Gran Tierra Energy today announced the Company’s financial and operating results for the quarter ended June 30, 2021. 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. 

Key Highlights:

• End of Colombian Blockades Affecting Gran Tierra:
  • As previously announced by Gran Tierra on May 17, 2021, a number of protests and blockades across Colombia impacted several key transportation routes throughout the country, resulting in the temporary shut-in of some of Gran Tierra’s wells and oil fields.
  • Though these blockades were not directed at Gran Tierra, these events caused the Company to implement temporary production curtailments during May and June 2021. As a result of the blockades, approximately 597,000 bbl of oil production were deferred during the Quarter and Gran Tierra does not expect any negative impact on the Company's oil reserves.
  • As the Company previously announced on July 12, 2021, the Colombian government successfully negotiated the end to all of the blockades in the areas that were affecting Gran Tierra’s operations, which has allowed the Company to restore its oil production throughout its entire Colombian portfolio.
• Second Quarter 2021 Production:
  • The Quarter's production averaged 23,035 BOPD, up 14% from the second quarter of 2020, but down 6% from the first quarter of 2021 ("the Prior Quarter").
  • The quarter-over-quarter production drop was due solely to the temporary impact of the blockades during the Quarter, all of which have since been lifted.
• Strong Second Half 2021 Production: Gran Tierra forecasts second half 2021 total production to average approximately 30,000-32,000 BOPD.
• Full Year 2021 Production Guidance: Based on the Company’s significant progress in restoring production subsequent to the Quarter, Gran Tierra reaffirms its 2021 full-year production guidance of 27,500-28,500 BOPD.
• Key Financial Metrics for the Quarter:
  • Credit Facility Paid Down: Despite the reduction in the Quarter's production, as of June 30, 2021, the Company had paid down its credit facility balance by $5 million to $175 million and had a cash and cash equivalents balance of $20 million. These figures compare to a credit facility balance of $180 million and cash and cash equivalents balance of $22 million at the end of the Prior Quarter. With 2021 expected free cash flow and changes in non-cash working capital (primarily related to the ongoing collection of tax receivables), Gran Tierra expects its bank credit facility to be paid down to a balance of $60-80 million by December 31, 2021.
  • Significant Reduction in Operating Expenses: Compared to the Prior Quarter, the Company’s operating expenses were down 9% to $12.46/bbl, despite the reduction in the Quarter's production. This decrease in operating expenses was achieved mainly by lower power generation costs in Acordionero.
  • Increases in Other Expenses:
    • Due to the temporary impact of the blockades during the Quarter, Gran Tierra rerouted some of its production to higher-cost transportation alternatives.
    • As a result of these temporary alternative marketing arrangements with higher costs, the quality and transportation discount was up $2.56/bbl during the Quarter to $11.54/bbl, relative to the Prior Quarter. Transportation expenses were up $0.28/bbl during the Quarter to $1.43/bbl, compared to the Prior Quarter.
    • With the resolution of the blockade situation, Gran Tierra has restored its normal, lower cost transportation routes and reaffirms its 2021 full year forecasts for quality and transportation discount of $8.00-10.00/bbl and transportation expenses of $0.90-1.10/bbl.
    • General and administrative ("G&A") expenses before stock-based compensation increased by $0.77/bbl during the Quarter to $3.49/bbl compared to the Prior Quarter due to the timing of certain corporate costs. Gran Tierra reaffirms its 2021 full year forecast for G&A expenses of $1.50-2.50/bbl.
  • Narrowed Net Loss and Increased EBITDA: Relative to the Prior Quarter, Gran Tierra significantly narrowed its realized net loss by 53% to $18 million from $37 million in the Prior Quarter; EBITDA1 also substantially improved to $34 million, up from $16 million in the Prior Quarter.
  • Funds Flow: Relative to the Prior Quarter, the Company's funds flow from operations was down 20% to $23 million, due to the Quarter's blockade-driven drop in production and temporary increase in expenses, but was up 290% from second quarter 2020.
  • Increased Oil Sales and Operating Netback: The Brent oil price averaged $69.08/bbl and Gran Tierra generated oil sales of $97 million, up 1% or $1 million from the Prior Quarter, as the 13% increase in the Brent oil price more than offset the 6% decrease in production during the Quarter. The Company’s operating netback  of $33.44/bbl was up 15%, an increase of $4.24/bbl relative to the Prior Quarter. This improvement was achieved despite an increase in royalties to $10.21/bbl, up from the Prior Quarter's $8.34/bbl, which was caused by higher oil prices and despite increased expenses during the Quarter.

Capital Expenditures: The Quarter's expenditures of approximately $37 million were flat with the Prior Quarter's level of $37 million, as Gran Tierra pressed ahead with development drilling operations, completions and workovers at the Acordionero and Costayaco oil fields. The Company estimates that approximately 50-60% of its 2021 capital program of $130-150 million has been spent during the first half of 2021.

Operations Update

• Acordionero Oil Field (100% WI)
  • Gran Tierra completed a total of 13 workovers during the Quarter to restore wells to production which had gone offline. During the current workover campaign, the average electric submersible pump replacement cost has decreased 57% from fourth quarter 2019.
  • The development drilling rig was active from November 30, 2020, to May 13, 2021, drilling both producers and water injectors. The average cost per well has decreased 38% since 2019. Five wells were drilled from Pad-6, with a pacesetter well from spud to rig release of 10.9 days, at a total cost of $1.9 million.
  • From January 1 to June 30, 2021, Gran Tierra drilled 11 new oil wells and 2 new water injection wells.
  • Gran Tierra believes its prudent reservoir management of Acordionero’s waterflood has allowed the Company to restore this field’s production to a level last achieved 20 months ago, which strongly demonstrates the effectiveness of the waterflood.

• Costayaco Oil Field (100% WI)
  • In March 2021, Gran Tierra commenced its infill development drilling campaign to drill 3 oil producers; this drilling program is the first in Costayaco since November 2019.
  • The CYC-42 and CYC-43 infill oil wells were drilled during March and April of 2021; and the CYC-44 infill well was drilled in late April, 2021.
  • The CYC-43 well is currently on production and the CYC-42 and CYC-44 wells are both expected to start production during August 2021.
• Moqueta Oil Field (100% WI)
  • During the Quarter, Gran Tierra initiated a 6-well workover program. One stimulation (MQT-12) and one injector conversion (MQT-2) were completed.
  • Two remaining injector conversions (MQT-6 and MQT-16) and two producer workovers (MQT-15 and MQT-8) are expected to be completed by early September 2021.
  • The workover program is designed to optimize the field's waterflood and potentially increase ultimate oil recovery.
• Suroriente Block (52% WI and Operator)
  • At the Cohembi oil field in the Suroriente Block, a facility expansion program is progressing as planned, which is expected to allow additional production to be brought online in the second half of 2021.
  • A workover rig in the Suroriente Block is currently running larger pumps in four oil wells. This pump upsizing program is being done in conjunction with the new facility expansion program.