-inch, 8 kilometer flow-line linking Moqueta to
Costayaco is expected to take place late May, 2011. Construction of the
line is approximately 85% complete. Once initiated, average production
from the Moqueta field is expected to be modest, at approximately 500
BOPD. Production is expected to begin ramping up in 2012 to levels
that will be determined once reservoir performance data has been
acquired, the full aerial extent of the field has been determined, and
the final development concept decided.
Brillante Field, Sierra Nevada Block, Lower Magdalena Basin
Development of the Brillante gas field is advancing, with first gas
sales expected to be initiated in the second quarter at approximately 2
to 3 MMCFD. A new 275 square kilometer 3D seismic program is expected
to be acquired in the second quarter of 2011, of which 222 square
kilometers will be in the Sierra Nevada License and 53 kilometers will
be in the Magdalena license. The Brillante SE-2x well is expected to be
drilled in the third quarter to evaluate the significant potential gas
resource discovered by Brillante SE-1x.
Costayaco Field, Chaza Block, Putumayo Basin
The Costyaco-12 and -13 development wells concluded drilling in February
2011. These were drilled as infill production wells to drain the
northern and southern portions of the Costayaco field and will be
converted to water injectors once depleted to assist in maintaining
reservoir pressure.
Magdalena Block, Lower Magdalena Basin
The San Angel-1 well encountered gas shows over two intervals totaling
415 feet (gross), but wireline logs and RFT data was not conclusive in
quantifying reservoir quality or gas saturation. Recently completed
testing operations produced water and non-commercial amounts of gas.
As a result, the well was plugged and abandoned.
Piedemonte Sur Block, Putumayo Basin
The Taruka-1 exploration well reached total depth on February 7,
2011. The target reservoirs were encountered, but with only poor oil
shows. As a result, the well was plugged and abandoned.
Chaza Block, Putumayo Basin
The Canangucho-1 exploration well reached total depth on March 23,
2011. After the evaluation of wireline logs, it was determined that the
T Sandstone and Caballos formations were water bearing. As a result,
the Canangucho well was plugged and abandoned.
BRAZIL
In August 2010, Gran Tierra Energy established an initial exploration
and production position in Brazil, subject to approval by Agência
Nacional de Petróleo Gás Natural e Biocombustíveis ('ANP'), whereby Gran Tierra Energy will receive a 70% working interest in
four blocks in the onshore Recôncavo Basin. In April 2011, Gran Tierra
Energy received final approvals for Blocks -129, -142 and -224 and
expects regulatory approval for Block 155 shortly. Gran Tierra Energy
will then assume its working interest share of a light oil discovery
which has an unaudited estimated gross recoverable resource of 6
million barrels of oil. Gran Tierra Energy anticipates drilling two
development wells in the second half of 2011 to grow production from
this discovery, which is currently producing 500 BOPD gross from one
zone without the assistance of pumps.
Two exploration wells are planned to be drilled on this acreage in 2011,
with drilling rigs currently being tendered and locations currently
being permitted. Additional drilling is scheduled to continue into
2012. The first exploration well is expected to start drilling on
Block 142 at the end of third quarter 2011.
PERU
Block 95, Marañon Basin
A drilling site location has been identified for the first exploration
well on Block 95, with civil construction expected to begin in the
third quarter of 2011. Drilling is expected to begin in second quarter
of 2012. An oil field has already been discovered on Block 95, with
the discovery well drilled in 1974 flowing 807 BOPD naturally without
pumps. The new exploration well will further delineate this field and
will explore deeper reservoir horizons not penetrated by the discovery
well.
Block 107, Marañon Basin
Permitting for drilling on Block 107 is advancing, with drilling
expected to begin in the second half of 2012. The prospects on Block
107 are on trend with the world class gas-condensate discoveries that
have been made around the Camisea region in southern Peru. Both oil
and gas seeps are present on Block 107.
Block 128, Marañon Basin
Gran Tierra Energy previously announced the Kanatari-1 exploration well
reached total depth on March 3, 2011. No oil or gas shows were noted
during drilling and interpretations from wireline logs indicate the
reservoirs are water bearing. As a result, Kanatari-1 was plugged and
abandoned; however, evaluation of the prospectivity of the block
continues.
Block 122, Marañon Basin
The prospectivity of Block 122 is under review as a result of the
Kanatari-1 drilling result on the adjacent Block 128. No well will be
drilled on the block in 2011 as currently permitted drilling locations
are not prospective.
Blocks 123, 124 and 129, Marañon Basin
In September 2010, Gran Tierra Energy acquired a 20% non-operated
working interest in ConocoPhillips operated Blocks 123, 124 and 129,
subject to government approval. The approval for these blocks was
granted on March 19, 2011 with final assignment completed April 26,
2011. Gran Tierra Energy is evaluating the prospectivity of these
blocks based on recently acquired 2-D seismic data.
ARGENTINA
Santa Victoria Block, Noroeste Basin
Gran Tierra Energy announced it has successfully farmed out a 50%
interest in its Santa Victoria block in the Noroeste Basin of
northwestern Argentina to Apache. The joint venture, with Gran Tierra
Energy as operator, is interested in testing the gas potential of the
acreage, with gas-condensate reserves and production proven in the
region.
Puesto Morales / Puesto Morales Este Blocks, Neuquen Basin
Gran Tierra Energy has initiated its workover program on 16 wells, and
is planning on drilling 6 development wells with the intention of
improving recovery in the remaining reserves, minimizing water
channeling through the use of polymer, and subsequently growing
production. Since taking over operations in March, production declines
of the last several years have been halted and oil production has now
been stabilized at approximately 1,600 BOPD NAR and gas production has
stabilized at 2.7 MMSCFD NAR.
Valle Morado Field, Valle Morado Block
The sidetrack drilling operation on the Valle Morado GTE.St.VMor-2001
well was suspended in February 2011 and the well is being abandoned due
to the poor condition of the casing in the discovery well. Gran Tierra
Energy is evaluating options to drill a new vertical well in the gas
field in 2012
Other Matters
In accordance with Gran Tierra Energy's Hydrocarbon Exploration and
Exploitation Agreement with Agencia Nacional de Hidrocarburos (National
Hydrocarbons Agency) ('ANH') for the Chaza Block in Colombia ('Chaza
Contract'), the company's crude oil production from each Exploitation
Area on the Block is subject to the payment of additional compensation
to the ANH ('Additional Compensation ') over and above the basic
sliding scale royalty that applies when cumulative gross production
from an Exploitation Area exceeds 5 million barrels. As previously
disclosed, production from the Costayaco Exploitation Area on the Chaza
Block became subject to the Additional Compensation in the fourth
quarter of 2009 after cumulative production from the Costayaco field
exceeded 5 million barrels.
The ANH has requested that the Additional Compensation be paid with
respect to production from the recently drilled wells relating to the
Moqueta discovery and has initiated a non-compliance procedure under
the Chaza Contract. The Moqueta discovery is not located in the
Costayaco Exploitation Area. Further, Gran Tierra Energy views the
Costayaco field and the Moqueta discovery as two clearly separate and
independent hydrocarbon accumulations. Therefore, it is Gran Tierra
Energy's view that it is clear that pursuant to the Chaza Contract the
Additional Compensation payments are only to be paid with respect to
production from the Moqueta wells when the accumulated crude oil
production from any new Exploitation Area created with respect to the
Moqueta discovery exceeds 5 million barrels. At the end of the first
quarter of 2011 cumulative production from the Moqueta field consists
of a small amount of test production only.
Gran Tierra will be responding to the ANH in accordance with the
provisions of the Chaza Contract and will attempt to cooperatively
resolve this issue with the ANH.
Conference Call Information:
Gran Tierra Energy Inc. will host its first quarter 2011 results
conference call on Tuesday, May 10, 2011 at 8:00 a.m. Mountain Time
(MT).
President and Chief Executive Officer Dana Coffield, Chief Financial
Officer Martin Eden and Chief Operating Officer Shane O'Leary will
discuss Gran Tierra Energy's financial and operating results for the
quarter and then take questions from securities analysts and
institutional shareholders.
Interested parties may access the conference call by dialing
1-866-804-6924 (domestic) or +1-857-350-1670 (international), pass code
85016866. The call will also be available via web cast at www.grantierra.com, www.streetevents.com, or www.fulldisclosure.com. The web cast will be available on Gran Tierra Energy's website until
the next earnings call.
For interested parties unable to participate, an audio replay of the
call will be available beginning two hours after the call until 11:59
p.m. on May 24, 2011. To access the replay dial 1-888-286-8010
(domestic) or 617-801-6888 (international) pass code 58763898.
Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required to
join the webcast.
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 Exchange (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 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. Additional information concerning
Gran Tierra Energy is available at www.grantierra.com. Investor inquiries may be directed to info@grantierra.com or (403) 265-3221.
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.
Forward Looking Statements:
This news release contains certain forward-looking information,
forward-looking statements and forward-looking financial outlook
(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', 'project', 'plan', 'outlook',
'anticipate', 'schedule', 'intend', 'will', 'target' and similar
expressions are intended to identify forward-looking statements. In
particular, but without limiting the foregoing, this news release
contains forward-looking statements regarding: the reserves potential
of the Moqueta oil field; drilling, testing and production
expectations; Gran Tierra Energy's planned capital program and the
allocation of capital; production guidance; Gran Tierra Energy's
planned operations, including as described under the captions
'Colombia', 'Peru', 'Brazil' and 'Argentina', Gran Tierra Energy's
proposed negotiations with ANH, together with all other statements
regarding expected or planned development, testing, drilling,
production, expenditures or exploration, or that otherwise reflect
expected future results or events.
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, that Gran Tierra Energy will continue to conduct its
operations in a manner consistent with past operations, the accuracy of
testing and production results and seismic data, the effects of
drilling down-dip and the general continuance of current or, where
applicable, assumed operational, regulatory 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 may impact its testing and drilling
operations, the integration of the assets acquired in the acquisition
of Petrolifera and the production, transport or sale of its products;
geographic, political, regulatory and weather conditions can impact
testing and drilling operations and the production, transport or sale
of its products; 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 and the risk that Gran Tierra Energy will not successfully
negotiate a resolution with ANH, which could have a material adverse
effect on the financial results of Gran Tierra Energy. 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 Mcf : 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
Basis of Presentation of Financial Results:
Gran Tierra Energy's financial results are reported in United States
dollars and prepared in accordance with generally accepted accounting
principles in the United States.
Gran Tierra Energy Inc.
Condensed Consolidated Statements of Operations and Retained Earnings
(Accumulated Deficit) (Unaudited)
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Three Months Ended March 31,
2011 2010
REVENUE AND OTHER
INCOME
Oil and natural $ $
gas sales 122,296 92,932
Interest 223 178
122,519 93,110
EXPENSES
Operating 16,396 10,185
Depletion,
depreciation,
accretion, and
impairment 63,357 40,343
General and
administrative 13,638 7,190
Equity tax
8,050 -
Financial
instruments gain (230) (44)
Gain on
acquisition (24,300) -
Foreign exchange
loss 5,199 14,294
82,110 71,968
INCOME BEFORE
INCOME TAXES 40,409 21,142
Income tax
expense (26,696) (11,182)
NET INCOME AND
COMPREHENSIVE
INCOME 13,713 9,960
RETAINED EARNINGS,
BEGINNING OF PERIOD 58,097 20,925
RETAINED EARNINGS, $ $
END OF PERIOD 71,810 30,885
NET INCOME PER $ $
SHARE — BASIC 0.05 0.04
NET INCOME PER $ $
SHARE —
DILUTED 0.05 0.04
WEIGHTED AVERAGE
SHARES OUTSTANDING
- BASIC 260,930,753 248,818,662
WEIGHTED AVERAGE
SHARES OUTSTANDING
- DILUTED 267,819,300 256,863,106
Gran Tierra Energy Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
March 31, December 31,
2011 2010
ASSETS
Current Assets
Cash and cash 355,428
equivalents $ 253,901 $
Restricted cash 7,950 250
Accounts 43,035
receivable 137,059
Inventory 6,448 5,669
6,974
Taxes receivable 16,660
Prepaids 3,107 1,940
Deferred tax
assets 2,112 4,852
Total Current 418,148
Assets 427,237
Oil and Gas
Properties (using
the full cost
method of
accounting)
Proved 544,828 442,404
Unproved 402,070 278,753
Total Oil and Gas 721,157
Properties 946,898
Other capital
assets 6,352 5,867
Total Property, 727,024
Plant and Equipment 953,250
Other Long Term
Assets
Restricted cash 2,335 1,190
Deferred tax
assets 2,497 -
Other long term
assets 308 311
Goodwill 102,581 102,581
Total Other Long 104,082
Term Assets 107,721
Total Assets $ 1,488,208 $ 1,249,254
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current Liabilities
76,023
Accounts payable $ 42,689 $
Accrued 32,120
liabilities 60,808
Bank debt 31,250 -
43,832
Taxes payable 66,300
Replacement
warrants 1,292 -
Asset retirement
obligations 334 338
Total Current 152,313
Liabilities 202,673
Long Term
Liabilities
Deferred tax 204,570
liabilities 216,697
Deferred
remittance tax and
other 1,064 1,036
Equity tax
payable 10,174 -
Asset retirement
obligations 9,767 4,469
Total Long Term 210,075
Liabilities 237,702
Commitments and
Contingencies
Shareholders'
Equity
Common shares 5,848 4,797
(260,053,351
and 240,440,830
common shares and
16,959,181 and
17,681,123
exchangeable
shares, par value
$0.001 per share,
issued and
outstanding as at
March 31, 2011 and
December 31, 2010
respectively)
Additional paid 821,781
in capital 968,101
Warrants 2,074 2,191
58,097
Retained earnings 71,810
Total Shareholders' 886,866
Equity 1,047,833
Total Liabilities 1,249,254
and Shareholders'
Equity $ 1,488,208 $
Gran Tierra Energy Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Thousands of U.S. Dollars)
Three Months Ended March 31,
2011 2010
Operating Activities
Net income $ 13,713 $ 9,960
Adjustments to
reconcile net income
to net cash provided
by (used in)
operating
activities:
Depletion,
depreciation,
accretion, and
impairment 63,357 40,343
Deferred taxes (187) (10,054)
Stock based
compensation 3,453 1,362
Unrealized gain on
financial
instruments (62) (44)
Unrealized foreign
exchange loss 4,458 12,707
Settlement of
asset retirement
obligations (4) -
Equity taxes
payable long-term 6,132 -
Gain on
acquisition (24,300) -
Net changes in
non-cash working
capital
Accounts
receivable (83,036) (46,208)
Inventory 736 97
Prepaids (831) (669)
Accounts payable
and accrued
liabilities (22,756) (17,796)
Taxes receivable
and payable 8,101 12,747
Net cash (used in)
provided by
operating activities (31,226) 2,445
Investing Activities
Restricted cash (5,600) 712
Additions to
property, plant and
equipment (74,266) (27,072)
Proceeds from
disposition of oil
and gas property - 600
Cash acquired on
acquisition 7,747 -
Proceeds on sale
of asset backed
commercial paper 22,679 -
Long term assets
and liabilities 3 32
Net cash used in
investing activities (49,437) (25,728)
Financing Activities
Settlement of bank
debt (22,853) -
Proceeds from
issuance of common
shares 1,989 18,173
Net cash (used in)
provided by
financing activities (20,864) 18,173
Net decrease in cash
and cash equivalents (101,527) (5,110)
Cash and cash
equivalents,
beginning of period 355,428 270,786
Cash and cash
equivalents, end of
period $ 253,901 $ 265,676
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2011/10/c2881.html
For investor and media inquiries please contact:
Jason Crumley
Director, Investor Relations
403-265-3221
info@grantierra.com
www.grantierra.com
