Page 16 - LatAmOil Week 31 2021

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As the Company previously announced on July capital programme of $130-150mn has been
12, 2021, the Colombian government success- spent during the first half of 2021.
fully negotiated the end to all of the blockades Oil Price Hedges In Place Designed To
in the areas that were affecting Gran Tierra’s Protect Cash Flows During Second Half 2021:
operations, which has allowed the Company to The Company has the following Brent oil price
restore its oil production throughout its entire hedges in place covering 10,000 BOPD in second
Colombian portfolio. half 2021, with a weighted average floor price of
Second Quarter 2021 Production: The $57.03 per barrel and a weighted average ceiling
Quarter’s production averaged 23,035 bpd, up price of $65.29 per barrel. (Realised oil price
14% from the second quarter of 2020, but down hedging losses totaled $24mn during the Quar-
6% from the first quarter of 2021. The quar- ter, but the Company’s H1-2021 hedges have
ter-over-quarter production drop was due solely now rolled off.)
to the temporary impact of the blockades during Gary Guidry, President and CEO of Gran
the Quarter, all of which have since been lifted. Tierra, commented: “Despite the challenges
Strong H2-2021 Production: Gran Tierra with blockades during the Quarter, we are very
forecasts H2-2021 total production to average pleased that we have now safely and diligently
approximately 30,000-32,000 bpd. ramped operations back up throughout our
Full Year 2021 Production Guidance: Based Colombia portfolio. Although the blockades
on the Company’s significant progress in restor- temporarily impacted Gran Tierra’s production
ing production subsequent to the Quarter, Gran volumes, the stronger Brent oil price environ-
Tierra reaffirms its 2021 full-year production ment more than offset the effect of lower pro-
guidance of 27,500-28,500 bpd. duction volumes, as demonstrated by our higher
Key Financial Metrics for the Quarter: Credit oil sales and EBITDA figures. With production
Facility Paid Down: Despite the reduction in expenses before stock-based compensation restored, we expect Gran Tierra to generate sec-
the Quarter’s production, as of June 30, 2021, increased by $0.77 per barrel during the Quarter ond-half 2021 free cash flow of $100-120mn.
the Company had paid down its credit facility to $3.49 per barrel compared to the Prior Quar- With a constructive oil price environment, a suc-
balance by $5mn to $175mn and had a cash ter due to the timing of certain corporate costs. cessful first half 2021 drilling programme and
and cash equivalents balance of $20mn. These Gran Tierra reaffirms its 2021 full year forecast the expiry of our first half 2021 oil price hedges,
figures compare to a credit facility balance of for G&A expenses of $1.50-2.50 per barrel. we are very excited about the second half of 2021
$180mn and cash and cash equivalents balance Narrowed Net Loss and Increased EBITDA: and all of 2022.”
of $22mn at the end of the Prior Quarter. With Relative to the Prior Quarter, Gran Tierra sig- Gran Tierra Energy, August 3 2021
2021 expected free cash flow2 and changes in nificantly narrowed its realised net loss by 53%
non-cash working capital (primarily related to to $18mn from $37mn in the Prior Quarter;
the ongoing collection of tax receivables), Gran EBITDA also substantially improved to $34mn, POLICY
Tierra expects its bank credit facility to be paid up from $16mn in the Prior Quarter.
down to a balance of $60-80mn by December Funds Flow: Relative to the Prior Quarter, PetroRio granted royalty
31, 2021. the Company’s funds flow from operations1
Significant Reduction in Operating was down 20% to $23mn, due to the Quarter’s rate reduction for Tubarão
Expenses: Compared to the Prior Quarter, the blockade-driven drop in production and tempo-
Company’s operating expenses were down 9% rary increase in expenses, but was up 290% from Martelo field
to $12.46 per barrel, despite the reduction in the second quarter 2020.
Quarter’s production. This decrease in operating Increased Oil Sales and Operating Netback: PetroRio has informed its shareholders that the
expenses was achieved mainly by lower power The Brent oil price averaged $69.08 per barrel country’s National Petroleum, Gas and Biofuels
generation costs in Acordionero. and Gran Tierra generated oil sales of $97mn, Agency (ANP) has approved the Development
Increases in Other Expenses: Due to the tem- up 1% or $1mn from the Prior Quarter, as the Plan of the cluster consisting of the Polvo and
porary impact of the blockades during the Quar- 13% increase in the Brent oil price more than Tubarão Martelo fields.
ter, Gran Tierra rerouted some of its production offset the 6% decrease in production during the Among other topics, ANP granted PetroRio
to higher-cost transportation alternatives. As a Quarter. The Company’s operating netback3 a royalty rate reduction for the Tubarão Martelo
result of these temporary alternative marketing of $33.44 per barrel was up 15%, an increase field, as an incentive to invest in the Field’s revi-
arrangements with higher costs, the quality and of $4.24 per barrel relative to the Prior Quar- talisation. The approval establishes the reduction
transportation discount was up $2.56 per barrel ter. This improvement was achieved despite an of the royalty rate from 10% to 5% on the incre-
during the Quarter to $11.54 per barrel, relative increase in royalties to $10.21 per barrel, up from mental production resulting from the Field’s
to the Prior Quarter. Transportation expenses the Prior Quarter’s $8.34 per barrel, which was investments, based on the concession contract
were up $0.28 per barrel during the Quarter to caused by higher oil prices and despite increased and on Resolution 749/18, which regulates the
$1.43 per barrel, compared to the Prior Quarter. expenses during the Quarter. royalty rate reduction on incremental produc-
With the resolution of the blockade situation, Capital Expenditures: The Quarter’s expendi- tion for mature fields.
Gran Tierra has restored its normal, lower cost tures of approximately $37mn were flat with the As such, incremental production from new
transportation routes and reaffirms its 2021 full Prior Quarter’s level of $37mn, as Gran Tierra investments in Tubarão Martelo Field will have
year forecasts for quality and transportation dis- pressed ahead with development drilling oper- their royalty rate reduced to 5%, including the
count of $8.00-10.00 per barrel and transporta- ations, completions and workovers at the Acor- production of the TBMT-10HP well, expected
tion expenses of $0.90-1.10 per barrel. dionero and Costayaco oil fields. The Company to start production in September.
General and administrative (“G&A”) estimates that approximately 50-60% of its 2021 PetroRio, July 29 2021

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