8-K: Gran Tierra Energy Announces Record Production and Increased Reserves in 2024 Year-End Results

Gran Tierra Energy reports record fourth-quarter production, increased reserves, and a net income of $3 million for 2024, setting a strong foundation for future growth.

Summary

• Gran Tierra Energy Inc. announced its financial and operating results for the fourth quarter and year ended December 31, 2024.
• The company achieved record fourth-quarter production of 41,009 BOEPD.
• Gran Tierra realized a net income of $3 million ($0.10 per share, basic) and an adjusted EBITDA of $367 million in 2024.
• Net cash provided by operating activities increased by 5% to $239.3 million.
• Funds flow from operations totaled $225 million, and the average working interest production was 34,710 BOEPD, up 6% from 2023.
• The company reported its sixth consecutive year of 1P total company reserves growth.
• Year-end total company reserves reached a historical high of 167 MMBOE (1P), 293 MMBOE (2P), and 385 MMBOE (3P).
• Reserves replacement ratios were strong, with 702% for 1P, 1,249% for 2P, and 1,500% for 3P.
• The net asset value per share is $35.22 before tax and $19.51 after tax (1P), and $71.14 before tax and $41.03 after tax (2P).
• Gran Tierra achieved its best safety performance on record in 2024.
• The company expects 2025 production of 47,000-53,000 boepd, driven by development drilling programs in Suroriente, Ecuador, and Canada.
• Gran Tierra plans to drill 6-8 exploration wells in South America in 2025.
• The first well on the Cohembi North pad spud on February 10, 2025, with production expected by the end of the first quarter of 2025.
• The Iguana SUR-B1 exploration well in Ecuador was spud on February 4, 2025.
• The development plan in Canada has commenced with the first two horizontal wells being drilled.
• Gran Tierra has re-purchased 6.7% of its outstanding shares through its normal course issuer bid (NCIB) program in 2024.
• Since January 1, 2022, the Company has re-purchased 6.8 million shares of Common Stock representing about 19% of shares outstanding as of December 31, 2024.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with record production, increased reserves, and a focus on future growth. While there are some negative aspects, the overall tone is optimistic and confident.

Positives

• Record fourth-quarter production of 41,009 BOEPD was achieved.
• Net income of $3 million was realized, a significant improvement from the previous year's net loss.
• Net cash provided by operating activities increased by 5% to $239.3 million.
• The company achieved its sixth consecutive year of 1P total company reserves growth.
• Year-end total company reserves reached a historical high.
• Strong reserves replacement ratios were achieved.
• Gran Tierra achieved its best safety performance on record in 2024.
• The NaturAmazonas project has benefited more than 4,200 families from the departments of Putumayo, Caquet and Cauca, who have been trained in conservation techniques and supported the implementation of sustainable economic opportunities such as the production of organic cocoa, honey and aa.

Negatives

• Adjusted EBITDA decreased by 8% from 2023, commensurate with the decrease in the Brent oil price.
• Funds flow from operations decreased compared to 2023.
• Operating netback decreased by 13% from $36.72 in 2023 to $31.99 per boe in 2024.
• Oil, natural gas and NGL sales decreased 2% to $621.8 million, compared to $637.0 million in 2023.

Risks

• Operations are located in South America, where unexpected problems can arise due to guerilla activity, strikes, local blockades, or protests.
• Technical and operational difficulties may impact the production, transport, or sale of products.
• Changes in commodity prices, including volatility or a prolonged decline, could negatively impact financial performance.
• Global economic and credit conditions may impact oil and natural gas prices and consumption.
• The company's ability to execute its business plan and realize expected benefits from current or future initiatives is subject to risk.
• Unexpected delays and difficulties in developing currently owned properties may occur.
• The company's ability to replace reserves and production and develop and manage reserves on an economically viable basis is subject to risk.

Future Outlook

Gran Tierra expects 2025 production of 47,000-53,000 boepd and plans to drill 6-8 exploration wells in South America. The company is focused on unlocking the full potential of its oil-weighted portfolio and delivering value to stakeholders.

Management Comments

• Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: 2025 is set to be a transformational year for Gran Tierra as we advance exploration drilling in Ecuador, fulfilling all our commitments in the country while integrating our new entry into Canada.
• We ended 2024 at record highs across all reserve categories and production, setting a solid foundation for the future.
• While 2024 was dedicated to investing in resource capture, 2025 and beyond will be focused on executionunlocking the full potential of our extensive, oil-weighted portfolio, which holds over 293 million BOE of 2P reserves.
• With a robust and diverse portfolio of assets, Gran Tierra is poised to capitalize on emerging opportunities and deliver value to all our stakeholders.

Industry Context

Gran Tierra's focus on exploration and production in South America and Canada aligns with the broader industry trend of diversifying asset portfolios and seeking growth opportunities in emerging markets. The company's commitment to sustainable operations and community engagement reflects increasing industry awareness of environmental and social responsibility.

Comparison to Industry Standards

• Gran Tierra's reserves replacement ratios of 702% (1P), 1,249% (2P), and 1,500% (3P) are significantly higher than the industry average, indicating strong organic growth.
• The company's FD&A costs of $9.74 (1P), $8.11 (2P) and $6.92 (3P) are competitive compared to other companies operating in similar regions.
• Gran Tierra's safety performance, with a TRIF of 0.03, places it in the top quartile for safety performance across its operating regions, demonstrating a strong commitment to safety.

Stakeholder Impact

• Shareholders will benefit from increased production, reserves, and potential for future growth.
• Employees will benefit from the company's commitment to safety and sustainable operations.
• Communities in the operating regions will benefit from the company's social responsibility initiatives and economic opportunities.
• Customers will benefit from a reliable supply of oil and natural gas.
• Suppliers will benefit from continued business opportunities with Gran Tierra Energy.

Next Steps

• Advance exploration drilling in Ecuador.
• Integrate the new entry into Canada.
• Drill 5-7 gross wells in Suroriente.
• Drill 2-3 appraisal wells in Ecuador.
• Drill 6 development wells in Canada.
• Drill 6-8 exploration wells in South America.
• Further appraise Ecuador discoveries.
• Commence development of the large Cohembi field.
• Commence a pilot waterflood at Marten Hills with the drilling of a multilateral injector in the first quarter 2025.

Key Dates

Keywords

Gran Tierra Energy, production, reserves, financial results, EBITDA, oil and gas, exploration, Colombia, Ecuador, Canada