CALGARY, ALBERTA--(Marketwired - Nov. 28, 2016) - 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, is pleased to announce that the Company submitted winning bids totaling a combined $30.4 million for two blocks which Ecopetrol S.A. ("Ecopetrol"), Colombia's national oil company, offered as part of the Ronda Campos Ecopetrol 2016 ("Bid Round") in an electronic live auction held on November 25, 2016. Gran Tierra's winning bids are for the Santana and Nancy-Burdine-Maxine Blocks, which are located in the Putumayo Basin. Under the terms of the Bid Round, a purchase and sale agreement relating to each block must be submitted to Ecopetrol by December 7, 2016, and executed by December 22, 2016. Gran Tierra intends to finance these acquisitions with cash on hand and available borrowings under its revolving credit facility.
Ecopetrol holds operatorship and a 100% working interest ("WI") in each of the Santana and Nancy-Burdine-Maxine Blocks. Upon execution of definitive documents relating to the purchase of these blocks, Ecopetrol will transfer ownership of the blocks' assets, contracts, permits and licenses, as well as 100% ownership of Ecopetrol's rights and obligations in respect of the oil and gas assets, by entering into assignment agreements with Gran Tierra. Each assignment agreement would be subject to the prior approval of Colombia's Agencia Nacional de Hidrocarburos (ANH).
Key Attributes of Acquisitions
Santana and Nancy-Burdine-Maxine Blocks (100% WI)
- Aggregate amount of Gran Tierra's winning bids: $30.4 million
- Gross WI 2016 average production before royalties of approximately 600 barrels of oil per day1 ("bopd") and estimated 300 bopd behind-pipe1
- Gran Tierra has identified potential upside with enhanced oil recovery ("EOR") waterflooding techniques, and prospective resources on the new lands from "N" sands and "A" Limestone exploration plays, with mapped prospects based on existing Company 2D and 3D seismic data
- Approximately 27,400 gross WI acres1
- Establishes a centralized transportation and production hub in the Putumayo Basin with strategic, operated, pipeline infrastructure and gathering facilities which include:
- 26,000 bopd of pipeline capacity, 25,000 barrels of oil storage and capacity to load and unload 11,500 and 13,500 bopd by truck, respectively1
- the O.M.U and O.U.S pipelines which connect Costayaco, Moqueta and Guayuyaco oil fields with Santana Station
- transportation and commercialization flexibility, which is expected to further strengthen the Company's competitive advantage in the Putumayo Basin
1As reported in Ecopetrol's Bid Round Summary Flyer - published December 2015
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: "These acquisitions are a continuation of Gran Tierra's focused strategy to build a high-quality, diversified portfolio to efficiently create value in the multi-horizon, proven hydrocarbon producing basins of Colombia. The Nancy-Burdine-Maxine Block provides upside potential through EOR by investing in advanced drilling and waterflooding techniques. Having already established reserves and production in the Villeta N, T and U sands, the Nancy-Burdine-Maxine Block provides a core operating hub for the identified multi-horizon exploration drilling plans on adjoining Gran Tierra lands over the next 3 years.
Gran Tierra operated the Santana Block through July 2015 when the contract expired, so we know these assets well. The important fluid processing, and transportation infrastructure where we ship, under tariff, Costayaco, Moqueta and Guayuyaco production, will be the core transportation system as we explore and expand throughout the Putumayo. We will be able to scale the system as required, and maintain the efficient cost structure and appropriate investment timing being the operator of the network. As with the Nancy-Burdine-Maxine Block, the Miraflor, Mary, Linda and Toroyaco fields in the Santana Block provide upside with EOR investment, and multi-horizon exploration potential."
To view Diagram 1 - Land and Infrastructure Map - Putumayo Basin, please visit: http://media3.marketwire.com/docs/1077997f1.pdf
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE MKT (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra holds interests in producing and prospective properties in Colombia, Peru, and Brazil. Gran Tierra has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth. Additional information concerning Gran Tierra is available at www.grantierra.com. 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.
Forward Looking Information Advisory
This press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements"). Such forward-looking statements include, but are not limited to, the Company's operations including the planned completion of the acquisitions, planned operations, the expected benefits of the acquisitions and the source of funds to complete such acquisitions. The forward-looking statements contained in this press release reflect several material factors and expectations and assumptions of Gran Tierra including, without limitation, that Gran Tierra will continue to conduct its operations in a manner consistent with its current expectations, the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates), rig availability, the effects of drilling down-dip, the effects of waterflood and multi-stage fracture stimulation operations, the extent and effect of delivery disruptions, and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions including in areas of potential expansion, and the ability of Gran Tierra to execute its current business and operational plans in the manner currently planned. Gran Tierra believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.
Among the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements in this press release are: sustained or future declines in commodity prices and potential resulting future impairments and reductions in proved reserve quantities and value; Gran Tierra's operations are located in South America, and unexpected problems can arise due to guerrilla activity; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; geographic, political and weather conditions can impact the production, transport or sale of our products; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts; the ability of Gran Tierra to execute its business plan; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; the risk that oil prices could continue to fall, or current global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts, which could cause Gran Tierra to further modify its strategy and capital spending program; and the risk factors detailed from time to time in Gran Tierra's periodic reports filed with the Securities and Exchange Commission, including, without limitation, under the caption "Risk Factors" in Gran Tierra's Annual Report on Form 10-K filed February 29, 2016 and its Quarterly Report on Form 10-Q filed November 4, 2016. These filings are available on the Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. Although the current capital spending program and long term strategy of Gran Tierra is based upon the current expectations of the management of Gran Tierra, should any one of a number of issues arise, Gran Tierra may find it necessary to alter its business strategy and/or capital spending program and there can be no assurance as at the date of this press release as to how those funds may be reallocated or strategy changed.
All forward-looking statements are made as of the date of this press release and the fact that this press release remains available does not constitute a representation by Gran Tierra that Gran Tierra believes these forward-looking statements continue to be true as of any subsequent date. Actual results may vary materially from the expected results expressed in forward-looking statements. Gran Tierra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities laws. Gran Tierra's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Oil and Gas Disclaimer
BOEs have been converted on the basis of 6 thousand cubic feet ("Mcf") of natural gas to 1 barrel of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 barrel would be misleading as an indication of value.