(Gran Tierra Energy Inc., 23.Jan.2017) – Gran Tierra Energy Inc. announced its 2016 year-end estimated reserves as evaluated by independent qualified reserve evaluator McDaniel & Associates Consultants Ltd. in a report with an effective date of December 31, 2016. Gran Tierra has also updated its corporate presentation, which is available on the company’s website. Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented:
Gran Tierra had a transformational year during 2016 in which we expanded, upgraded and diversified our portfolio in Colombia through four strategic and accretive acquisitions: Petroamerica, PetroGranada, PetroLatina and the Ecopetrol 2016 Bid Round, which is expected to close in 2017. In 2016 the company was able to add approximately 9.2 million barrels of oil equivalent (MMBOE) of Proved plus Probable (2P) working interest before royalties (WI) reserves organically in both existing assets and our new assets postacquisition, despite only commencing exploration and appraisal drilling in late September 2016. The 2016 exploration drilling delivered 2016 2P WI reserve additions of 2.1 MMBOE in the N-sands exploration play in the acquired Putumayo-7 (“PUT-7”) Block. Total 2P WI reserves booked on PUT-7 are now 5.4 MMBOE.
Development activities delivered 2P WI reserves additions of 2.6 MMBOE in the newly acquired asset at Acordionero in the Middle Magdalena Basin and 2.0 MMBOE of 2P WI reserves in the legacy asset at Costayaco in the Putumayo Basin from the “A” Limestone. In 2017 the company looks to further proving up Acordionero through ongoing development drilling which targets 48 MMBOE of Possible reserves (out of Acordionero’s total Proved plus Probable plus Possible (3P) WI reserves of 96 MMBOE), and developing the “A” Limestone in Costayaco through horizontal drilling, which commenced at the end of 2016.
During 2016, Gran Tierra’s total 2P WI reserves increased by 91% compared with year-end 2015, while the company’s 3P WI reserves increased by 146% over the same time period. In addition, the company’s exploration portfolio has been substantially enhanced and expanded. Our 2P reserves replacement ratio in 2016 was 708%1 including acquisitions. The company also inceaesed its 2P reserve life index from 7.8 years to 11.1 years.
Since the senior management team joined the company in May 2015, 2016 represents the first full year in which the company has been delivering on its focused strategy. The company has grown its before tax net asset value per share during 2016 by 5%, on a 2P reserves basis and by 37% on a 3P reserves basis, despite a 10% decrease in forecasted pricing. The company increased 2P WI reserves by 60 MMBOE, increased 3P WI reserves by 118 MMBOE and exploration inventory has increased to 72 locations and over 680 MMBOE WI unrisked net prospective resources. After effectively no reserves growth between 2010 and 2015, the company is once again significantly growing reserves on an accretive basis. During 2016, Gran Tierra’s portfolio achieved a 2P finding, development and acquisition, excluding changes in future development costs, cost of $9.81 per barrel of oil equivalent (BOE) and a 2P recycle ratio of 2.1 times excluding changes in future developments costs and 1.5 times including changes in future development costs. Gran Tierra now has visible production growth from its existing asset base through 2019 on a 2P reserves basis and through 2020 on a 3P reserves basis and a world class exploration portfolio that can be funded through cash flow.
The developed reserves base is currently producing approximately 32,000 barrels of oil equivalent per day (BOEPD) (January 2017 year to date) and it is expected cash flow from the 2P WI reserves base will be more than enough to fund exciting exploration portfolio. The asset portfolio is forecasted to generate cumulative net cash provided by operating activities on a 2P basis of approximately $1.0 billion during the next three years (2017 – 2019), with is expected to fund development and exploration programs over this time period. With an operated, low cost, high netback, positive cash-flowing asset base, the company will focus on organic reserves development for production growth and drilling 30 to 35 exploration wells over the next three years, all funded from cash from operating activities.
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