Highlights

• Generated Net Income of $14 Million
• Increased Adjusted EBITDA to $119 Million, Up 185% Year-on-Year
• Grew Net Cash Provided by Operating Activities to $104 Million, Up 148% Year-on-Year
• Increased Funds Flow from Operations(1) to $87 Million, Up 201% Year-on-Year
• Generated Free Cash Flow of $46 Million, Highest Since Fourth Quarter 2012
• Credit Facility Balance Paid Down to $40 Million at March 31, 2022, Current Balance of $10 Million
• Balance of Credit Facility Expected to be Fully Paid Down Before End of Second Quarter 2022
• 2021 Sustainability Report to be Released May 4, 2022
• Acordionero and Costayaco Infill Development Drilling Campaigns Yielding Encouraging Results
• Expect to Meet Full Year 2022 Guidance of 30,500-32,500 BOPD

Gran Tierra Energy today announced the Company’s financial and operating results for the quarter ended March 31, 2022. 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 of the Quarter:

• Net Income: Gran Tierra generated a net income of $14 million versus a net loss of $37 million in first quarter of 2021.
• Significant Growth in Net Cash Provided by Operating Activities: The Company realized net cash provided by operating activities of $104 million, up 148% from the first quarter of 2021.
• Material Growth in Funds Flow from Operations(1): Funds flow from operations(1) increased to $87 million, up by 34% from the fourth quarter of 2021 (“the Prior Quarter”) and up by 201% from the first quarter of 2021.
• Strong Free Cash Flow(1): Gran Tierra generated free cash flow(1) of $46 million, the highest quarterly amount in almost a decade.
• Rapid Debt Reduction: Gran Tierra has been utilizing its free cash flow(1) to strengthen the Company's balance sheet by paying down its credit facility and building its cash position. During the Quarter, the Company paid down its credit facility balance by $27.5 million to $40 million and had a cash balance of $59 million. These figures compare to a credit facility balance of $67.5 million and a cash balance of $26 million at the end of the Prior Quarter. As of May 3, 2022, Gran Tierra has paid down its credit facility to a balance of $10 million and expects the facility to be fully repaid before the end of the second quarter 2022.
• Annual Production Growth: The Quarter's production was in-line with management expectations and averaged 29,362 BOPD, up 20% from the first quarter of 2021 and approximately flat compared to the Prior Quarter.
• Expects to Meet 2022 Production Guidance: Gran Tierra believes its ability to keep production flat compared to the Prior Quarter demonstrates the ongoing successful results from the Company’s waterflooding efforts in all major assets. The ongoing infill development drilling campaigns in the Acordionero and Costayaco oil fields are expected to increase the Company’s full year 2022 average production into the guidance range of 30,500-32,500 BOPD. The ramp-up in production from the Quarter’s level is expected to begin in the latter half of second quarter of 2022 as new Acordionero and Costayaco oil wells are brought online.
• Revised 2022 Financial Guidance: As previously announced on April 19, 2022, Gran Tierra has updated the Company's 2022 financial guidance in light of the significant increase in world oil prices this year. The Company has increased its 2022 Brent price forecast to $95/bbl. At this higher oil price, the Company would maintain 2022 capital at $220-240 million with a forecast 2022 cash flow(1) of $410-430 million, free cash flow(1) of $180-200 million, EBITDA(1) of $550-570 million and a 2022 year-end cash balance of $210-230 million.
• Additional Key Financial Metrics:
  • Capital Expenditures: Capital expenditures of approximately $41 million were relatively flat with the Prior Quarter's level of $40 million, as Gran Tierra maintained capital discipline and its focus on driving down drilling and completion costs.
  • Increased Oil Sales: The Brent oil price averaged $97.90/bbl, up 23% from the Prior Quarter and up 60% year-on-year. Gran Tierra generated oil sales of $175 million, up 19% from the Prior Quarter and up 83% from the first quarter of 2021. The significant annual increase in oil sales was driven by the Company's 20% increase in quarterly production year-on-year, combined with the large rise in the Brent oil price over the same period.
  • Strong Operating Netback(2): The Company’s operating netback(2) of $52.45/bbl was up 39% from the Prior Quarter and up 80% year-on-year. This strong annual increase was driven by Gran Tierra's 20% increase in quarterly production year-on-year and increased Brent pricing.
  • Decreased Operating Expenses: Compared to the Prior Quarter, Gran Tierra’s operating expenses decreased 9% to $13.14/bbl, down from $14.46/bbl, due to lower workover, environmental and administration costs, which were only partially offset by higher expenses for chemicals used in the Company's waterflood projects. Compared to first quarter 2021, operating expenses decreased by 4% on a per bbl basis, primarily as a result of Gran Tierra's higher production.
  • Other Expenses:
    • The quality and transportation discount dropped 2% to $12.57 per bbl, compared to $12.78 per bbl in the Prior Quarter, because of higher world demand for Colombian oil.
    • General and administrative (“G&A”) expenses before stock-based compensation were $2.97 per bbl, down from $3.08 per bbl in the Prior Quarter and $3.14 per bbl in the first quarter of 2021, due to a lower accrued performance bonus.
  • Oil Price Hedges: The Company continues to have Brent oil price hedges in place for 9,000 BOPD in the first half of 2022, with an average ceiling price of $87.62/bbl on 8,000 BOPD. Therefore, approximately 73% of Gran Tierra’s oil production, which is unhedged, has fully benefited from the current high oil price environment.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented:
“The strong recovery for the energy industry and Gran Tierra, from the challenges of 2020, continued into the first quarter of 2022. Our top tier, low-decline, onshore, conventional asset base continues to prove its high quality, as shown by the Company’s production growth of 20% over the last year. At the same time, we have significantly strengthened our balance sheet and expect to completely pay off our entire credit facility before the end of the second quarter of 2022, which will be a major milestone for Gran Tierra. Looking to the end of the year, we are forecasting a net debt to EBITDA ratio of under 0.8 times.

We are pleased with the results so far of our ongoing development drilling campaigns in the Middle Magdalena Valley and Putumayo Basins in Colombia with record drilling performance in both Acordionero and Costayaco. In addition, we plan to allocate capital to prioritized, high-impact exploration drilling opportunities as we restart our exploration campaign during the second half of 2022. We plan to drill our first ever exploration wells in Ecuador, in addition to our first exploration wells in Colombia in more than two years.

We believe Gran Tierra is in an excellent position for continued development and enhanced oil recovery activities in 2022 to optimize value from each of our assets. Our waterflood programs across all of our assets continue to perform well, and we expect another strong year of free cash flow(1) from these high quality, low decline assets.

As always, 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. Through operational efficiencies, including gas-to-power projects, we have also been able to reduce our greenhouse gas emissions by 55% for 2021 compared to our 2019 baseline.”

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