Gran Tierra Energy Inc. Announces First Quarter 2017 Results Highlighted by Strong Financial Performance and New Discoveries in the Putumayo and Middle Magdalena Valley Basins
Gran Tierra Energy Inc. ("Gran Tierra" or the "Company") (NYSE MKT:GTE)(TSX:GTE), a company focused on oil and gas exploration and production in Colombia, today announced its financial and operating results for the quarter ended March 31, 2017. All dollar amounts are in United States ("U.S.") dollars unless otherwise indicated. Per barrel of oil equivalent ("BOE") amounts are based on working interest ("WI") sales before royalties. For per BOE amounts based on net after royalty ("NAR") production, see Gran Tierra's Quarterly Report on Form 10-Q filed May 3, 2017.
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented "Gran Tierra's strong first quarter 2017 results clearly demonstrate that we are delivering on our focused strategy of growing the Company's net asset value per share through our financially disciplined and results-driven exploration and development of our diversified Colombian asset base. We are pleased to report new oil discoveries in the Lisama D Sand in the Acordionero field in the Middle Magdalena Valley Basin and the "U" Sand and "A" Limestone in the PUT-7 block in the Putumayo Basin. Based on open hole logs, we also believe the Lisama B Sand at Acordionero may be a new discovery, but needs to be production tested at a later date.
We are also continuing to develop our new oil play in Costayaco's "A" Limestone, where we are now producing oil from 3 vertical wells and have just cased our first dedicated horizontal well in this play, the Costayaco-28. We believe the "A" Limestone play may extend from the Costayaco field in the north to the PUT-7 block in the south of the Putumayo Basin and could represent a significant resource with positive basin-wide implications. This new play will be further tested through the multiple exploration wells we plan on drilling in the Putumayo Basin in 2017 and 2018. We have a very strong position in the basin with 13 blocks and 1.1 million gross acres.
We did experience pump failures in both Acordionero-7 and Cumplidor-1, which impacted first quarter 2017 production by approximately 1,200 BOEPD. Subsequent to first quarter 2017, we have changed the pump design and expect to minimize failures going forward. We also deferred production from the final completion of Confianza (Villeta "N" Sands) and the Acordionero-8i and -9 to complete the testing of newly discovered zones and experienced well downtime due to workovers in the Costayaco Field.
Our strong first quarter 2017 financial performance is demonstrated by the fact that funds flow from operations was up 24% relative to the Prior Quarter to $45 million, and covered 98% of the Company's first quarter 2017 capital expenditures of $46 million. The increase in funds flow from operations was due to higher operating netbacks and lower G&A expenses.
Average Brent prices in the first quarter 2017 increased 7% to $54.66 per bbl from the Prior Quarter, while Gran Tierra's average realized oil price increased 10% to $35.17 per BOE in the same time period. Gran Tierra has successfully driven down combined operating and transportation expenses to $11.45 per BOE for the Quarter, a decrease of 5% from one year ago. Our operating netback increased 14% compared with the Prior Quarter to $23.72 per BOE, as a result of higher realized prices. We believe our low cost structure and solid production base allow us to be successful in a variety of pricing environments.
We are focused on delivering long-term growth in net asset value per share to our shareholders. Therefore, when Gran Tierra makes new discoveries such as the Lisama D Sand at Acordionero, the "A" Limestone at Costayaco and the "U" Sand and "A" Limestone in the PUT-7 block, we will spend the extra time necessary to fully evaluate these potential new resources even when these deliberate decisions lead to temporary delays in bringing production online. Our transformed asset base is located in proven basins with stacked reservoirs and are either underexplored or underdeveloped and, at times, require additional time to evaluate. The time dedicated to properly test and assess new discoveries is expected to result in enhanced long-term value creation. Mostly as a result of the extended production testing of the Acordionero-8i and 9 and the Confianza-1 wells, as well as the pump failures at Acordionero-7 and Cumplidor-1, WI production before royalties for first quarter 2017 averaged 29,879 BOEPD, 4% lower compared to 31,031 BEOPD in the Prior Quarter, but 17% higher than first quarter 2016's average WI production before royalties of 25,610 BOEPD. Over the next three years, we continue to forecast both visible organic production growth and to drill a total of 30 to 35 exploration wells, with all of this activity expected to be funded from cash flows from operations.
Interested parties may also access the live webcast on the investor relations page of Gran Tierra's website at www.grantierra.com. An archive of the webcast will be available on Gran Tierra's website until the next earnings call. In addition, an audio replay of the conference call will be available following the call until May 6, 2017. To access the replay, dial toll-free 1-855-859-2056 (North America), or 1-404-537-3406 (outside of Canada and USA), conference ID: 9267216.
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company focused on oil and natural gas exploration and production in Colombia. The Company also has business activities in Peru and Brazil. The Company is focused on its existing portfolio of assets in Colombia and will pursue new growth opportunities throughout Colombia, leveraging our financial strength. The Company's common shares trade on the NYSE MKT and the Toronto Stock Exchange under the ticker symbol GTE. Additional information concerning Gran Tierra is available at www.grantierra.com. Information on the Company's website does not constitute a part of this press release. Investor inquiries may be directed to email@example.com or (403) 265-3221.
Gran Tierra's Securities and Exchange Commission filings are available on a website maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
SOURCE: Gran Tierra Energy Inc
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